BASIS OF PRESENTATION, GOING CONCERN AND CORRECTION OF PRIOR YEAR INFORMATION | NOTE 1 BASIS OF PRESENTATION, GOING CONCERN AND CORRECTION OF PRIOR YEAR INFORMATION Interim Financial Reporting While the information presented in the accompanying interim financial statements is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance with generally accepted accounting principles in the United States of America ("GAAP"). All adjustments are of a normal, recurring nature. Interim financial statements and the notes thereto do not contain all of the disclosures normally found in year-end audited financial statements and these Notes to Financial Statements are abbreviated and contain only certain disclosures related to the three and nine month period ended September 30, 2015. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2014 as reported in the Form 10-K have been omitted. It is suggested that these interim financial statements be read in conjunction with our audited financial statements and related notes for the year ended December 31, 2014 included in our Form 10-K filed with the Securities Exchange Commission on September 23, 2015. Operating results for the three an nine months ended September 30, 2015 are not necessarily indicative of the results that can be expected for the period from January 1, 2015 through December 31, 2015. Earnings Per Share We present both basic and diluted earnings per share (EPS) amounts in our financial reporting. Basic EPS excludes dilution and is computed by dividing income available to Common Stock holders by the weighted-average number of Common Stock outstanding for the period. Diluted EPS reflects the maximum potential dilution that could occur from our convertible debt. Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period. During the three and nine months ended September 30, 2015 and 2014, the shares underlying the outstanding convertible debt were excluded as their effect would have been anti-dilutive. Going Concern The accompanying unaudited consolidated financial statements have been prepared in conformity with GAAP, which contemplates continuation of the Company as a going concern, which is dependent upon the Company's ability to establish itself as a profitable business. At September 30, 2015, the Company has an accumulated deficit of $ 5,456,532 and has a working capital deficit of $1,541,444. These matters raise substantial doubt about the Company's ability to continue as a going concern. These unaudited consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties, nor do they include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation. The Companys ability to continue in business is dependent upon obtaining sufficient financing or attaining profitable operations. However, there can be no assurance that management will be successful in obtaining additional funding or in attaining profitable operations. Correction of Prior Year Information During the audit of the year ended December 31, 2014, we identified errors in previously reported financial statements for the interim quarters of 2014. These errors were in the valuation and accounting for stock issued for services and the the valuation and accounting for derivative liabilities. This resulted in adjustments to the previously reported amounts in the consolidated financial statements for the three and nine months ended September 30, 2014. In accordance with the SECs Staff Accounting Bulletin Nos. 99 and 108 (SAB 99 and SAB 108), the Company evaluated these errors and, based upon an analysis of quantitative and qualitative factors, determined that the error was immaterial to each of the prior reporting periods affected. However, if the adjustments to correct the cumulative effect of the above error had been recorded in the tyhree and nine months ended September30, 2014, the Company believes that the impact would have been significant and would impact comparisons to prior periods. Therefore, as permitted by SAB 108, the Company corrected, in the current filing, previously reported results as of and for the three and nine months ended September 30, 2014. The following table presents the comparative effect of the correction to the three and nine month information and the impact on the Companys consolidated financial statements as of and for the three and nine months ended September 30, 2014: Three months ended September 30, 2014 As Reported Adjustments As Amended Consolidated Statement of Operations Operating Expenses: Selling, general and administrative $ 21,016 $ (3,329 ) $ 17,687 Bad debt expense - - - Other Income (Expenses): Interest expense (61,251 ) 31,414 (29,837 ) Gain on sale of assets - - - Gain (Loss) on conversion of debt 46,187 - 46,187 Derivative gain (loss) (561,296 ) (99,875 ) (661,171 ) Net loss (597,376 ) (93,632 ) (691,008 ) Loss per share, basic $ (1.48 ) $ (0.26 ) $ (1.74 ) Loss per share, diluted $ (1.48 ) $ (0.26 ) $ (1.74 ) Nine months ended September 30, 2014 As Reported Adjustments As Amended Consolidated Balance Sheet Liabilities and Stockholders Deficit Current Liabilities: Derivative liabilities $ 967,301 $ 106,066 $ 1,073,367 Convertible notes payable 196,944 14,416 211,360 Stockholders Deficit Common stock 741,392 (740,581 ) 811 Additional paid-in capital 204,490 37,209 241,699 Accumulated deficit (2,160,967 ) 825,410 (1,335,557 ) Consolidated Statement of Operations Operating Expenses: Selling, general and administrative $ 225,080 $ (49,957 ) $ 175,123 Bad debt expense 100,613 (100,613 ) - Other Income (Expenses): Interest expense (249,426 ) 97,451 (151,975 ) Derivative gain (loss) (290,137 ) (516,173 ) (806,310 ) Gain on sale of asset - (53,329 ) (53,329 ) Debt settlement loss (59,776 ) 45,176 (14,600 ) Net loss (879,240 ) (215,439 ) (1,094,679 ) Loss per share, basic $ (3.38 ) $ (0.83 ) $ (4.21 ) Loss share, diluted $ (3.38 ) $ (0.83 ) $ (4.21 ) Consolidated Statement of Cash Flows Cash flows from operating activities: Net loss $ (879,240 ) $ (215,439 ) $ (1,094,679 ) Adjustments to reconcile net loss to net cash used in operating activities: (Gain) loss on change in fair value of derivative liabilities 290,138 516,172 806,310 (Gain) on conversion of debt (45,792 ) (395 ) (45,792 ) Amortization of debt discounts 111,587 55,915 110,844 Bad debt expense 100,613 (100,613 ) - Stock issued for services 61,700 (7,600 ) 54,100 Non-cash interest 147,586 (147,586 ) - Loss on settlement of debt 59,776 (45,176 ) 14,600 Gain on sale of asset - (53,329 ) (53,329 ) Changes in operating assets and liabilities: Accounts payable 94,276 (71,820 ) 22,456 Accrued expenses and current liabilities 9,356 (3,657 ) 5,699 Cash flows from financing activities: Proceeds from convertible notes payable 50,000 (40,000 ) 10,000 NON CASH INVESTING AND FINANCING ACTIVITIES: Common stock issued in reverse merger $ 1,281,727 $ (188,395 ) $ 1,093,332 Resolution of derivative liabilities 260,689 133,695 185,800 Debt discount due to derivative liabilities - 153,344 153,344 Founders shares - 10 10 Common shares issued and held in escrow 15,000 (14,985 ) 15 Common stock issued for conversion of debt 420,566 (7,000 ) 82,500 Common stock issued for settlement of liabilities 129,001 (127,501 ) 1,500 Common stock issued for settlement of liabilities to related parties - 93,500 93,500 Accounts payable settled by debt 103,344 40,000 143,344 Sale of Subsidiary 143,942 (143,942 ) - Services to be received as consideration for sale of subsidiary 10,000 (10,000 ) - Derivative liability at inception 281,871 (281,871 ) - |