| Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES Basis of Presentation These consolidated financial statements are
presented in United States dollars and have been prepared in accordance with United States generally accepted accounting principles. Going Concern The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern, however, the above conditions raise substantial
doubt about the Company’s ability to do so. The financial statements do not include any adjustment to reflect the possible
future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result
should the Company be unable to continue as a going concern. Management plans to fund future operations
by raising capital and or seeking joint venture opportunities. Principles of Consolidation The Company evaluates the need to consolidate
affiliates based on standards set forth in ASC 810 Consolidation (“ASC 810”). The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries, PHCP and Prolific Nutrition (Note 10). All significant consolidated
transactions and balances have been eliminated in consolidation. The operations of PHCP are included in the consolidated financial
statement from the date of acquisition of December 31, 2018 onward. The operations of Prolific Nutrition are included in the consolidated
financial statement from the date of acquisition of September 30, 2019 onward. 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 valuation
of deferred tax assets. Cash and Cash Equivalents The Company considers all highly liquid temporary
cash investments with an original maturity of six months or less to be cash equivalents. 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, 2019 and 2018, 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 five years. Impairment of Long-Lived Assets and Intangible
Assets The Company reviews long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of the assets, including intangible assets, may not
be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected
future cash flows. If the Company determines that the carrying value of the asset is not recoverable, a permanent impairment charge
is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value. There were no impairments
recorded during the year ended December 31, 2019. Goodwill Goodwill represents the excess of the acquisition
cost of businesses over the fair value of the identifiable net assets acquired. Goodwill is not amortized, but tested for impairment,
or if circumstances occur that more likely than not reduce the fair value of the reporting unit below its carrying amount. The
Company performed its annual test on December 31, 2019 for which no impairments were recorded. Lease Commitments The Company determines if an arrangement is
a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control
the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an
underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially
all of the economic benefits from using the underlying asset. The Company has lease agreements which include lease and non-lease
components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease
expense for variable lease components are recognized when the obligation is probable. Operating lease right of use (“ROU”)
assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term.
Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company primarily leases
buildings (real estate) which are classified as operating leases. ASC 842 requires a lessee to discount its unpaid lease payments
using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As
an implicit interest rate is not readily determinable in the Company’s leases, the incremental borrowing rate is used based
on the information available at commencement date in determining the present value of lease payments. The lease term for all of the Company’s
leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend
(or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate)
the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for
the majority of the Company’s leases as the reasonably certain threshold is not met. Lease payments included in the measurement
of the lease liability are comprised of fixed payments, variable payments that depend on index or rate, and amounts probable to
be payable under the exercise of the Company option to purchase the underlying asset if reasonably certain. Variable lease payments not dependent on a
rate or index associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease
agreement on which those payments are assessed as probable. Variable lease payments are presented as operating expenses in the
Company’s statement of operations in the same line item as expense arising from fixed lease payments. As of December 31,
2019, management determined that there were no variable lease costs. Convertible Debt and Convertible Preferred
Stock When the Company issues convertible debt or
convertible preferred stock, it first evaluates the balance sheet classification of the convertible instrument in its entirety
to determine whether the instrument should be classified as a liability under ASC 480, “Distinguishing Liabilities from Equity”,
and second whether the conversion feature should be accounted for separately from the host instrument. A conversion feature of
a convertible debt instrument or certain convertible preferred stock would be separated from the convertible instrument and classified
as a derivative liability if the conversion feature, were it a standalone instrument, meets the definition of an “embedded
derivative” in ASC 815, Derivatives and Hedging. Generally, characteristics that require derivative treatment include, among
others, when the conversion feature is not indexed to the Company’s equity, as defined in ASC 815-40, or when it must be
settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition
of an embedded derivative, it would be separated from the host instrument and classified as a derivative liability carried on the
consolidated balance sheet at fair value, with any changes in its fair value recognized currently in the consolidated statements
of operations. If a conversion feature does not meet the conditions
to be separated and accounted for as an embedded derivative liability, the Company then determines whether the conversion feature
is “beneficial”. A conversion feature would be considered beneficial if the conversion feature is “in the money”
when the host instrument is issued or, under certain circumstances, later. If convertible debt contains a beneficial conversion
feature (“BCF”), the amount of the amount of the proceeds allocated to the BCF reduces the balance of the convertible
debt, creating a discount which is amortized over the debt’s term to interest expense in the consolidated statements of operations. When a convertible preferred stock contains
a BCF, after allocating the proceeds to the BCF, the resulting discount is either amortized over the period beginning when the
convertible preferred stock is issued up to the earliest date the conversion feature may be exercised, or if the convertible preferred
stock is immediately exercisable, the discount is fully amortized at the date of issuance. The amortization is recorded similar
to a dividend. Offering Costs The Company accounts for offering costs in
accordance with FASB ASC 340, “Other Assets and Deferred Costs” Prior to the completion of an offering, offering costs
will be capitalized as deferred offering costs on the balance sheet. The deferred offering costs will be charged to stockholders’
equity or as a reduction of debt upon the completion of an offering or to expense if the offering is not completed. Business Combinations The Company accounts for businesses it acquires
in accordance with ASC Topic 805, “Business Combinations”, which allocates the fair value of the purchase consideration
to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the
purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining
the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. Acquisition-related
expenses and transaction costs associated with business combinations are expensed as incurred. Revenue Recognition The Company records revenue under the adoption
of ASC 606 by analyzing exchanges with its customers using a five-step analysis such as identifying performance obligations in
the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction
price to each separate performance obligation. The Company’s policy is to record revenue as earned when a firm commitment,
indicating sales quantity and price exists, delivery has taken place and collectability is reasonably assured. The Company records
sales of finished products once the customer places the order and the product is shipped. Delivery is considered to have occurred
when title and risk of loss have transferred to the customer. Provisions for discounts, returns, allowances, customer rebates and
other adjustments are netted with gross sales. The Company accounts for such provisions during the same period in which the related
revenues are earned. Provisions for discounts, returns, allowances, customer rebates and other adjustments are minimal and are
recorded as a reduction of revenue 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. General and Administrative This category includes salaries and 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. Stock-Based Compensation The Company accounts for share-based payments
pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company records compensation expense for share-based
awards based upon an assessment of the grant date fair value for stock options and restricted stock awards using the Black-Scholes
option pricing model. Share based expense paid through direct stock grants is expensed over the vesting period or upon issuance
for awards with no further service requirements. Income Taxes The Company is taxed as a C-Corporation, whereby
it is subject to federal and state income taxes. The Company follows ASC 740, Income Taxes for recording the provision for income
taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax
basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected
to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period.
If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be
realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be
realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary
differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. In addition, the calculation of the Company’s
tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities
for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining
if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including
resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount
that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions
taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining
the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments
and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to
a revision become known. As of December 31, 2019 and 2018, the Company’s
deferred tax assets consisted entirely of net operating losses to which there is a full valuation allowance applied. In addition,
as of December 31, 2019 all tax years since 2016 are open for examination for which not current examinations are in progress. 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 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, 2019 and 2018, due to the short-term nature of these instruments. 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. As of December 31, 2019 and 2018, dilutive instruments consisted of convertible notes payable and
warrants to purchase shares of the Company’s common stock, the effects of which to net loss are anti-dilutive. Recent Accounting Pronouncements In February 2016, the FASB issued ASU, Leases
(ASC 842), which requires lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding
lease liability. Lessor accounting under the standard is substantially unchanged. Additional qualitative and quantitative disclosures
are also required. The Company adopted the standard effective January 1, 2019 using the cumulative-effect adjustment transition
method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented.
The Company adopted the following practical expedients and elected the following accounting policies related to this standard update:
● The option to not reassess prior conclusions related to the identification, classification and accounting for initial direct costs for leases that commenced prior to January 1, 2019.
● Short-term lease accounting policy election allowing lessees to not recognize right-of-use assets and liabilities for leases with a term of 12 months or less; and
● The option to not separate lease and non-lease components for certain equipment lease asset categories such as freight car, vehicles and work equipment.
● The package of practical expedients applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing initial direct costs for any existing leases. The Company has inventoried all leases where
the Company is a lessee as of the initial date of application and has examined other contracts with suppliers, vendors, customers
and other outside parties to identify whether such contracts contain an embedded lease as defined under the new guidance. As of
December 31, 2019, the Company has one lease to which requires treatment under ASC 842. The lease was entered into during May 2019
and didn’t impact periods prior to then. The adoption of ASC 842 had a material effect on the consolidated financial statements.
In addition, the Company will review for the existence of embedded leases in future agreements. See Note 9 for additional information. In June 2018, the FASB issued ASU No. 2018-07,
“Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” These
amendments expand the scope of Topic 718, Compensation - Stock Compensation (which currently only includes share-based payments
to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based
payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity - Equity-Based
Payments to Non-Employees. This standard is effective for public companies for annual periods beginning after December 15, 2018,
including interim periods within those fiscal years, with early adoption permitted as long as ASU 2014-09 has been adopted. The
Company adopted the guidance on January 1, 2019. The adoption did not have a material impact on our consolidated financial statements. The Company reviewed all recently issued,
but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected
to cause a material impact on its financial condition or the results of its operations. |
