Basanite, Inc 10-Q for FY2023 Q1
Basanite, Inc. (BASA)
About this 10-Q
Basanite, Inc filed this 10-Q on May 23, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).
Headline figures
Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $468.45K
- compared with a net loss of $1.52M a year earlier
- Diluted EPS
- -$0.00
- compared with -$0.01 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM
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(Mark One)
For the quarterly period ended:
or
For the transition period from: _____________ to _____________
Commission File Number:
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(Exact name of registrant as specified in its charter)
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| (State or other jurisdiction | (I.R.S. Employer |
| of incorporation or organization) | Identification No.) |
(Address of Principal Executive Office) (Zip Code)
(Registrant’s telephone number, including area code)
_______________________________________________
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
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Securities registered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. ☒
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ¨ | Accelerated filer ¨ | |
| Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). ¨ Yes ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
| Class | Shares Outstanding as of May 19, 2023 | |
| Common Stock, $0.001 par value per share |
BASANITE, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I. – FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
BASANITE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Lease right-of-use asset, financing | ||||||||
| Fixed assets, net | ||||||||
| TOTAL NON–CURRENT ASSETS | ||||||||
| TOTAL ASSETS | $ | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued legal liability | ||||||||
| Subscription liability | ||||||||
| Notes payable | ||||||||
| Notes payable - related party | ||||||||
| Notes payable - convertible - related party, net | ||||||||
| Due to shareholders | ||||||||
| Lease liability - current portion | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| Lease liability - net of current portion | ||||||||
| TOTAL LIABILITIES | ||||||||
| STOCKHOLDERS’ (DEFICIT) EQUITY | ||||||||
| Preferred stock, $ par value, shares authorized, issued and outstanding | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
| 1 |
BASANITE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the three months ended | |||||||||
| March 31, | |||||||||
| 2023 | 2022 | ||||||||
| Revenue | |||||||||
| Products sales | $ | $ | |||||||
| Total cost of goods sold | |||||||||
| Gross (loss) profit | ( | ) | |||||||
| OPERATING EXPENSES | |||||||||
| Sales, general, and administrative | |||||||||
| Total operating expenses | |||||||||
| NET LOSS FROM OPERATIONS | ( | ) | ( | ) | |||||
| OTHER INCOME (EXPENSE) | |||||||||
| Interest expense | ( | ) | ( | ) | |||||
| Total other income (expense) | ( | ) | ( | ) | |||||
| NET LOSS | $ | ( | ) | $ | ( | ) | |||
| Net loss per share – | |||||||||
| Basic | $ | ( | ) | $ | ( | ) | |||
| Diluted | $ | ( | ) | $ | ( | ) | |||
| Weighted average number of shares outstanding – | |||||||||
| Basic | |||||||||
| Diluted | |||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
| 2 |
BASANITE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(UNAUDITED)
| Total | ||||||||||||||||||||||||||||
| Additional | Stockholders' | |||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | (Deficit) | ||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance January 1, 2022 | $ | $ | ( | ) | $ | |||||||||||||||||||||||
| Stock issued in private placement offering, net of cost of $ | — | |||||||||||||||||||||||||||
| Stock issued for exercise options | — | |||||||||||||||||||||||||||
| Stock issued to service provider | — | |||||||||||||||||||||||||||
| Warrants issued to management | — | — | ||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance March 31, 2022 | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
| 3 |
BASANITE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(UNAUDITED)
| Additional | Total | |||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | Stockholders' | ||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance January 1, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Stock based compensation | — | — | ||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
| 4 |
BASANITE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | ( | ) | $ | ( | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Lease right-of-use asset amortization | ||||||||
| Depreciation | ||||||||
| Stock-based compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ||||||||
| Inventory | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Deposits and other current assets | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Subscription liability | ||||||||
| Lease liability | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from sale of common stock, net | ||||||||
| Proceeds from exercise of stock options | ||||||||
| Proceeds from notes payable and notes payable related party | ||||||||
| Repayments of notes payable and notes payable related party | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| NET INCREASE IN CASH | ||||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | |||||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | |||||||
| Forgiveness of Paycheck Protection Program loan and accrued interest | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Common stock issued for services | $ | |||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
| 5 |
BASANITE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN
(A) Description of Business
Basanite, Inc., a Nevada corporation (the “Company”, “Basanite”, “we”, “us”, “our” or similar terminology), through our wholly owned subsidiary, Basanite Industries, LLC, a Delaware limited liability company (“BI”), manufactures a range of “green” (environmentally friendly), sustainable, non-corrosive, lightweight, composite products used in concrete reinforcement by the construction industry. Our core product is BasaFlex™, a basalt fiber reinforced polymer reinforcing bar (“rebar”) which we believe is a stronger, lighter, sustainable, non-conductive and corrosion-proof alternative to traditional steel.
Our two other main product lines are BasaMix™, which are fine denier basalt fibers available in various sizes, and BasaMesh™, a line of Basalt Geogrid Mesh Rolls, intended to replace welded wire mesh (made of steel) and other fiber reinforced polymer (“FRB”) grids and mesh.
BasaMix™ is designed to help absorb the stresses associated with early-aged plastic shrinkage and settlement cracking in concrete, as well as providing an increased toughness for enhanced reinforcement in Slab-on-Grade ("SOG”) and precast elements. BasaMix™ also serves in a “system approach” for optimum performance of a concrete element when used in conjunction with our BasaFlex™ rebar.
BasaMesh™ is designed for secondary and temperature shrinkage reinforcement. BasaMesh™ can also work in conjunction with the BasaFlex™ rebar or BasaMix™ for a total reinforcement program.
Each of our products is specifically designed to extend the lifecycle of concrete products by eliminating “concrete spalling.” Spalling results from the steel reinforcing materials embedded within the concrete member rusting (contrary to popular belief, concrete is porous and water can permeate into concrete). Rusting leads to the steel expanding and eventually causing the surrounding concrete to delaminate, crack, or even break off, resulting in potential structural failure. We believe that each Basanite product addresses this important need along with other key requirements in today’s construction market.
(B) Liquidity and Management Plans
Since inception, the Company has incurred net operating losses and used cash in operations. As of March 31, 2023, and December 31, 2022, respectively, the Company reported:
| • | an accumulated deficit of $ |
| • | a working capital deficiency of $ |
| • | cash used in operations of $ |
Losses have principally occurred as a result of the substantial resources required for product research and development and for marketing of the Company’s products; including the general and administrative expenses associated with the organization.
While we have generated relatively little revenue to date, revenue from sales of product began to increase in the quarter ended March 31, 2021, and we continue to receive inquiries and solicit orders from a range of customers for our products, indicating what we believe is a significant level of market interest for BasaFlex™. While the Company expects to expand its manufacturing capacity during 2023, based on our current limited manufacturing capacity there is no guarantee that orders will actually be received or that orders, if received, can be properly fulfilled.
| 6 |
BASANITE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 1 – ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN (CONTINUED)
We have historically satisfied our working capital requirements through the sale of restricted common stock of the Company, $ par value per share (the “Common Stock”), and the issuance of warrants to purchase Common Stock and promissory notes. Until we are able to internally generate meaningful revenue and positive cash flow, we will attempt to fund working capital requirements through third party financing, including through potential private or public offerings of our securities as well as bridge or other loan arrangements. However, a number of factors continue to hinder the Company’s ability to attract new capital investment. We cannot provide any assurances that the required capital will be obtained at all, or that the terms of such required capital may be acceptable to us. If we are unable to obtain adequate financing, we may reduce our operating activities to reduce our cash use until sufficient funding is secured. If we are unable to secure funding when needed, our results of operations may suffer, and our business may fail.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties.
At March 31, 2023, the Company
had cash of $
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) Use of Estimates in Financial Statements
The presentation 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 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. Actual results could differ from those estimates.
Stock-based compensation and stock awards related to convertible debt instruments are recognized based on the fair value of the awards granted. The fair value of each award or conversion feature is typically estimated on the grant date using the Black-Scholes pricing model. The Black-Scholes pricing model requires the input of highly subjective assumptions, including the fair value of the underlying Common Stock, the expected term of the option, the expected volatility of the price of our Common Stock, risk-free interest rates and the expected dividend yield of our Common Stock. The assumptions used to determine the fair value of the stock awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment.
The Company used the Black Scholes valuation model to determine the fair value of the warrants and options issued, using the following key assumptions for the three months ended March 31, 2023 and 2022, respectively:
| Schedule of Fair Value Assumptions | ||||||||
| Three months | Three months | |||||||
| ended | ended | |||||||
| March 31, | March 31, | |||||||
| 2022 | 2021 | |||||||
| Expected price volatility | % | % | ||||||
| Risk-free interest rate | ||||||||
| Expected life in years | ||||||||
| Dividend yield | ||||||||
(B) Principles of Consolidation
The condensed consolidated financial statements include the accounts of Basanite, Inc. and its wholly owned subsidiaries, Basanite Industries, LLC and Basalt America, LLC. All intercompany balances have been eliminated in consolidation. The Company’s operations are conducted primarily through Basanite Industries, LLC. Basalt America, LLC is currently inactive.
| 7 |
BASANITE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(C) Cash
The Company considers all
highly liquid temporary cash instruments with an original maturity of three months or less to be cash equivalents. The Company places
its cash, cash equivalents and restricted cash on deposit with financial institutions in the United States, which are insured by the Federal
Deposit Insurance Company “("FDIC") up to $
(D) Inventories
The Company’s inventories
consist of raw materials, work in process and finished goods, both purchased and manufactured. Inventories are stated at lower of cost
or net realizable value. Cost is determined on the first-in, first-out basis. Raw materials inventory consists of basalt fiber and other
necessary elements to produce the basalt rebar. On a quarterly basis, the Company analyzes its inventory levels and records allowances
for inventory that has become obsolete and inventory that has a cost basis in excess of the expected net realizable value. The Company
had
(E) Fixed assets
Fixed assets consist of the following:
| Schedule of Fixed Assets | ||||||||
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (Unaudited) | ||||||||
| Computer equipment | $ | $ | ||||||
| Machinery | ||||||||
| Leasehold improvements | ||||||||
| Office furniture and equipment | ||||||||
| Land improvements | ||||||||
| Website development | ||||||||
| Construction in process | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Depreciation expense for the three months ended March 31, 2023
was $
| 8 |
BASANITE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(F) Deposits and other current assets
The Company’s deposits and other current assets consist of the deposits made on equipment, security deposits, utility deposits and other receivables. The deposits are reclassified as part of the fixed asset cost when received and placed into service.
The basic loss per share is calculated by dividing the Company's net loss available to common shareholders by the weighted average number of common shares during the period. The diluted loss per share is calculated by dividing the Company's net loss by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.
The following are potentially dilutive shares not included in the loss per share computation:
| Schedule of Dilutive Shares Not Included in Loss Per Share Computation | ||||||||
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (Unaudited) | ||||||||
| Options | ||||||||
| Warrants | ||||||||
| Convertible securities | ||||||||
| Total | ||||||||
The Company recognizes compensation costs to employees under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation. Under FASB ASC Topic 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the grant. The Company recognized $ in stock-based compensation during the three months ended March 31, 2023.
(I) Revenue Recognition
We recognize revenue when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration we expected to be entitled to in exchange for those goods or services. The timing of revenue recognition largely is dependent on shipping terms. Revenue is recorded at the time of shipment for terms designated free on board (“FOB”) shipping point. For sales transactions designated FOB destination, revenue is recorded when the product is delivered to the customer’s delivery site.
| 9 |
BASANITE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
All revenues recognized are
net of trade allowances, cash discounts, and sales returns. Trade allowances are based on the estimated obligations. Adjustments to earnings
resulting from revisions to estimates on discounts and returns have been immaterial for each of the reported periods. Shipping and handling
amounts billed to a customer as part of a sales transaction are included in revenues, and the related costs are included in cost of goods
sold. Shipping and handling is treated as a fulfillment activity, rather than a promised service, and therefore is not considered a separate
performance obligation. During the three months ended March 31, 2023 and 2022, the Company incurred shipping and handling costs in the
amount of $
NOTE 3 – OPERATING LEASE
On January 18, 2019, the
Company entered into an agreement to lease approximately 25,470 square feet of office and manufacturing space in Pompano Beach, Florida
through March 2024. On March 25, 2019, the Company entered into an amendment to the agreement to increase the square footage of leased
premises to 36,900 square feet, increasing the Company’s base rent obligation to be approximately $
On December 31, 2022 the Company vacated the lease, as of this filing the Company has not entered into a new commercial lease for a manufacturing facility. The Company is actively engaged in a nation-wide search to secure a manufacturing facility.
For the three months ended
March 31, 2023 and 2022, the Company expensed $
NOTE 4 – NOTES PAYABLE
Notes payable totaled $
On March 31, 2022
the Company entered financing arrangements to finance the insurance premiums for its liability coverage. The financings have an interest
rate of
| 10 |
BASANITE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 4 – NOTES PAYABLE -- (CONTINUED)
On April 2, 2021, the Company
issued a promissory note with an investor in exchange for $
On April 9, 2021, the Company
issued a promissory note with an investor in exchange for $
On April 16, 2021, the Company
issued a promissory note with an investor in exchange for $
On April 16, 2021, the Company
issued a promissory note with an investor in exchange for $
During the three months ended March 31, 2022, the Company made
principal payments in the amount of $
Interest expense for the
Company’s notes payable for the three months ended March 31, 2022 was $
Accrued interest
for the Company’s notes payable on March 31, 2023 and December 31, 2022 was $
NOTE 5 – NOTES PAYABLE – RELATED PARTY
Notes payable - related party totaled $
On April 2, 2021, the Company
issued a promissory note with Paul Sallarulo, a member of our Board of Directors, in exchange for $
On April 2, 2021, the Company
issued a promissory note with Michael V. Barbera, our Chairman of the Board, in exchange for $
On August 31, 2022 the Company
issued a promissory note to a board member in exchange for $
On August 22, 2022 the Company
issued a promissory note to a board member in exchange for $
On August 22, 2022 the Company
issued a promissory note to a board member in exchange for $
On August 29, 2022 the Company
issued a promissory note to a board member in exchange for $
On August 29, 2022 the Company
issued a promissory note to a board member in exchange for $
| 11 |
BASANITE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 5 – NOTES PAYABLE – RELATED PARTY -- (CONTINUED)
On August 31, 2022 the Company
issued a promissory note to a board member in exchange for $
On September 9, 2022 the
Company issued a promissory note to a board member in exchange for $
On September 9, 2022 the
Company issued a promissory note to a board member in exchange for $
On September 9, 2022 the
Company issued a promissory note to a strategic partner in exchange for $
On September 9, 2022 the
Company issued a promissory note to a strategic partner in exchange for $
On September 9, 2022 the
Company issued a promissory note to an investor and advisor to the board, in exchange for $
On September 22, 2022 the
Company issued a promissory note to a board member in exchange for $
On September 22, 2022 the
Company issued a promissory note to an investor and advisor to the board in exchange for $
On February 14, 2023 the
Company issued a promissory note to a board member in exchange for $
On February 24, 2023 the
Company issued a promissory note to a board member in exchange for $
Interest expense for the
Company’s notes payable – related party for the three months ended March 31, 2023 and 2022 was $
| 12 |
BASANITE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 6 – NOTES PAYABLE – CONVERTIBLE – RELATED PARTY
Convertible Notes payable – related party totaled $
On August 3, 2020, the Company
issued a secured convertible promissory note to certain investors in exchange for $
On February 12, 2021, the
Company exchanged the original debt for a newly issued amended and restated secured convertible promissory note with a new principal balance
of $
On May 12, 2021, the Company
extended the debt for a newly issued amended and restated secured convertible promissory note with a new principal balance of $
On September 15, 2022, the Company
extended the debt for a newly issued amended and restated secured convertible promissory note with a new principal balance of $
Interest expense for the
Company’s convertible notes payable – related parties for the three months ended March 31, 2023, was $
Accrued interest for the
Company’s convertible notes payable – related parties on March 31, 2023 and December 31, 2022, was $
| 13 |
BASANITE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 7 – COMMITMENTS AND CONTINGENCIES
The Company is the obligor under certain promissory notes that are currently past due (although formal events of default have not been declared). See notes 4 and 5.
The Company is presently
in default of its obligations under the terms of the Company’s private placement which closed in August 2021 to file a registration
statement for an underwritten public offering and concurrently listing on a national stock exchange. As a result, the Company is required
to pay liquidated damages in the amount of $
On August 17, 2021, the
Company conducted the closing of a private placement offering to accredited investors of the Company’s units at a price of $0.275
per unit, with each unit consisting of: (i) one share of the Company’s common stock, (ii) a five-year, immediately exercisable warrant
(“Warrant A”) to purchase one share of common stock at an exercise price of $0.33 per share and (iii) an additional five-year,
immediately exercisable warrant to purchase one share of common stock at an exercise price of $0.33 per share (“Warrant B”).
The Warrant A and Warrant B are identical, except that the Warrant B has a call feature in favor of the Company, as defined in the offering
agreements. In connection with the closing,
NOTE 8 – STOCKHOLDERS’ DEFICIT
No activity for the period ended March 31, 2023.
Stock Options:
The following table provides the activity in options for the respective periods:
| Schedule of Option Activity | ||||||||||||
| Total Options | Weighted Average | Aggregate Intrinsic | ||||||||||
| Outstanding | Exercise Price | Value | ||||||||||
| Balance at January 1, 2022 | $ | |||||||||||
| Issued | ( | — | ||||||||||
| Cancelled / Expired | ( | ) | — | |||||||||
| Balance at December 31, 2022 | $ | $ | ||||||||||
| Exercised | — | |||||||||||
| Cancelled / Expired | — | |||||||||||
| Balance at March 31, 2023 | $ | $ | ||||||||||
| 14 |
BASANITE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 9 – OPTIONS AND WARRANTS – (CONTINUED)
Options exercisable and outstanding at March 31, 2023 are as follows:
| Schedule of Options and Warrants Exercisable and Outstanding | ||||||||
| Weighted Average | ||||||||
| Remaining | ||||||||
| Range of | Number | Contractual | Weighted Average | Aggregate | ||||
| Exercise Prices | Outstanding | Life (Years) | Exercise Price | Intrinsic Value | ||||
| $ - $ | $ |
During the three months ended March 31, 2023, options to acquire shares of Common Stock at a price of $ per share were exercised. See note 8.
Stock Warrants:
The following table provides the activity in warrants for the respective periods:
| Schedule of Warrants Activity | |||||||||||||
| Total Warrants | Weighted Average Exercise Price | Aggregate Intrinsic Value | |||||||||||
| Balance at January 1, 2022 | $ | $ | |||||||||||
| Granted | — | ||||||||||||
| Exercised | ( | ) | — | ||||||||||
| Cancelled | |||||||||||||
| Balance at December 31, 2022 | $ | $ | |||||||||||
| Granted | — | ||||||||||||
| Balance at March 31, 2023 | $ | $ | |||||||||||
Warrants exercisable and outstanding at March 31, 2023 are as follows:
| Schedule of Warrants Exercisable and Outstanding | ||||||||
| Weighted Average | ||||||||
| Remaining | ||||||||
| Range of | Number | Contractual | Weighted Average | Aggregate | ||||
| Exercise Prices | Outstanding | Life (Years) | Exercise Price | Intrinsic Value | ||||
| $ - $ | $ | $ | ||||||
| $ - $ | $ | |||||||
| $ | ||||||||
NOTE 10 – SUBSEQUENT EVENTS
Thomas Richmond Services Agreement
On April 6, 2023, the Board of Directors appointed Mr. Richmond and entered into an Employment Services Agreement to serve as the Acting Interim Chief Executive Officer of the Company. The terms of Richmond’s employment with the Company and his job description are provided for in an Employment Agreement, dated April 6, 2023, between the Company and Richmond.
Michael Giorgio Services Agreement
On April 6, 2023, the Board of Directors appointed Mr. Giorgio and entered into an Employment Services Agreement to serve as the Chief Growth Officer of the Company. The terms of Giorgio’s employment with the Company and his job description are provided for in an Employment Agreement, dated April 6, 2023, between the Company and Giorgio.
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| ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
This overview provides a high-level discussion of our operating results and some of the trends that affect our business. We believe that an understanding of these trends is important to understand our financial results for the three months ended March 31, 2023 and 2022, respectively. This summary is not intended to be exhaustive, nor is it intended to be a substitute for the detailed discussion and analysis provided elsewhere in this report, and our audited consolidated financial statements and accompanying notes included in the Annual Report in Form-10-K for the period ended December 31, 2022 and filed with the SEC on May 16, 2023.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). These forward-looking statements are based on our management’s beliefs, assumptions, and expectations and on information currently available to our management. Generally, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions intended to identify forward-looking statements, which generally are not historical in nature. All statements that address operating or financial performance, events, or developments that we expect or anticipate will occur in the future are forward-looking statements, including without limitation our expectations with respect to the timing for our planned manufacturing expansion, the benefits of our products, customer leads, product sales, financings, or the commercial viability of, and prospects for, our business model. We may not actually achieve the plans, projections or expectations disclosed in forward-looking statements, and actual results, developments or events (including, without limitation, those related to our planned manufacturing capacity expansion and our sales and marketing initiatives) could differ materially from those disclosed in the forward-looking statements. Our management believes that these forward-looking statements are reasonable as and when made. However, you should not place undue reliance on forward-looking statements because they speak only as of the date when made. We do not assume any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by federal securities laws and the rules of the Securities and Exchange Commission (the “SEC”). We may not actually achieve the plans, projections or expectations disclosed in our forward-looking statements, and actual results, developments or events could differ materially and adversely from those disclosed in the forward-looking statements. Forward-looking statements are subject to a number of significant risks and uncertainties, including without limitation those described from time to time in our reports filed with the SEC.
The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited interim condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q as well as the risk factors and other disclosures contained in our Annual Report on Form 10-K for the period ended December 31, 2022.
Basanite, Inc., and its wholly owned subsidiaries are referred to in this discussion as the “Company”, “we”, “our”, or “us”. “Common stock” refers to the common stock of the Company.
Overview
On May 30, 2006, Basanite, Inc. was formed as a Nevada corporation. Through our wholly owned subsidiary, Basanite Industries, LLC, a Delaware limited liability company (“BI”), we manufacture a range of “green” (environmentally friendly), sustainable, non-corrosive, lightweight, composite products used in concrete reinforcement by the construction industry. Our core product is BasaFlex™, a basalt fiber reinforced polymer reinforcing bar (“rebar”) which we believe is a stronger, lighter, sustainable, non-conductive and corrosion-proof alternative to traditional steel.
Our two other main product lines are BasaMix™, which are fine denier basalt fibers available in various chopped sizes, and BasaMesh™, a line of Basalt Geogrid Mesh Rolls, intended to replace welded wire mesh (made of steel) and other fiber reinforced polymer grids and mesh.
BasaMix™ is designed to help absorb the stresses associated with early-aged plastic shrinkage and settlement cracking in concrete, as well as providing an increased toughness for enhanced reinforcement in Slab on Grade (SOG) and precast elements. BasaMix™ also serves in a “system approach” for optimum performance of a concrete element when used in conjunction with our BasaFlex™ rebar.
BasaMesh™ is designed for secondary and temperature shrinkage reinforcement. BasaMesh™ can also work in conjunction with the BasaFlex™ rebar or BasaMix™ for a total reinforcement program.
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Each of our products is specifically designed to extend the lifecycle of concrete products by eliminating “concrete spalling.” Spalling results from the steel reinforcing materials embedded within the concrete member rusting (contrary to popular belief, concrete is porous, and water can permeate into concrete). Rusting leads to the steel expanding and eventually causing the surrounding concrete to delaminate, crack, or even break off, resulting in potential structural failure. We believe that each of our products addresses this important need along with other key requirements in today’s construction market.
We believe that the following attributes of BasaFlex™ provide it with a competitive advantage in the marketplace:
| • | BasaFlex™ never corrodes: steel reinforcement products rust, leading to spalling and significant repair costs down the road; |
•
| • | BasaFlex™ is sustainable: BasaFlex™ is made from Basalt rock, the most abundant rock found on Earth’s surface, and offers a longer product lifecycle than traditional steel (the lack of corrosion allows the life span of concrete products reinforced with BasaFlex to be significantly longer); |
| • | BasaFlex™ is “green”: From mining, through production, to installation at the building site, BasaFlex™ has an exceptionally low carbon footprint when compared with that of steel; and |
| • | BasaFlex™ has a lower in-place cost: the physical nature of our products relative to steel result in a lower net cost to the contractor once installed, such as: BasaFlex™ is one-quarter of the weight of equivalent sized steel, meaning 4 times the quantity of material can be delivered by the same truck (or container); all Basanite products can be loaded/unloaded and moved around the jobsite by hand – no expensive handling equipment is needed; less concrete is required as BasaFlex™ does not require the extra concrete cover needed when using steel; and Basanite products are safer and easier to use. We believe all these factors materially reduce the net in-place cost of concrete reinforcement. |
During the past year, we have designed, developed, and prototyped a next generation Pultrusion manufacturing system we call BasaMax™. This new system has been designed in two versions, a quad-line system (for smaller bar sizes) and a dual-line system (for larger bar sizes), which not only have double the manufacturing capacity of the current machines, but they also run faster and they fit it the same manufacturing floorspace. We currently have five of these new BasaMax pultrusion machines on order: three quad-line machines and two dual-line machines. We expect to have these new machines in place during the third quarter of 2023. With the introduction of this new equipment and the establishment of our planned two-shift operations, our maximum manufacturing capacity for BasaFlex™ rebar will increase to approximately 128,000 linear feet per working day (on a two-shift basis).
Importantly, BI’s own fully equipped Test Lab is utilized to evaluate, validate, and verify each raw material and each batch of completed BasaFlex™ product, ensuring our finished goods meet the required specifications and performance attributes. We are also developing a new process specifically for manufacturing BasaFlex™ shapes (hoops; angles and stirrups) which we call BasaLinks™, which includes developing a next generation pultrusion system as part of this process. We expect our first BasaLinks system to be in place and operational during the second quarter of 2024.
We believe that macroeconomic factors are pressuring the construction industry to consider the use of alternative reinforcement materials for the following reasons:
| • | the increasing need for global infrastructure repair; |
| • | recent design trends towards increasing the lifespan of projects and materials; |
| • | the global interest in promoting the use of sustainable products; and |
| • | increasing consideration of both the long-term costs and environmental impacts of material selections. |
We believe we are well positioned to benefit from this renewed focus, particularly in light of the interest of the U.S. government in funding infrastructure improvements and events such as the collapse of a residential building in Surfside, Florida.
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Inflation & Interest Rate Sensitivity
In the past two fiscal years, inflation has not had a significant impact on our business. However, during the second half of 2021 and into 2022, the U.S. economy has entered into a period of increasing inflation. Should inflation persist or increase, interest rates may continue to rise, and inflation overall could have a significant effect on the economy in general and the construction industry in particular, as well as create volatility in the capital markets. For example, inflation and increased interests could affect the prices of raw materials we use, demand for our products, our ability to attract and retain skilled labor and our ability to obtain financing. We are carefully watching chemical prices, which are following oil and gas prices, as a core component of BasaFlex™ is the chemical resin mix. Prices have risen, but we have been able to raise our own prices to support our margins, largely as the result of the increase in steel prices. We believe we have actually benefitted from the rapid rise in steel prices over the past 6 to 9 months as well as the reduced availability of steel rebar, both of which changes have opened opportunities to more readily introduce our products into the marketplace. As of the date of this report, BasaFlex™ has become directly competitive with steel on price alone, and it is relatively available, whereas steel has been impacted by raw material supply chain constraints. We will seek to continue to take advantage of these opportunities while high steel prices and restricted supply are prevalent.
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Supply Chain
In the past year, supply chain shortages or delays have had an immaterial impact on our operations. Our raw material suppliers have maintained a consistent flow of goods which we receive monthly. Domestic suppliers have increased their in-stock flows to maintain adequate levels with our manufacturing needs. However, we might experience supply chain challenges in the future, which could harm our business and our results of operations.
War in Ukraine
The recent war in Ukraine has led the world to issue sanctions on the government of Russia. This has shut down our ability to procure basalt fiber material from our secondary supplier, UWF/Kamenny Vek. However, our primary supplier, Mafic, is U.S. based, and has ample capacity to support our current and anticipated future needs with 100% domestic source of raw materials. We have also recently increased the levels of our safety stock of raw materials as an additional cushion. Nonetheless, we are currently qualifying alternate material from other suppliers to preserve our options in case of further disruptions.
Government Approvals and Specifying of our Products
We continue to pursue additional product and facility qualifications and approvals, and these qualifications and approvals are critical to the market acceptance of our products. We are currently testing products at two independent laboratories in the pursuit of ICC-ES certification and a FDOT production facility approval, all of which is expected by the end of September 2022. We are already selling to FDOT projects on an individual basis through exemptions or specs. The FDOT approval will allow us to bid on any project approved for basalt fiber reinforced polymer products. Until we have obtained these additional approvals, our opportunities to bid on certain projects will be limited.
Results of Operations
Revenue: We had revenue of $115,118 from sales of finished goods for the three months ended March 31, 2023, compared to $258,289 in the prior year. While the decrease in revenue in the year over year periods was relatively significant due to our constraints and limited working capital. We continued our efforts to scale our production capacity, increase our sales, and grow finished goods inventory during the period.
Cost of goods sold: During the three months ended March 31, 2023, we had cost of sales of $19,751 compared to $585,811 in the prior year. We began our production activities in late 2021. The first activities were to build test articles for two sets of independent lab tests, and then the commencement of building finished goods inventory. However, we lost money on a gross margin basis due to normal inefficiencies in the start-up and ramping and scaling process, including limited initial sales volume, and further due to extremely narrow margins on the initial sales of our products as we began introducing them to the marketplace in the first quarter of 2022.
Sales, General, and Administrating Expenses: During the three months ended March 31, 2022, selling, general, and administrative were $429,714 compared to $1,047,378 in the prior year. The primary components of selling, general, and administrative expenses were as follows:
Payroll and related costs: During the three months ended March 31, 2023, payroll and related costs were $124,793 compared to $253,421 in the prior period. The decrease was due to the reduction of staff over the third and fourth quarter of 2022. The Company expects to return to a fully staffed operation by year end 2023.
Stock based compensation: During the three months ended March 31, 2023, stock-based compensation was $64,266 compared to $229,223 in the prior period. The decrease is due to a reduction in operational engagement of service providers..
Consulting fees: During the three months ended March 31, 2023, consulting fees were $49,615 compared to $$185,351 in the prior period. The Company utilized financial consultants in the current period in connection with its equity financing.
Product testing cost: During the three months ended March 31, 2023, product testing costs were $67,556 compared to $138,605 in the prior period. During the current period, the Company recorded the cost of annual testing services with the University of Miami and University of Sherbrooke.
Legal fees: During the three months ended March 31, 2022, legal fees were $6,155 compared to $32,280 in the prior period. Legal fees decreased primarily due a no ongoing matters in the current period.
Accounting and audit fees: During the three months ended March 31, 2023 accounting and audit fees were $22,155 compared to $67,763 in the prior period. Accounting and audit fees consisted of annual audit fees and the cost of outside consultants in the preparation of the Company’s financial statements.
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Liquidity and Capital Resources
Since inception, we have incurred net operating losses and negative cash flow. As of March 31, 2023, we had an accumulated deficit of $55,006,079. We have incurred general and administrative expenses associated with our product development and compliance while concurrently setting up our manufacturing facility, beginning operations, and developing our business plan. We also continue to incur legal fees arising from ongoing activities due to fundraising. We expect operating losses to continue in the short term, and we require additional financing for expanding our manufacturing capability and generally scaling our business until we can generate sufficient revenues to achieve positive cash flow. These conditions raise substantial doubt about our ability to continue as a going concern.
We have historically satisfied our working capital requirements through the sale of restricted common stock and the issuance of warrants and promissory notes. We will continue our fundraising efforts until we have obtained positive cash flow to cover our expenses. No assurances can be given that we will be successful in raising capital at all or on terms acceptable to us, or at all, and no assurances can be given that even if we raise capital that we will be able to generate sufficient revenue to be cash flow positive.
Notwithstanding proceeds from the sale of our securities, a recent related party equipment lease transaction and warrant and option exercises in 2022 and 2023, current working capital is very limited and our projected sales revenue (together with our limited working capital) are presently insufficient to maintain our current operations. In order to grow our manufacturing and sales and marketing operations and reach the level of revenue sufficient to provide positive cash flow, we require significant funding of both our expansion plans (which includes the finalization of our current manufacturing expansion plans and potential investments in other manufacturing facilities, as well as increased headcount necessary to operate our manufacturing at planned capacity) as well as our significant operating deficit while we seeking to scale our manufacturing capability, secure orders from known potential customers and introduce our products to new customers. We will attempt to raise this capital through third party financing, including potential private or public offerings of our securities (including a potential underwritten offering and uplist to a national exchange) as well as bridge or other loan arrangements. However, there is a material risk that we will be unable to secure required capital (whether through an underwritten uplist financing or otherwise) at all or that the terms of such required financing may be available or acceptable to us. If we are unable to obtain adequate financing, we may reduce our operating activities to reduce our cash use until sufficient funding is secured. If we are unable to secure funding when needed, our results of operations may suffer, and our business may fail.
Cash Flows
Net cash provided by (used in) operating activities amounted to $1,859,981 and 71,166 for the three months ended March 31, 2023 and 2022, respectively. The increase in net cash provided by (used in) operating activities was primarily a result of an increase in accounts payable in the amount of $1,853,361 during the three months ended March 31, 2023 compared to $1,713,045 in the prior period.
During the three months ended March 31, 2022, we used $900,000 net cash for investing activities compared to $713,863 used in the same period in the prior fiscal year. The increase is largely due to costs associated with the customization, installation, and verification and validation testing of the first BasaMax™ prototype pultrusion machine, for the modifications and UL listing of the production machinery and the final payments for the enhancements made to our production facility as compared to the deposits made on machinery and equipment.
We do not believe that our cash on hand as of March 31, 2023, will be sufficient to fund our current working capital requirements to the point where we are generating positive cash flow. We have recently entered into several convertible promissory notes to help fund operations and will require additional working capital in the short term. We continue working towards securing more working capital with a preference towards debt which may be convertible to equity. However, there is no assurance that we will be successful in our efforts or, if we are, that the terms will be beneficial to our shareholders.
Critical Accounting Estimates
The presentation 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 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. Actual results could differ from those estimates. Please see note 2 to the condensed financial statements included in this report.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Not applicable to smaller reporting companies.
| ITEM 4. | CONTROLS AND PROCEDURES |
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
Our management, under the supervision and with the participation of our Chief Executive Officer (who also serves as Acting Interim Chief Financial Officer) and our Controller, carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) through March 31, 2023.
| 20 |
During our assessment of the effectiveness of internal control over financial reporting as of March 31, 2023, management identified material weaknesses related to (i) the U.S. GAAP expertise and experience of our internal accounting personnel and (ii) a lack of segregation of duties within accounting functions. As a result of these material weaknesses, our management concluded that our internal control over financial reporting was not effective as of March 31, 2023.
We are committed to maintaining a strong internal control environment and implementing measures designed to help ensure that the material weaknesses described above are remediated as soon as possible. We believe we will have the opportunity to remediate these weaknesses when adequate funding is secured. We will consider the material weaknesses remediated after the applicable controls operate for a sufficient period of time, and management has concluded, through testing, that the controls are operating effectively.
Because of its inherent limitations, however, readers are cautioned that internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
Changes in Internal Control over Financial Reporting
No change in our system of internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. – OTHER INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS |
From time to time, we may become involved in legal proceedings that, individually or in the aggregate, could have a material adverse effect on our business, financial condition, cash flows, or results of operations. As of the date of this report, we are not aware of any such proceedings pending against our company.
| ITEM 1A. | RISK FACTORS |
Not required for smaller reporting companies.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
None.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
| ITEM 4. | MINE SAFETY DISCLOSURE |
Not applicable.
| ITEM 5. | OTHER INFORMATION |
None.
| ITEM 6. | EXHIBITS |
| Exhibit | ||
| No. | Exhibit Description | |
| 31.1 | Certification of Chief Executive Officer pursuant to Rule 13A-14(a) or Rule 15d-14(a) of the Securities Exchange Act | |
| 31.2 | Certification of Chief Financial Officer pursuant to Rule 13A-14(a) or Rule 15d-14(a) of the Securities Exchange Act | |
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| 22 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 22, 2023
| Basanite, Inc. | ||
| By: | /s/ Jackie Placeres | |
| Jackie Placeres | ||
| Acting Interim Chief Financial Officer | ||
23
EXHIBIT 31.1
OFFICER’S CERTIFICATE
PURSUANT TO RULE 13a-14(a)/15d-14(a)
I, Thomas Richmond, Acting Interim Chief Executive Officer, certify that:
1. I have reviewed this Form 10-Q for the quarter ended March 31, 2023, of Basanite, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: May 22, 2023 | By: /s/ Thomas Richmond |
| Name: Thomas Richmond | |
|
Title: Acting Interim Chief Executive Officer |
EXHIBIT 31.2
OFFICER’S CERTIFICATE
PURSUANT TO RULE 13a-14(a)/15d-14(a)
I, Jackie Placeres, Acting Interim Chief Financial Officer, certify that:
1. I have reviewed this Form 10-Q for the quarter ended March 31, 2023, of Basanite, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant issuer and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: May 22, 2023 | By: /s/ Jackie Placeres |
| Name: Jackie Placeres | |
|
Title: Acting Interim Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Basanite, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2023 as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. |
| Date: May 22, 2023 | By: /s/ Thomas Richmond |
| Name: Thomas Richmond | |
|
Title: Acting Interim Chief Executive Officer |
A signed original of this written statement required by Section 906, or other document authentications, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Basanite, Inc. and will be retained by Basanite, Inc. and furnished to the United States Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Basanite, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2023, as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. |
| Date: May 22, 2023 | By: /s/ Jackie Placeres |
| Name:Jackie Placeres | |
|
Title: Acting Interim Chief Financial Officer | |
A signed original of this written statement required by Section 906, or other document authentications, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Basanite, Inc. and will be retained by Basanite, Inc. and furnished to the United States Securities and Exchange Commission or its staff upon request.