| UPDATES TO SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – UPDATES TO SIGNIFICANT ACCOUNTING
POLICIES Revenue Recognition Revenues are recognized at a point in time,
typically when control of the promised goods is transferred to customers, in an amount that reflects the consideration the Company
expects to be entitled to in exchange for those goods. The Company does not recognize revenue in cases where collectability is
not probable, and defers the recognition until collection is probable or payment is received. The Company generally
expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded
within selling, general and administrative expenses. Customer deposits, deferred revenue and other receipts are deferred and recognized
when the revenue is realized and earned. Revenue related to licensing agreements is
recorded upon substantial performance of the terms of the licensing contract. In the case of licensing arrangements that involve
up-front payments, revenue is recorded when management determines that the appropriate terms of the contract have been fulfilled.
For example, this may occur when technology has been transferred via written documents or, if training is involved, whenever all
contracted training has occurred. In the case of licenses where product delivery is also embedded in the deliverable, a portion
of revenue would be recognized when products are delivered. We have also out-licensed certain intellectual
property to licensees under terms and conditions of license agreements that specify the intellectual property licensed,
the territory, and the type of license. In exchange for these licenses, we have recorded revenues associated with the initial granting
of the license and expect to receive royalties based on sales of products produced under these licenses. License revenues are recorded
to reflect our performance of requirements under these license agreements. In addition, we record royalty revenues from licensees
at the time they are earned. Grant contract revenue is recognized over the
life of the contracts as the services are performed or as milestones are met. Amounts received in excess of revenues earned
are recorded as deferred revenue. Liquidity We have historically incurred recurring losses
from operations and we may continue to generate negative cash flows as we implement our business plan. Our consolidated financial
statements are prepared using GAAP as applicable to a going concern, which contemplates the realization of assets and liquidation
of liabilities in the normal course of business. As of August 12, 2019, we had cash on hand
of $2,680,604. We believe our cash is sufficient to fund our operations through August 31, 2020 after taking into account various
sources of funding and cash received from continued commercial sales transactions. Our primary means for raising funds since 2016
has been through our offering of shares of common stock at a fixed price of $8.00 per share to the general public in a self-underwritten
offering (the “Offering” or our “IPO”) and under a draw loan note and agreement with The Dow Chemical
Company (the “Dow Facility”). On April 12, 2019, we completed the Offering, after selling 2,615,425 shares under the
Registration Statement at a price of $8.00 per share for total proceeds of $20,923,400. On July 8, 2019 we borrowed $2 million
under the draw loan note and agreement with The Dow Chemical Company (the “Dow Facility”). We have $3 million of proceeds
from the Dow Facility available to us, which we intend to be our primary source of liquidity at this time (See Note 3). There has been
no public market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained.
Our common stock is not currently quoted on or traded on any exchange or on any over-the-counter market. In the event we are unable
to fund our operations from existing cash on hand, operating cash flows, additional borrowings or raising equity capital, we may
be forced to reduce our expenses, slow down our growth rate, or discontinue operations. Our condensed consolidated financial statements
do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification
of liabilities that might be necessary should we be unable to continue as a going concern. Inventory
The following amounts were included in inventory at the end of the period:
June 30, December 31,
2019 2018
Raw materials $ 66,395 $ 48,371
Consumables 160,630 188,764
Finished goods 738,553 423,082
Total $ 965,578 $ 660,217 Recent Accounting Pronouncements In February 2016,
the FASB issued Accounting Standards Update No. 2016-02, Leases We
adopted ASU 2016-02 as of January 1, 2019. Adoption of Lease Accounting Policy We applied ASU 2016-02 and all related amendments
(“ASC 842”) using the modified retrospective method by recognizing the cumulative effect of adoption as an adjustment
to the opening balance of retained earnings at January 1, 2019. Therefore, the comparative information has not been adjusted and
continues to be reported under prior leasing guidance. As a result, in the first quarter of 2019 we recorded ROU assets of $1,871,366.
We also recorded lease liabilities of $1,981,795. The decrease to retained earnings was $116,319, reflecting the cumulative impact
of the accounting change. The standard did not have a material effect on consolidated net income or cash flows. Right-of-use assets represent our right to
use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the
lease. As our leases do not provide an implicit rate, we used our incremental borrowing rate based on the information available
at commencement date in determining the present value of lease payments. Lease expense for lease payments is recognized on a straight-line
basis over the lease term. We do not record a ROU asset or lease liability
for leases with an expected term of 12 months or less. The comparative information has not been adjusted and continues to be reported
under prior leasing guidance. |
