Quarterly report pursuant to Section 13 or 15(d)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


(A) Cash


The Company considers all highly liquid temporary cash instruments with a maturity of three months or less to be cash equivalents.  The Company places its cash and cash equivalents and restricted cash on deposit with financial institutions in the United States, which are insured by the Federal Deposit Insurance Company ("FDIC") up to $250 thousand. The Company's credit loss in the event of failure of these financial institutions is represented by the difference between the FDIC limit and the total amounts on deposit. Management monitors the financial institutions credit worthiness in conjunction with balances on deposit to minimize risk.


(B) Use of Estimates in Financial Statements


The presentation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


(C) Inventories


The Company’s inventories consist of raw materials and finished goods, both purchased and manufactured. Inventories are stated at lower of cost or market. Cost is determined on the first-in, first-out basis. Raw inventory is comprised of basalt fiber and other necessary elements to produce the basalt rebar. On a quarterly basis, the Company analyzes its inventory levels and records allowances for inventory that has become obsolete and inventory that has a cost basis in excess of the expected net realizable value. As of September 30, 2019, and December 31, 2018, the inventory reserve for these factors was $0 and $240,121, respectively. The Company’s inventory at September 30, 2019 and December 31, 2018 was comprised of:


 

 

September 30,
2019

 

 

December 31, 2018

 

 

 

(Unaudited)

 

 

 

 

Finished goods               

 

$

56,637

 

 

$

56,586

 

Raw materials

 

 

111,384

 

 

 

—

 

Inventory

 

$

168,021

 

 

$

56,586

 


(D) Fixed assets


Fixed assets consist of the following:


 

 

September 30,
2019

 

 

December 31, 2018

 

 

 

(unaudited)

 

 

 

 

Computer equipment

 

$

7,268

 

 

$

13,813

 

Machinery

 

 

578,347

 

 

 

20,000

 

Leasehold improvements

 

 

49,602

 

 

 

—

 

Office furniture and equipment

 

 

62,926

 

 

 

—

 

Website development                  

 

 

27,275

 

 

 

24,775

 

 

 

 

725,418

 

 

 

58,588

 

Accumulated depreciation

 

 

(41,760

)

 

 

(34,888

)

 

 

$

683,658

 

 

$

23,700

 

 

Depreciation expense for the three and nine months ended September 30, 2019 was $6,187 and $10,595, respectively, compared to $10,262 and $30,142 to the three and nine months ended September 30, 2018.


(E) Loss Per Share

 

The basic loss per share is calculated by dividing the Company's net loss available to common shareholders by the weighted average number of common shares during the period. The diluted loss per share is calculated by dividing the Company's net loss by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.

The following are dilutive shares not included in the loss per share computation:


 

 

September 30,
2019

 

 

December 31, 2018

 

 

 

(unaudited)

 

 

 

 

Options

 

 

5,067,500

 

 

 

2,587,500

 

Warrants

 

 

30,276,190

 

 

 

18,025,000

 

Convertible shares

 

 

—

 

 

 

2,715,897

 

     

 

 

35,343,690

 

 

 

23,328,397

 


(F) Stock-Based Compensation


The Company recognizes compensation costs to employees under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation. Under FASB ASC Topic 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.


(G) Non-controlling Interests in Consolidated Financial Statements


Accounting guidance on non-controlling interests in consolidated financial statements requires that a non-controlling interest in the equity of a subsidiary be accounted for and reported as equity; provides revised guidance on the treatment of net income and losses attributable to the non-controlling interest and changes in ownership interests in a subsidiary; and requires additional disclosures that identify and distinguish between the interests of the controlling and non-controlling owners. Net loss attributable to the non-controlling interests totaling $0 and $540 for the nine months ended September 30, 2019 and 2018, respectively, are included in the consolidated financial statements.


On February 12, 2019, as a result of the termination of the RAW License Agreement (see Note 9), the Company agreed to settle with the non-controlling investors in Basalt America Territory 1, LLC to unwind this investment. In the settlement, the Company issued 2,010,000 restricted common shares. The non-controlling investors were issued these shares on March 21, 2019 and the Company took control of the previous 44.7% of Basalt America Territory 1, LLC formerly representing the non-controlling interest as of December 31, 2018 in the accompanying consolidated financial statements. As a result of this unwinding, Basalt America Territory 1, LLC was fully consolidated into Basalt America.