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Metalert (MLRT) Risk Analysis
Risk Overview Q4, 2023
Source: the company's latest filing for the period ended Dec 31, 2023, filed May 24, 2024
Risk Change Over Time
- Innovation / R&D - Risk 1Our projected revenues in 2024 rely on the scaling of the our new 4G LTE GPS SmartSole and the introduction of the Gun Alert product to local state and federal government agencies, adding subscribers, increasing our military business, growing our OEM and IP monetization business, and continuing the sales of related medical, health and wellness products and supplies.
Our revenue projections for 2023 assumed that the revenues we generate from the SmartSole, including subscriptions will increase from the amount generated in 2022 and that our other business units will grow accordingly. However, we cannot predict the future and continued market acceptance of the SmartSole and new Gun Alerts product lines. Accordingly, it is uncertain whether our revenues will equal our internally projected levels. Failure to reach our target revenue levels will materially, and adversely, affect our financial condition. With the acquisition of Level 2 Security, LLC, and their Gun Alert product, in the 3rd quarter of 2023, we expect that this product line will help us grow in 2024.
Risk Highlights Q4, 2023
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 35
- Share Price & Shareholder Rights - Risk 1There is substantial doubt about the entity's ability to continue as a going concern.
The consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred net losses of $1,190,158 and $1,503,087 for the years ended December 31, 2023, and 2022, respectively, has incurred losses since inception resulting in an accumulated deficit of $28,746,629 as of December 31, 2023, and has negative working capital of $4,049,387 as of December 31, 2023. A significant part of our negative working capital position on December 31, 2023, consisted of $1,739,165, of amounts due to various accredited investors of the Company for convertible promissory notes, loans and a letter of credit, as well as the current portion of $12,972 in CARE loans. The Company anticipates further losses in the development of its business. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The Company's ability to raise additional capital through the future issuances of debt or equity is unknown. The obtainment of additional financing, the successful development of the Company's contemplated plan of operations, or its attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties.
- Share Price & Shareholder Rights - Risk 2Our executive officers and directors have the ability to significantly influence matters submitted to our stockholders for approval.
As of May 17, 2024, our executive officers and directors, in the aggregate, beneficially own shares representing approximately 0.5971% of our common stock as well as super voting rights due to the Directors' ownership of Preferred A shares (see Footnote #13 of our Financial Statements included herein). Beneficial ownership includes shares over which an individual or entity has investment or voting power and includes shares that could be issued upon the exercise of options and warrants within 60 days after the date of determination. On matters submitted to our stockholders for approval, holders of our common stock are entitled to one vote per share. If our executive officers and directors choose to act together, they would have significant influence over all matters submitted to our stockholders for approval, as well as our management and affairs. For example, these individuals, if they chose to act together, would have significant influence on the election of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. This concentration of voting power could delay or prevent an acquisition of our company on terms that other stockholders may desire.
- Share Price & Shareholder Rights - Risk 3The resale of shares by the holders of our convertible promissory notes and our other investors could depress the market price of our common stock.
We have issued a substantial amount of convertible promissory notes in the recent past to fund our working capital and other financial needs and may need to do so in the future. A number of the holders of these convertible notes have been converting these promissory notes into shares of our common stock. In addition, a substantial additional number of shares are issuable upon the conversion of currently outstanding convertible notes. The resale of a significant number of these shares into the public market by the investors could depress the market price of our common stock.
- Share Price & Shareholder Rights - Risk 4Our convertible notes may be converted into shares of our common stock at less than the then-prevailing market price for our common stock if the lenders chooses to convert the notes.
As of December 31, 2023, we had short term convertible notes with outstanding principal balances totaling $1,490,930 some of which can potentially be convertible into shares of the Company's common stock at prices less than the then-prevailing market price. The lenders for these convertible notes have a financial incentive to convert the notes and realize the profit equal to the difference between the conversion price and the market price. If the convertible notes are converted, the price of our common stock could decrease. See further discussion regarding the conversion features of our convertible debentures in footnote 8 of our Financial Statements included herein. During 2023, we converted notes payable with principal balances of approximately $73,469 owed to various investors and employees into 7,421,137 shares of our common stock. Our average market price during 2023 was $0.0950 per share. Although our goal is to limit future issuances of such convertible notes, no assurance can be given that we will not have to raise funds from these types of investments in the future.
- Share Price & Shareholder Rights - Risk 5Our common stock is thinly traded and the price of our common stock may be negatively impacted by factors that are unrelated to our operations.
Our common stock is currently quoted on the OTC Pink Open Market (the "Pinks"). Trading of our stock through the Pinks is frequently thin and highly volatile. The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our business objectives, trading volume in our common stock, changes in general conditions in the economy and the financial markets, or other developments which affect us or our industry. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.
- Share Price & Shareholder Rights - Risk 6When we issue additional shares in the future, it will likely result in the dilution of our existing stockholders.
Our articles of incorporation authorizes the issuance of up to 2,071,000,000 shares of common stock with a $0.0001 par value, of which 32,445,931 common shares were issued and outstanding as of December 31, 2023 (we also are authorized to issue 10,000,000 preferred shares with a par value of $0.0001, 13,846 of which have been issued and are outstanding Series-A, 3 of which have been issued and outstanding Series-B, 6 of which have been issued and outstanding Series-C), and 15,000 of which have been issued and outstanding Series-D). From time to time we may increase the number of shares available for issuance in connection with our equity compensation plans. Our board of directors may fix and determine the designations, rights, preferences or other variations of each class or series within each class of preferred stock and may choose to issue some or all of such shares to provide additional financing or acquire more businesses in the future. The issuance of any shares for acquisition, licensing or financing efforts, upon conversion of any preferred stock or exercise of warrants and options, pursuant to our equity compensation plans, or otherwise may result in a reduction of the book value and market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will cause a reduction in the proportionate ownership and voting power of all current stockholders.
- Share Price & Shareholder Rights - Risk 7You may have difficulty selling our shares because they are deemed "penny stocks."
Our common stock is currently quoted on the Pinks under the symbol "MLRT." Since our common stock is not listed on a national securities exchange, if the trading price of our common stock remains below $5.00 per share, trading in our common stock will be subject to the requirements of certain rules promulgated under the Exchange Act, which require additional disclosure by broker-dealers in connection with any trades involving a stock defined as a penny stock (generally, any non-national securities exchange equity security that has a market price of less than $5.00 per share, subject to certain exceptions). The additional burdens imposed upon broker-dealers could discourage broker-dealers from effecting transactions in our common stock, which could severely limit the market liquidity of the common stock and the ability of holders of the common stock to sell their shares. Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through pre-arranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.
See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.
