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, 2020
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 an original maturity of three months or less to be cash equivalents.  The Company places its cash, 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 $250,000. The Company's credit risk 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, work in process and finished goods, both purchased and manufactured. Inventories are stated at lower of cost or net realizable value. Cost is determined on the first-in, first-out basis. Raw inventory consists 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.


The Company’s inventory at September 30, 2020 and December 31, 2019 was comprised of:


 

 

September 30,
2020

 

 

December 31, 2019

 

 

 

(Unaudited)

 

 

 

 

Finished goods               

 

$

116,134

 

 

$

47,462

 

Work in process

 

 

11,793

 

 

 

—

 

Raw materials

 

 

77,718

 

 

 

112,010

 

Total inventory

 

$

205,645

 

 

$

159,472

 


(D) Fixed assets


Fixed assets consist of the following:


 

 

September 30,
2020

 

 

December 31, 2019

 

 

 

(Unaudited)

 

 

 

 

Computer equipment

 

$

7,268

 

 

$

7,268

 

Machinery

 

 

657,368

 

 

 

578,347

 

Leasehold improvements

 

 

161,579

 

 

 

137,217

 

Office furniture and equipment

 

 

71,292

 

 

 

62,926

 

Land improvements

 

 

7,270

 

 

 

7,270

 

Website development

 

 

27,275

 

 

 

27,275

 

Construction in process                  

 

 

30,000

 

 

 

—

 

 

 

 

962,052

 

 

 

820,303

 

Accumulated depreciation

 

 

(134,182

)

 

 

(48,307

)

 

 

$

827,870

 

 

$

771,996

 

 

Depreciation expense for the three and nine months ended September 30, 2020 was $30,102 and $85,875, respectively, compared to $6,187 and $10,595 to the three and nine months ended September 30, 2019.


(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 potentially dilutive shares not included in the loss per share computation:


 

 

September 30,
2020

 

 

December 31, 2019

 

 

 

(Unaudited)

 

 

 

 

Options

 

 

4,542,500

 

 

 

5,042,500

 

Warrants

 

 

40,489,050

 

 

 

29,849,761

 

Convertible shares

 

 

108,853,912

 

 

 

984,014

 

     

 

 

153,885,462

 

 

 

35,876,275

 


(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 grant.

 

The Company entered into a consulting agreement on July 9, 2020 for services in exchange for restricted common stock as compensation for the consulting services.  The term of the agreement is for six months with the option for renewal quarterly. Upon execution of the agreement, 600,000 shares were due within 5 days of execution.  The execution date fair value of the shares was $0.29 per share.  The Company recognized $78,590 in stock-based compensation as a result and is accrued as a subscription liability as of September 30, 2020.  If the Company agrees to renew each quarter, an additional 350,000 shares are to be issued per quarter.