Note 2 - Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2013 |
Policies | ' |
Basis of Accounting | ' |
Basis of Accounting |
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The consolidated financial statements of the Company have been prepared on the accrual basis of accounting, in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). |
Principles of Consolidation | ' |
Principles of Consolidation |
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The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, OWDPI and National Fuel and Energy, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Reclassifications | ' |
Reclassifications |
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Certain items in the 2012 consolidated financial statements have been reclassified to conform to the 2013 consolidated financial statements’ presentation. |
Use of Estimates | ' |
Use of Estimates |
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The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents |
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For purposes of the consolidated statements of cash flows, we consider all highly liquid investments with an original maturity date of three months or less to be cash equivalents. Cash balances may at times exceed the federal depository insurance limit; however, we believe that risk of loss is minimal due to the strength of the financial institution in which funds are held. We held no short-term investments considered to be cash equivalents at December 31, 2013 and 2012. |
Inventories | ' |
Inventories |
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Inventories, consisting primarily of dolls manufactured for resale, are stated at the lower of cost or market, with cost determined using primarily the first-in-first-out (FIFO) method. We currently purchase substantially all inventories from one foreign supplier, and are dependent on that supplier for substantially all merchandise inventory purchases since we commenced operations. |
Prepaid Consulting Services | ' |
Prepaid Consulting Services |
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Fees for consulting services, generally paid through the issuance of shares of our common stock, are amortized over the life of the underlying consulting contracts. |
Property and Equipment | ' |
Property and Equipment |
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Property and equipment is stated at cost and consists of molds and equipment used by our manufacturer to produce dolls and their accessories, including clothes, shoes, jewelry, as well as face painting masks. Because we currently are unable to project the number of units to be manufactured from our molds, our property and equipment is depreciated over an estimated useful life of five years using the straight-line method. At December 31, 2013, property and equipment cost was $70,000, with accumulated depreciation of $3,500. Depreciation expense was $3,500 and $0 for the years ended December 31, 2013 and 2012, respectively. |
Revenue Recognition | ' |
Revenue Recognition |
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We record revenue from the sales of dolls and accessories in accordance with the underlying sales agreements when the products are shipped, the selling price is fixed and determinable, and collection is reasonably assured. |
Research and Development Costs | ' |
Research and Development Costs |
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Research and development costs are expensed as incurred in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 730, Research and Development. The costs of materials and other costs acquired for research and development activities are charged to expense as incurred. Research and development costs for the years ended December 31, 2013 and 2012 were $28,173 and $29,976, respectively. |
Advertising | ' |
Advertising |
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Advertising costs are non-direct in nature, and are expensed in the periods in which the advertising takes place. Advertising expense totaled $284,517 and $42,419 for the years ended December 31, 2013 and 2012, respectively. |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments |
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Disclosures about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of December 31, 2013, we believe the amounts reported for cash, accrued interest, accrued expenses, and notes payable approximate fair value because of the short-term nature of these financial instruments. |
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We adopted ASC Topic 820 (originally issued as SFAS 157, “Fair Value Measurements”) for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. |
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Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: |
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• Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; |
• Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
• Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Assets and liabilities measured at fair value on a recurring basis are as follows at December 31, 2013 and 2012: |
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| Total | Level 1 | Level 2 | Level 3 |
December 31, 2013: | | | | |
Derivative liability | $2,104,849 | - | - | $2,104,849 |
Convertible debentures | 592,095 | - | - | 592,095 |
Current portion of long-term debt | 13,979 | - | - | 13,979 |
Long-term debt | 9,106 | - | - | 9,106 |
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Total liabilities measured at fair value | $2,720,029 | - | - | $2,720,029 |
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December 31, 2012: | | | | |
Convertible debentures | $408,719 | - | - | $408,719 |
Current portion of long-term debt | 45,189 | - | - | 45,189 |
Long-term debt | 42,762 | - | - | 42,762 |
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Total liabilities measured at fair value | $496,670 | - | - | $496,670 |
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Income (loss) Per Share | ' |
Income (Loss) per Share |
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The computation of basic income (loss) per common share is based on the weighted average number of shares outstanding during each year. |
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The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus the common stock equivalents that would arise from the exercise of stock options and warrants outstanding, using the treasury stock method and the average market price per share during the year. Common stock equivalents are not included in the diluted loss per share calculation when their effect is anti-dilutive. |
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Since we had no dilutive effect of stock options and warrants for the years ended December 31, 2013 and 2012, our basic weighted average number of common shares outstanding is the same as our diluted weighted average number of common shares outstanding. |
Income Taxes | ' |
Income Taxes |
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We account for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. |
Comprehensive Loss | ' |
Comprehensive Loss |
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Comprehensive loss is the same as net loss for all years presented. |
Recently Issued Accounting Pronouncements | ' |
Recently Issued Accounting Pronouncements |
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No new accounting pronouncements were issued during the year ended December 31, 2013 and through the date of filing this report that we believe are applicable or would have a material impact on our financial statements. |