| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of Presentation The
Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”) and following the requirements of the Securities and Exchange Commission (“SEC”)
for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by
U.S. GAAP can be condensed or omitted. These interim financial statements have been prepared on the same basis as the Company’s
annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments,
which are necessary for a fair statement of the Company’s financial information. These interim results are not necessarily indicative
of the results to be expected for the year ending December 31, 2021 or any other interim period or for any other future year. These unaudited
condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements
and the notes thereto for the year ended December 31, 2020, included in the Company’s 2020 Annual Report on Form 10-K filed with
the SEC. The balance sheet as of December 30, 2020 has been derived from audited financial statements at that date but does not include
all of the information required by U.S. GAAP for complete financial statements. On
October 6, 2020, the Company effectuated a one-for-twenty (1:20) reverse split 25,000,000 100,000,000 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. VISION
HYDROGEN CORPORATION NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER
30, 2021 AND 2020 (UNAUDITED) 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 September
30, 2021 and December 31, 2020, there was no Goodwill
and Finite-Lived Intangible Assets Goodwill
represents the excess of the aggregate of the following (1) consideration transferred, (2) the fair value of any non-controlling interest
in the acquiree, and (3) if the business combination is achieved in stages, the acquisition-date fair value of our previously held equity
interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
Identifiable intangible assets consist primarily of customer lists and relationships, non-compete agreements and technology-based intangibles
and other contractual agreements. The Company amortizes finite lived identifiable intangible assets over five years, on a straight-line
basis to their estimated residual values and periodically reviews them for impairment. Total goodwill and identifiable intangible assets
comprised 0% The Company uses the acquisition method
of accounting for all business combinations and does not amortize goodwill. Goodwill is tested for possible impairment annually during
the fourth quarter of each fiscal year or more frequently if events or changes in circumstances indicate that the asset might be impaired.
The Company has the option to perform a qualitative assessment to determine if an impairment is more
likely than not to have occurred. In the qualitative assessment, the Company must evaluate the totality of qualitative factors, including
any recent fair value measurements, that impact whether an indefinite-lived intangible asset other than goodwill has a carrying amount
that more likely than not exceeds its fair value. The Company must proceed to conducting a quantitative analysis if the Company (i) determines
that such an impairment is more likely than not to exist, or (ii) foregoes the qualitative assessment entirely. Under the quantitative
assessment, the impairment test for identifiable indefinite-lived intangible assets consists of a comparison of the
estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its
fair value, then an impairment loss is recognized in an amount equal to that excess. The Company generally determines the fair
value of an indefinite-lived intangible asset using an income approach, such as the relief from royalty method, in instances when it
does not perform the qualitative assessment of the intangible asset. As
of September 30, 2021, the Company had no goodwill and has included the write-off of goodwill in the calculation of the loss on disposal
of PVBJ for the three and nine months ended September 30, 2020. (See Note 12 “Discontinued Operations”). Comprehensive
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 zero as of September 30, 2021 and 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 the three and nine months ended September 30, 2020. The
functional and reporting currency of the Company is the United States Dollar (“U.S. Dollar”). For
the three and nine months ended September 30, 2021, 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. For the three and nine months ended September 30, 2020, the Company recorded other comprehensive loss of $ 13,100 VISION
HYDROGEN CORPORATION NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER
30, 2021 AND 2020 (UNAUDITED) 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 non-controlled 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 and 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 non-controlled 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. Cash
and Cash Equivalents Cash
and cash equivalents include cash in bank and money market funds as well as other highly liquid investments with an original maturity
of three months or less. The Company had no 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 were no outstanding awards
as of September 30, 2021. Fair
Value of Financial Instruments The
carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the
balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets,
financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with
other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable
the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information
pertinent to fair value has been disclosed. The Company classifies and discloses assets and liabilities carried at fair value in one
of the following three categories:
☐
Level
1—quoted prices in active markets for identical assets and liabilities;
☐
Level
2—observable market-based inputs or unobservable inputs that are corroborated by market data; and
☐
Level
3—significant unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own
assumptions. There
were no fair value measurements of financial instruments as of September 30, 2021 or December 31, 2020. Net
Income (Loss) Per Common Share The
Company computes basic net income (loss) per share by dividing net income (loss) per share available to common stockholders by the weighted
average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings
per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities
into common stock using the “if converted” method as applicable. The computation of diluted loss per share excludes dilutive
securities because their inclusion would be anti-dilutive. There were no potentially dilutive securities as of September 30, 2021. VISION
HYDROGEN CORPORATION NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER
30, 2021 AND 2020 (UNAUDITED) |
