| Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES Use of Estimates In preparing financial statements in
conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant
estimates include estimated useful lives and potential impairment of property and equipment, estimate of fair value of share based
payments and derivative instruments and recorded debt discount, valuation of deferred tax assets and valuation of in-kind contribution
of services and interest. Cash and Cash Equivalents The Company considers all highly liquid
temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2016 and December
31, 2017, the Company cash equivalents totaled $51,965 and $35,737 respectively. Accounts Receivable We record accounts receivable at net
realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated
on the accounts receivable balances and is charged to other income (expense) in the combined statements of operations. We calculate
this allowance based on our history of write-offs, the level of past-due accounts based on the contractual terms of the receivables,
and our relationships with, and the economic status of, our customers. As of December 31, 2016 and December 31, 2017, an allowance
for estimated, uncollectible accounts was determined to be unnecessary. Inventory Inventory is reported at the lower of
cost or market on the first-in, first-out (FIFO) method. Our inventory is subject to obsolescence. Accordingly, quantities on hand
are periodically monitored for items no longer being sold, which are written off. All inventory is stored at the manufacturer and
maintained by them. Inventory consists of pouches, display and shipping boxes and no inventory is deemed obsolete. Machinery and Equipment Machinery and equipment is recorded
at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are
charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation
are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period.
Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement
purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated
useful lives for significant machinery and equipment categories are as five years. A summary of machinery and equipment
as of December 31, 2017 and 2016, is as follows:
2017 2016
Machinery and equipment $ 305,165 $ 305,165
Less accumulated depreciation (253,307 ) (224,595 )
$ 51,858 $ 80,570 Depreciation expense for years ended
December 31, 2017 and 2016, was $28,712 and $24,670, respectively. Cost of Sales The costs associated with our royalty
income are packaging, a royalty of $1.20 per case, and repair and maintenance costs of our filling machines. Advertising and Promotion This category includes costs of website
design and maintenance and event sponsorships. General and Administrative This category includes costs of legal
and accounting, telephone, office supplies, product samples, insurance, registration costs, and consulting expenses. Travel and Entertainment This category includes the costs of
air travel, hotels, meals and reimbursed automotive expenses. Net Loss per Share Net loss per common share is computed
by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards,
ASC Topic 260, “Earnings per Share”. Basic earnings per common share (“EPS”) calculations are determined
by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per
common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common
share equivalents outstanding. Revenue Recognition We recognize revenue when the four revenue
recognition criteria are met, as follows:
● Persuasive evidence of an arrangement exists
● Delivery
● The price is fixed or determinable
● Collectability is reasonably assured Refunds and returns, which are minimal,
are recorded as a reduction of revenue. Payments received by customers prior to our satisfying the above criteria are recorded
as unearned income in the combined balance sheets. Fair Value of Financial Instruments The Company applies the accounting guidance
under Financial Accounting Standards Board (“FASB”) ASC 820-10, “Fair Value Measurements”, as well as certain
related FASB staff positions. This guidance defines fair value as the price that would be received from m selling an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair
value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most
advantageous market in which it would transact business and considers assumptions that marketplace participants would use when
pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The guidance also establishes a fair
value hierarchy for measurements of fair value as follows:
● Level 1 - quoted market prices in active markets for identical assets or liabilities.
● Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
● Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amount of the Company’s
financial instruments approximates their fair value as of December 31, 2016 and December 31, 2017, due to the short-term nature
of these instruments. Recent Accounting Pronouncements In June 2014, FASB issued Accounting
Standards Update (“ASU”) No. 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial
Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. The update
removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic
915 from the FASB Accounting Standards Codification. In addition, the update adds an example disclosure in Risks and Uncertainties
(Topic 275) to illustrate one way that an entity that has not begun planned principal operations could provide information about
the risks and uncertainties related to the company’s current activities. Furthermore, the update removes an exception provided
to development stage entities in Consolidations (Topic 810) for determining whether an entity is a variable interest entity-which
may change the consolidation analysis, consolidation decision, and disclosure requirements for a company that has an interest in
a company in the development stage. The update is effective for the annual reporting periods beginning after December 15, 2014,
including interim periods therein. Early application with the first annual reporting period or interim period for which the entity’s
financial statements have not yet been issued (Public business entities) or made available for issuance (other entities). The Company
adopted this pronouncement as of the year ended December 31, 2014. In June 2014, FASB issued Accounting
Standards Update (“ASU”) No. 2014-12, “Compensation – Stock Compensation ( Topic 718 ); Accounting for
Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service
Period”. The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which
the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period.
The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period
be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with
performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective
for annual periods and interim periods within those annual periods beginning after December 15, 2016. Earlier adoption is permitted.
Entities may apply the amendments in this ASU either (a) prospectively to all awards granted or modified after the effective date
or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period
presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the
cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements
should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition
is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This updated guidance is not expected
to have a material impact on our results of operations, cash flows or financial condition. We are currently reviewing the provisions
of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition. In August 2014, the FASB issued Accounting
Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) –
Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance
in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability
to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance.
In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments
require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain
principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial
doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating
effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration
of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and
(6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be
issued). We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations,
cash flows or financial condition. All other newly issued accounting pronouncements
but not yet effective have been deemed either immaterial or not applicable. |
