NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2021 AND 2020
1. ORGANIZATION AND LINE OF BUSINESS
Vision
Hydrogen Corporation (the “Company”) was incorporated in the state of Nevada on August 17, 2015 as H/Cell Energy Corporation
and is based in Jersey City, New Jersey. The Company changed its name to Vision Hydrogen Corporation in October 2020.
During
the year ended December 31, 2020, the Company took significant steps to transition its hydrogen energy business to focus on hydrogen
production on a scaled production plant model. During the period, the Company disposed of its interests in both PVBJ and Pride (See Note
11 “Discontinued Operations”) in order to facilitate this transition. As part of the disposition the Company provided
certain post-closing support to both PVBJ and Pride through Q3 2020. On August 12, 2020, pursuant to a Seed Capital Subscription Agreement,
the Company made an equity investment into VoltH2 Holdings AG (“VoltH2”), a Swiss corporation developing scalable green hydrogen
production projects primarily in Europe. VoltH2 is currently planning to develop a 25MW green hydrogen production site near Vlissingen,
Netherlands. The investment was for a total purchase price $175,000,
representing a 17.5%
equity interest in VoltH2.
Effective
September 30, 2020 the Company moved its principal office from Dallas, Texas to Jersey City, New Jersey.
On
September 29, 2020, the Company filed an amendment to and restatement of its Articles of Incorporation with the Secretary of State of
the State of Nevada. Pursuant to the Amendment, the Company (i) changed its name from H/Cell Energy Corporation to Vision Hydrogen Corporation
(ii) effectuated a one-for-twenty (1:20) reverse split of the issued and outstanding shares of common stock of the Company without changing
the par value of the stock and (iii) increased its authorized shares of common stock from 25,000,000 to 100,000,000. The Amendment took
effect on October 6, 2020.
On
October 14, 2020, the Company filed an S-1 registration statement offering up to a maximum of 12,500,000
shares of its common stock for gross proceeds
of $2,500,000,
before deduction of commissions and offering expenses. The registration statement was declared effective on October 23, 2020. As of the
date of this filing, the Company has sold all shares under the registration statement. On January 29, 2021, Judd Brammah converted
his note and interest payable totaling $596,747, together with an additional cash payment of $3,253 for a total of $600,000 into 3,000,000
shares of the Company pursuant to the Company public offering of common stock on the Form S-1 registration statement.
On
November 8, 2021, we entered into a Stock Purchase Agreement (the “Purchase Agreement”) with VoltH2 Holdings AG (“VoltH2”),
a Swiss corporation, and the other shareholders of VoltH2 (each, a “Seller”, and together, the “Sellers”) pursuant
to which we acquired VoltH2 (the “Acquisition”). VoltH2 is a European-based developer of clean hydrogen production facilities
for the supply of commercial offtake volumes of clean hydrogen to manufacturers, gas and power traders, industrial consumers, and both
heavy and marine transportation sectors that have pivoted away from carbon emitting energy sources and fuels.
Pursuant
to the Purchase Agreement, we acquired an 84.1% interest of VoltH2, and together with our existing 15.9% ownership interest, we now own
100% of VoltH2. The Acquisition was completed in exchange for 8,409,091 shares of our common stock (the “Consideration Shares”).
In connection with the Acquisition, we also entered into an indemnification escrow agreement (the “Escrow Agreement”) with
one of the Sellers providing for the periodic release of up to 1,768,182 of the Consideration Shares (the “Escrowed Shares”)
and a pledge and security agreement (the “Pledge and Security Agreement”) to grant to us a continuing security interest in
the Escrowed Shares to secure such Seller’s indemnity obligations under the Purchase Agreement.
The
VoltH2 acquisition was accounted for as an asset acquisition with no step up basis due to the 15.9% ownership of VoltH2 by Vision Hydrogen
prior to the acquisition and due to VoltH2 being an early stage company that has not generated revenues and lacks outputs. Since this
transaction does not constitute the acquisition of a business, but a transfer of long lived there is no step up in basis. The SEC generally
will not permit the recognition of gain in the transferor’s financial statements or a step-up in basis on the transferee’s books for
sales or transfers of long-lived assets when related parties are involved. As a result of the Company’s previously held 15.9% interest
in VoltH2, it was determined to be a related party. The acquisition consideration consisted of 8,409,098 shares of Vision Hydrogen
Corporation common stock granted on the acquisition date of November 8, 2021 at a closing market price of $11. A deemed dividend for
the excess share price over cost basis of the net assets of ($1,340,426) was recorded in the amount of $93,840,427.
At
each reporting period, the Company evaluates whether there are conditions or events that raise substantial doubt about the Company’s
ability to continue as a going concern within one year after the date that the financial statements are issued. The Company’s evaluation
entails analyzing prospective operating budgets and forecasts for expectations of the Company’s cash needs and comparing those
needs to the current cash and cash equivalent balances. The Company is required to make certain additional disclosures if it concludes
substantial doubt exists and it is not alleviated by the Company’s plans or when its plans alleviate substantial doubt about the
Company’s ability to continue as a going concern. The consolidated financial statements have been prepared assuming that the Company
will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction
of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments to the specific
amounts and classifications of assets and liabilities, which might be necessary should the Company be unable to continue as a going concern.
As
reflected in the year-end financial statements, the Company had a net loss $988,437 and net cash used in operations of $872,681 for the
year ended December 31, 2021. In addition, the Company is a start up in the renewable energy space and has generated limited revenues
to date.
Management
has evaluated the significance of these conditions and under these circumstances These conditions raise substantial doubt about the ability
to continue as a going concern.To alleviate these concerns Vision is planning multiple equity raises in 2022.
The
annual report has been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded
assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis
of Presentation
The
accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States
of America (“GAAP”). All inter-company transactions and balances have been eliminated upon consolidation.
VISION
HYDROGEN CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2021 AND 2020
Use
of Estimates
The
preparation 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, 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. The Company bases its estimates on historical experience and on various other assumptions
that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under
different assumptions or conditions.
Reclassification
Certain
prior period amounts have been reclassified to conform to current period presentation specifically as it relates to the reclassification
of assets, liabilities, operating results, cash flows and the accumulated comprehensive loss as a result of the Company’s disposition
of interests in our PVBJ and Pride subsidiaries.
Accounts
Receivable
Accounts
receivable are recorded when invoices are issued and are presented in the balance sheet net of the allowance for doubtful accounts.
The allowance for doubtful accounts is estimated based on the Company’s historical losses, the existing economic conditions in
the construction industry, and the financial stability of its customers. Accounts are written off as uncollectible after collection
efforts have failed. In addition, the Company does not generally charge interest on past due accounts or require collateral. As of
December 31, 2021 and 2020, there was no
allowance for doubtful accounts required.
Comprehensive
Gain/Loss
Comprehensive
loss consists of two components, net loss and other comprehensive loss. The Company’s other comprehensive loss is comprised of
foreign currency translation adjustments. The balance of accumulated other comprehensive loss is $34,389 as of December 31, 2021.
At December 31, 2020 due to the disposition of Pride on May 18, 2020. Comprehensive loss is included in discontinued operations on
the statement of operations for year ended December 31, 2020.
The
functional and reporting currency of the Company is the United States Dollar (“U.S. Dollar”).
For
the year ended December 31 2021 the Company recorded comprehensive gain of $34,389. The balance of comprehensive
loss and accumulated comprehensive loss has been reclassified to discontinued operations as of December 31, 2020 due to the
disposition of Pride on May 18, 2020. For year ended December 31, 2020, the Company recorded other comprehensive loss of $13,100,
which has been included in net loss from discontinued operations on the condensed consolidated statement of operations.
VISION
HYDROGEN CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2021 AND 2020
Currency
Translation
The
Company translates its foreign subsidiary’s assets and liabilities denominated in foreign currencies into U.S. dollars at current
rates of exchange as of the balance sheet date and income and expense items at the average exchange rate for the reporting period. Translation
adjustments resulting from exchange rate fluctuations are recorded in accumulated other comprehensive income. The Company records gains
and losses from changes in exchange rates on transactions denominated in currencies other than each reporting location’s functional
currency in net income (loss) for each period. Items included in the financial statements of each entity in the group are measured using
the currency of the primary economic environment in which the entity operates (“functional currency”).
The
functional and reporting currency of the Company is the United States Dollar (“U.S. Dollar”).
For
the year ended December 31, 2021, the Company recorded $34,389
in comprehensive gain. For the year
ended December 31, 2020, the Company recorded no
other comprehensive loss. The balance of comprehensive
loss and accumulated comprehensive loss has been reclassified to discontinued operations as of December 31, 2020 due to the disposition
of Pride on May 18, 2020.
Investments
The
Company follows Accounting Standards Codification (“ASC”) 321-10-35-2 “Equity Securities without Readily Determinable
Fair Values, to account for its ownership interest in noncontrolled entities. Under this guidance, equity securities that do not have
readily determinable fair values (i.e., non-marketable equity securities and do not qualify for the practical expedient to determine
the fair value at net asset value (“NAV”) are not required to be accounted for under the equity method are typically carried
at cost (i.e., cost method investments) less accumulated impairment. Investments of this nature are initially recorded at cost. Income
is recorded for dividends received that are distributed from net accumulated earnings of the noncontrolled entity subsequent to the date
of investment. Dividends received in excess of earnings subsequent to the date of investment are considered a return of investment and
are recorded as reductions in the cost of the investment. Investments are written down only when there is clear evidence that a decline
in value that is other than temporary has occurred.
Stock-Based
Compensation
The
Company recognizes expense for its stock-based compensation based on the fair value of the awards at the time they are granted. We estimate
the value of stock option awards on the date of grant using the Black-Scholes model. The determination of the fair value of stock-based
payment awards on the date of grant is affected by our stock price as well as assumptions regarding a number of complex and subjective
variables. These variables include our expected stock price volatility over the term of the awards, expected term, risk-free interest
rate and expected dividends. The impact of forfeitures are recorded in the period in which they occur. There are no outstanding awards
as of December 31, 2021.
VISION
HYDROGEN CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2021 AND 2020
Website Development Costs
Website development costs
were for a new company website created in 2021 and is amortized over 3 years.
Leases
Please see note 6.
Property and Equipment,
and Depreciation
Property and equipment are stated
at cost. Depreciation is generally provided using the straight-line method over the estimated useful lives of the related assets. Leasehold
improvements are amortized on a straight-line basis over the shorter of the remaining term of the lease or the estimated useful life
of the improvement.
Repairs and maintenance that do
not improve or extend the lives of the property and equipment are charged to expense as incurred.
Income
Taxes
The
Company uses the asset and liability method of accounting for income taxes pursuant to Financial Accounting Standard Board (“FASB”)
Accounting Standards Codification (“ASC”) 740, Income Taxes (“ASC 740”). Under this method, deferred tax
assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards,
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred
tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current
and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
The
determination of the Company’s provision for income taxes requires significant judgment, the use of estimates, and the interpretation
and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items
and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company’s
financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge,
if any, from taxing authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes
in the financial statements as appropriate. Accrued interest and penalties related to income tax matters are classified as a component
of income tax expense.
The
Company recognizes and measures its unrecognized tax benefits in accordance with ASC 740. Under that guidance, management assesses the
likelihood that tax positions will be sustained upon examination based on the facts, circumstances and information, including the technical
merits of those positions, available at the end of each period. The measurement of unrecognized tax benefits is adjusted when new information
is available, or when an event occurs that requires a change.
The
Company did not identify any material uncertain tax positions. The Company did not recognize any interest or penalties for unrecognized
tax benefits.
The
federal income tax returns of the Company are subject to examination by the IRS, generally for the three years after they are filed.
The Company’s 2020, 2019, and 2018 income tax returns are still open for examination by the taxing authorities.
Asset acquisitions
Asset
acquisitions are measured based on their cost to us, including transaction costs incurred by us. An asset acquisition’s cost or
the consideration transferred by us is assumed to be equal to the fair value of the net assets acquired. If the consideration transferred
is cash, measurement is based on the amount of cash we paid to the seller, as well as transaction costs incurred by us. Consideration
given in the form of nonmonetary assets, liabilities incurred or equity interests issued is measured based on either the cost to us or
the fair value of the assets or net assets acquired, whichever is more clearly evident. The cost of an asset acquisition is allocated
to the assets acquired based on their estimated relative fair values. We engage third-party appraisal firms to assist in the fair value
determination of inventories, identifiable long-lived assets and identifiable intangible assets. Goodwill is not recognized in an asset
acquisition. See note 17 for further information.
3. |
RELATED PARTY TRANSACTIONS |
The
Company has entered into agreements to indemnify its directors and executive officers, in addition to the indemnification provided for
in the Company’s articles of incorporation and bylaws. These agreements, among other things, provide for indemnification of the
Company’s directors and executive officers for certain expenses (including attorneys’ fees), judgments, fines and settlement
amounts incurred by any such person in any action or proceeding, including any action by or in the right of the Company, arising out
of such person’s services as a director or executive officer of the Company, any subsidiary of the Company or any other company
or enterprise to which the person provided services at the Company’s request. The Company believes that these provisions and agreements
are necessary to attract and retain qualified persons as directors and executive officers.
In October 2020, the Company filed
a registration statement on Form S-1 with the Securities and Exchange Commission, whereby the Company registered 12,500,000 shares of
its common stock for sale as a company offering. First Finance Limited which is an investment firm of which co-CEO Andrew Hromyk is a
principal bought 1,000,000 shares.
There
was $137,500 and $86,250 of management fees expensed for the years ended December 31, 2021 and December 31, 2020 to Turquino Equity LLC
(“Turquino”), a former significant shareholder owned by our former Chief Executive Officer and Chief Financial Officer. Services
provided were continuing the management positions of the Company.
There was $37,221 and $0 of management
fees expensed for the years ended December 31, 2021 and December 31, 2020 to Volt Energy B.V. a company owned by our co-CEO Andre Jurres
for the management position of the Company.
On
January 2, 2018 and February 8, 2019, the Company and Andrew Hidalgo (“Hidalgo”), completed a Convertible Debenture Agreement
whereby Hidalgo, the Company’s Chief Executive Officer, lent us an aggregate of $275,000 (the “Hidalgo Notes”). On
January 2, 2018 and February 8, 2019, the Company and Michael Doyle (“Doyle”), a then director of the Company, completed
a Convertible Debenture Agreement whereby Doyle lent the Company an aggregate of $275,000 (the “Doyle Notes”).
VISION
HYDROGEN CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2021 AND 2020
The
Company recorded a $395,000 discount on debt, related to the beneficial conversion feature of the note to be amortized over the life
of the note using the effective interest method, or until the note is converted or repaid. On January 3, 2020, the Company entered into
an amendment agreement (the “Amendment”) with two of its directors (the “Holders”) to convertible notes issued
by the Company to the Holders in January 2018 (the “2018 Notes”). Pursuant to the Amendment, which was effective as of January
2, 2020, the maturity date of the 2018 Notes was amended from January 2, 2020 to February 8, 2021, and the Holders waived any defaults
that might have occurred prior to the date of the Amendment.
As
a result of these changes, management determined debt extinguishment which was applied and the new notes were recorded at their fair
value resulting in a discount of approximately $40,000 and a gain on extinguishment of this amount recorded to additional paid in capital.
May
18, 2020 Purchase and Sale Agreement
On
May 18, 2020, the Company’s Board of Directors authorized the Company, in accordance with Nevada Statute 78.565, to complete and
execute the May 18, 2020 Purchase and Sale Agreement between the Company and Turquino providing for the Company’s sale of 100%
of Pride’s outstanding stock Pride to Turquino in return for Turquino’s assumption of the Hidalgo Notes and the Doyle Notes
and the debt obligations and accrued interest related thereto (the “Agreement”). In conjunction therewith, Hidalgo and Doyle
assigned the Notes to Turquino, at which time Turquino became responsible for the debt obligations upon the Notes. The Company has no
further note obligations to Hidalgo or Doyle, and it reduced its debt by approximately $600,000 or 65% of the corporate debt obligations.
Pursuant to Nevada Statute Section 78.565, approval of the Agreement only required the approval of the board of directors and did not
require shareholder approval. The Company obtained a valuation of the fair market value of Pride from an independent third party which
valued Pride at $425,000. The Agreement provides that the Parties mutually release one another and discharge and release the other party
(and their respective current and former officers, directors, employees, shareholders, note holders, attorneys, assigns, agents, representatives,
predecessors and successors in interest), from any and all claims, demands, obligations, or causes of action. Hidalgo, our Chief Executive
Officer, and a managing member of Turquino, is a related party in connection with the Exchange Agreement, the Notes, and the Agreement.
On
June 19, 2020, the Company entered into a Promissory Note with Judd Brammah, a director of the Company, for a principal amount up to
$230,332 bearing interest with interest at 6% per annum. The entire principal and interest of the Promissory Note are due on June 19,
2021. The proceeds from the note was used to pay accrued expenses of the Company.
Effective
July 17, 2020, Judd Brammah lent the Company $50,000 at 6% per annum payable on the due date, June 19, 2021.
Effective
July 22, 2020, Judd Brammah lent the Company $299,900 at 6% per annum payable on the due date of June 19, 2021. The Company accrued and
expensed $16,515 in interest on these notes in 2020 and no interest in 2021.
On
January 29, 2021, Judd Brammah converted his note and interest payable totaling $596,747, together with an additional cash payment of
$3,253 for a total of $600,000 into 3,000,000 shares of the Company pursuant to the Company public offering of common stock on the Form
S-1 registration statement.
On
November 8, 2021 Andrew Hidalgo, our former Chief Executive Officer, has been appointed as our Senior Vice-President. Mr. Hidalgo also
resigned as a director. Also on November 8, 2021, the Company entered into a services agreement (the “Turquino Services Agreement”)
with Turquino Equity LLC providing for payment of $25,000 per month for Mr. Hidalgo’s continued service to the Company and for
Matthew Hidalgo’s continued services as Chief Financial Officer.
On November 8, 2021, we entered
into a Stock Purchase Agreement (the “Purchase Agreement”) with VoltH2 Holdings AG (“VoltH2”), a Swiss corporation,
and the other shareholders of VoltH2 (each, a “Seller”, and together, the “Sellers”) pursuant to which we acquired
VoltH2 (the “Acquisition”). First Finance Limited Europe which is an investment firm of which co-CEO Andrew Hromyk is a principal
owned 725,000 shares of VoltH2.
Andre Jurres is a director of the
IT consulting company Diablo ICT B.V. For the year ended December 31, 2021 Volt H2 paid Diablo $7,860 for IT services rendered.
4. |
SIGNIFICANT CONCENTRATIONS OF CREDIT RISK |
Cash
is maintained at an authorized deposit taking institution (bank) incorporated in the United States and The Netherlands is insured
by the U.S. Federal Deposit Insurance Corporation and the Dutch Central Bank up to $250,000 and $114,000 respectively. As of December
31, 2021 hold and December 31, 2020 the balances were fully covered.
Due
to the sale of Pride and PVBJ the Company had no major customers for the year ended December 31, 2021 or 2020
VISION
HYDROGEN CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2021 AND 2020
Operating
Leases
For
leases with a term of 12 months or less, the Company is permitted to make and has made an accounting policy election by class of underlying
asset not to recognize lease assets and lease liabilities, and we recognize lease expense for such leases on a straight-line basis over
the lease term.
The
Company maintains its principal office at 95 Christopher Columbus Drive, 16th Floor Jersey City, NJ 07302. The Company moved
in October 2020 and its office is in a shared office space provider, at a cost of $99 per month and currently the lease is month-to-month.
Right
of use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation
to make lease payments arising from the lease. Operating lease right of use assets and liabilities are recognized at commencement date
based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate,
the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value
of lease payments. The operating lease right of use asset also excludes lease incentives. The Company’s lease terms may include
options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for
lease payments is recognized on a straight-line basis over the lease term.
In
determining the discount rate to use in calculating the present value of lease payments, the Company estimates the rate of interest it
would pay on a collateralized loan with the same payment terms as the lease by utilizing bond yields traded in the secondary market to
determine the estimated cost of funds for the particular tenor.
Upon
the purchase of Volt on November 8, 2021 the Company acquired a lease for new office space in the Netherlands, for a term of three years.
The Company analyzed this lease and determined that this agreement meets the definition of a lease under ASU 2016-02 as it provides management
with the exclusive right to direct the use of and obtain substantially all of the economic benefits from the identified leased asset,
which is the office space. Management also analyzed the terms of this arrangement and concluded it should be classified as an operating
lease, as none of the criteria were met for finance lease classification. As there was only one identified asset, no allocation of the
lease payments was deemed necessary. Management did not incur any initial direct costs associated with this lease. As of the commencement
date, a right of use asset and lease liability of $102,331 was recorded on the consolidated balance sheet based on the present value
of payments in the lease agreement. Per review of the lease agreement, there was no variable terms identified and there is no implicit
rate stated. Therefore, the Company determined the present value of the future minimum lease payments based on the incremental borrowing
rate of the Company. The incremental borrowing rate was determined to be 4%, as this is the rate which represents the incremental borrowing
rate for the Company, on a collateralized basis, in a similar economic environment with similar payment terms.
The future minimum payments on operating
leases for each of the next three years and in the aggregate amount to the following:
SCHEDULE OF OPERATING
LEASES PAYMENTS
| |
| | |
2022 | |
$ | 43,500 | |
2023 | |
| 43,500 | |
2024 | |
| 39,875 | |
Total lease payments | |
| 126,875 | |
Less: present value discount | |
| (20,255 | ) |
Total operating lease liabilities | |
$ | 106,620 | |
The weighted-average remaining term
of the Company’s operating leases was 2.8 years and the weighted-average discount rate used to measure the present value of the
Company’s operating lease liabilities was 4% as of December 31, 2021.
Rent expense for the years ended
December 31, 2021 and 2020 was $5,474 and $1,319, respectively, and is included in “General and Administrative” expenses
on the related statements of operations.
As
of December 31, 2020, the Company had no
operating leases.
Finance
Leases
As
of December 31, 2021 and December 31, 2020, the Company had no
finance leases.
7. |
STOCK OPTIONS AWARDS AND GRANTS |
On
May 12, 2021 and November 12, 2021 directors Michael Doyle and Charles Benton were each awarded 2,500 shares each.
A summary of the stock grant activity
and related information is as follows:
SCHEDULE
OF STOCK GRANT ACTIVITY
| |
Shares | | |
Share Price | | |
Value | |
May 12, 2021 Grants | |
| 5,000 | | |
$ | 15.00 | | |
$ | 75,000 | |
November 12, 2021 Grants | |
| 5,000 | | |
$ | 9.50 | | |
$ | 47,500 | |
Total | |
| 10,000 | | |
| - | | |
$ | 122,500 | |
As
of December 31, 2021, there was no unrecognized compensation expense as all option holders had their options forfeited through the sale
of Pride and PVBJ.
VISION
HYDROGEN CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2021 AND 2020
Prior
to the disposition of Pride and PVBJ, the Company’s business was organized into two reportable segments: renewable systems integration
revenue and non-renewable systems integration revenue. Due to the sale of both Pride and PVBJ (See Note 11 ‘Discontinued
Operations’) the Company operates in only one reportable segment. Please refer to the Management’s Discussion and
Analysis for further detail.
QRIDA
Loan
On
May 6, 2020, the Company entered into a loan for $160,410
with the Queensland Rural and Industry Development
Authority. (“QRIDA”) The interest rate was 2.5%
with a term of ten
years and the first year being interest free.
Through the disposition of Pride, the Company no longer has this loan as a liability on its balance sheet as of December 31, 2020.
2020
Convertible Note Financing
On
January 15, 2020, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with FirstFire, pursuant
to which the Company issued a $85,250 principal amount convertible note (the “2020 Note”) for gross proceeds of $77,500,
with an original discount issuance of $7,750. The transaction closed on January 16, 2020. The Company incurred $2,500 of legal fees for
this transaction.
On
June 18, 2020, the Company and FirstFire entered into a settlement agreement whereby both the 2019 Note and 2020 Note were cancelled
and all remaining amounts due under the above notes were settled for $90,000. The Company has no further obligations with respect to
any of the notes under terms of the First Fire Note settlement.
The
Company incurred $2,289 of interest expense in 2019 and $7,438 in 2020 which both amounts were accrued on the balance sheet. There was
an early termination penalty of $19,953. The unamortized discount of the notes was $171,203 on the cancellation date of May 20, 2020.
The
Notes were cancelled, and all remaining contractual obligations there under were extinguished under terms of a Settlement and Release
Agreement which resulted in a gain on the statement of operations of $81,203 for the year ended December 31, 2020.
Paycheck
Protection Program Loan
On
May 5, 2020, the Company entered into a term note with Comerica Bank, with a principal amount of $20,000 pursuant to the Paycheck Protection
Program (“PPP Term Note”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The
PPP Loan is evidenced by a promissory note. The PPP Term Note bears interest at a fixed annual rate of 1.00%, with the first six months
of interest deferred. Beginning in November 2022, the Company will make 18 equal monthly payments of principal and interest with the
final payment due in April 2022. The PPP Term Note may be accelerated upon the occurrence of an event of default.
The
PPP Term Note is unsecured and guaranteed by the United States Small Business Administration. On January 21, 2021, the PPP Term Note
was fully forgiven and as a result, the Company recorded a gain on the forgiveness in accordance with ASC-470.
Director
Related Party Note
On
June 19, 2020, the Company entered into a promissory note with Judd Brammah, a director of the Company, for the principal amount up to
$230,332 bearing interest at 6% per annum. The entire principal and interest upon the promissory note are due on June 19, 2021.
VISION
HYDROGEN CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2021 AND 2020
Effective
July 17, 2020, Judd Brammah lent the Company $50,000 at 6% per annum payable on the due date, June 19, 2021. The Company incurred interest
expense of $628 for year ended December 31, 2020. Effective July 22, 2020, Judd Brammah lent the Company $299,900 at 6% per annum payable
on the due date of June 19, 2021.
On
January 29, 2021, Judd Brammah converted his note and interest payable totaling $596,747, together with an additional cash payment of
$3,253 for a total of $600,000 into 3,000,000 shares of the Company pursuant to the Company public offering of common stock on the Form
S-1 registration statement.
On
July 9, 2019, the Company entered into an equity financing agreement with GHS Investments LLC (the “GHS Financing Agreement”);
in connection therewith, the Company filed a Form S-1 Registration Statement (the “S-1”) registering up to 1,750 Common Stock
Shares, which S-1 was declared effective on July 31, 2019. On May 21, 2020, the offering was terminated.
In
October 2020, the Company filed a registration statement on Form S-1 with the Securities and Exchange Commission, whereby the Company
registered 12,500,000
shares of its common stock for sale as a company offering.
The registration statement was declared effective in October 2020. The Company sold a total of 12,500,000
shares of Common Stock in January 2021 for total
consideration of $2,500,000.
The consideration consisted of $596,747
of debt converted to equity (see Note 19)
and gross cash proceeds of $1,903,253.
The Company incurred $70,000
of legal fees and a $51,000
consulting fee in connection with the capital
raise.
11. |
DISCONTINUED OPERATIONS |
Sale
of PVBJ
On
April 21, 2020, the Company’s Board of Directors authorized its resale of PVBJ pursuant to the following terms: (a) the outstanding
$221,800 earn-out liability that was used as consideration towards the purchase of PVBJ; (b) Paul Benis agreed to apply the remaining
salary due to him, as prorated from the Closing Date to the expiration date of the Employment Agreement (January 31, 2021), to the purchase
of PVBJ by Benis Holdings LLC as additional consideration thereof and (c) as additional consideration for the purchase of PVBJ by Benis
Holdings LLC, PVBJ shall continue to be responsible for the line of credit (see below).
Sale
of Pride
On
May 18, 2020, the Company executed a Purchase and Sale Agreement with Turquino providing for its sale of 100% of Pride’s outstanding
stock Pride to Turquino in return for Turquino’s assumption of the Hidalgo Notes and the Doyle Notes and the debt obligations and
accrued interest related thereto (the “Agreement”). In conjunction therewith, Hidalgo and Doyle assigned the Notes to Turquino,
at which time Turquino became responsible for the debt obligations upon the Notes. The Company has no further note obligations to Hidalgo
or Doyle, and it reduced its debt by approximately $600,000 or 65% of the corporate debt obligations.
There
were no discontinued operations for the year ended December 31, 2021. The results of discontinued operations for the year ended December
31, 2020 are as follows:
SCHEDULE OF DISCONTINUED OPERATIONS
| |
Year Ended
December 31, 2020 | |
PVBJ | |
| | |
Revenue | |
| | |
Sales | |
$ | 722,786 | |
Total revenue | |
| 722,786 | |
| |
| | |
Cost of goods sold | |
| | |
Direct costs | |
| 560,328 | |
Total
cost of goods sold | |
$ | 560,328 | |
| |
| | |
Selling, general and administrative | |
| 230,807 | |
| |
| | |
Net income (loss) for period | |
$ | (68,349 | ) |
VISION
HYDROGEN CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2021 AND 2020
| |
Year ended
December 31, 2020 | |
Pride | |
| | |
Revenue | |
| | |
Sales | |
$ | 1,474,460 | |
Total revenue | |
| 1,474,460 | |
| |
| | |
Cost of goods sold | |
| | |
Direct costs | |
| 1,121,121 | |
Total
cost of goods sold | |
$ | 1,121,121 | |
| |
| | |
Selling, general and administrative | |
| 440,396 | |
| |
| | |
Net income (loss) for period | |
$ | (87,057 | ) |
Gain
(loss) from discontinued operations:
SCHEDULE OF
GAIN/LOSS ON DISCONTINUED OPERATIONS
Results from discontinued operations | |
$ | (155,406 | ) |
Loss on disposal of assets | |
| (789,425 | ) |
Loss from discontinued operations | |
$ | (944,831 | ) |
12. |
RECENT ACCOUNTING PRONOUNCEMENTS |
In February 2016, the FASB issued
ASU 2016-02 and issued subsequent amendments to the initial guidance thereafter. This ASU requires an entity to recognize a right of
use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses
will depend on classification of the underlying lease as either finance or operating. Similar modifications have been made to lessor
accounting in-line with revenue recognition guidance. The amendments also require certain quantitative and qualitative disclosures about
leasing arrangements. Leases will be classified as finance or operating, with classification affecting the pattern and classification
of expense recognition in the income statement. The new standard was effective for the Company on January 1, 2019. Entities are required
to adopt ASU 2016-02 using a modified retrospective transition method. Full retrospective transition is prohibited. The guidance permits
an entity to apply the standard’s transition provisions at either the beginning of the earliest comparative period presented in
the financial statements or the beginning of the period of adoption (i.e., on the effective date). The Company adopted the new standard
on its effective date.
In June 2018, the FASB issued ASU 2018-07,
Compensation - Stock Compensation (ASC 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”).
ASU 2018-07 simplifies the accounting for nonemployee share-based payment transactions. Consequently, the accounting for share-based
payments to nonemployees and employees will be substantially aligned. The new standard will become effective for the Company beginning
January 1, 2019, with early adoption permitted. The Company has adopted this standard and has no impact on its consolidated financial
statements and disclosures.
In August 2018, the FASB issue ASU 2018-13,
Fair Value Measurement (ASC 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies
the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The new standard will
become effective for the Company January 1, 2020, with early adoption permitted. The Company has adopted this standard and has no impact
on its consolidated financial statements and disclosures.
In
January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures
(Topic 323), and Derivative and Hedging (Topic 815), which clarifies the interaction of rules for equity securities, the equity method
of accounting, and forward contracts and purchase options on certain types of securities. The guidance clarifies how to account for the
transition into and out of the equity method of accounting when considering observable transactions under the measurement alternative.
The ASU is effective for annual reporting periods beginning after December 15, 2020, including interim reporting periods within those
annual periods, with early adoption permitted. The Company has adopted this standard and there is no impact on the current financial
statements.
In
August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts
in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.
This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity,
and also improves and amends the related EPS guidance for both Subtopics. The ASU will be effective for annual reporting periods after
December 15, 2021 and interim periods within those annual periods and early adoption is permitted. The Company has not yet adopted this
standard and there is no impact expected on the current financial statements.
VISION
HYDROGEN CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2021 AND 2020
On
August 12, 2020, pursuant to a Seed Capital Subscription Agreement, the Company made an equity investment of 175,000 shares into VoltH2
a Swiss corporation developing scalable green hydrogen production projects primarily in Europe. VoltH2 is currently developing a 25MW
green hydrogen production site near Vlissingen, Netherlands. The investment was for a total purchase price of $175,000, representing
a 16% equity interest in VoltH2. Due to the lack of readily determinable fair value of VoltH2, and because this investment does not qualify
for the practical expedient to determine fair value using NAV, this investment has been recorded at cost. The Company will continually
evaluate the treatment of this investment each reporting period to determine if a fair value can be determined, and if so will reassess
the accounting for this investment. The Company considers whether the fair value of its investment has declined below its carrying value
whenever adverse events or changes in circumstances indicate that the recorded value may not be recoverable. The Company reviews its
investments for other-than-temporary impairment whenever events or changes in business circumstances indicate that the carrying value
of the investment may not be fully recoverable. Investments identified as having an indication of impairment are subject to further analysis
to determine if the impairment is other-than-temporary and this analysis requires estimating the fair value of the investment. The determination
of fair value of the investment involves considering factors such as current economic and market conditions, the operating performance
of the entities including current earnings trends and forecasted cash flows, and other company and industry specific information. If
the Company considers any decline to be other than temporary (based on various factors, including historical financial results and the
overall health of the investee), then a write-down would be recorded to estimated fair value.
The remaining equity interest
of VoltH2 was acquired November 8, 2021 resulting in consolidation accounting see Note 7.
Effective
June 7, 2021, we loaned VoltH2 $100,000, payable on September 1, 2021. The loan is non-interest bearing and evidenced by a promissory
note issued to us by VoltH2 (the “Note”). VoltH2 may prepay the Note in whole or in part at any time or from time to time
without penalty or premium. We currently own approximately 16% of VoltH2. Our Board of Directors approved the foregoing transaction.
Effective
June 28, 2021, we loaned VoltH2 $500,000, payable on September 1, 2021. The loan is non-interest bearing and evidenced by a promissory
note issued to us by VoltH2 (the “Note”). VoltH2 may prepay the Note in whole or in part at any time or from time to time
without penalty or premium. We currently own approximately 16% of VoltH2. Our Board of Directors approved the foregoing transaction.
Effective
August 25, 2021, we loaned VoltH2 $500,000, payable on November 1, 2021. The loan is non-interest bearing and evidenced by a promissory
note issued to us by VoltH2 (the “Note”). VoltH2 may prepay the Note in whole or in part at any time or from time to time
without penalty or premium. Our Board of Directors approved the foregoing transaction.
Effective
August 25, 2021, we entered into an amendment (the “June 7 Amendment”) to a promissory note issued to VoltH2 on June 7, 2021
(The “June 7 Note”), pursuant to which the Payment Date (as defined in the June 7 Note) was changed from September 1, 2021
to November 1, 2021. Our Board of Directors approved the foregoing amendment.
Effective
August 25, 2021, we entered into an amendment (the “June 28 Amendment”) to a promissory note issued to VoltH2 on June 28,
2021 (The “June 28 Note”), pursuant to which the Payment Date (as defined in the June 28 Note) was changed from September
1, 2021 to November 1, 2021. Our Board of Directors approved the foregoing amendment.
All note
receivables referenced above are netted out in the consolidation due to 100% ownership of VoltH2 as of November 8, 2021.
The
Company uses the asset and liability method of accounting for income taxes pursuant to Financial Accounting Standard Board (“FASB”)
Accounting Standards Codification (“ASC”) 740, Income Taxes (“ASC 740”). Under this method, deferred tax
assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards,
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred
tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that
some portion or all of the deferred tax assets will not be realized.
VISION
HYDROGEN CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2021 AND 2020
The
determination of the Company’s provision for income taxes requires significant judgment, the use of estimates, and the interpretation
and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items
and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company’s
financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge,
if any, from taxing authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes
in the financial statements as appropriate. Accrued interest and penalties related to income tax matters are classified as a component
of income tax expense.
The
Company recognizes and measures its unrecognized tax benefits in accordance with ASC 740. Under that guidance, management assesses the
likelihood that tax positions will be sustained upon examination based on the facts, circumstances and information, including the technical
merits of those positions, available at the end of each period. The measurement of unrecognized tax benefits is adjusted when new information
is available, or when an event occurs that requires a change.
The
Company did not identify any material uncertain tax positions. The Company did not recognize any interest or penalties for unrecognized
tax benefits.
The
federal income tax returns of the Company are subject to examination by the IRS, generally for the three years after they are filed.
The Company’s 2020, 2019 and 2018 income tax returns are still open for examination by the taxing authorities.
The
components of income tax expense (benefit) from continuing operations are as follows:
SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT)
| |
| 2021 | | |
| 2020 | |
| |
| Year
Ended December 31, | |
| |
| 2021 | | |
| 2020 | |
Current | |
| | | |
| | |
U.S.
Federal | |
$ | - | | |
$ | - | |
U.S.
State and local | |
| - | | |
| - | |
Netherlands | |
| - | | |
| - | |
Total
current | |
| - | | |
| - | |
| |
| 2021 | | |
| 2020 | |
| |
| Year
Ended December 31, | |
| |
| 2021 | | |
| 2020 | |
Deferred | |
| | | |
| | |
U.S.
Federal | |
$ | - | | |
$ | - | |
U.S.
State and local | |
| - | | |
| - | |
Netherlands | |
| - | | |
| - | |
Total
deferred | |
| - | | |
| - | |
| |
| | | |
| | |
Total
income tax expense | |
| - | | |
| - | |
At
December 31, 2021 and 2020, the Company had deferred tax assets from continuing operations loss of $871,374 and $1,050,000, respectively,
against which a valuation allowance of $1,230,092 and $1,050,000, respectively, had been recorded. The change in the valuation allowance
for the year ended December 31, 2021 was an increase of $180,092. The increase in the valuation allowance for the year ended December
31, 2021 was mainly attributable to an increase in the capital loss carryforward, which resulted in an increase in the Company’s
deferred tax asset. The Company periodically assesses the likelihood that it will be able to recover the deferred tax asset. The Company
considers all available evidence, both positive and negative, including historical levels of income, expectations and risks associated
with estimates of future taxable income.
Significant components of deferred tax assets from continuing
operations at December 31, 2021 and 2020 were as follows:
SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS
| |
2021 | |
|
2020 | |
| |
December 31, | |
| |
2021 | |
|
2020 | |
Deferred tax assets: | |
| |
|
| |
Net operating loss carryforward | |
| 518,669 | |
|
| 373,000 | |
Capital loss carryforward | |
| 833,923 | |
|
| 677,000 | |
Share-based compensation | |
| (122,500 | ) |
|
| - | |
Gross deferred tax asset | |
| 1,230,092 | |
|
| 1,050,000 | |
Less: valuation allowance | |
| (1,230,092 | ) |
|
| (1,050,000 | ) |
Net deferred tax assets | |
| - | |
|
| - | |
16. |
INCOME (LOSS) PER SHARE |
The
following table sets forth the information needed to compute basic loss per share. There are no dilutive securities.
Continuing
Operations:
SCHEDULE
OF COMPUTE BASIC AND DILUTED LOSS PER SHARE CONTINUED AND DISCONTINUED
| |
Year Ended December 31, 2021 | | |
Year Ended December 31, 2020 | |
Net (loss) from continuing operations | |
$ | (988,437 | ) | |
$ | (466,731 | ) |
Weighted average common shares outstanding | |
| 13,217,639 | | |
| 394,197 | |
Basic net loss per share | |
$ | (0.07 | ) | |
$ | (1.18 | ) |
Discontinued
Operations:
| |
Year Ended December 31, 2021 | | |
Year Ended December 31, 2020 | |
Net loss | |
$ | - | | |
$ | (944,831 | ) |
Weighted average common shares outstanding | |
| 13,217,639 | | |
| 394,197 | |
Basic net loss per share | |
$ | 0.0 | | |
$ | (3.58 | ) |
Comprehensive
loss attributable to common shareholders:
SCHEDULE OF COMPREHENSIVE LOSS TABLE TEXT BLOCK
| |
Year Ended December 31, 2021 | | |
Year Ended December 31, 2020 | |
Net comprehensive loss attributable to common shareholders | |
$ | (94,794,475 | ) | |
$ | (1,411,562 | ) |
Weighted average common shares outstanding | |
| 13,217,639 | | |
| 394,197 | |
Basic net loss per share | |
$ | (7.17 | ) | |
$ | (0.00 | ) |
VISION
HYDROGEN CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2021 AND 2020
On
November 8, 2021, we entered into a Stock Purchase Agreement (the “Purchase Agreement”) with VoltH2 Holdings AG (“VoltH2”),
a Swiss corporation, and the other shareholders of VoltH2 (each, a “Seller”, and together, the “Sellers”) pursuant
to which we acquired VoltH2 (the “Acquisition”). VoltH2 is a European-based developer of clean hydrogen production facilities
for the supply of commercial offtake volumes of clean hydrogen to manufacturers, gas and power traders, industrial consumers, and both
heavy and marine transportation sectors that have pivoted away from carbon emitting energy sources and fuels.
Pursuant
to the Purchase Agreement, we acquired an 84.1%
interest of VoltH2, and together with our existing
15.9%
ownership interest, we now own 100%
of VoltH2. The Acquisition was completed in
exchange for 8,409,091
shares of our common stock (the “Consideration
Shares”). The market price of the shares were $11 on the closing date of November 8, 2021.
In connection with the Acquisition, we also entered into an indemnification escrow agreement (the “Escrow Agreement”) with
one of the Sellers providing for the periodic release of up to 1,768,182
of the Consideration Shares (the “Escrowed
Shares”) and a pledge and security agreement (the “Pledge and Security Agreement”) to grant to us a continuing security
interest in the Escrowed Shares to secure such Seller’s indemnity obligations under the Purchase Agreement.
The
VoltH2 acquisition was accounted for as an asset acquisition with no step up basis due to the 15.9% ownership of VoltH2 by Vision Hydrogen
Corporation prior to the acquisition and due to VoltH2 being an early stage company that has not generated revenues and lacks outputs.
Since this transaction is not an acquisition of a business but yet a transfer of long lived assets (primarily) between two non-operating
companies there is no step up in basis allowed. Both of the entities are non-operating entities and the fair value business combination
rules do not apply. When related parties are involved, the SEC generally will not permit the recognition of gain in the transferor’s
financial statements or a step-up in basis on the transferee’s books for sales or transfers of long-lived assets. No exceptions are permitted
on transactions between a parent company and a subsidiary or between subsidiaries of the same parent, other than in regulated industries
when a nonregulated subsidiary sells manufactured goods to a regulated affiliate. The acquisition consideration consisted of 8,409,0981
shares of Vision Hydrogen Corporation common stock granted on the acquisition date of November 8, 2021 at a closing market price of $11.
A deemed dividend for the excess share price over cost basis of the net assets of ($1,340,426) was recorded in the amount of $93,840,427.
For
the year ended December 31, 2021, acquisition related costs for the Company were minimal, and are included in general and administration
expenses.
Pro
forma results for Vision. giving effect to the Volt. acquisition
The
following pro forma financial information presents the combined results of operations of Volt and the Company for the year ended December
31, 2021 and 2020. The pro forma financial information presents the results as if the acquisition had occurred as of the beginning of
2021 and 2020.
The
unaudited pro forma results presented include amortization charges for acquired intangible assets, interest expense and stock-based compensation
expense.
Pro
forma financial information is presented for informational purposes and is not indicative of the results of operations that would have
been achieved if the acquisitions had taken place as of the beginning of 2021.
SCHEDULE
OF PRO FORMA FINANCIAL INFORMATION
| |
|
Year Ended
December 31,
2021 | | |
|
Year Ended
December 31, 2020 | |
Revenues | |
$ |
- | | |
$ |
- | |
Net income (loss) | |
$ | (2,798,673 | ) | |
$ | (1,735,647 | ) |
Net income per share: | |
| | | |
| | |
Basic | |
$ | (0.16 | ) | |
$ | (4.40 | ) |
18. |
PROPERTY AND EQUIPMENT |
At
December 31, 2021 and December 31, 2020, property and equipment were comprised of the following:
SCHEDULE
OF PROPERTY AND EQUIPMENT
| |
December 31, 2021 | | |
December 31, 2020 | |
Furniture and fixtures (5 to 7 years) | |
$ | - | | |
$ | - | |
Machinery and equipment (5 to 7 years) | |
| - | | |
| - | |
Computer and software (3 to 5 years) | |
| 22,932 | | |
| - | |
Auto and truck (5 to 7 years) | |
| - | | |
| - | |
Leasehold improvements (life of lease) | |
| - | | |
| - | |
Property and equipment
gross | |
| 22,932 | | |
| - | |
Less accumulated depreciation | |
| - | | |
| - | |
Property and equipment
net | |
$ | 22,932 | | |
$ | - | |
There
was no depreciation expense for the years ended December 31, 2021 and 2020. The computers and software were just ordered in 2021 and
installed in 2022.
19. | WEBSITE
DEVELOPMENT COSTS |
The
tables below present a reconciliation of the Company’s website development costs:
SCHEDULE
OF WEBSITE
DEVELOPMENT COSTS
Balance at January 1, 2021 | |
$ | - | |
Purchases | |
| 28,847 | |
Amortization | |
| (3,254 | ) |
Balance at December 31, 2021 | |
$ | 25,233 | |
The
tables below present a reconciliation of the Company’s sales tax receivable:
SCHEDULE
OF SALES
TAX RECEIVABLE
Balance at January 1, 2021 | |
$ | - | |
Sales tax receivable | |
| 60,613 | |
Balance at December 31, 2021 | |
$ | 60,613 | |
On
March 7, 2022, we, through our wholly owned subsidiary, entered into a services agreement (the “Services Agreement”) with
Volt Energy B.V., a shareholder of 8.3% of our outstanding common stock controlled by our Co-Chief Executive Officer and director Andre
Jurres, pursuant to which we agreed to pay Mr. Jurres’ entity €225,000 or equivalent to $244,125 per year with a discretionary
annual bonus of up to €112,500 or equivalent to $122,063. The Services Agreement is effective as of December 1, 2021 and expires
February 28, 2023 with an option for renewal upon mutual agreement.