Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

———————

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2023

¨ 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: 000-53574

———————

Basanite, Inc.

(Exact name of registrant as specified in its charter)

———————

Nevada	20-4959207
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

2660 NW 15th Court, Unit 108, Pompano Beach, Florida 33069

(Address of Principal Executive Office) (Zip Code)

(954) 532-4653

(Registrant’s telephone number, including area code)

_______________________________________________

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

———————

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. ☒ Yes ¨ No

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). ☒ Yes ¨ No

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 ¨
Non-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 ☒ No

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 August 14, 2023

Common Stock, $0.001 par value per share		259,156,796

BASANITE, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

		Page No.
	PART I. – FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022	1
	Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2023 and 2022	2
	Condensed Consolidated Statements of Stockholder’s (Deficit) Equity (Unaudited) for Three and Six Months Ended June 30, 2023 and 2022	3
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2023 and 2022	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	19

	PART II. – OTHER INFORMATION

Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Mine Safety Disclosures	20
Item 5.	Other Information	20
Item 6.	Exhibits	20
Signatures		21

PART I. – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BASANITE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30, 2023			December 31, 2022
		(Unaudited )
ASSETS

CURRENT ASSETS
Cash	$	31,919		$	30,340
Accounts receivable, net		49,942			67,960
Prepaid expenses		98,068			137,370
TOTAL CURRENT ASSETS		179,929			235,670

Lease right-of-use asset		104,178			153,270
Fixed assets, net		466,195			530,238
TOTAL NON CURRENT ASSETS		570,373			683,508

TOTAL ASSETS	$	750,302		$	919,178

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY


CURRENT LIABILITIES
Accounts payable	$	1,777,783		$	1,713,045
Accrued expenses		744,461			438,870
Accrued legal liability		165,000			165,000
Subscription liability		—			1,300,000
Notes payable		295,000			304,243
Notes payable - related party		1,165,000			605,000
Notes payable - convertible - related party, net		2,144,357			2,144,357
Due to shareholders		485,000			505,000
Lease liability –current portion		95,928			93,186
TOTAL CURRENT LIABILITIES		7,170,984			7,268,701

Lease liability –net of current portion		8,250			56,915

TOTAL LIABILITIES		7,179,234			7,325,616

STOCKHOLDERS’ (DEFICIT) EQUITY
Preferred stock, $0.001 par value, 5,000,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 257,156,796 and 253,217,402 shares issued and outstanding, respectively		257,157			253,218
Additional paid-in capital		48,793,681			47,433,354
Accumulated deficit		(55,181,315	)		(54,093,010	)
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY		(6,130,477	)		(6,406,438	)

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY	$	750,302		$	919,178

The accompanying notes are an integral part of the condensed consolidated financial statements.

BASANITE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



	For the three months ended						For the six months ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenue
Products sales – rebar	$	153,406		$	288,050		$	268,524		$	546,339

Total cost of goods sold		93,832			611,163			113,583			1,196,974

Gross (loss)		59,574			(323,113	)		154,941			(650,635	)

OPERATING EXPENSES
Sales, general, and administrative		535,355			1,035,717			970,139			2,083,095
Total operating expenses		535,355			1,035,717			970,139			2,083,095

NET LOSS FROM OPERATIONS		(475,781	)		(1,358,830	)		(815,198	)		(2,733,730	)

OTHER INCOME (EXPENSE)
Liquidated damages – loan commitment		—			(403,643	)		—			(426,759	)
Interest expense		(144,070	)		(181,589	)		(273,107	)		(304,234	)
Total other income (expense)		(144,070	)		(585,232	)		(273,107	)		(730,993	)

NET LOSS	$	(619,851	)	$	(1,944,062	)	$	(1,088,305	)	$	(3,464,723	)


Net loss per share – basic & diluted	$	(0.02	)	$	(0.01	)	$	(0.04	)	$	(0.01	)

Weighted average number of shares outstanding – diluted & diluted		251,488,656			251,800,462			253,884,069			250,996,454

The accompanying notes are an integral part of the condensed consolidated financial statements.

BASANITE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2023

(UNAUDITED)


					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Par Value		Capital		Deficit			Deficit
Balance January 1, 2023		253,217,402	$	253,218	$	47,433,354	$	(54,093,010	)	$	(6,406,438	)
Stock-based compensation		—		—		64,266		—			64,266
Net loss		—		—		—		(468,454	)	$	(468,454	)

Balance June 30, 2023		253,217,402	$	253,218		47,497,620	$	(54,561,464	)	$	(6,810,626	)

Stock issued for cash		3,939,394		3,939		1,269,061		—			1,300,000
Net loss		—		—		—		(619,851	)		(619,851	)

Balance June 30, 2023		257,156,796	$	257,157	$	48,793,681	$	(55,181,315	)	$	(6,130,477	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

BASANITE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023

(UNAUDITED)


										Total
										Stockholders’
	Common Stock				Paid-in		Accumulated			Equity
	Shares		Par Value		Capital		Deficit			(Deficit)
Balance January 1, 2022		248,840,144	$	248,842	$	46,054,126	$	(46,121,210	)	$	181,758

Stock issued for cash, net of costs of $50,409		2,121,212		2,121		647,470		—			649,591
Stock issued for exercise of warrants		500,000		500		124,500		—			125,000
Stock issued to service provider		300,000		300		57,600		—			57,900
Warrants issued to management		—		—		169,565		—			169,565
Net loss		—		—		—		(1,520,661	)		(1,520,661	)

Balance June 30, 2022		251,761,356	$	251,763	$	47,053,261	$	(47,641,871	)	$	(336,847	)

Shares issued to related party for services		122,713		122		18,162		—			18,284
Vesting of warrants issued to management		—		—		41,706		—			41,706
Warrants issued to Related Party for services provided		—		—		64,264		—			64,264
Net loss		—		—		—		(1,944,062	)		(1,944,062	)
Balance June 30, 2022		251,884,069		251,885		47,177,393		(49,585,933	)	$	(2,156,655	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

BASANITE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	For the six months ended
	June 30,
	2023			2022

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,088,305	)	$	(3,464,723	)
Adjustments to reconcile net loss to net cash used in operating activities:
Lease right-of-use asset amortization		49,092			143,495
Lease right-of-use asset accretion, related party		—			(1,050	)
Depreciation and amortization		64,043			67,165
Stock-based compensation		506,149			426,856
Changes in operating assets and liabilities:
Prepaid expenses		39,302			(18,383	)
Inventory		—			396,683
Accounts receivable		18,018			(16,439	)
Deposits and other current assets		—			12,117
Accounts payable and accrued expenses		370,329			1,227,774
Subscription liability		—			1,300,000
Lease liability, operating leases		(45,923	)		(155,024	)
Net cash used in operating activities		(529,178	)		(81,529	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment		—			(742,832	)
Net cash used in investing activities		—			(742,832	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Lease liability, financing lease – related party		—			851
Proceeds from sale of common stock, net of costs		—			649,591
Proceeds from exercise of stock options		—			125,000
Proceeds from notes payable and notes payable related party		560,000			—
Repayments of notes payable and notes payable related party		(29,243	)		—
Net cash provided by financing activities		530,757			773,740

NET INCREASE (DECREASE) IN CASH		1,579			(50,621	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		30,340			109,514

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	31,919		$	58,893

Supplemental cash flow information:
Cash paid for income taxes	$	—		$	—
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	$	—		$	57,900
Issuance of warrants for services	$	—		$	64,264
Shares issued for subscription liability	$	1,300,000		$	—
Accounts payable paid by financing lease, related party	$	—		$	450,000

The accompanying notes are an integral part of the condensed consolidated financial statements.

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.

Manufacturing

We previously leased a fully permitted, 36,900 square foot facility located in Pompano Beach, Florida equipped with five customized, Underwriters Laboratories approved, Pultrusion manufacturing machines for BasaFlex™ production, plus other composite manufacturing equipment. Each Pultrusion machine has up to two linear production lines (we use one or two lines per machine depending on rebar size – giving a maximum capacity of 10 manufacturing lines). To date, BI’s operations team has successfully optimized and scaled the capacity of our manufacturing plant to produce up to 25,000 linear feet of BasaFlex™ rebar per shift, per day, depending on the product mix. BI’s own fully equipped test lab is utilized to evaluate, validate, and verify each product’s performance attributes. Depending on our manufacturing needs in the future, we have and may continue to explore alternative or additional manufacturing or corporate facilities. As of December 31, 2022, we no longer operate nor manufacture in our previous Pompano Beach facility.

To satisfy what we perceive the market interest for BasaFlex™ to be, and in particular to address potential large-scale customers like CPPB, we need to significantly accelerate the expansion of our manufacturing capacity. Our current goal is to locate a new manufacturing facility and restart our manufacturing operations and ultimately to reach a plant production capacity exceeding 73,000 linear feet per day per day on a two day shift basis (which would be 3 times our current capacity). To accomplish these goals, we have designed and developed customized pultrusion equipment which offers significantly increased capacity in the same footprint as our current equipment. Our new technology manufacturing system, named BasaMax™, has been specifically designed for the manufacture of BasaFlex™ using our patent pending process. Two versions of this equipment have been designed, and these will not only offer double the capacity of our current equipment (per machine), but also each will run at faster and more efficient rates. A prototype has completed thorough testing in our previous Pompano facility, including initial production runs, and is currently undergoing modifications and upgrades to the final production configuration.

Based on this trial, we are planning a two-phase plant expansion, eventually including a total of 10 of these new machines. Our goal, subject to raising sufficient funding of about 5 million dollars, is to have the first set of five of the new machines installed and be operational by the end of the third quarter of 2023, and to install and have operational five more, along with additional custom manufacturing equipment, by the third quarter of 2024 providing sales dictate. This would create the opportunity for BI to ultimately reach our production level target for the new facility by the close of 2024.

BASANITE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN (CONTINUED)

(B) Liquidity and Management Plans

Since inception, the Company has incurred net operating losses and used cash in operations. As of June 30, 2023, and December 31, 2022, respectively, the Company reported:

an accumulated deficit of $55,181,315 and $54,093,010;

a working capital deficiency of $6,692,600 and $7,033,031; and

cash used in operations of $529,178 and $81,529.

Losses have principally occurred as a result of the substantial resources required for product research and development, establishment and upgrading of our manufacturing facility and equipment, and for certification, government approval and 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 during the first half of 2023 (including the quarter ended June 30, 2023), 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™ and BasaMix ™ products. We also spent time and resources during the first half of 2023 in introducing our products to, and receiving approvals and certifications from, various county and local government agencies to have our products used in such agencies’ construction projects.

We have historically satisfied our working capital requirements through the sale of restricted Common Stock of the Company, $0.001 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 June 30, 2023, the Company had cash of $31,919 compared to $30,340 at December 31, 2022.

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.

(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.

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 $250,000. The Company’s credit risk in the event of failure of these financial institutions is represented by the difference between the FDIC limit and the total amounts on deposit. Management monitors the financial institutions' creditworthiness in conjunction with balances on deposit to minimize risk. The Company from time to time may have amounts on deposit in excess of the insured limits.

(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 a first-in, first-out basis. Raw materials inventory consists of basalt fiber and other necessary elements to produce BasaFlex™ rebar and our other products. 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’s inventory at June 30, 2023 and December 31, 2022 was comprised zero —.

Schedule of inventories
	June 30,		December 31,
	2023		2022
Finished Good	$	—	$	—
Work in process		—		—
Raw material		—		—
Total Inventory	$	—	$	—

(E) Fixed assets

Fixed assets consist of the following:

Schedule of fixed assets
	June 30,			December 31,
	2023			2022
		(Unaudited)
Computer equipment	$	203,193		$	203,193
Machinery		728,245			728,245
		931,438			931,438
Accumulated depreciation		(465,243	)		(401,162	)
	$	466,195		$	530,238

Depreciation expense for the three and six months ended June 30, 2023, was $31,979 and $64,043, respectively; depreciation expense for the three months and six months ended June 30, 2022, was $33,493 and $66,751, respectively.

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.

(G) Loss Per Share

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:


	June 30,		December 31,
	2023		2022
		(Unaudited)
Options		1,477,778		1,477,778
Warrants		135,435,757		139,555,757
Convertible securities		8,016,068		8,016,068
Total		144,929,603		149,949,603

(H) Stock-Based Compensation

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.

(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.

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 are treated as fulfillment activities, rather than promised services, and therefore are not considered separate performance obligations. During the six three and six months ended June 30, 2022, and 2021, the Company incurred shipping and handling costs in the amount of $16,537 and $0, respectively.

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 $33,825 per month for one year and nine months, and increasing annually at a rate of three percent for the remainder of the lease term.

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 June 30, 2023 and 2022, the Company expensed $0 and 107,116, respectively for rent.

For the six months ended June 30, 2022, and 2021, the Company expensed $0 and $220,863, respectively for rent.

NOTE 4 – NOTES PAYABLE

Notes payable totaled $295,000 and $304,243 on June 30, 2023, and December 31, 2023, respectively.

On June 30, 2023 the Company entered financing arrangements to finance the insurance premiums for its liability coverage. The financings have an interest rate of 9.40% and last through March of 2024. The balance as of June 30, 2023 and December 31, 2022 $6,075 and $3,245, respectively.

On April 2, 2021, the Company issued a promissory note with an investor in exchange for $200,000 bearing an interest rate of 18% per annum and payable on April 2, 2022. The Company also issued a warrant to purchase 2,000,000 shares of Common Stock at an exercise price of $0.20 per share expiring in 5 years. On April 2, 2022, the due date of this note was extended to April 2, 2024.

On April 9, 2021, the Company issued a promissory note with an investor in exchange for $50,000 bearing an interest rate of 18% per annum and payable on October 9, 2022. The Company also issued a warrant to purchase 500,000 shares of Common Stock at an exercise price of $0.20 per share expiring in 5 years. The note was not paid by its due date. As of the date of this filing, the noteholder has not issued a formal demand for payment and the Company is in negotiations with the noteholder to remedy the past-due status.

On April 16, 2021, the Company issued a promissory note with an investor in exchange for $25,000 bearing an interest rate of 18% per annum and payable on October 16, 2022. The Company also issued a warrant to purchase 250,000 shares of Common Stock at an exercise price of $0.25 per share expiring in 5 years. The note was not paid by its due date. As of the date of this filing, the noteholder has issued a formal demand for payment and the Company is in negotiations with the noteholder to remedy the past-due status.

On April 16, 2021, the Company issued a promissory note with an investor in exchange for $20,000 bearing an interest rate of 18% per annum and payable on October 16, 2022. The company also issued a warrant to purchase 200,000 shares of Common Stock at an exercise price of $0.25 per share expiring in 5 years. The note was not paid by its due date. As of the date of this filing, the noteholder has not issued a formal demand for payment and the Company is in negotiations with the noteholder to remedy the past-due status.

During the three and six months ended June 30, 2023, the Company made principal payments in the amount of $0 on notes payable.

Interest expense for the Company’s notes payable for the three and six months ended June 30, 2023 was $17,051 and $34,102, respectively, compared to $16,493 and $32,300 for the three and six months ended June 30, 2022, respectively.

Accrued interest for the Company’s notes payable on June 30, 2022 and December 31, 2021 was $130,055 and $99,886, respectively, and is included in accrued expenses on the accompanying condensed consolidated balance sheets.

BASANITE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 5 – NOTES PAYABLE – RELATED PARTY

Notes payable - related party totaled $1,165,000 June 30, 2022 and $605,000 December 31, 2022, respectively.

On April 2, 2021, the Company issued a promissory note with Paul Sallarulo, a member of our Board of Directors, in exchange for $150,000 bearing an interest rate of 18% per annum and payable on October 2, 2022. The company also issued 1,500,000 common stock warrants at an exercise price of $0.20 per share expiring in 5 years. The note was not paid by its due date. On April 2, 2022, the due date of this note was extended to October 31, 2022. As of the date of this report, the note has not been called.

On April 2, 2021, the Company issued a promissory note with Michael V. Barbera, our Chairman of the Board, in exchange for $150,000 bearing an interest rate of 18% per annum and payable on October 2, 2022. The company also issued 1,500,000 common stock warrants at an exercise price of $0.20 per share expiring in 5 years. The note was not paid by its due date. On April 2, 2022, the due date of this note was extended to April 2, 2024.

On July 15, 2022 the Company issued a promissory note to a board member in exchange for $20,000 bearing an interest rate of 20% per annum and payable on July 15, 2023.

On August 31, 2022 the Company issued a promissory note to a board member in exchange for $37,000 bearing an interest rate of 10% per annum and payable on August 31, 2023.

On August 22, 2022 the Company issued a promissory note to a board member in exchange for $20,000 bearing an interest rate of 10% per annum and payable on August 22, 2023.

On August 22, 2022 the Company issued a promissory note to a board member in exchange for $5,000 bearing an interest rate of 10% per annum and payable on August 22, 2023.

On August 29, 2022 the Company issued a promissory note to a board member in exchange for $25,000 bearing an interest rate of 10% per annum and payable on August 29, 2023.

On August 29, 2022 the Company issued a promissory note to a board member in exchange for $10,000 bearing an interest rate of 10% per annum and payable on August 29, 2023.

On August 31, 2022 the Company issued a promissory note to a board member in exchange for $13,000 bearing an interest rate of 10% per annum and payable on August 31, 2023.

On September 9, 2022 the Company issued a promissory note to a board member in exchange for $60,000 bearing an interest rate of 10% per annum and payable on August 16, 2023.

On September 9, 2022 the Company issued a promissory note to a board member in exchange for $10,000 bearing an interest rate of 10% per annum and payable on September 9, 2023.

On September 9, 2022 the Company issued a promissory note to a strategic partner in exchange for $10,000 bearing an interest rate of 10% per annum and payable on September 9, 2023.

On September 9, 2022 the Company issued a promissory note to a strategic partner in exchange for $15,000 bearing an interest rate of 10% per annum and payable on September 9, 2023.

On September 9, 2022 the Company issued a promissory note to an investor and advisor to the board, in exchange for $15,000 bearing an interest rate of 10% per annum and payable on September 9, 2023.

On September 22, 2022 the Company issued a promissory note to a board member in exchange for $42,500 bearing an interest rate of 10% per annum and payable on March 22, 2023.

On September 22, 2022 the Company issued a promissory note to an investor and advisor to the board in exchange for $42,500 bearing an interest rate of 10% per annum and payable on March 22, 2023.

On February 14, 2023 the Company issued a promissory note to a board member in exchange for $10,000 bearing an interest rate of 20% per annum and payable February 14, 2024.

On February 24, 2023 the Company issued a promissory note to a board member in exchange for $50,000 bearing an interest rate of 20% per annum and payable February 24, 2024.

On April 12, 2023 the Company issued a promissory note to a board member in exchange for $150,000 bearing an interest rate of 20% per annum and payable April 11, 2024.

On April 28, 2023 the Company issued a promissory note to a board member in exchange for $100,000 bearing an interest rate of 20% per annum and payable April 27, 2024.

BASANITE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 5 – NOTES PAYABLE – RELATED PARTY (CONTINUED)

On May 12, 2023 the Company issued a promissory note to a board member in exchange for $100,000 bearing an interest rate of 20% per annum and payable May 11, 2024.

On June 5, 2023 the Company issued a promissory note to a board member in exchange for $100,000 bearing an interest rate of 20% per annum and payable June 4, 2023.

Interest expense for the Company’s notes payable – related party for the three and six months ended June 30, 2022 was $16,365 and $32,015, respectively. Interest expense for the Company’s notes payable – related party for the three and six months ended June 30, 2021, was $0 and $13,335, respectively.

Accrued interest for the Company’s notes payable - related party on June 30, 2023, and December 31, 2022, was $181,259 and $116,300, respectively, and is included in accrued expenses on the accompanying condensed consolidated balance sheets.

NOTE 6 – NOTES PAYABLE – CONVERTIBLE – RELATED PARTY

Convertible Notes payable – related party totaled $2,144,357 on June 30,, 2023, and December 31, 2022.

On August 3, 2020, the Company issued a secured convertible promissory note to certain investors in exchange for $1,000,000 in the aggregate bearing an interest rate of 20% per annum and payable in 6 months. The holder may convert the unpaid principal balance of the note into shares of restricted Common Stock at the conversion price equal to $0.275 per share, which conversion price was set with the consummation of the Company’s private placement of Units which closed on August 17, 2021. This note contains a negative covenant that requires the Company to obtain consent prior to incurring any additional equity or debt investments and is secured by all of the assets of the Company. The Richard A. LoRicco Sr. and Lucille M. LoRicco Irrevocable Insurance Trust DTD 4/28/95, Louis Demaio as Trustee (the “Trust”) is the holder of $750,000 of the principal amount of this note. The Trust was created by Richard A. LoRicco Sr. and Lucille M. LoRicco, who were the parents of Ronald J. LoRicco Sr., one of the members of the Company’s Board of Directors and is maintained by an independent trustee. Ronald J. LoRicco Sr. does not have voting or investment control of or power over the Trust but is an anticipated, partial beneficiary of the Trust.

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 $1,610,005 bearing an interest rate of 20% per annum and fully payable in 3 months. This was accounted for as a debt extinguishment and the new promissory note was recorded at fair value in accordance with ASC 470 “Debt”. The original principal of $1,000,000 and accrued interest of $110,005 calculated as of the date of amendment and restatement along with an additional advance of $500,000 determined the principal amount of the new note. In consideration of the additional advance and the extension of the maturity date of the original note, the Company issued to the noteholders 5-year warrants to purchase an aggregate of 15,000,000 shares of Common Stock with an exercise price of $0.20 per share. The issuance of the warrants for the extension generated a loss on extinguishment of $3,686,123 for the fair value of the warrants issued.

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 $1,689,746 bearing an interest rate of 20% per annum and fully payable February 12, 2022. The original principal of $1,610,005 and accrued interest of $79,742 calculated as of the date of amendment and restatement determined the principal amount of the new note. In consideration of the additional advance and the extension of the maturity date of the original note, the Company issued to the noteholders 5-year warrants to purchase an aggregate of 7,500,000 shares of common stock with an exercise price of $0.35 per share. The issuance of the warrants for the extension generated a loss on extinguishment of $1,874,705 for the fair value of the warrants issued. The note was not paid by its due date of February 12, 2022. As of the date of this filing, the noteholder has not issued a formal demand for payment and the Company is in negotiations with the noteholder to remedy the past-due status.

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 $2,027,695 bearing an interest rate of 20% per annum and fully payable February 12, 2023. The amended principal of $1,689,746 and accrued interest of $454,612 calculated as of the date of amendment and restatement determined the principal amount of the new note. No additional consideration was provided.

Interest expense for the Company’s convertible notes payable – related parties for the three and six months ended June 30, 2023, was $107,218 and 344,902, respectively, compared to $102,398 and 199,843, respectively, for the three and six months ended June 30, 2022.

Accrued interest for the Company’s convertible notes payable – related parties on June 30, 2022, and December 31, 2023, was $344,303 and $129,867, respectively, and is included in accrued expenses on the condensed consolidated balance sheets.

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 $53,345 per month starting in March 2022, and the maximum amount of such liquidated damages could be approximately $480,000 if such filing is not made.

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, the Company entered into definitive securities purchase agreements with 19 accredited investors and issued an aggregate of 19,398,144 shares of common stock, Warrant A to purchase up to an aggregate of 19,398,144 shares of common stock, and Warrant B to purchase up to an aggregate of 19,398,144 shares of Common Stock (for an aggregate of 38,796,288 Warrant Shares), for aggregate gross proceeds to the Company of approximately $5,334,490. Costs of the offering in the amount of $611,603 were charge to additional paid in capital. As of December 31, 2022 the Company also accrued the amount of $386,759 as liquidated damages due to the investors in the Company’s August 2021 private placement, such liquidated damages being related to the Company’s failure to timely file a registration statement on Form S-1 for an underwritten public offering and concurrent listing of the Common Stock on a national exchange.

NOTE 8 – STOCKHOLDERS’ DEFICIT

During the 3 months ended June 30, 2023, the Company issued 3,939,394 shares at $0.33 per share from subscription liabilities of $1,300,000 for cash that was received in a prior period.

NOTE 9 – OPTIONS AND WARRANTS

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		4,227,778		$	0.33	$	—
Issued		(20,000,000	)		0.35		—
Cancelled / Expired		(750,000	)		0.25		—
Balance at December 31, 2022		1,477,778		$	0.33	$	6,798
Exercised		—			0.27		—
Cancelled / Expired		—			0.27		—
Balance at June 30, 2023		1,477,778		$	0.27	$	—
Cancelled / Expired		—			0.27		—
Balance at June 30, 2023		1,477,778		$	0.27	$	—

Options exercisable and outstanding at June 30, 2023 are as follows:

Range of

Weighted Average

Weighted

Contractual

Number

Remaining

Average

Aggregate

Exercise Prices

Outstanding

Life (Years)

Exercise Price

Intrinsic Value

$0.01 - $0.50

1,727,778

2.831

0.27

—

Stock Warrants:

The following table provides the activity in warrants for the respective periods:

Schedule of Warrants Activity
					Weighted
					Average		Aggregate
		Total Warrants			Exercise Price		Intrinsic Value

	Balance at January 1, 2022		138,191,666		$	0.29	$	2,973,660
	Granted		7,242,424			0.29		—
	Exercised		(1,333,333	)		0.29		—
	Cancelled		3,545,000			0.29		—
	Balance at December 31, 2022		139,555,757		$	0.29	$	3,824,750
	Granted		—			0.29		—
	Balance at June 30, 2023		139,555,757		$	0.29	$	1,147,100
	Granted		—			0.29		—
	Expired - cancelled		(3,220,000	)		0.29		—
	Balance at June 30, 2023		132,215,757			0.29	$	150,667

Warrants exercisable and outstanding at June 30, 2023 are as follows:


				Weighted Average
				Remaining
Range of		Number		Contractual		Weighted Average		Aggregate
Exercise Prices		Outstanding		Life (Years)		Exercise Price		Intrinsic Value

	$0.01 - $0.50		132,142,714		3.53	$	0.29	$	150,667
	$0.51 - $1.00		73,043		1.00	$	0.60		—
			141,889,090					$	150,667

BASANITE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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.

On July 31, 2023, the Board of Directors extended Mr. Richmond’s Engagement through December 31, 2023 at a rate of $33,333 per month. ..Mr.Richmond received Options to purchase 4 million shares exercisable at $.045 per share over a period of 5 years.

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.

On July 15^th, 2023, the Board of Directors elected to conclude the engagement by providing Mr. Giorgi written notice of the exit of the agreement.

Frederick Berndt Services Agreement

On July 19^th, 2023 the Board of Directors elected to conclude the engagement with Frederick Berndt as the capital market consultant.

Aaron Capital Inc Services Agreement

On July 28^th, 2023 the Board of Directors elected to engage Aaron Capital to assist in fundraising and private capital investments.

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 six months ended June 30, 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.

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.

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.

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.

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.

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.

Results of Operations for the Three and Six Months Ended June 30, 2023, and 2022

Revenue: We had revenue of $153,406 from sales of finished goods for the three months ended June 30, 2022, a decrease of $134,644 compared to $288,050 in the prior year.

Revenue: We had revenue of $268,524 from sales of finished goods for the six months ended June 30, 2023, compared to $546,339 in the prior year.

Cost of goods sold: Cost of goods sold was $19,751 for the three months ended June 30, 2023, a decrease of $73,631 compared to cost of goods sold of $611,163 during the prior comparative period. Our gross profit during the three months ended June 30, 20233, was $59,574 compared to $95,367 during the prior period. We expect our gross profit to increase as fixed overhead costs are absorbed over a greater volume of sales.

Cost of goods sold: Cost of goods sold was $113,583 for the six months ended June 30, 2023, a decrease of $93,832 compared to cost of goods sold of $1,196,974 during the prior comparative period. Cost of goods sold reflects the fixed overhead costs absorbed by manufacturing, at low sales volumes this results in negative margins. Our gross profit during the six months ended June 30, 2023, was negative 154,942 compared to a negative $95,367 during the prior period. We expect our gross profit to increase as fixed overhead costs are absorbed over a greater volume of sales.

Sales, general, and administrative: Sales, general, and administrative expenses were $434,784 during the three months ended June 30, 2023, a decrease of $600,933 compared to $1,035,717 during the prior comparative period.

Sales, general, and administrative: Sales, general, and administrative expenses were $970,139 during the six months ended June 30, 2023, a decrease of $1,112,956 compared to $2,083,095 during the prior comparative period. For the current six-month period, sales, general, and administrative costs consisted primarily of payroll and related costs of $79,611, consulting fees of $120,385; research and development of $2,845; investor relations costs of $7,980; insurance expense of $52,326; computer and IT costs of $5,853; and professional legal costs of $90,594. The primary increase is due to litigation explained in Item 1: Legal Proceedings and the onboarding of consulting professionals in legal and administration for the Company.

Other Income (Expense):

Interest expense: Interest expense was $273,108 during the six months ended June 30, 2022, an increase of $144,070 compared to interest expense of $129,037 during the prior period. Interest expense consists of interest on the Company’s notes and loans payable along with late fees on past due invoices charged by vendors.

Liquidity and Capital Resources

Since inception, we have incurred net operating losses and negative cash flow. As of June 30, 2023, we had an accumulated deficit of $55,181,315. We have incurred general and administrative expenses associated with our product development and compliance while concurrently searching for a new 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 become cash flow positive.

Notwithstanding proceeds from the sale of our securities, recent related party equipment lease transaction and warrant and option exercises in 2022 and 2023, our current working capital is extremely limited, and our projected sales revenue (together with our limited working capital) are presently insufficient to maintain our current operations. In order to establish a new manufacturing facility and sales and marketing operations and reach the level of revenue sufficient to provide positive cash flow, we require significant funding of both our re-start plans. This will cover our significant operating deficit while as we seek to reestablish 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 up list/re-IPO 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 the required capital (whether through an underwritten financing and/or uplisting to a national exchange 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 from operations may suffer, and our business may fail.

As of June 30, 2023, we had cash of $31,919 compared to $30,340 as of December 31, 2022. The small increase in cash was due to related party borrowings offset by operating expenses incurred and sales in the current period.

Cash Flows

Net cash used in operating activities amounted to $529,178 and $81,529 for the six months ended June 30, 2023, and 2022, respectively. The increase in net cash used in operating activities was primarily a result of an decrease in subscription liability in the amount of $1,300,000.

During the six months ended June 30, 2023, we used $0 cash for investing activities compared to $742,832 used in the same period in the prior fiscal year. The Company has elected to refrain from this expense while it adheres to a restart strategy within the current period, however, the Company will elect to expend funds in the closing of fundraising activities in the remaining quarters of 2023.

We do not believe that our cash on hand as of June 30, 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

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 Acting Interim Chief Executive Officer and our Acting Interim Chief Financial Officer 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 June 30, 2023.

During our assessment of the effectiveness of internal control over financial reporting as of June 30, 2023, management identified material weaknesses related to (i) 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 June 30, 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.

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, the Company has filed a lawsuit in the state of South Carolina against Upstate Custom Products, LLC. The lawsuit is based on the contract entered by both parties on August 2021 in relation to the manufacturing of the protrusion machines exclusively manufactured by Upstate Custom Products. LLC. As of this filing the lawsuit is ongoing.

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

Effective July 28, 2022, we entered into an engagement agreement with Aaron Capital Inc, a registered Alabama corporation (“ACI”). This engagement agreement consists of the non-exclusive consulting and capital raising activities provided by ACI for a period of one (1) year.

ITEM 6.

EXHIBITS

		Incorporation by Reference
Exhibit Number	Description	Form	Exhibit	Date	Filed/Furnished Herewith

31.1*	Certification of Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
31.2*	Certification of Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
32.1+	Certification of Principal Executive Officer pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				XX
32.2+	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				XX
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)				X
101.SCH*	XBRL Taxonomy Extension Schema Document.				X
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document				X
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document				X
104*	Cover Page Interactive Date File (embedded with the Inline XBRL document)				X

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.

	Basanite, Inc.

	By:	/s/ Jackie Placeres
		Jackie Placeres Acting/Interim Chief Financial Officer

Date: August 14, 2023

EXHIBIT 31.1

OFFICER’S CERTIFICATE

PURSUANT TO RULE 13a-14(a)/15d-14(a)

I, Thomas Richmond, Chief Executive Officer, certify that:

I have reviewed this Form 10-Q for the quarter ended June 30, 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: August 14, 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:

I have reviewed this Form 10-Q for the quarter ended June 30, 2023, of Basanite, Inc.;

(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: August 14, 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 June 30, 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:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date: August 14, 2023	By: /s/ Thomas Richmond

	Name: Thomas Richmond
	Title: Acting / Interim Chief Executive Officer, President

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 June 30, 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:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date: August 14, 2023	By: /s/ Jackie Placeres

	Name: Jackie Plaeceres
	Title: Acting/Interim Chief Financial Officer

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2023	Aug. 14, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2023
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	000-53574
Entity Registrant Name	Basanite, Inc.
Entity Central Index Key	0001448705
Entity Tax Identification Number	20-4959207
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	2660 NW 15th Court
Entity Address, Address Line Two	Unit 108
Entity Address, City or Town	Pompano Beach
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33069
City Area Code	(954)
Local Phone Number	532-4653
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		259,156,796

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
CURRENT ASSETS
Cash	$ 31,919	$ 30,340
Accounts receivable, net	49,942	67,960
Prepaid expenses	98,068	137,370
TOTAL CURRENT ASSETS	179,929	235,670
Lease right-of-use asset	104,178	153,270
Fixed assets, net	466,195	530,238
TOTAL NON CURRENT ASSETS	570,373	683,508
TOTAL ASSETS	750,302	919,178
CURRENT LIABILITIES
Accounts payable	1,777,783	1,713,045
Accrued expenses	744,461	438,870
Accrued legal liability	165,000	165,000
Subscription liability		1,300,000
Notes payable	295,000	304,243
Notes payable - related party	1,165,000	605,000
Notes payable - convertible - related party, net	2,144,357	2,144,357
Due to shareholders	485,000	505,000
Lease liability –current portion	95,928	93,186
TOTAL CURRENT LIABILITIES	7,170,984	7,268,701
Lease liability –net of current portion	8,250	56,915
TOTAL LIABILITIES	7,179,234	7,325,616
STOCKHOLDERS’ (DEFICIT) EQUITY
Preferred stock, $0.001 par value, 5,000,000 shares authorized, none issued and outstanding
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 257,156,796 and 253,217,402 shares issued and outstanding, respectively	257,157	253,218
Additional paid-in capital	48,793,681	47,433,354
Accumulated deficit	(55,181,315)	(54,093,010)
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY	(6,130,477)	(6,406,438)
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY	$ 750,302	$ 919,178

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	1,000,000,000
Common Stock, Shares, Outstanding	257,156,796	253,217,402

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue
Products sales – rebar	$ 153,406	$ 288,050	$ 268,524	$ 546,339
Total cost of goods sold	93,832	611,163	113,583	1,196,974
Gross (loss)	59,574	(323,113)	154,941	(650,635)
OPERATING EXPENSES
Sales, general, and administrative	535,355	1,035,717	970,139	2,083,095
Total operating expenses	535,355	1,035,717	970,139	2,083,095
NET LOSS FROM OPERATIONS	(475,781)	(1,358,830)	(815,198)	(2,733,730)
OTHER INCOME (EXPENSE)
Liquidated damages – loan commitment		(403,643)		(426,759)
Interest expense	(144,070)	(181,589)	(273,107)	(304,234)
Total other income (expense)	(144,070)	(585,232)	(273,107)	(730,993)
NET LOSS	$ (619,851)	$ (1,944,062)	$ (1,088,305)	$ (3,464,723)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Earnings per share, basic	$ (0.02)	$ (0.01)	$ (0.04)	$ (0.01)
Earnings per share, diluted	$ (0.02)	$ (0.01)	$ (0.04)	$ (0.01)
Weighted average number of shares outstanding, basic	251,488,656	251,800,462	253,884,069	250,996,454
Weighted average number of shares outstanding, diluted	251,488,656	251,800,462	253,884,069	250,996,454

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2021	$ 248,842	$ 46,054,126	$ (46,121,210)	$ 181,758
Beginning balance, shares at Dec. 31, 2021	248,840,144
Stock issued for cash, net of costs of $50,409	$ 2,121	647,470		649,591
Stock issued for cash, net of costs, shares	2,121,212
Stock issued for exercise of warrants	$ 500	124,500		125,000
Stock issued for exercise of warrants, shares	500,000
Stock issued to service provider	$ 300	57,600		57,900
Stock issued to service provider, shares	300,000
Warrants issued to management		169,565		169,565
Net loss			(1,520,661)	(1,520,661)
Ending balance, value at Mar. 31, 2022	$ 251,763	47,053,261	(47,641,871)	(336,847)
Ending balance, shares at Mar. 31, 2022	251,761,356
Shares issued to related party for services	$ 122	18,162		18,284
Shares issued to related party for services, shares	122,713
Vesting of warrants issued to management		41,706		41,706
Warrants issued to Related Party for services provided		64,264		64,264
Net loss			(1,944,062)	(1,944,062)
Ending balance, value at Jun. 30, 2022	$ 251,885	47,177,393	(49,585,933)	(2,156,655)
Ending balance, shares at Jun. 30, 2022	251,884,069
Beginning balance, value at Dec. 31, 2022	$ 253,218	47,433,354	(54,093,010)	(6,406,438)
Beginning balance, shares at Dec. 31, 2022	253,217,402
Stock-based compensation		64,266		64,266
Net loss			(468,454)	(468,454)
Ending balance, value at Mar. 31, 2023	$ 253,218	47,497,620	(54,561,464)	(6,810,626)
Ending balance, shares at Mar. 31, 2023	253,217,402
Stock issued for cash	$ 3,939	1,269,061		$ 1,300,000
Stock issued for cash, shares	3,939,394			3,939,394
Net loss			(619,851)	$ (619,851)
Ending balance, value at Jun. 30, 2023	$ 257,157	$ 48,793,681	$ (55,181,315)	$ (6,130,477)
Ending balance, shares at Jun. 30, 2023	257,156,796

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) (Parenthetical)	3 Months Ended
	Mar. 31, 2022 USD ($)
Statement of Stockholders' Equity [Abstract]
Net of cost	$ 50,409

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (1,088,305)	$ (3,464,723)
Adjustments to reconcile net loss to net cash used in operating activities:
Lease right-of-use asset amortization	49,092	143,495
Lease right-of-use asset accretion, related party		(1,050)
Depreciation and amortization	64,043	67,165
Stock-based compensation	506,149	426,856
Changes in operating assets and liabilities:
Prepaid expenses	39,302	(18,383)
Inventory		396,683
Accounts receivable	18,018	(16,439)
Deposits and other current assets		12,117
Accounts payable and accrued expenses	370,329	1,227,774
Subscription liability		1,300,000
Lease liability, operating leases	(45,923)	(155,024)
Net cash used in operating activities	(529,178)	(81,529)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment		(742,832)
Net cash used in investing activities		(742,832)
CASH FLOWS FROM FINANCING ACTIVITIES:
Lease liability, financing lease – related party		851
Proceeds from sale of common stock, net of costs		649,591
Proceeds from exercise of stock options		125,000
Proceeds from notes payable and notes payable related party	560,000
Repayments of notes payable and notes payable related party	(29,243)
Net cash provided by financing activities	530,757	773,740
NET INCREASE (DECREASE) IN CASH	1,579	(50,621)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	30,340	109,514
CASH AND CASH EQUIVALENTS AT END OF PERIOD	31,919	58,893
Supplemental cash flow information:
Cash paid for income taxes
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		57,900
Issuance of warrants for services		64,264
Shares issued for subscription liability	1,300,000
Accounts payable paid by financing lease, related party		$ 450,000

ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN

NOTE 1 – ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN

(A) Description of Business

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.

Manufacturing

(B) Liquidity and Management Plans

Since inception, the Company has incurred net operating losses and used cash in operations. As of June 30, 2023, and December 31, 2022, respectively, the Company reported:

an accumulated deficit of $55,181,315 and $54,093,010;

a working capital deficiency of $6,692,600 and $7,033,031; and

cash used in operations of $529,178 and $81,529.

At June 30, 2023, the Company had cash of $31,919 compared to $30,340 at December 31, 2022.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) Use of Estimates in Financial Statements

(B) Principles of Consolidation

(C) Cash

(D) Inventories

The Company’s inventory at June 30, 2023 and December 31, 2022 was comprised zero —.

Schedule of inventories
	June 30,		December 31,
	2023		2022
Finished Good	$	—	$	—
Work in process		—		—
Raw material		—		—
Total Inventory	$	—	$	—

(E) Fixed assets

Fixed assets consist of the following:

Schedule of fixed assets
	June 30,			December 31,
	2023			2022
		(Unaudited)
Computer equipment	$	203,193		$	203,193
Machinery		728,245			728,245
		931,438			931,438
Accumulated depreciation		(465,243	)		(401,162	)
	$	466,195		$	530,238

(F) Deposits and other current assets

(G) Loss Per Share

The following are potentially dilutive shares not included in the loss per share computation:


	June 30,		December 31,
	2023		2022
		(Unaudited)
Options		1,477,778		1,477,778
Warrants		135,435,757		139,555,757
Convertible securities		8,016,068		8,016,068
Total		144,929,603		149,949,603

(H) Stock-Based Compensation

(I) Revenue Recognition

OPERATING LEASE

6 Months Ended

Jun. 30, 2023

Operating Lease

OPERATING LEASE

NOTE 3 – OPERATING LEASE

For the three months ended June 30, 2023 and 2022, the Company expensed $0 and 107,116, respectively for rent.

For the six months ended June 30, 2022, and 2021, the Company expensed $0 and $220,863, respectively for rent.

NOTES PAYABLE

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

NOTES PAYABLE

NOTE 4 – NOTES PAYABLE

Notes payable totaled $295,000 and $304,243 on June 30, 2023, and December 31, 2023, respectively.

During the three and six months ended June 30, 2023, the Company made principal payments in the amount of $0 on notes payable.

NOTES PAYABLE – RELATED PARTY

6 Months Ended

Jun. 30, 2023

Notes Payable Related Party

NOTES PAYABLE – RELATED PARTY