Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 07, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | Acology Inc. | |
Entity Central Index Key | 1,096,950 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 5,249,511,090 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Balance Sheets
Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash | $ 3,591 | $ 24,452 |
Accounts Receivable | 75,770 | 67,034 |
Inventories | 228,851 | 109,949 |
Note Receivable | 20,836 | 170,836 |
TOTAL CURRENT ASSETS | 329,048 | 372,271 |
Property & equipment, net of accumulated depreciation | 75,331 | 75,160 |
Security deposits | 7,489 | 7,489 |
TOTAL ASSETS | 411,868 | 454,920 |
CURRENT LIABILITIES: | ||
Accounts payable | 261,019 | 213,574 |
Convertible notes payable, net of discount | 105,006 | 510,395 |
Notes payable | 375,000 | 600,000 |
Loan payable - stockholder | 122,994 | 83,494 |
Accrued expenses | 100,554 | 130,752 |
Derivative Liablility | 24,619 | 481,767 |
Capital Lease Payable | 45,148 | 26,372 |
TOTAL CURRENT LIABILITIES | 1,034,340 | 2,046,354 |
STOCKHOLDERS' DEFICIENCY | ||
Preferred Stock, $.001 par value, 5,000,000 shares authorized No shares issued and outstanding | ||
Common Stock, $.00001 par value, 6,000,000,000 shares authorized 5,249,511,090 and 5,164,134,794 shares issued and outstanding at September 30, 2017, and December 31, 2016, respectively | 137,017 | 51,641 |
Additional Paid in Capital | 1,399,509 | 252,572 |
Accumulated Deficit | (2,158,998) | (1,895,647) |
TOTAL STOCKHOLDERS' DEFICIENCY | (622,472) | (1,591,434) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY | $ 411,868 | $ 454,920 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred Stock Par Value | $ .001 | $ .001 |
Preferred Stock Shares Authorized | 5,000,000 | 5,000,000 |
Common Stock Par Value | $ 0.001 | $ 0.001 |
Common Stock Shares Authorized | 6,000,000,000 | 6,000,000,000 |
Common Stock Shares Issued | 5,249,511,090 | 5,164,134,794 |
Common Stock Shares Outstanding | 5,249,511,090 | 5,164,134,794 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Sales | $ 495,185 | $ 478,852 | $ 1,585,220 | $ 1,441,180 |
Cost of Sales | 155,773 | 117,544 | 494,497 | 383,709 |
Gross Profit | 339,412 | 361,308 | 1,090,723 | 1,057,471 |
Operating expenses: | ||||
General and administrative | 435,463 | 309,023 | 1,170,056 | 876,701 |
Advertising and marketing | 2,143 | 52,188 | 42,971 | 248,773 |
Total operating expenses | 437,606 | 361,211 | 1,213,027 | 1,125,474 |
Income (Loss) from operations | (98,194) | 97 | (122,304) | (68,003) |
Other Expenses (Income): | ||||
Interest expense | 17,029 | 61,462 | 50,909 | 224,696 |
(Gain) Loss on extinguishment of debt | (245,391) | (245,391) | (16,542) | |
Gain on change in fair value of derivative | 1,738 | (65,069) | 166,253 | (160,618) |
Loss on sale of equipment | 11,000 | 11,000 | ||
Total Other Expenses (Income) | 271,682 | (3,607) | 141,047 | 47,536 |
Income (Loss) before income taxes | (369,876) | 3,704 | (263,351) | (115,539) |
Income tax provision | ||||
Net Income (Loss) | $ (369,876) | $ 3,704 | $ (263,351) | $ (115,539) |
Income (Loss) per common share, basic and diluted | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted average common shares outstanding, basic & diluted | 5,224,221,173 | 5,164,134,794 | 5,191,085,302 | 5,116,235,757 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
OPERATING ACTIVITIES: | ||
Net Loss | $ (263,351) | $ (115,539) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities | ||
Depreciation expense | 16,800 | 22,500 |
(Gain) Loss on extinguishment of debt | 245,391 | (16,542) |
Gain on change in fair value of derivative | (166,253) | (160,618) |
Non cash interest expense | 2,711 | 184,196 |
Loss on sale of equipment | 11,000 | |
Changes in operating assets and liabilities | ||
Accounts receivable | (8,736) | (33,338) |
Inventories | (118,904) | (29,877) |
Accounts payable | 47,445 | 25,792 |
Advance to supplier | 10,683 | |
Accrued expenses | 42,829 | 113,302 |
NET CASH USED IN OPERATING ACTIVITIES | (191,068) | 559 |
INVESTING ACTIVITIES: | ||
Repayment of loan from non related party | 150,000 | |
Proceeds from sale of equipment | 15,000 | |
Acquisition of property and equipment | (3,069) | (15,330) |
NET CASH USED IN INVESTING ACTIVITIES | 161,931 | (15,330) |
FINANCING ACTIVITIES: | ||
Proceeds from notes payable | 15,000 | |
Repayment of notes payable | (10,000) | (32,900) |
Proceeds from related party loan | 39,500 | |
Repayment of capital lease payable | (21,224) | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 8,276 | (17,900) |
INCREASE (DECREASE) IN CASH | (20,861) | (32,671) |
CASH - BEGINNING OF PERIOD | 24,452 | 37,533 |
CASH - END OF PERIOD | 3,591 | 4,862 |
Non-cash financing activities | ||
Conversion of convertible debt with derivative into common stock | 168,153 | |
Common stock issued in connection with conversion | $ 151,611 |
1. Business
1. Business | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
1. Business | Note 1 – Business Acology, Inc. (the “Company”), through its wholly owned subsidiary, D&C Distributors LLC (“D&C”) is in the business of designing, manufacturing, branding and selling proprietary plastic medical grade containers that can store pharmaceuticals, herbs, teas and other solids or liquids, some of which can grind solids and shred herbs, and through D&C’s wholly owned subsidiary, D&C Printing LLC (“Printing”), is in the business of private labeling and branding for purchasers of containers and other products. D&C and Printing were formed under the laws of the State of California on January 29, 2013, and April 14, 2015, respectively. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
2. Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Basis of Presentation and Principals of Consolidation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30,2017, and the results of operations and cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2017, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Form 10-K for the year ended December 31, 2016, filed with the SEC on April 14, 2017. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Certain of the Company’s estimates could be affected by external conditions, including those unique to its industry, and general economic conditions. It is possible that these external factors could have an effect on the Company’s estimates that could cause actual results to differ from its estimates. The Company re-evaluates all of its accounting estimates at least quarterly based on these conditions and record adjustments when necessary. Cash The Company considers all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. Revenue Recognition The Company follows the guidance of the Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition. Inventories Inventories, which consist of the Company’s product held for resale, are stated at the lower of cost, determined using the first-in first-out, and net realizable value. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose of the product. If the Company identifies excess, obsolete or unsalable items, its inventories are written down to their realizable value in the period in which the impairment is first identified. Shipping and handling costs incurred for inventory purchases and product shipments are recorded in cost of sales in the Company’s statements of operations. Fair Value Measurements The Company adopted the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 – quoted prices in active markets for identical assets or liabilities Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions) The derivative liability in connection with the conversion feature of the convertible debt, classified as a Level 3 liability, is the only financial liability measure at fair value on a recurring basis. The change in the Level 3 financial instrument is as follows: Balance, January 1, 2017 $ 481,767 · Extinguished during the Period $ (290,895 ) · Change in fair value recognized in operations $ (166,253 ) Balance, September 30, 2017 $ 24,619 Property and Equipment Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets. For furniture and fixtures the useful life is 5 years, Leasehold Improvements are depreciated over the 2-year lease term. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred. Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities. Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. The Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities. During the nine months ended September 30, 2017, there were no conversions of convertible debt. Advertising Advertising and marketing expenses are charged to operations as incurred. Income Taxes The Company use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes. ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions. Recent accounting pronouncements The Company does not believe there are any recently issued, but not yet effective; accounting standards that would have a significant impact on the Company’s financial position or results of operations. |
3. Going Concern
3. Going Concern | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
3. Going Concern | Note 3 – Going Concern The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. At September 30, 2017, the Company had a stockholders’ deficiency of $622,472 and a working capital deficit of $705,292. In addition, the Company has generated operating losses since inception and has notes payable that are currently in default. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the successful execution of its operating plan which includes increasing sales of existing products while introducing additional products and services, controlling operation expenses, negotiating extensions of existing loans and raising either debt or equity financing. There is no assurance that we will be able to increase sales or to obtain or extend financing on terms acceptable to us or at all or successfully execute any of the other measures set forth in the previous sentence. |
4. Note Receivable
4. Note Receivable | 9 Months Ended |
Sep. 30, 2017 | |
Note Receivable Abstract | |
4. Note Receivable | Note 4 – Note Receivable On August 11, 2015, the Company loaned $150,000 to an unrelated person who is one of the convertible noteholders referred to in Note 5. The note accrues interest at the highest lawful rate, but not more the 20% per annum, the Company is accruing interest at 10% per annum based on California usury rates. The principal amount of this note was repaid on February 16, 2017, but accrued interest of $20,836 remains unpaid at September 30, 2017. |
5. Convertible Notes payable
5. Convertible Notes payable | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
5. Convertible Notes payable | Note 5 – Convertible Notes Payable The following is a description of convertible notes payable at September 30, 2017: On August 20, 2015, the Companymade into a convertible promissory note in the principal amount of $400,000 in favor of a then-related party, which was reduced to $360,000 as the result of a prepayment. The note bears interest at 0.28% per annum. It originally matured on March 4, 2015, but its maturity was extended to September 14, 2016, as described below. The note is subject to acceleration in the event of certain events of default, contains certain restrictive covenants, and is secured by a pledge of all the membership units in D&C. The note provided that if an event of default were to occur, the unpaid principal amount and interest accrued thereon would be convertible into shares of the Company’s common stock at a conversion price per share equal to 50% of the average daily closing price for 3 consecutive trading days ending on the trading day immediately prior to the conversion date. The note was in default when it was not paid on March 4, 2015. On August 20, 2015, the holder of the note assigned it to an unrelated third party and on September 14, 2015, the maturity of the note was extended to September 14, 2016, the holder waived all events of default and any right to receive interest at the default rate, and the Company agreed that the holder could convert the principal and interest of the note into common stock, notwithstanding the cure of defaults. On September 14, 2016, the maturity of this note was extended to September 14, 2017. On August 28, 2015, the holder converted $50,000 of principal of the note into 428,571,429 shares of common stock and on March 10, 2016, the holder converted $60,000 of principal of the note into 189,513,580 shares of common stock. On July 5, 2017, the Company satisfied the note in full for a payment of $100, resulting in a gain on extinguishment of $540,795, which included a removal of the associated derivative liability relating to the conversion feature of $290,895. The Company made a convertible promissory note, dated December 15, 2015, in favor of the unrelated party referred to above in the principal amount of $8,000. This note is convertible into shares of the Company’s common stock at a conversion price equal to the average of the daily closing price for a share of Common Stock for the 3 consecutive trading days ending on the trading day immediately prior to the day on which a notice of conversion is delivered. The note matured on December 27, 2016, and bears interest at the highest lawful rate, but not more than 20% per annum. The note is overdue and the Company is negotiating an extension of its maturity date. The Company made two convertible promissory notes, one dated February 11, 2016, and the other dated April 25, 2016, in favor of the unrelated party referred to above, each in the principal amount of $7,500. Each note is due 1 year after the date on which it was made, bears simple interest at the rate of 20 percent per annum and is convertible into shares of Common Stock at a conversion price per share equal to 50% of the average daily closing price for 3 consecutive trading days ending on the trading day immediately prior to the conversion date. These notes are overdue and the Company is negotiating an extension of the maturity dates. The Company has determined that the conversion feature embedded in the notes described above contain a potential variable conversion amount which constitutes a derivative which has been bifurcated from the note and recorded as a derivative liability at fair value, with a corresponding discount recorded to the associated debt. The excess of the derivative value over the face amount of the note is recorded immediately to interest expense at inception. The above notes are presented net of a discount of $493 at September 30, 2017, on the accompanying balance sheet. The Company used the Black-Scholes-Merton valuation model to value the conversion features using the expected life of each note, average volatility rate of approximately 174% and a discount rate of 0.52% A series of promissory note conversion agreements that the Company entered into during 2014 with 10 unaffiliated persons in the aggregate amount of $224,500. These notes are convertible into shares of the Company’s common stock at a conversion price of $0.05 per share. The loans are non-interest bearing and have no stated maturity date. During the year ended December 31, 2016, the Company entered into agreements with four of the individuals in which the Company agreed to pay to them an additional amount equal to the current principal balance (which aggregated $32,000), which was recorded as interest expense. The notes were amended such that the Company agreed to repay the new balance over 10 monthly equal installments. The Company repaid $25,900 during the year ended December 31, 2016, and $0 during the nine months ended September 30, 2017. During the nine months ended September 30, 2017, the Company exchanged $148,100 of the above notes for 15,376,296 shares of common stock. The conversion were accounted for as an extinguishment of debt resulting in a loss of $81,213. There was a balance of $72,500 relating to notes at September 30, 2017. The Company has entered into a promissory note conversion agreement that with an unaffiliated person in the amount of $10,000. This note is convertible into shares of the Company’s common stock at a conversion price of $0.05 per share. The note bears interest at 15% per annum and matured April 3, 2015. The note is overdue and Company is negotiating an extension of the maturity date. |
6. Notes payable
6. Notes payable | 9 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
6. Notes payable | Note 6 – Notes Payable During 2014, the Company made a series of promissory notes in favor of four unaffiliated persons in the original aggregate amount of $457,000. During the year ended December 31, 2016, the Company repaid one of these notes in the original principal amount of $7,000. These notes bear interest at rates ranging from 10% to 15% (with a weighted-average rate of 11.7%). These notes are overdue and the Company is negotiating an extension of their respective maturity dates. On August 15, 2015, the Company made a promissory note in the amount of $150,000 in favor of an unrelated third party. The note bears interest at 0.48% per annum provided that the note is paid on or before maturity date, or 2 percentage points over the Wall Street Journal Prime Rate, if not repaid on or before the maturity date. This note matured on August 11, 2016. Upon an event of default, as defined in the note, interest shall be compounded daily. The note is overdue and the Company is negotiating an extension of the maturity date. During the nine months ended September 30, 2017, the Company exchanged $225,000 of principal and $73,027 of accrued interest of the above notes for 70,000,000 shares of common stock. These exchanges were accounted for as an extinguishment of debt resulting in a loss of $704,973. The Company had $375,000 of notes payable outstanding at September 30, 2017. During the year ended December 31, 2016, the Company entered into a capitalized equipment lease. The capital lease is payable in 24 monthly installments of $2,000, including interest at the rate of 19.87% per annum. During the nine months ended September 30, 2017, the Company entered into a second capitalized equipment lease. The capital lease is payable in 24 monthly installments of $2,000, including interest at the rate of 19.87% per annum. |
7. Loan payable - shareholder
7. Loan payable - shareholder | 9 Months Ended |
Sep. 30, 2017 | |
Notes to Financial Statements | |
7. Loan payable - shareholder | Note 7 – Loan Payable - Shareholder The Company has received advances from one of its stockholders, who is a related party, to help finance its operations. During the nine months ended September 30, 2017, the Company received advances of $39,500 from this stockholder. These advances are non-interest bearing and have no set maturity date. The balance at September 30, 2017, and December 31, 2016, was $122,994 and $83,494, respectively. The Company expects to repay these loans when cash flows become available. |
8. Concentrations
8. Concentrations | 9 Months Ended |
Sep. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
8. Concentrations | Note 8 – Concentrations For the three month period ended September 30, 2017, the Company’s largest customer accounted for approximately 19% of sales and 18% of sales for the nine months ended September 30, 2017. For the three month period ended September 30, 2016, the Company’s largest customer accounted for approximately 20% of sales and for approximately 14% of sales for the nine months ended September 30, 2016. For the nine months ended September 30, 2017 and 2016, the Company purchased respectively approximately 39% and 83% of its products from one distributor. For the three months ended September 30, 2017 and 2016, the Company purchased respectively approximately 42% and 72% of its products from one distributor. |
9. Stockholders' Equity
9. Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
STOCKHOLDERS' DEFICIENCY | |
9. Stockholders' Equity | Note 9 – Stockholders’ Equity During the nine months ended September 30, 2017, the Company issued 85,376,296 shares of common stock to certain noteholders, as described in notes 5 and 6. |
10. Commitments
10. Commitments | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
10. Commitments | Note 9 – Commitments The Company is committed under an operating lease for its premises. The lease originally called for monthly payments of $6,300 plus 55% of operating expenses until May 31, 2015. The lease was amended to provide for monthly payments of $7,500 plus 100% of operating expenses thereafter, until the lease was to have expired June 30, 2016. On June 1, 2016, the lease was amended to extend its term until June 30, 2018, without changing its other terms. |
11. Subsequent events
11. Subsequent events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
11. Subsequent events | Note 10 – Subsequent Events Management has evaluated events occurring after the date of these financial statements through the date that these financial statements were issued. |
2. Summary of Significant Acc17
2. Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principals of Consolidation | Basis of Presentation and Principals of Consolidation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30,2017, and the results of operations and cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2017, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Form 10-K for the year ended December 31, 2016, filed with the SEC on April 14, 2017. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Certain of the Company’s estimates could be affected by external conditions, including those unique to its industry, and general economic conditions. It is possible that these external factors could have an effect on the Company’s estimates that could cause actual results to differ from its estimates. The Company re-evaluates all of its accounting estimates at least quarterly based on these conditions and record adjustments when necessary. |
Cash | Cash The Company considers all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. |
Revenue Recognition | Revenue Recognition The Company follows the guidance of the Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition. |
Inventories | Inventories Inventories, which consist of the Company’s product held for resale, are stated at the lower of cost, determined using the first-in first-out, and net realizable value. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose of the product. If the Company identifies excess, obsolete or unsalable items, its inventories are written down to their realizable value in the period in which the impairment is first identified. Shipping and handling costs incurred for inventory purchases and product shipments are recorded in cost of sales in the Company’s statements of operations. |
Fair Value Measurements | Fair Value Measurements The Company adopted the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 – quoted prices in active markets for identical assets or liabilities Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions) The derivative liability in connection with the conversion feature of the convertible debt, classified as a Level 3 liability, is the only financial liability measure at fair value on a recurring basis. The change in the Level 3 financial instrument is as follows: Balance, January 1, 2017 481,767 481,767 · Extinguished during the Period $ (290,895 ) — · Change in fair value recognized in operations (166,253 ) (35,988 ) Balance, September 30, 2017 $ 24,619 445,779 |
Property and Equipment | Property and Equipment Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets. For furniture and fixtures the useful life is 5 years, Leasehold Improvements are depreciated over the 2-year lease term. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred. |
Convertible Instruments | Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities. Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. The Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities. During the nine months ended September 30, 2017, there were no conversions of convertible debt. |
Advertising | Advertising Advertising and marketing expenses are charged to operations as incurred. |
Income Taxes | Income Taxes The Company use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes. ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions. |
Recent accounting pronouncements | Recent accounting pronouncements The Company does not believe there are any recently issued, but not yet effective; accounting standards that would have a significant impact on the Company’s financial position or results of operations. |
2. Summary of Significant Acc18
2. Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Summary Of Significant Accounting Policies Tables | |
Fair value measurements | Balance, January 1, 2017 481,767 481,767 · Extinguished during the Period $ (290,895 ) — · Change in fair value recognized in operations (166,253 ) (35,988 ) Balance, September 30, 2017 $ 24,619 445,779 |
2. Summary of Significant Acc19
2. Summary of Significant Accounting Policies (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Summary Of Significant Accounting Policies Details | ||
Balance, January 1, 2017 | $ 481,767 | $ 481,767 |
• Extinguished during the Period | (290,895) | |
• Change in fair value recognized in operations | (166,253) | (35,988) |
Balance, June 30, 2017 | $ 24,619 | $ 445,779 |
3. Going Concern (Details Narra
3. Going Concern (Details Narrative) | Sep. 30, 2017USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Shareholders Deficit | $ 622,472 |
Working Capital Deficit | $ 705,292 |
8. Concentrations (Details Narr
8. Concentrations (Details Narrative) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Risks and Uncertainties [Abstract] | ||
Concentration risk percentage sales | 18.00% | 19.00% |