| ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – ORGANIZATION, BUSINESS AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Description of Business On July 27, 2016, Jupiter Gold Corporation
("Jupiter Gold" or the "Company") was incorporated under the laws of the Republic of the Marshall Islands. Concurrently,
Brazil Minerals, Inc. ("Brazil Minerals"), a U.S. corporation, exchanged its 99.99% ownership in Mineração Jupiter
Ltda ("MJL"), a Brazilian company, for 4,000,000 shares of Jupiter Gold's common stock. Brazil Minerals held an approximate
51.7% interest in the Company as of December 31, 2018. The remaining 0.01% in MJL that was not exchanged is to accommodate regulations
in Brazil that require a minimum of two owners in a company. This additional 0.01% ownership interest is held by a director of
Jupiter Gold. The Company is a producer of gold from the
modular gold recovery plant that it owns and which is located in a mining concession in Brazil. Additionally, Jupiter Gold owns
nine mineral rights for gold and two mineral rights for manganese, all in exploratory phase and located in known mining districts
in Brazil. On December 16, 2016, Jupiter Gold's Registration
Statement on Form F-1 was declared effective by the Securities and Exchange Commission ("SEC"). In 2017, Jupiter Gold conducted
an initial public offering of its common stock in which $254,000 in gross proceeds were raised at a price of $1.00 per common share.
The Company trades on the OTC Pink Market under the symbol JUPGF. Basis of Presentation The consolidated financial
statements of the Company have been prepared in accordance with generally accepted accounting principles ("GAAP") of the
United States of America and are expressed in United States dollars. For the years ended December 31, 2018 and 2017 and the period
ending December 31, 2016, the consolidated financial statements include the accounts of the Company and its 99.99% owned subsidiary,
Mineração Jupiter Ltda. All material intercompany
accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in
conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingencies at the date of the financial statements and the reported amount of revenues and expenses
during the reporting period. Actual results may differ from those estimates. Going Concern The consolidated financial statements have
been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities in the normal
course of business. The Company has limited working capital, has incurred losses since its inception, and has not yet generated
material revenues from the sale of its products or services. These factors create substantial doubt about the Company's ability
to continue as a going concern. The consolidated financial statements do not include any adjustment that might be necessary if
the Company is unable to continue as a going concern. The ability of the Company to continue as
a going concern is dependent on the Company generating cash from its operations, the sale of its stock and/or obtaining debt financing.
During the year ended December 31, 2018, the Company funded operations primarily through the sale of equity securities and to
a lessor effect the receipt of proceeds from gold sales. Management's plan to fund its capital requirements and ongoing operations
include an increase in cash received from sales of gold and minerals recovered from mining areas that the Company expects will
become operational during 2019. Management's secondary plan to cover any shortfall is selling its equity securities and obtaining
debt financing. There can be no assurance the Company will be successful in these efforts. Fair Value of Financial Instruments Jupiter Gold follows the guidance of Accounting
Standards Codification ("ASC") Topic 820 – Fair Value Measurement and Disclosure. Fair value is defined as the exit
price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value
that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable
inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and
are developed based on market data obtained from sources independent of Jupiter Gold. Unobservable inputs are inputs that reflect
Jupiter Gold's assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes
three levels of inputs that may be used to measure fair value: Level 1. Observable inputs such as quoted
prices in active markets; Level 2. Inputs, other than the quoted
prices in active markets, that are observable either directly or indirectly; and Level 3. Unobservable inputs in which
there is little or no market data, which require the reporting entity to develop its own assumptions. As of December 31, 2018, Jupiter Gold did not
have any level 2 or 3 assets or liabilities. Jupiter Gold's financial instruments consist
of cash and cash equivalents, accounts payable, and accrued expenses. The carrying amount of these financial instruments approximates
fair value due to either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed
in these consolidated financial statements. Cash and Cash Equivalents The Company considers all highly liquid instruments
purchased with a maturity of three months or less to be cash equivalents to the extent that the funds are not being held for investment
purposes. Funds held in Brazilian banks are insured up to 250,000 Brazilian Real (approximately $64,519 based on the December 31,
2018 exchange rate). Property and Equipment Property and equipment are stated at cost.
Major improvements and betterments are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is computed
using the straight-line method over the estimated useful life. At the time of retirement or other disposition of property and equipment,
the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the statements
of operations as other gain or loss, net. The diamond and gold processing plant and other
machinery are depreciated over an estimated useful life of ten years; vehicles are depreciated over an estimated life of five years;
and computer and other office equipment over an estimated useful life of three years. Mineral Properties Costs of exploration,
carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs, including
licenses and lease payments, are capitalized. Impairment losses are recorded on mineral properties used in operations when indicators
of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets'
carrying amount. As of December 31, 2018 and 2017, Jupiter Gold did not recognize any impairment losses related to mineral properties
held. For intangible assets
purchased in a business combination, the estimated fair values of the assets received are used to establish their recorded values.
For intangible assets acquired in a non-monetary exchange, the estimated fair values of the assets transferred (or the estimated
fair values of the assets received, if more clearly evident) are used to establish their recorded values, unless the values of
neither the assets received nor the assets transferred are determinable within reasonable limits, in which case the assets received
are measured based on the carrying values of the assets transferred. Valuation techniques consistent with the market approach,
income approach and/or cost approach are used to measure fair value. Intangible assets consist of mineral rights held by MJL and
hold a recorded value of $2,044, the cost of fees paid to the Brazilian national mining department. These rights are held in perpetuity
provided the Company remains in compliance with various government regulations and industry requirements. Impairment of Long-Lived Assets For long-lived assets,
such as property and equipment and intangible assets subject to amortization, Jupiter Gold continually monitors events and changes
in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes
in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying
value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is
less than the carrying amount of those assets, Jupiter Gold recognizes an impairment loss based on the excess of the carrying amount
over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value
less costs to sell. Revenue Recognition The Company generates
revenue from the sale of gold and other minerals excavated from its modular gold recovery plant located in a mining concession
in Brazil. On January 1, 2018, the
Company adopted ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), using the modified retrospective method
applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January
1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with
our historic accounting under ASC 605. As of December 31, 2018, the consolidated financial statements were not materially impacted
as a result of the application of Topic 606 compared to Topic 605. The Company recognizes
revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the new revenue standard is that a company
should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve
that core principle:
· Step 1: Identify the contract with the customer
· Step 2: Identify the performance obligations in the contract
· Step 3: Determine the transaction price
· Step 4: Allocate the transaction price to the performance obligations in the contract
· Step 5: Recognize revenue when the company satisfies a performance obligation In order to identify the
performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and
identify each promised good or service that is distinct. A performance obligation meets ASC 606's definition of a "distinct"
good or service (or bundle of goods or services) if both of the following criteria are met:
· The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer
· The entity's promise to transfer the good or service to the customer is separately identifiable from other promises in the contract If a good or service is
not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified
that is distinct. The transaction price
is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services
to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When
determining the transaction price, an entity must consider the effects of all of the following:
· Variable consideration
· Constraining estimates of variable consideration
· The existence of a significant financing component in the contract
· Noncash consideration
· Consideration payable to a customer Variable consideration
is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative
revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price
is allocated to each performance obligation on a relative standalone selling price basis. The transaction price
allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over
time as appropriate. Stock-Based Compensation The Company records stock-based compensation
in accordance with ASC Topic 718, Compensation - Stock Compensation. ASC 718 requires companies to measure compensation cost for
stock-based employee compensation at fair value at the grant date and recognize the expense over the employee's requisite service
period. Under ASC 718, volatility is based on the historical volatility of our stock or the expected volatility of the stock of
similar companies. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination
behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at
the time of grant. The Company utilizes the Black-Scholes option-pricing
model, which was developed for use in estimating the fair value of options. Option-pricing models require the input of highly complex
and subjective variables including the expected life of options granted and the expected volatility of our stock price over a period
equal to or greater than the expected life of the options. Because changes in the subjective assumptions can materially affect
the estimated value of our employee stock options, it is management's opinion that the Black-Scholes option-pricing model may not
provide an accurate measure of the fair value of our employee stock options. Although the fair value of employee stock options
is determined in accordance with ASC Topic 718 using an option-pricing model, that value may not be indicative of the fair value
observed in a willing buyer/willing seller market transaction. Foreign Currency Jupiter Gold's subsidiary, MJL, uses its local
currency as its functional currency. Resulting translation gains or losses are recognized as a component of accumulated other
comprehensive income. Transaction gains or losses related to balances denominated in a currency other than the functional currency
are recognized in the consolidated statements of operations. Basic Earnings (Loss) Per Share The Company computes loss per share in accordance
with ASC Topic 260, Earnings per Share, which requires presentation of both basic and diluted earnings per share on the face of
the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted
average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common
shares outstanding during the period. As of December 31, 2018, the Company's potentially dilutive securities relate to common stock
issuable in connection with options. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02,
“Leases (Topic 842)” (“ASC 842”) that amends the accounting guidance on leases for both lessees and lessors.
The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease
liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or
operating, with classification affecting the pattern of expense recognition in the income statement. The FASB also subsequently
issued amendments to the standard, including providing an additional and optional transition method to adopt the new standard,
described below, as well as certain practical expedients related to land easements and lessor accounting. The amendments in this
accounting standard update are effective for the Company on January 1, 2019, with early adoption permitted. The Company will adopt
this accounting standard update effective January 1, 2019. The accounting standard update originally required
the use of a modified retrospective approach reflecting the application of the standard to leases existing at, or entered into
after, the beginning of the earliest comparative period presented in the financial statements with the option to elect certain
practical expedients. A subsequent amendment to the standard provides an additional and optional transition method that allows
entities to initially apply the new leases standard at the adoption date and recognize a cumulative effect adjustment to the opening
balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented
in the financial statements in which it adopts the new leases standard will continue to be in accordance with ASC Topic 840 if
the optional transition method is elected. The Company plans to adopt the standard using the optional transition method with no
restatement of comparative periods and a cumulative effect adjustment, if any, recognized as of the date of adoption. The Company
does not expect that this standard to have a material effect on its consolidated financial statements due to the recognition of
new ROU assets and lease liabilities for lessee activities. As part of the implementation process, the
Company assessed its lease arrangements and evaluated practical expedient and accounting policy elections to meet the reporting
requirements of this standard. The Company has also evaluated the changes in controls and processes that are necessary to implement
the new standard, and no material changes were required. The new standard provides a number of optional practical expedients in
transition. The Company expects to elect the ‘package of practical expedients’ which permits us not to reassess under
the new standard the prior conclusions about lease identification, lease classification, and initial direct costs. The Company
does not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable
to the Company. Consequently, on adoption, the Company expects to recognize additional operating liabilities ranging from $22,000
to $43,000, with corresponding ROU assets of approximately the same amount based on the present value of the remaining minimum
rental payments under current leasing standards for existing operating leases. The new standard also provides practical expedients
for an entity’s ongoing accounting. The Company currently expects to elect the short-term lease recognition exemption for
all leases that qualify. As a result, for those leases that qualify, the Company will not recognize ROU assets or lease liabilities,
including for existing short-term leases of those assets in transition. The Company also currently expects to elect the practical
expedient to not separate lease and non-lease components for the majority of its leases as both lessee and lessor. In June 2018, the FASB issued ASU 2018-07,
Compensation - Stock Compensation (Topic 718) Compensation - Stock Compensation Revenue from
Contracts with Customers We have reviewed other recent accounting pronouncements
issued to the date of the issuance of these consolidated financial statements, and we do not believe any of these pronouncements
will have a material impact on the Company. |
