Company Quick10K Filing
4M Carbon Fiber
Price-0.00 EPS-0
Shares81 P/E0
MCap-0 P/FCF0
Net Debt-0 EBIT-4
TEV-0 TEV/EBIT0
TTM 2019-09-30, in MM, except price, ratios
10-Q 2019-09-30 Filed 2019-11-19
10-Q 2019-06-30 Filed 2019-10-23
10-Q 2019-03-31 Filed 2019-05-20
10-K 2018-12-31 Filed 2019-04-17
10-Q 2018-09-30 Filed 2018-11-20
10-Q 2018-03-31 Filed 2018-09-13
10-K 2017-12-31 Filed 2018-06-08
10-Q 2017-09-30 Filed 2018-02-23
10-Q 2017-06-30 Filed 2017-12-20
10-Q 2017-03-31 Filed 2017-05-15
10-K 2016-12-31 Filed 2017-04-24
10-Q 2016-09-30 Filed 2017-03-31
10-Q 2016-06-30 Filed 2017-03-31
10-Q 2016-03-31 Filed 2016-05-19
10-K 2015-12-31 Filed 2016-04-14
10-Q 2015-09-30 Filed 2015-11-16
8-K 2020-07-17 Officers
8-K 2020-06-29 Officers
8-K 2020-02-28
8-K 2019-12-31
8-K 2019-07-26
8-K 2019-04-18
8-K 2018-07-24
8-K 2018-02-20
8-K 2018-01-31
8-K 2002-05-01

FMCF 10Q Quarterly Report

Part 1 - Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 fourm_ex31z1.htm
EX-31.2 fourm_ex31z2.htm
EX-32.1 fourm_ex32z1.htm
EX-32.2 fourm_ex32z2.htm

4M Carbon Fiber Earnings 2019-09-30

Balance SheetIncome StatementCash Flow
2.31.81.30.90.4-0.12013201520172020
Assets, Equity
0.2-0.2-0.7-1.1-1.6-2.02013201520172020
Rev, G Profit, Net Income
2.31.71.10.5-0.1-0.72013201520172020
Ops, Inv, Fin

4M Carbon Fiber Corp. - Form 10-Q SEC filing
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ________

 

Commission File Number: 000-55401

 


4M Carbon Fiber Corp.
(Exact name of registrant as specified in its charter)

 

Delaware

80-0379897

(State or other jurisdiction of incorporation organization)  

(I.R.S. Employer Identification No.)

 

835 Innovation Drive, Suite 200, Knoxville, TN 37932
(Address of principal executive offices) (Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 865-444-6789

________________ __________________________
(Former name, former address and former fiscal year, if changed since last report)

Securities registered under Section 12(b) of the Exchange Act

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

 

 

 

 

 

 

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. Yes [X]  No [  ]

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes [X] No [ ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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

[      ]

Non-accelerated Filer

[      ]

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark 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 No [X]


 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 81,024,699 as of November 1, 2019.


 

 

 

 

4M CARBON FIBER CORP.

INDEX

 

 

Page

PART I.

FINANCIAL INFORMATION

 

 

ITEM 1

Financial Statements

 

 

 

Consolidated balance sheets as of September 30, 2019 and December 31, 2018 (unaudited)

F-1

 

 

Consolidated statements of operations for the three- and nine-month periods ended September 30, 2019 and 2018 (unaudited)

F-2

 

 

Consolidated statements of Stockholders’ Equity for the three- and nine-month periods September 30, 2019 and 2018 (unaudited)

F-3

 

 

Consolidated statements of cash flows for the nine months ended September 30, 2019 and 2018 (unaudited)

F-4

 

 

Notes to condensed consolidated financial statements (unaudited)

F 5-12

 

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15-18

 

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

18

 

ITEM 4.

Controls and Procedures

19

PART II.

OTHER INFORMATION

 

 

ITEM 1.

Legal Proceedings

19

 

ITEM 1A.

Risk Factors

19

 

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

19

 

ITEM 3.

Defaults Upon Senior Securities

20

 

ITEM 4.

Mine Safety Disclosures

21

 

ITEM 5.

Other Information

21

 

ITEM 6.

Exhibits

21

 

SIGNATURES

22


 

 

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements.

 

 

4M CARBON FIBER CORP. & SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

September 30, 2019

 

December 31, 2018

ASSETS

 

 

 

Current assets:

 

 

 

Cash

$433,921  

 

$1,457,761  

Accounts receivable (net of reserve for bad debts of $0 and $0, respectively)

1,286  

 

566  

Prepaid expenses

28,117  

 

13,065  

Prepaid license fees

150,000  

 

150,000  

     Total current assets

613,324  

 

1,621,392  

 

 

 

 

Fixed assets:

 

 

 

Computer hardware

5,371  

 

5,371  

Equipment

696,025  

 

696,025  

Website and presentation templates

12,825  

 

12,825  

Leasehold improvements

96,605  

 

96,605  

    Total fixed assets

810,826  

 

810,826  

Accumulated depreciation and amortization

(241,869) 

 

(193,792) 

Fixed assets, net

568,957  

 

617,034  

 

 

 

 

       Total other assets

-  

 

-  

 

 

 

 

       Total assets

$1,182,281  

 

$2,238,426  

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$1,050,527  

 

$852,060  

Accrued interest

30,499  

 

40,665  

Accrued payroll taxes and withholdings

16,635  

 

22,713  

Deferred sales

11,368  

 

11,368  

Loans from related party

-  

 

278,000  

Notes payable

300,583  

 

350,584  

Total current liabilities

1,409,612  

 

1,555,390  

 

 

 

 

Long-term liabilities:

 

 

 

 Convertible debt - long term (net of debt discount of $0 and $0, respectively)

-  

 

20,000  

     Total long-term liabilities

-  

 

20,000  

 

 

 

 

       Total liabilities

1,409,612  

 

1,575,390  

 

 

 

 

Commitments and contingencies

-  

 

 

 

 

 

 

Stockholders' equity (deficit)

 

 

 

Preferred stock - par $0.0001; Authorized 25,000,000 shares; Issued and outstanding 0 and 0 shares, respectively

-  

 

-  

Common stock, par $0.0001; Authorized 250,000,000 shares, Issued and outstanding 80,843,499 and 78,273,588 shares, respectively

8,084  

 

7,827  

Additional paid-in capital

9,603,398  

 

6,720,603  

Subscriptions receivable

(52,200) 

 

(104,400) 

Stock to be issued

562,465  

 

703,000  

Treasury Stock, at cost, 3,664,641 and 3,664,641 shares, respectively

(100,000) 

 

(100,000) 

Accumulated Deficit

(10,249,079) 

 

(6,563,994) 

       Total stockholders' equity (deficit)

(227,331 

 

663,036  

 

 

 

 


       Total liabilities and stockholders' equity (deficit)

$1,182,281  

 

$2,238,426  

See accompanying notes to the unaudited condensed consolidated financial statements

F-1


 

 

 

4M CARBON FIBER CORP & SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

For the three months ended

 

For the nine months ended

 

September 30, 2019

 

September 30, 2018

 

September 30, 2019

 

September 30, 2018

 

 

 

 

 

 

 

 

Total Income

$-  

 

$-  

 

$-  

 

$-  

 

 

 

 

 

 

 

 

Cost of sales

-  

 

-  

 

-  

 

-  

 

 

 

 

 

 

 

 

Gross profit

-  

 

-  

 

-  

 

-  

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 Selling expenses

971  

 

10,493  

 

1,520  

 

11,740  

 General and administrative

828,399  

 

734,888  

 

3,629,846  

 

2,751,624  

 Depreciation and amortization

16,025  

 

17,404  

 

48,077  

 

52,212  

Total operating expenses

845,395  

 

762,784  

 

3,679,443  

 

2,815,575  

 

 

 

 

 

 

 

 

Loss from operations

(845,395) 

 

(762,784) 

 

(3,679,443) 

 

(2,815,575) 

 

 

 

 

 

 

 

 

Other (Income) / Expenses:

 

 

 

 

 

 

 

Interest expense

6,911  

 

10,749  

 

14,608  

 

28,410  

Interest income

(3,280) 

 

-  

 

(8,966) 

 

-  

Total other (income) expenses

3,631 

 

10,749  

 

5,642  

 

28,410  

 

 

 

 

 

 

 

 

Net loss

$(849,026) 

 

$(773,533) 

 

$(3,685,085) 

 

$(2,843,985) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Per share data Net Loss per share - basic and diluted

$(0.01) 

 

$(0.01) 

 

$(0.05) 

 

$(0.04) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding- basic and diluted

80,827,488  

 

76,987,779  

 

79,576,287  

 

75,798,395  

 

 

 

 

 

 

 

 

F-2

See accompanying notes to the unaudited condensed consolidated financial statements


 

 

4M CARBON FIBER CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE THREE AND NINE-MONTH PERIODS ENDED - September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

Treasury Stock

 

 

 

Stock

 

Additional

 

 

 

Total

 

($.0001 par value)

 

($.0001 par value)

 

Subscriptions

 

To be

 

Paid-In

 

Accumulated

 

Stockholders'

 

Shares

 

Amount

 

Shares

 

Amount

 

Receivable

 

issued

 

Capital

 

Deficit

 

Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2018

72,793,709 

 

$7,279 

 

- 

 

$(100,000) 

 

$(104,400) 

 

$522,500  

 

$2,636,902 

 

$(2,022,859) 

 

$939,422  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of stock for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of loans & accrued interest

241,667 

 

24 

 

- 

 

-  

 

-  

 

-  

 

119,977 

 

-  

 

120,001  

Private placement

514,220 

 

51 

 

- 

 

-  

 

-  

 

-  

 

400,149 

 

-  

 

400,200  

Compensation

1,081,320 

 

108 

 

- 

 

-  

 

-  

 

-  

 

583,684 

 

-  

 

583,792  

Consulting

460,531 

 

46 

 

- 

 

-  

 

-  

 

-  

 

276,274 

 

-  

 

276,320  

Issuance of stock to be issued

763,334 

 

76 

 

- 

 

-  

 

-  

 

(522,500) 

 

522,424 

 

 

 

-  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(548) 

 

 

Net loss

- 

 

- 

 

- 

 

-  

 

-  

 

-  

 

- 

 

(1,354,164) 

 

(1,354,164) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, Three - Months Ended March 31, 2018

75,854,781 

 

7,585 

 

- 

 

(100,000) 

 

(104,400) 

 

-  

 

4,539,409 

 

(3,377,571) 

 

965,571  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of stock for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private placement

789,745 

 

79 

 

- 

 

-  

 

-  

 

-  

 

710,691 

 

-  

 

710,770  

Consulting

45,000 

 

5 

 

- 

 

-  

 

-  

 

-  

 

32,996 

 

-  

 

33,000  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

548  

 

 

Net loss

- 

 

- 

 

- 

 

-  

 

-  

 

-  

 

- 

 

(716,287) 

 

(716,287) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, Six- Months Ended

June 30, 2018

76,689,526 

 

$7,669 

 

- 

 

$(100,000) 

 

$(104,400) 

 

$-  

 

$5,283,095 

 

$(4,093,310) 

 

$993,054  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of stock for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private placement

492,331 

 

49 

 

 

 

 

 

 

 

 

 

440,219 

 

 

 

440,268  

Compensation

92,037 

 

9 

 

 

 

 

 

 

 

 

 

82,824 

 

 

 

82,833  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(773,533) 

 

(443,833) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, Nine- Months Ended September 30, 2018

 77,273,894

 

$7,727 

 

-

 

$(100,000) 

 

$(104,400) 

 

$- 

 

$5,806,138 

 

$(4,093,310) 

 

$742,620  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4M CARBON FIBER CORP. AND SUBSIDIARY


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE THREE AND NINE-MONTH PERIODS ENDED - September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

Treasury Stock

 

 

 

Stock

 

Additional

 

 

 

Total

 

($.0001 par value)

 

($.0001 par value)

 

Subscriptions

 

To be

 

Paid-In

 

Accumulated

 

Stockholders'

 

Shares

 

Amount

 

Shares

 

Amount

 

Receivable

 

issued

 

Capital

 

Deficit

 

Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2019

78,273,588 

 

$7,827 

 

- 

 

$(100,000) 

 

$(104,400) 

 

$703,000  

 

$6,720,603 

 

$(6,563,994) 

 

$663,036  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of stock for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private placement

80,000 

 

8 

 

- 

 

-  

 

-  

 

-  

 

119,992 

 

-  

 

120,000  

Consulting

150,000 

 

15 

 

- 

 

-  

 

-  

 

-  

 

224,985 

 

-  

 

225,000  

Change in Common stock to be issued

- 

 

- 

 

 

 

-  

 

-  

 

254,167  

 

 

 

-  

 

254,167  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

- 

 

- 

 

- 

 

-  

 

-  

 

-  

 

- 

 

(900,901) 

 

(900,901) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, Three-Months Ended March 31, 2019

78,503,588 

 

7,850 

 

- 

 

(100,000) 

 

(104,400) 

 

957,167  

 

7,065,580 

 

(7,464,895) 

 

361,302  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of stock for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private placement

724,000 

 

72 

 

- 

 

-  

 

-  

 

-  

 

960,928 

 

-  

 

961,000  

Compensation

758,888 

 

76 

 

- 

 

-  

 

-  

 

-  

 

814,170 

 

-  

 

814,246  

Consulting

12,000 

 

1 

 

- 

 

-  

 

-  

 

-  

 

11,999 

 

-  

 

12,000  

Issuance of stock to be issued

794,440 

 

79 

 

- 

 

-  

 

-  

 

(703,000) 

 

702,921 

 

-  

 

-  

Change in stock to be issued

 

 

 

 

 

 

 

 

 

 

$308,298  

 

- 

 

-  

 

308,298  

Receipt of subscription receivable

- 

 

- 

 

- 

 

-  

 

$52,200  

 

-  

 

- 

 

-  

 

52,200  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

- 

 

- 

 

- 

 

-  

 

-  

 

-  

 

- 

 

(1,935,158) 

 

(1,935,158) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, Six-Months Ended

June 30, 2019

80,792,916 

 

$8,079 

 

- 

 

$(100,000) 

 

$(52,200) 

 

$562,465  

 

$9,555,597 

 

$(9,400,053) 

 

$573,889  

 

                                    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of stock for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private placement

         27,777

 

               2

 

 

 

 

 

 

 

 

 

        24,997

 

 

 

        25,000

Conversion of debentures

         22,806

 

               3

 

 

 

 

 

 

 

 

 

         22,804

 

 

 

        22,806

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     (849,026)

 

     (849,026)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, Nine-Months Ended

September 30, 2019

 80,843,499 

 

$8,084 

 

- 

 

$(100,000) 

 

$(52,200) 

 

$562,465  

 

$9,503,398 

 

$ (10,249,079) 

 

$  (227,331 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


See accompanying notes to the unaudited consolidated financial statements

F-3

 


 

 

 

4M CARBON FIBER CORP & SUBSIDIARY

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

 

 

For the nine-month periods ended

 

September 30, 2019

 

September 30, 2018

 

 

 

 

Cash flows from operating activities:

 

 

 

Net loss

$(3,685,085) 

 

$(2,843,985) 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

    48,077  

 

    52,212  

Common stock issued for services

235,800  

 

958,112  

        Common stock issued for compensation

1,104,915  

 

-  

   Changes in operating asset and liability account balances:

 

 

 

Other receivable

                      (720)

 

                           -

Prepaid expenses

221,948  

 

(13,942) 

Accrued interest

(7,360) 

 

(49,304 

Accrued officers' salaries and director's compensation

280,504  

 

-  

Accounts payable and accrued expenses

(52,119) 

 

208,414  

Total adjustments

1,831,045  

 

1,227,492  

 

 

 

 

Net cash used in operating activities

(1,854,040) 

 

(1,616,493) 

 

 

 

 

Net cash used in investing activities

-  

 

-  

 

 

 

 

Cash flows from financing activities:

 

 

 

Payment of related party loan

(278,000) 

 

-  

Proceeds from subscription receivable

52,200  

 

-  

Payment of notes payable

                 (50,000)

 

          -               

Proceeds of sale of common stock

1,106,000  

 

1,619,072  

Net cash provided by financing activities

830,200 

 

1,619,072  

 

 

 

 

Net  increase (decrease) in cash

(1,023,840) 

 

2,579  

 

 

 

 

Cash at beginning of period

1,457,761  

 

1,309,573  

 

 

 

 

Cash at end of period

$433,921  

 

$1,312,152  

 

 

 

 

Supplemental Schedule of Cash Flow Information:

 

 

 

Cash paid for interest

$21,967  

 

$79,928  

Cash paid for income taxes

$-  

 

$-  

 

 

 

 

Supplemental Schedules of Noncash Investing and Financing Activities:

 

 

 

Conversion of convertible debt to equity

$-  

 

$70,000  

 

 

 

 

F-3

See accompanying notes to the unaudited condensed consolidated financial statements


4M Carbon Fiber Corp. and Subsidiary

Notes to the Unaudited Condensed Consolidated Financial Statements

For the nine months ended September 30, 2019 and 2018

 

1.Organization and Nature of Operations 

 

The Company was incorporated in the state of Delaware on January 21, 2009 as a wholly owned subsidiary of CornerWorld Corporation (“CWC”), a Nevada corporation publicly traded on the OTCQB exchange.

 

The Company was setup as a holding company for three telecommunications services subsidiaries.  It disposed of these operations when it simultaneously entered into a Stock Purchase Agreement, dated March 31, 2017 (the “Stock Purchase Agreement”), with 4M Industrial Oxidation, LLC, a Tennessee limited liability company (“4MIO”), pursuant to which 4MIO purchased from the Selling Stockholders an aggregate of 3,664,641 shares of common stock, par value $0.0001 per share (the “Common Stock”), of the Company, representing approximately 78.7% of the issued and outstanding shares of Common Stock of the Company.  The foregoing sale of Common Stock by the Selling Shareholders to 4MIO resulted in a change in control of the Company.

 

Subsequently, on April 6, 2017, Woodland acquired one hundred percent (100%) of the outstanding membership interests of 4MIO which became a wholly owned subsidiary.   The acquisition had an effective date of April 1, 2017.

 

In early 2018, Woodland changed its name to 4M Carbon Fiber Corp (“4M”) and while fully reporting to the Securities Exchange Commission (SEC), expects to complete the process whereby it can begin trading on a public stock exchange in late 2019.

 

 

2.Basis of Presentation 

 

Interim Unaudited Consolidated Financial Statements

 

The unaudited interim consolidated financial statements of 4M Carbon Fiber Corporation (the “Company,” “4MCF,” “we,” “our” or “us”) for the nine-month periods ended September 30, 2019 and 2018 contained in this Quarterly Report (collectively, the “Unaudited Interim Consolidated Financial Statements”) were prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for all periods presented. The results of operations for the nine-month period ended September 30, 2019 are not necessarily indicative of the results that may be expected for the entire fiscal year.

 

The accompanying Unaudited Interim Consolidated Financial Statements have been prepared in accordance with the regulations for interim financial information of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited accompanying statements of financial condition and related interim statements of operations, cash flows, and stockholders’ deficit include all adjustments (which consist only of normal and recurring adjustments) considered necessary for a fair presentation in conformity with U.S. GAAP. These Unaudited Interim Consolidated Financial Statements should be read in conjunction with the 4M Carbon Fiber Corp. consolidated financial statements as of and for the year ended December 31, 2018, as filed with the SEC on Form 10-K.

 

3.Summary of Significant Accounting Policies 

 

a)   Use of Estimates

 

The preparation of unaudited condensed consolidated financial statements in conformity with US 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. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 


 

b)  Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary 4M Industrial Oxidation, LLC.  All significant inter-company transactions are eliminated.

 

 

c)   Cash and Cash Equivalents

 

For purposes of the statement of cash flows, cash includes demand deposits, saving accounts and money market accounts. The Company considers all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents.

 

At September 30, 2019 and December 31, 2018, the Company had one bank account that exceeded the $250,000 FDIC limit.  The Company  has opened additional accounts to mitigate the risk of loss and provide additional benefits and bank flexibility.  

 

d)   Accounts receivable and concentration of credit risk

 

The Company currently offers specialized testing services to various carbon fiber manufacturers and companies utilizing carbon fiber to evaluate the efficacy of the technology on their particular products and product lines.  The Company typically requires an upfront fee prior to setup and operation of the test runs.  At times, some accounts utilize more than the anticipated resources and additional services are invoiced after the fact.  This has minimized the risk of default in the collection of accounts receivable.  

 

e)   Allowance for doubtful accounts

 

The allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts and the aging of the accounts receivable.  The Company regularly reviews the adequacy of the Company’s allowance for doubtful accounts through identification of specific receivables where it is expected that payments will not be received.  The Company also establishes an unallocated reserve that is applied to all amounts that are not specifically identified.  In determining specific receivables where collections may not have been received, the Company reviews past due receivables and gives consideration to prior collection history and changes in the customer’s overall business condition.  The allowance for doubtful accounts reflects the Company’s best estimate as of the reporting dates.

 

At September 30, 2019 and December 31, 2018, the Company had an allowance for bad debts in the amount of $0 and $0, respectively.

 

 

f)   Basic and Diluted Net Loss per Share

 

The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. There were dilutive potential securities as of June 30, 2019 in the form of convertible debt (see Note 5), however, due to the Company’s loss their effect on EPS was anti-dilutive and therefor did not affect the EPS calculation.

 

g)   Financial Instruments

 

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.


 

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

The Company did not have any Level 2 or Level 3 assets or liabilities as of September 30, 2019, with the exception of its notes payable. The carrying amounts of these liabilities at September 30, 2019 approximate their respective fair value based on the Company’s incremental borrowing rate.

 

Cash is considered to be highly liquid and easily tradable as of September 30, 2019 and therefore classified as Level 1 within our fair value hierarchy.

 

In addition, FASB ASC 825-10-25 Fair Value Option, or ASC 825-10-25, was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments

 

h)   Income Taxes

 

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740 “Accounting for Income Taxes” as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in this financial statement because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

 

i) Revenue Recognition

 

The Company recognizes revenue in accordance with ASC-605, “Revenue Recognition,” which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or title has passed; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts.

 

Revenues are recognized (a) for larger construction type projects based on the percentage of completion method; or (b) for direct sales of products, upon shipment, provided that a signed purchase order has been received, the price is fixed, title has transferred, collection of resulting receivables is reasonably assured, and there are no remaining significant obligations. Reserves for sales returns and allowances, based on historical levels of returns and discounts, current economic trends and changes in customer demand.  

 

Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

 

j) Reclassification

 

Certain reclassifications have been made to conform the prior period data to the current presentation. These reclassifications had no effect on reported net loss.

 

 

 

 

 

 

4.Notes Payable 


 

Notes Payable, others:

 

The Company owed $200,584 and $200,584 at September 30, 2019 and December 31, 2018, respectively, to a formerly related party.  The relationship ceased to exist when 4MIO was merged into 4M Carbon Fiber.   

 

During the year ended December 31, 2015, the Company had through its 4MIO subsidiary borrowed $150,000 in 2-year notes issued to an accredited investor.  On July 17, 2019, the Company repaid $50,000 in principle, the balance due under one note, and all accrued and unpaid interest on both notes to the note holder.  The remaining $100,000 note’s due date has been extended to July 1, 2020.  

 

During the nine months ended September 30, 2019 and the year ended December 31, 2018 the Company made no other repayments of notes, and paid total accrued interest of $21,967 and $79,928, respectively.   

 

At September 30, 2019 and December 31, 2018, the Company has accrued interest of $30,499 and $40,665, respectively.

 

 

5.Convertible debt 

 

In September 2017, the Company entered into four, two-year convertible debentures, totaling $90,000 with four accredited investors.  The debentures are convertible at the higher of (a) 80% of the market price on the date of conversion or (b) $2.00 per share.  The notes carry interest at eight percent (8%) per annum.  In 2018, three of the notes were fully converted into common shares.  In July 2019, the remaining convertible debenture was converted into common shares.  The convertible debenture balances are listed below:

 

Date

September 30, 2019

 

December 31, 2018

September 7, 2017

$- 

 

$20,000 

 

 

 

 

Total

$- 

 

$20,000 

 

The Company computed the Beneficial Conversion Feature to determine any debt discount.  The computations indicated that no discount adjustment was required.

 

At September 30, 2019 and December 31, 2018 convertible notes and debentures consisted of the following:

 

 

September 30, 2019

 

December 31, 2018

Convertible notes payable

$ 

 

$20,000  

Unamortized debt discount

(-) 

 

(-) 

Carrying amount

$ 

 

$20,000  

Less: current portion

(-) 

 

(-) 

Long-term convertible notes, net

$ 

 

$20,000  

  

 

 

 

6.Related Party Transactions 

   

Prior to the reverse merger of 4MIO with Woodland Holdings Corp. on April 6, 2017, approximately 95% of outstanding membership interests of 4MIO were owned by Remaxco Technologies, Inc. (“RMX”).  As a result, there are certain transactions between the companies which are disclosed below as well as other places in these footnotes (see Footnote 4).

 

In January 2016, the Company reclassified a Note Receivable of $150,000 due from RMX to Prepaid Licensing Fees.  This reclassification reflects a portion of the expected royalties that are to be paid to RMX and ORNL once the Plasma Oxidation ovens equipped with the technology begin to ship.  Since the strategic pivot away from selling hardware to one of carbon fiber production, these prepaid amounts will be applied against future license fees payable.  

 

 


Notes Payable to Related Parties:

On the following dates, the Company entered into individual eighteen-month promissory note agreements for an aggregate principal amount of $278,000 with a company of which our COO is a member.  Pursuant to the agreement, the loans bear interest at 10% per annum.

 

Date

Amount

03/04/16

$50,000 

03/11/16

50,000 

09/30/16

58,000 

10/05/16

60,000 

10/20/16

60,000 

Total

$278,000 

 

During the nine months ended September 30, 2019 the Company repaid the $278,000 of notes and accrued interest of $12,186.   

 

 

7.Stockholders’ Equity 

 

 a) Authorized 

    

Authorized capital stock consists of: 

 

· 250,000,000 shares of common stock with a par value of $0.0001 per share; and

 

· 25,000 preferred shares with a par value of $0.0001 per share;

 

 

b) Share Issuances 

 

On February 1, 2019, the Company issued 250,000 shares of common stock at a price of $1.50 per share to a consultant for services to be rendered throughout the course of the year.  The Company recorded $187,500 as prepaid consulting expense and $37,500 as consulting expense.  The Company is amortizing the prepaid amount over the course of the current calendar year.   

 

On February 4, 2019, the Company issued 20,000 shares of common stock at a price of $1.50 per share to an accredited investor in consideration of a cash investment of $30,000. 

 

On February 11, 2019, the Company issued 30,000 shares of common stock at a price of $1.50 per share to an accredited investor in consideration of a cash investment of $45,000. 

 

On March 12, 2019, the Company issued 30,000 shares of common stock at a price of $1.50 per share to an accredited investor in consideration of a cash investment of $45,000. 

 

On April 1, 2019, the Company issued 39,996 shares of common stock at a price of $0.60 per share to our chief financial officer under the terms of an agreement to defer a portion of his compensation in the previous year (2018) which was expensed in the prior year and recorded as “stock to be issued” in the amount of $23,998.   

 

On April 1, 2019, the Company issued 13,332 shares of common stock at a price of $0.90 per share to our chief financial officer under the terms of an agreement to defer a portion of his compensation in the current year and was expensed and recorded as “stock to be issued” in the amount of $11,999.   

 

On April 2, 2019, the Company issued 20,000 shares of common stock at a price of $1.50 per share to an accredited investor in consideration of a cash investment of $30,000. 

 

On April 3, 2019, the Company issued 40,000 shares of common stock at a price of $1.25 per share to an accredited investor in consideration of a cash investment of $50,000. 


 

On April 3, 2019, the Company issued 40,000 shares of common stock at a price of $1.25 per share to an accredited investor in consideration of a cash investment of $40,000. 

 

On April 3, 2019, the Company issued 8,000 shares of common stock at a price of $1.50 per share to an accredited investor in consideration of a cash investment of $12,000. 

 

On April 3, 2019, the Company issued 40,000 shares of common stock at a price of $1.25 per share to an accredited investor in consideration of a cash investment of $50,000. 

 

On April 4, 2019, the Company issued 40,000 shares of common stock at a price of $1.25 per share to an accredited investor in consideration of a cash investment of $40,000. 

 

On April 4, 2019, the Company issued 20,000 shares of common stock at a price of $1.50 per share to an accredited investor in consideration of a cash investment of $30,000. 

 

On April 4, 2019, the Company issued 16,667 shares of common stock at a price of $1.50 per share to an accredited investor in consideration of a cash investment of $25,000. 

 

On April 8, 2019, the Company issued 20,000 shares of common stock at a price of $1.50 per share to an accredited investor in consideration of a cash investment of $30,000. 

 

On April 8, 2019, the Company issued 26,000 shares of common stock at a price of $1.50 per share to an accredited investor in consideration of a cash investment of $39,000. 

 

On April 8, 2019, the Company issued 40,000 shares of common stock at a price of $1.25 per share to an accredited investor in consideration of a cash investment of $50,000. 

 

On April 18, 2019, the Company issued 33,333 shares of common stock at a price of $1.50 per share to an officer and director in consideration of a cash investment of $50,000. 

 

On April 29, 2019, the Company issued 20,000 shares of common stock at a price of $1.50 per share to an accredited investor in consideration of a cash investment of $30,000. 

 

On April 30, 2019, the Company issued 40,000 shares of common stock at a price of $1.25 per share to an accredited investor in consideration of a cash investment of $50,000. 

 

On May 7, 2019, the Company issued 160,000 shares of common stock at a price of $1.25 per share to an accredited investor in consideration of a cash investment of $200,000. 

 

On May 8, 2019, the Company issued 20,000 shares of common stock at a price of $1.50 per share to an accredited investor in consideration of a cash investment of $30,000. 

 

On May 16, 2019, the Company issued 40,000 shares of common stock at a price of $1.25 per share to an accredited investor in consideration of a cash investment of $50,000. 

 

On June 5, 2019, the Company issued 1,125,000 shares of common stock at a price of $0.90 per share to an officer in consideration of $1,012,500 of stock grants previously issued but not exercised during the year 2018.  The grants were expensed in 2018 and recorded as “stock to be issued”. 

 

On June 5, 2019, the Company issued 375,000 shares of common stock at a price of $1.25 per share to an officer in consideration of $468,750 of stock grants issued during the current year but not exercised until June 2019.  The grants were expensed during the current fiscal year and recorded as “stock to be issued”. 

 

On June 20, 2019, the Company issued 12,000 shares of common stock at a price of $0.90 per share to a consultant in consideration of services rendered of $10,800. 

 


On June 20, 2019, the Company issued 20,000 shares of common stock at a price of $1.50 per share to an accredited investor in consideration of a cash investment of $30,000. 

 

On June 20, 2019, the Company issued 20,000 shares of common stock at a price of $1.50 per share to an accredited investor in consideration of a cash investment of $30,000. 

 

On June 20, 2019, the Company issued 60,000 shares of common stock at a price of $1.25 per share to an accredited investor in consideration of a cash investment of $75,000. 

 

On July 11, 2019, the Company issued 22,806 shares of common stock at a price of $1.00 per share to an accredited investor upon conversion of a convertible debenture and accrued interest totaling $22,806. 

 

On August 13, 2019, the Company issued 27,777 shares of common stock at a price of $0.90 per share to an accredited investor in consideration of a cash investment of $25,000. 

As of September 30, 2019, and December 31, 2018, there were 80,843,499 and 78,273,588 shares of common stock issued and outstanding, respectively.  

 

8.Income Taxes  

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740 “Accounting for Income Taxes” as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in this financial statement because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

Deferred income tax assets as of September 30, 2019 and December 31, 2018 of $1,825,945 and $1,217,545, respectively, resulting from net operating losses and future amortization deductions, have been fully offset by valuation allowances.  The valuation allowances have been established equal to the full amounts of the deferred tax assets, as the Company is not assured that it is more likely than not that these benefits will be realized.

Reconciliation between the statutory United States corporate income tax rate (21%) and the effective income tax rates based on continuing operations is as follows:

 

 

September 30, 2019

 

December 31, 2018

Income tax benefit at Federal statutory rate of 21%

$(773,868) 

 

$(558,600) 

State Income tax benefit, net of Federal effect

(184,254) 

 

(133,000) 

Permanent and other differences

348,586  

 

309,277  

Change in valuation allowance

609,536  

 

382,323  

 Total

$ 

 

$ 

 

Components of deferred tax assets were approximately as follows:

 

 

September 30, 2019

 

December 31, 2018

 Net operating loss

$1,825,945  

 

$1,217,545  

Asset impairment

-  

 

-  

Valuation allowance

(1,825,945) 

 

(1,217,545) 

Total

$ 

 

$ 

At December 31, 2018, the Company has available net operating losses of approximately $4,682,864 which may be carried forward to apply against future taxable income. These losses will begin to expire in 2032. Deferred tax assets related to these losses have not been recorded due to uncertainty regarding their utilization.

The provisions of ASC 740 require companies to recognize in their financial statements the impact of a tax position if that position is more likely than not to be sustained upon audit, based upon the technical merits of the position. ASC


740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure.

Management does not believe that the Company has any material uncertain tax positions requiring recognition or measurement in accordance with the provisions of ASC 740. Accordingly, the adoption of these provisions of ASC 740 did not have a material effect on the Company’s financial statements. The Company’s policy is to record interest and penalties on uncertain tax positions, if any, as income tax expense.

The Company has filed its applicable extensions for the Federal and State tax returns for the year ended December 31, 2018 giving it until October 15, 2019 to complete their filing. The Company has filed returns for 2017.

The Company entered into a share exchange agreement during fiscal year 2017, as a result, pursuant to Internal Revenue Code Section 382, the amount of future taxable income that can be offset by pre-share exchange agreement net operating losses may be limited. The deferred tax asset derived from these tax loss carryforwards have been included in consolidated deferred tax assets - net operating loss carryforwards, and a full valuation allowance has been established since it is not more likely than not that such benefits will be recovered.

9.Commitments and Contingencies  

 

Litigation

 

The Company may, from time to time, become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. The Company is currently not aware of any such legal proceedings that it believes will have, individually or in the aggregate, a material adverse effect on its business.

 

10.Acquisition of 4M Industrial Oxidation, LLC.  

 

On April 6, 2017, the Company entered into an Agreement and Plan of Merger, dated April 6, 2017 (the “Merger Agreement”) with an effective date of April 1, 2017, with 4MIO Merger Sub, LLC, a Tennessee limited liability company and wholly-owned subsidiary of the Company (the “Merger Sub”), and 4MIO, for the purposes of consummating a reverse merger (the “Merger”).

 

Pursuant to the Merger Agreement, Merger Sub merged with and into 4MIO, with 4MIO being the surviving company and resulting in 4MIO becoming a wholly owned subsidiary of the Company. The Merger was intended to constitute a tax-free reorganization within the meaning of Section 368 of the United States Internal Revenue Code of 1986, as amended.

 

In the Merger, the members of 4MIO exchanged their membership interests of 4MIO, representing 100% of the outstanding membership interests of 4MIO, for an aggregate of 55 million (55,000,000) shares of Common Stock of the Company which represented approximately 78.46% of the shares of Common Stock of the Company based on an aggregate of 70,096,470 shares of Common Stock outstanding upon consummation of the Merger.

 

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

 

ASSETS:

 

Current assets

$319,983 

Property & equipment

603,949 

Furniture & fixtures

11,854 

Leasehold improvements

73,127 

Total

$1,008,913 

 

 

LIABILITIES:

 

Current liabilities

$388,086 

Net purchase price

$620,827 

 

 

 


11. Subsequent Events

 

We have evaluated subsequent events through the date of issuance of the unaudited condensed consolidated financial statements, and below are the material recognizable subsequent events.

 

Issuance of Shares

 

oOn October 3, 2019, the Company issued 64,000 shares of common stock at a price of $1.25 per share to an accredited investor in consideration of a cash investment of $80,000. 

 

oOn October 7, 2019, the Company issued 49,200 shares of common stock at a price of $1.25 per share to an accredited investor in consideration of a cash investment of $61,500. 

 

oOn October 7, 2019, the Company issued 12,000 shares of common stock at a price of $1.25 per share to an accredited investor in consideration of a cash investment of $15,000. 

 

oOn October 7, 2019, the Company issued 8,000 shares of common stock at a price of $1.25 per share to an accredited investor in consideration of a cash investment of $10,000. 

 

oOn October 31, 2019, the Company issued 8,000 shares of common stock at a price of $1.25 per share to an accredited investor in consideration of a cash investment of $10,000. 

 

oOn November 5, 2019, the Company issued 40,000 shares of common stock at a price of $1.25 per share to an accredited investor in consideration of a cash investment of $50,000. 


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

 

Corporate History

 

The Company was incorporated in the state of Delaware on January 21, 2009 as a wholly owned subsidiary of CornerWorld Corporation (“CWC”), a Nevada corporation publicly traded on the OTCQB exchange.

 

The Company was setup as a holding company for three telecommunications services subsidiaries.  It recently disposed of these operations when it simultaneously entered into a Stock Purchase Agreement, dated March 31, 2017 (the “Stock Purchase Agreement”), with 4M Industrial Oxidation, LLC, a Tennessee limited liability company (“4MIO”), pursuant to which 4MIO purchased from the Selling Stockholders an aggregate of 3,664,641 shares of common stock, par value $0.0001 per share (the “Common Stock”), of the Company, representing approximately 78.7% of the issued and outstanding shares of Common Stock of the Company.  The foregoing sale of Common Stock by the Selling Shareholders to 4MIO resulted in a change in control of the Company.

 

Subsequently, on April 6, 2017, Woodland acquired one hundred percent (100%) of the outstanding membership interests of 4MIO which became a wholly owned subsidiary.   The acquisition had an effective date of April 1, 2017.

 

In early 2018, Woodland changed its name to 4M Carbon Fiber Corp (“4M”) and while fully reporting to the Securities Exchange Commission (SEC), expects to complete the process whereby it can begin trading on a public stock exchange in late 2019.

 

 

Results of Operations for the three and nine months ended September 30, 2019 and 2018.

 

 

Operating Expenses

Our operating expenses for the three and nine months ended September 30, 2019 and 2018 are outlined in the table below:

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2019

 

2018

 

2018

 

2019

Selling expense

$971 

 

$10,493 

 

$1,520 

 

$11,740 

General and administrative

828,399 

 

734,888 

 

3,629,846 

 

2,751,624 

Depreciation and amortization

16,025 

 

17,404 

 

48,077 

 

52,212 

Total

$845,395 

 

$762,784 

 

$3,679,443 

 

$2,815,575 

 

 

Operating expenses for the nine-months ended September 30, 2019 and 2018, were $3,679,443 and $2,815,575, respectively, and for the three-months ended September 30, 2019 and 2018, were $845,395 and $762,784, respectively.  The increase in operating expense during both the nine-month and three-month periods is due in part to significant reductions in the R&D costs in 2019 versus 2018, offset by increased compensation of officers and an increase in equity grants in 2019 versus 2018.  Other general and administrative costs remained about the same year to year.  

 

Other Expenses


 

In addition to operating expenses, we incurred interest expenses of $14,608 and $28,410 during the nine months ended September 30, 2019 and 2018, respectively and $6,911 and $10,749 during the three months September 30, 2019 and 2018 respectively.  The decrease in interest expense during the period ended September 30, 2019 is primarily attributable to the conversion of several convertible debentures and the repayment of certain notes during the period.    

 

Net Loss

 

We incurred a net loss of $3,685,085 and $2,843,985 for the nine-months ended September 30, 2019 and 2018, respectively and $849,026 and $773,533 for the three-months ended September 30, 2019 and 2018, respectively.      

 

 

Liquidity and Capital Resources

 

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

 

To date we have financed our operations through sales of common stock and the issuance of debt.

 

The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing and generating profitable operations from the Company’s future operations. The Company has, with over $1,100,000 of cash, sufficient funds to cover its overhead and operating expenses for the coming months.  

 

Working Capital

 

 

 

 

 

Percentage

 

September 30,

 

December 31,

 

Increase

 

2019

 

2018

 

(Decrease)

Current Assets

$613,324  

 

$1,621,392 

 

(62.1)% 

Current Liabilities

$1,409,612  

 

$1,555,390 

 

(9.4)% 

Working Capital Surplus (Deficit)

$      (796,297) 

 

$66,002 

 

(86.5)% 

 

 

At September 30, 2019, our cash balance was $433,921 compared to $1,457,761 at December 31, 2018.  The decrease in cash is attributed to proceeds of $1,106,000 from the private sale of shares of common stock, all of which were used to pay operating expenses, and payments of accounts payable and accrued but unpaid interest, a note of $50,000, and a related party note of $278,000.

 

At September 30, 2019, we had total current liabilities of $1,409,612, compared with total current liabilities of $1,555,390 at December 31, 2018.  The decrease in total liabilities is attributed to a decrease in accounts payable and accrued liabilities of $52,119 and repayment of two notes totaling $328,000, offset by an increase in accrued officers and director’s compensation of $280,504.  

 

At September 30, 2019, we had a working capital deficit of 796,287 compared with a working capital surplus of $66,002 at December 31, 2018.  The decrease in working capital is primarily due to an increase in our selling, general, and administrative expenses, and decreases in prepaid expenses, accrued interest, accounts payable and accrued expenses, and notes payable offset with cash obtained from proceeds of common stock sales.

 

 

Cash Flows

 

For the Nine Months Ended

 

Percentage

 

September 30,

 

September 30,

 

Increase

 

2019

 

2018

 

(Decrease)

Cash Used in Operating Activities

$(1,854,040) 

 

$(1,616,493) 

 

14.7 % 


Cash Used in Investing Activities

 

 

 

 

- % 

Cash Provided by Financing Activities

830,200  

 

1,619,072  

 

(48.7) % 

Net Increase (Decrease) in Cash

$(1,023,840) 

 

$2,579 

 

(398.0) % 

 

 

Cash flow from Operating Activities

 

During the nine-months ended September 30, 2019, we used $1,854,040 of cash in operating activities compared to the use of $1,616,492 of cash for operating activities during the nine-month period ended September 30, 2018.  The increase in the use of cash for operating activities was mainly attributed to our net loss of $3,685,085 offset mainly by common stock issued for services of $235,800, common stock issued for compensation of $1,340,715, accrued officer and directors compensation of $280,504, and prepaid expenses of $221,948 and decreases in accounts payable of $52,119.

 

 

Cash flow from Investing Activities

 

During the nine-months ended September 30, 2019 and 2018, we used $0 in investing activities.

 

 

Cash flow from Financing Activities

 

During the nine-months ended September 30, 2019 and 2018, we received net proceeds of $830,200 and $1,619,072, respectively from financing activities.  The proceeds from financing activities for the period ended September 30, 2019 are attributed to $1,106,000 from the issuance of unregistered shares of common stock, receipt of $52,200 in payment of a subscription receivable, offset by the payment of two notes totaling $328,000.  For the period ended September 30, 2018, the proceeds from financing activities are attributed to $1,619,072 from the issuance of unregistered shares of common stock.

 

 

Going Concern

 

As of September 30, 2019, the Company had cash on hand of $433,921 which management believes is sufficient to support the next twelve (12) months of operations with additional cash to be raised from investors coupled with certain overhead reductions that have been undertaken.  Therefore, the accompanying unaudited consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 

Off-Balance Sheet Arrangements 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

 

Future Financings

 

We intend to continue to rely on private sales of our shares of common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

 

Critical Accounting Policies

 

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management 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 reporting periods.

 

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based


on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Our significant accounting policies are more fully described in Note 3 to our unaudited consolidated financial statements included in this Quarterly Report.

Recently Issued Accounting Pronouncements

 

Our significant accounting policies are more fully described in Note 3 to our unaudited consolidated financial statements included in this Quarterly Report.

 

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the 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.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of September 30, 2019 and December 31, 2018.

Inflation

We do not believe that inflation has had a material effect on our Company’s results of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not Applicable.

 

 

 

 

Item 4. Controls and Procedures.

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2019. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

 

Changes in Internal Control Over Financial Reporting


During the quarter ended September 30, 2019 the Company continued to strengthen and improve its internal control over financial reporting.  Additional personnel have been added with backgrounds in accounting and administration.  No other changes in our internal control over financial reporting occurred during the nine-months ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II-OTHER INFORMATION

Item 1. Legal Proceedings.

None

Item 1A. Risk Factors.

Not Applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On July 11, 2019, the Company issued 22,806 shares of common stock at a price of $1.00 per share to an accredited investor upon conversion of a convertible debenture and accrued interest totaling $22,806. 

 

On August 13, 2019, the Company issued 27,777 shares of common stock at a price of $0.90 per share to an accredited investor in consideration of a cash investment of $25,000. 

 

The foregoing unregistered shares of common stock of the Company were issued pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended, available under Section 4(a)(2) and/or Rule 504(b) of Regulation D promulgated thereunder due to the fact that there were no solicitation or advertisement and that such issuances did not involve a public offering of securities.  

 

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

 

Item 5. Other Information

Not applicable.

 

Item 6. Exhibits

Exhibit No.

Description of Exhibit

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Chief Executive Officer pursuant to Section 906 Certifications under Sarbanes-Oxley Act of 2002

32.2

Certification of Chief Financial Officer and Accounting pursuant to Section 906 Certifications under Sarbanes-Oxley Act of 2002

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document


101.DEF

XBRL Taxonomy Extension Definition Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document


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.

4M CARBON FIBER CORP.

 

By: /s/ Erwin Vahlsing, Jr.

Name: Erwin Vahlsing, Jr.

Title: Chief Financial Officer

(Principal Financial and Accounting Officer and officer authorized to sign on behalf of registrant)

 

Date:      November 19, 2019