| 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”). 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 contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives
of property and equipment. Actual results could differ from those estimates. 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 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, 2023 and 2022, we recognized revenue of $ 410,000 60,067 Additionally,
we recognized revenues of $ 1,206,148 1,659,291 The
Company also recognizes revenue from advanced royalty payments per the terms in its Manufacturing and Distribution Agreement with one
of its distributors. The royalty to be received is calculated based on 8 %
of gross sales, with an annual minimum royalty paid upfront per calendar year for the term of the contract. There is a non-refundable
$ 350,000 Minimum
Royalty for FY 2023. The Company recognizes the minimum royalty and corresponding expense at the time of receipt. Accounts
Receivable Revenues
that have been recognized but not yet received are recorded as accounts receivable. Losses on receivables will be recognized when it
is more likely than not that a receivable will not be collected. An allowance for estimated uncollectible amounts will be recognized
to reduce the amount receivable to its net realizable value when needed. As December 31, 2023 and 2022, the Company has recorded an allowance
for doubtful accounts of $ 0 39,438 Investment
in Securities Our
cost-method investment consists of an investment in a private digital multi-media technology company that totaled $ 300,000 20 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 total $ 26,983 224,411 40,440 417,633 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, 2023 December 31, 2022
Finished goods $ 772,589 $ 787,671
Raw materials 43,023 28,343
Total $ 815,612 $ 816,014 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 Quoted prices Significant Significant inputs(Level
3)
Derivative liabilities $ 1,296,937 $ — $ — $ 1,296,937
Total Fair Quoted prices Significant Significant
Derivative liabilities $ 1,004,837 $ — $ — $ 1,004,837
Loss
per Share Basic
loss per share is calculated by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding
during each period. Diluted loss per share 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. There were approximately
216,834,000 106,623,280 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, 2023 and 2022, no liability for unrecognized tax benefits was required to be reported. Recently
Issued Accounting Pronouncements The
Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting
pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change
to its Consolidated Financial Statements and assures that there are proper controls in place to ascertain that the Company’s Consolidated
Financial Statements properly reflect the change. 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. Derivatives and Hedging Derivatives and Hedging—Contracts in
Entity’s Own Equity In
December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-09, Income Taxes (Topic 740):
Improvements to Income Tax Disclosures In
December 2023, the FASB issued ASU 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60): Accounting for
and Disclosure of Crypto Assets, In
November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In
June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments Financial Instruments – Credit Losses |
