| Summary of Significant Accounting Policies | 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) Basis of presentation and Consolidation The accompanying unaudited interim consolidated
financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United
States of America for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X related
to smaller reporting companies. The unaudited interim consolidated financial
statements should be read in conjunction with the financial statements and Notes thereto together with management’s discussion
and analysis of financial condition and results of operations contained in the Company’s annual report on Form 10-K for the
year ended December 31, 2017. In the opinion of management, the accompanying unaudited interim consolidated financial statements
reflect all adjustments of a normal recurring nature considered necessary to fairly state the financial position of the Company
at September 30, 2018, the results of its operations for the six months ended September 30, 2018 and 2017, and its cash flows for
the six months ended September 30, 2018 and 2017. In addition, some of the Company’s statements in its quarterly report on
Form 10-Q may be considered forward-looking and involve risks and uncertainties that could significantly impact expected results.
The results of operations for the six months ended September 30, 2018 are not necessarily indicative of results to be expected
for the full year.
b) Use of Estimates The preparation of financial statements for
any period involves the use of estimates as the precise determination of assets and liabilities, and revenues and expenses, depends
on future events. Actual amounts may differ from these estimates. Significant estimates include the valuation of allowances for
deferred tax assets.
c) Financial Instruments The Company’s financial instruments consist
of cash, accounts payable and accrued liabilities, and loans payable to related party and to director. Unless otherwise noted,
it is management’s opinion that the Company is not exposed to significant interest, or credit risks arising from these financial
instruments. The fair values of these financial instruments approximate their carrying values due to the relatively short period
to maturity for these instruments. The Company follows ASC 820-10, “Fair
Value Measurements and Disclosures” (ASC 820-10), which among other things, defines fair value, establishes a consistent
framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on
either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based
measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.
As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs
used in measuring fair value as follows: ● Level 1—Inputs are unadjusted,
quoted prices in active markets for identical assets or liabilities at the measurement date. ● Level 2—Inputs (other than quoted
prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market
data at the measurement date and for the duration of the instrument’s anticipated life. ● Level 3—Unobservable inputs reflect
management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.
Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Assets and liabilities measured at fair value
as of September 30, 2018 and December 31, 2017 are classified below based on the three fair value hierarchy tiers described above:
2018 2017
Carrying Fair Carrying Fair
Value Value Value Value
Cash 11 11 644 644
Accounts payable and accrued liabilities 41,181 41,181 36,118 36,118
Loan payable to director 156,169 156,169 149,716 149,716
Loan payable to related party 540,000 540,000 540,000 540,000 Cash has been measured using Level 1 of the
fair value hierarchy. Accounts payable and accrued liabilities, loans payable to related party and director have been measured
using Level 3 of the fair value hierarchy.
d) Income Taxes The Company accounts for income taxes under
FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, 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. Under ASC
740-10-25, 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. The Company provides a valuation allowance for deferred tax assets for which it does not consider
realization of such assets likely. Net operating loss carry-forwards and other
deferred tax assets are reviewed annually for recoverability, and, if necessary, are recorded net of a valuation allowance.
e) Comprehensive loss Comprehensive loss includes all changes in
equity during a period from non-owner sources.
f) Intangible Assets Intangible assets include the technology licenses
which are amortized over the estimated useful life of 10 years on a straight- line basis. However, since these licenses were previously
written down to a nominal value, no amortization was recognized during the period for accounting purposes.
g) Loss per share Basic loss per share is computed by dividing
net loss by the weighted average number of common shares outstanding for the period. Diluted loss per share is computed by dividing
net loss by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive). As of September
30, 2018, there were no common stock equivalents.
h) Stock-Based Compensation The Company accounts for equity instruments
issued in exchange for the receipt of goods or services from parties other than employees using the estimated fair market value
of the consideration received or estimated fair value of the equity instruments issued, whichever is more reliably measurable.
The value of equity instruments issued for consideration other than employee services is determined on the earlier of a performance
commitment or completion of performance by the provider of goods or services. As of September 30, 2018, the unrecognized expense
related to stock-based compensation, and stock -based compensation expense relating to all employees and non-employees were $nil
and $nil for the 6-month periods ended September 30, 2018 and 2017 respectively.
i) Foreign Currency The parent Company maintains its books and
records in U.S. dollars which is its functional and reporting currency. One of the Company’s operating subsidiary is a foreign
private company and maintains its books in Canadian dollars (the functional currency). The subsidiary’s financial statements
are converted to US dollars for consolidation purposes. The translation method used is the current rate method, where the functional
currency of the subsidiary is the foreign currency. Under the current rate method all assets and liabilities are translated at
the current rate, stockholders’ equity is translated at historical rates and revenues and expenses are translated at average
rates for the year. Due to the dormant status of the wholly owned subsidiary, there have been no adjustments for the past years. j) Non-controlling Interest Non-controlling interests in the Company’s
subsidiaries are recorded in accordance with the provisions of ASC 810 and are reported as a component of equity, separate from
the Company’s equity. k) Recent Accounting Pronouncements FASB ASU 2017-11 “Earnings Per Share
(Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815)” - In July 2017,
the FASB issued 2017-11. The guidance eliminates the requirement to consider “down round” features when determining
whether certain equity-linked financial instruments or embedded features are indexed to an entity’s own stock. Our warrants
issued with our convertible notes are treated as derivative instruments, because they include a “down round” feature.
The ASU is effective for annual periods beginning after December 15, 2018, and for interim periods within those years, with early
adoption permitted. Early adoption of this guidance could have a significant impact on our financial statements, as it would effectively
eliminate the warrant derivative liability and the gain or loss from changes in the fair value of the warrant derivative liability.
We do not expect this ASU to have a significant impact on our consolidated financial statements and related disclosures. FASB ASU 2017-09 “Scope of Modification
Accounting (Topic 718)” - In May 2017, the FASB issued 2017-09. The guidance clarifies the accounting for when the terms
of a share-based award are modified. The ASU is effective for annual reporting periods beginning after December 15, 2017, and for
interim periods within those years, with early adoption permitted. This new guidance would only impact our consolidated financial
statements if, in the future, we modified the terms of any of our share-based awards. FASB ASU2018-05, “Amendments to SEC
Paragraphs Pursuant to SEC Staff Accounting Bulletin No.118” – In March 2018, the amendments provide guidance on when
to record and disclose provisional amounts for certain income tax effects of the Tax Cuts and Jobs Act, and also require any provisional
amounts or subsequent adjustments to be included in net income. Additionally, ASU 2018-05 discusses required disclosures that
an entity must make with regard to the Tax Reform Act. ASU2018-05 is effective immediately as new information is available to
adjust provisional amounts that were previously recorded. We do not expect this ASU to have a significant impact on our consolidated
financial statements and related disclosures. |
