| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of Presentation Our
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States
of America (“U.S. GAAP”). Principles
of Consolidation The
consolidated financial statements include the accounts of the company and our wholly owned subsidiaries: CirTran Products Corp., LBC
Products, Inc., and CirTran Asia, Inc. Intercompany accounts and transactions have been eliminated in consolidation Use
of Estimates In
preparing the financial statements in accordance with US GAAP, management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. Concentrations
of Credit Risk We
maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor
our banking relationships and consequently have not experienced any losses in our accounts. At times, such deposits may exceed the Federal
Deposit Insurance Corporation insurable limit. Cash
Equivalents We
consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no Property
and Equipment Property
and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is calculated
using the straight-line method over the estimated useful lives of the assets, which ranges from three to ten years. Leasehold improvements
are amortized over the lesser of the remaining term of the lease or the estimated useful life of the asset. Expenditures for repairs
and maintenance are expensed as incurred. Gains or losses on dispositions of property and equipment are included in operating results. Revenue
Recognition We
follow Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue
from Contracts with Customers During
the years ended December 31, 2021 and 2020, we recognized revenue of $ 60,500 515,000 Additionally,
we recognized revenues of $ 2,862,769 1,217,625 Leases In
February 2016, the FASB issued Accounting Standard Update (“ASU”) 2016-02, Leases Leases The
adoption of the standard resulted in recording right-of-use (“ROU”) assets and operating lease liabilities of $22,291 as
of December 31, 2021. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future
minimum lease payments over the lease term at commencement date. As the lease does not provide an implicit rate, we use our incremental
borrowing rate based on information available at the commencement date in determining the present value of future payments. The operating
lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Lease terms may
include options to extend or terminate the lease when it is reasonably certain we will exercise that option. Although considered, we
determined it was appropriate to exclude future renewal terms from the capitalization of our operating lease. We
have one lease in effect requiring minimum monthly payments of $ 2,500 5 SUMMARY OF FUTURE MINIMUM LEASE PAYMENTS DUE
Total future payments $ 22,500
Implied interest (209 )
Operating lease liability as of December
31, 2021 $ 22,291 Investment
in Securities Our
cost-method investment consists of an investment in a private digital multi-media technology company that totaled $ 300,000 20 Impairment
of Long-Lived Assets We
review our long-lived assets, including intangibles, for impairment when events or changes in circumstances indicate that the carrying
value of an asset may not be recoverable. At each balance sheet date, we evaluate whether events and circumstances have occurred that
indicate possible impairment. We use an estimate of future undiscounted net cash flows from the related asset or group of assets over
their remaining life in measuring whether the assets are recoverable. We did no Inventories Inventories
are stated at the lower of average cost or net realizable value. Cost on manufactured inventories includes labor, material, and overhead.
Overhead cost is based on indirect costs allocated to cost of sales, work-in-process inventory, and finished goods inventory. Indirect
overhead costs have been charged to cost of sales or capitalized as inventory, based on management’s estimate of the benefit of
indirect manufacturing costs to the manufacturing process. When
there is evidence that the inventory’s value is less than original cost, the inventory is reduced to market value. We determine
market value on current resale amounts and whether technological obsolescence exists. We will seek agreements with manufacturing customers
that require them to purchase their inventory items in the event they cancel their business with us. From
time to time, we will place deposits on inventory to be delivered in the future. These deposits are carried as a separate balance sheet
component and totaled $ 11,639 87,042 53,900 319,333 On
most of tobacco related products, the Company pays in advance for Federal Excise Taxes and State Excise Taxes prior to receiving product.
The Company accrues those taxes on its balance sheet and expenses them per-unit basis as sold. Inventory
balances consisted of the following: SCHEDULE OF INVENTORY
December
31, 2021 December
31, 2020
Finished goods $ 501,929 $ 526,372
Raw materials 36,032 40,803
Reserve for obsolescence — (241,923 )
Total $ 537,961 $ 325,252 Stock-Based
Compensation We
have outstanding stock options to directors and employees, which are described more fully in Note 13–Stock Options and Warrants.
We account for our stock options in accordance with ASC 718-10, Accounting for Stock Issued to Employees Improvements
to Nonemployee Share-Based Payment Accounting Fair
Value of Financial Instruments ASC
820-10-15, Fair Value Measurement-Overall-Scope and Scope Exceptions Level
1 Level
2 Level
3 Accounts
payable and related-party payables have fair values that approximate the carrying value due to the short-term nature of these instruments.
Derivative liabilities are measured using level 3 inputs. SCHEDULE OF FINANCIAL ASSETS AND LIABILITIES CARRIED AT FAIR VALUED MEASURED ON RECURRING BASIS
Total
Fair Value at December 31, 2021 Quoted
prices in active markets (Level 1) Significant
other observable inputs (Level 2) Significant
Derivative liabilities $ 938,794 $ - $ - $ 938,794
Total
Fair Value at December 31, 2020 Quoted
prices in active markets (Level 1) Significant
other observable inputs (Level 2) Significant
unobservable inputs (Level 3)
Derivative liabilities $ 922,654 $ - $ - $ 922,654 Loss
per Share Basic
loss per share is calculated by dividing net loss available to common shareholders by the weighted-average number of common s hares
outstanding during each period. Diluted is similarly calculated, except that
the weighted-average number of common shares outstanding would include common shares that may be issued subject to existing rights with
dilutive potential when applicable. 144,264,247 There were 167,761,552 Income
Taxes Income
taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus
deferred taxes related primarily to tax net operating loss carryforwards. The deferred tax assets and liabilities represent the future
tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or
settled, as well as operating loss carryforwards. Deferred tax assets 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. A valuation
allowance is established against deferred tax assets when in the judgment of management, it is more likely than not that such deferred
tax assets will not become available. Because the judgment about the level of future taxable income is dependent to a great extent on
matters that may, at least in part, be beyond our control, it is at least reasonably possible that management’s judgment about
the need for a valuation allowance for deferred taxes could change in the near term. Tax
benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The
amount recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon settlement. A liability
for “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet these recognition
and measurement standards. As of December 31, 2021 and 2020, no Recently
Issued Accounting Pronouncements We
have implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on our financial
statements unless otherwise disclosed, and we do not believe that there are any other new accounting pronouncements that have been issued
that might have a material impact on our financial position or results of operations. |
