NOTE 1 ORGANIZATION AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
New Bastion Development, Inc. (the Company)
was incorporated in the Commonwealth of Pennsylvania on January 12, 1951 as Jetronic Industries, Inc. (Jetronic).
Jetronic filed a voluntary Petition under Chapter 7 of Title 11, of the United States Code (Bankruptcy Code) on November
22, 2000. In February 2008, on behalf of New Bastion Development, Inc., a Florida corporation incorporated on May 29, 2007, (New
Bastion Florida), a representative of New Bastion Florida purchased the Jetronic corporate shell from the Chapter 7 Trustee
pursuant to the Bankruptcy Code.
On November 21, 2008, pursuant to the Share
Exchange Agreement (the "Transaction" or "Share Exchange"), Jetronic acquired all of the outstanding common
stock of New Bastion Florida in exchange for Jetronics common stock, par value $0.10 per share whereby New Bastion Florida
shareholders received one common share of Jetronic for each two shares they held in New Bastion Florida. This transaction
closed on December 29, 2008. The capitalization of Jetronic just subsequent to the exchange consists of 19,180,253 shares of common
stock outstanding, of which Jetronics stockholders retain 9,677,834 shares of common stock, and New Bastion Florida's stockholders
retain 9,502,419 shares of Common Stock. Additionally, all of the controlling shares of Jetronic Common Stock that was previously
issued to New Bastion Florida by Jetronic were cancelled. New Bastion Florida's stockholders holding the 880 shares of Series A
Convertible Preferred Stock shall retain such shares until such time that Jetronics capital structure will enable it to
issue 880 shares of comparable preferred stock. The Transaction was structured so as to qualify as a tax-free exchange under Section
368 of the Internal Revenue Code of 1986, as amended. Jetronic changed its name to New Bastion Development, Inc., effective February
2, 2009. This share exchange transaction is treated as a combination of entities under common control and recapitalization
of New Bastion Florida with New Bastion Florida considered the historical issuer. New Bastion is deemed to have issued 9,677,834
common shares to the pre-share exchange stockholders of Jetronic. The consolidated financial statements subsequent to the
share exchange consist of the balance sheet of both parent and subsidiary, the historical results of operations of New Bastion
Florida, and the results of operations of Jetronic since the date it became under common control in March 2008.
On December 29, 2008, the Company changed its
fiscal year end from January 31 to December 31 to conform to the fiscal year end of New Bastion Florida; and on February 2, 2009
the Company filed with the State of Pennsylvania articles of amendment to Jetronics articles of incorporation changing its
name from Jetronic to New Bastion Development, Inc.
New Bastion Florida was formed for the purpose
of exploiting local real estate opportunities in the Panama City Beach/Marianna, Florida area (the Panama City/Marianna
area) located in Northwest Florida, which is the last major undeveloped area in Florida. The first post-9/11 airport, Northwest
Florida Beaches International Airport, broke ground on November 1, 2007 on 4,000 acres located in the Panama City/Marianna area
that were donated by the St. Joe Company (NYSE: JOE). The project was completed on May 23, 2010 and it serves as a gateway
to Northwest Florida and its beautiful world-famous beaches. The airport serves Southwest Airlines and Delta Airlines, which together
provide daily flights to key U.S. destinations, including cities serving as international gateways.
In September 2010, the Company formed a wholly-owned
subsidiary, NB Regeneration, Inc., a Florida corporation (NB Regeneration) designed to pursue business opportunities
relative to the construction of a facility and the production of nitrogen fertilizers used in the global agricultural market. In
May 2011, NB Regeneration entered into a Memorandum of Understanding with United Advisory, a Panamanian corporation that was formed
to own and construct an ammonia and urea facility in the Republic of Panama, in the Free trade Zone. Under the terms of the
agreement certain financial partners will subscribe to United Advisory and contribute sufficient funds to complete construction
of the Outer Battery Limits (OBL) which are estimated to cost between $300-$500 Million, and NB Regeneration has undertaken to
arrange debt financing for the facility, supervise the development of construction, contract for feedstock and raw materials, market
and sell the products from the operation of the facility, and to manage the facility's day to day operation upon completion. NB
Regeneration shall receive a 51% interest in United Advisory and its financial partners shall receive a 49% interest. The
Company is actively pursuing this project and expects to finalize all details and to sign a definitive agreement in 2012.
On August 25, 2011, the Company formed NB Medical,
Inc. a new wholly-owned division, incorporated in the State of Florida for the purpose of exploring some business prospects in
the medical and related fields.
Basis of presentation, principals of consolidation,
and going concern
Management acknowledges its responsibility
for the preparation of the accompanying interim consolidated financial statements which reflect all adjustments, consisting of
normal recurring adjustments, considered necessary in its opinion for a fair statement of its financial position and the results
of its operations for the interim period presented. These consolidated financial statements should be read in conjunction with
the summary of significant accounting policies and notes to financial statements included in the Companys Form 10-K annual
report for the year ended December 31, 2010. The accompanying unaudited consolidated financial statements for New Bastion
Development, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America
(the U.S.) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation
S-X. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as
The consolidated financial statements include
the accounts of New Bastion Development, Inc. and its subsidiaries. All intercompany balances and transactions have been
eliminated in consolidation.
The Company is presented
as a development stage company. Activities during the development stage include organizing the business, raising capital
and acquiring real estate properties or rights. The Company is a development stage company with no revenues and no profits.
Since the Company has a limited operating history, there is only a limited basis upon which to evaluate the Companys
performance and its prospects for achieving its intended business objectives. As reflected in
the accompanying consolidated financial statements, the Company had a net loss and net cash used in operations of $562,042 and
$238,065, respectively, for the six months ended June 30, 2011 and an accumulated deficit of $2,577,206 at June 30, 2011 and had
no revenues. These matters raise substantial doubt about the companys ability to continue as a going concern. The
ability of the Company to continue as a going concern is dependent on the Companys ability to further implement its business
plan, raise additional capital, and generate revenues. Currently, management is seeking capital to implement its business plan. Management
believes that the actions presently being taken provide the opportunity for the Company to continue as a going concern. The consolidated
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Use of estimates
of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management
to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related
disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from
these estimates. Significant estimates in the 2011 and 2010 periods include assumptions used in assessing impairment of long-term
assets, the fair market value of real estate properties held for sale, the valuation of deferred
tax assets, and the value of stock-based compensation and fees.
Cash and cash equivalents
For purposes of the consolidated statements
of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less and money
market accounts to be cash equivalents.
Concentration of credit risk
Financial instruments which potentially subject
the Company to concentrations of credit risk consist principally of cash.
On November 9, 2010, the FDIC issued a Final
Rule implementing section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that provides for unlimited insurance
coverage of noninterest-bearing transaction accounts. Beginning December 31, 2010, through December 31, 2012, all noninterest-bearing
transaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured institutions. The unlimited
insurance coverage is available to all depositors, including consumers, businesses, and governmental entities. This unlimited
insurance coverage is separate from, and in addition to, the insurance coverage provided to a depositors other deposit accounts
held at an FDIC-insured institution. A noninterest-bearing transaction account is a deposit account where interest is neither
accrued nor paid; depositors are permitted to make an unlimited number of transfers and withdrawals; and the bank does not reserve
the right to require advance notice of an intended withdrawal.
The Company maintains its cash in bank and
financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in
such accounts through June 30, 2011. There were no balances in excess of FDIC insured levels as of June 30, 2011 and December
Geographic concentration of real estate inventories
All of the Companies real estate inventories are located in the
Panama City Beach/Marianna, Florida area (the Panama City/Marianna Area) located in Northwest Florida.
Fair value measurements and fair value of financial instruments
The Company adopted ASC Topic 820, Fair Value
Measurements. ASC Topic 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes
a fair value hierarchy to classify the inputs used in measuring fair value as follows:
|*||Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement
|*||Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical
or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs
derived from or corroborated by observable market data.|
|*||Level 3-Inputs are unobservable inputs which reflect the reporting entitys own assumptions on what assumptions the market
participants would use in pricing the asset or liability based on the best available information.|
The carrying amounts
reported in the balance sheets for cash, accounts payable and accrued expenses, notes and mortgages payable, and amounts due to
related party approximate their fair market value based on the short-term maturity of these instruments. Mortgage and other
notes payable carrying value approximate fair value based on the market interest rates under such notes. The
Company did not identify any assets or liabilities that are required to be presented on the balance sheets at fair value in accordance
with ASC Topic 820.
Real estate inventories
Real estate inventories, consisting of 65 undeveloped
plots of land and a 27 acre commercial parcel of land primarily in Jackson and Washington, Florida, are recorded at cost on the
acquisition date which was based on the fair value of such property using a certified real estate appraisal if the consideration
paid was the Companys common stock or the amount of cash paid. If the Company was to develop the properties, inventory costs
may also include land development or home construction costs and interest related to development and construction. Construction
overhead and selling expenses would be expensed as incurred.
Whenever events or changes in circumstances
suggest that the carrying amount may not be recoverable, management assesses the recoverability of its real estate by comparing
the carrying amount with its fair value. The process involved in the determination of fair value requires estimates as to
future events and market conditions. This estimation process may assume that the Company has the ability to complete development
and dispose of its real estate properties in the ordinary course of business based on managements present plans and intentions.
If management determines that the carrying value of a specific real estate investment is impaired, a write-down is recorded
as a charge to current period operations. The evaluation process is based on estimates and assumptions and the ultimate outcome
may be different. For the six months ended June 30, 2011 and 2010, the Company recorded an impairment loss on the properties
of $168,700 and $0, respectively.
Capitalization of interest and real estate taxes
Interest and real estate taxes attributable
to land and property construction are capitalized and added to the cost of those properties while the properties are being actively
developed. If properties are not being actively developed, such costs are expensed.
The Company records the purchase of property
rights, an intangible asset, not purchased in a business combination, in accordance with ASC 350 Goodwill and
Other Intangible Assets (as amended) Property rights generally enable the Company to control a property and
participate in any profit from the future sale of such property. Property rights are recorded at net cost which is typically
the appraised value of the property, less any mortgage notes balances due from the property owner, less estimated selling costs.
Property and equipment
Property and equipment are carried at cost
and are depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance
is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of,
the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in
the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes
in circumstances reflect the fact that their recorded value may not be recoverable.
Impairment of long-lived assets
In accordance with ASC Topic 360, the Company
reviews, long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the
assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted
future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between
the assets estimated fair value and its book value. Other than the impairment of real estate inventories held for sale,
the Company did not record any impairment charges during the six months ended June 30, 2011 or 2010.
The Company recognizes revenue when persuasive
evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable
and collectability is reasonably assured. The Companys specific revenue recognition policies are as follows:
Revenue from the sale of real estate is recognized
in full (full accrual method) at the time the sale is closed and title is conveyed to the buyer if the profit is determinable,
collectability of the sales price is reasonably assured (demonstrated by meeting minimum down payment and continuing investment
requirements), the sellers receivable is not subject to future subordination, and the earnings process is virtually complete,
such that the Company is not obligated to perform significant activities after the sale and does not have substantial continuing
involvement with the sold property.
If the criteria for the full accrual method
is not met then the revenue and profit is deferred using the deposit, cost recovery, reduced-profit, installment, or percentage
of completion method of accounting, as appropriate depending upon the specific terms of the transaction.
When the Company has an obligation to complete
improvements on property subsequent to the date of sale, it utilizes the percentage of completion method of accounting to record
revenues and cost of sales. Under percentage of completion accounting, the Company recognizes revenues and costs of sales
based upon the ratio of development costs completed as of the date of sale to an estimate of total development costs which will
ultimately be incurred, including an estimate for common areas. Unearned revenues resulting from applying the percentage
of completion accounting are reported as deferred revenue in the liabilities section of the balance sheet.
The Company is governed by the Income Tax Law
of the United States. The Company utilizes ASC Topic 740, "Accounting for Income Taxes," which requires the recognition
of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based
on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
Under ASC Topic 740, the evaluation of a tax
position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained
upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position.
The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to
be recognized in the financial statements.
A tax position is measured at the largest amount
of benefit that is greater than 50% likelihood of being realized upon ultimate settlement. Tax positions that previously failed
to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold
is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the
first subsequent financial reporting period in which the threshold is no longer met. ASC Topic 740 also provides guidance on de-recognition,
classification, interest and penalties, accounting in interim periods, disclosures, and transition.
The Company accounts for stock-based instruments
issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations
the grant-date fair value of stock options and other equity based compensation issued to employees. The Company accounts for non-employee
share-based awards in accordance with ASC Topic 505-50.
Advertising is expensed as incurred and is
included in general and administrative expenses on the accompanying statements of operations. For the six months ended June 30,
2011 and 2010, advertising expense was $1,050 and $0, respectively.
Research and development
Research and development costs are expensed
as incurred. For the six months ended June 30, 2011 and 2010, the Company did not have any research and development activities.
Net loss per share of common stock
Basic net loss per
share is computed by dividing net loss available to common shareholders by the weighted average number of shares of common stock
outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares
of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. Because the
Company reported a net loss for the six months ended June 30, 2011 and 2010, any common stock equivalents, including stock options,
warrants, and shares issuable upon conversion of convertible debt were anti-dilutive; therefore, the amounts reported for basic
and dilutive loss per share were the same. All potentially dilutive common shares were excluded
from the computation of diluted shares outstanding as they would have an anti-dilutive impact on the Companys net losses
and consisted of the following:
Recent accounting pronouncements
Accounting standards that have been issued
or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial
statements upon adoption.