| Organization and Significant Accounting Policies | Note
1 – Organization and Significant Accounting Policies Nature
of Business New
You, Inc., formerly known as The Radiant Creations Group, Inc. (the “Company”) was incorporated in Nevada on December
29, 2005. From inception, the Company's principal business activity was the acquisition and exploration of mineral resources. On
June 20, 2013, following a change of control and subsequent acquisition of an exclusive license agreement, the Company changed
its principal business to the development and marketing of cosmetics and over-the-counter personal enhancement products and devices.
After a change in control on July 11, 2018, the Company changed its principal business to selling cannabidiol (“CBD”)
hemp oil-based products through independent business owners (called “Brand Partners”). The
Company, through its wholly owned subsidiary New You LLC, markets and sells its products through a multi-level marketing sales
opportunity. Basis
of Presentation The accompanying
financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America
(“GAAP”) to reflect the accounts and operations of the Company. On
January 9, 2019, the Company completed a reverse recapitalization (“Recapitalization”) with New You LLC, a privately
held Wyoming limited liability company, in accordance with the terms of a share exchange agreement (“Share Exchange Agreement”).
Pursuant to the Share Exchange Agreement, the Company issued 15,974,558 common shares in exchange for one hundred percent (100%)
of the outstanding units of New You LLC (11,450 units), with New You LLC becoming a wholly-owned operating subsidiary of the Company.
The transaction was accounted for as a reverse recapitalization because the Company was a shell company prior to the transaction.
For accounting purposes, New You LLC is considered to have obtained the net monetary assets of the Company in exchange for equity.
Upon the consummation of the Recapitalization, the historical financial statements of New You LLC became the consolidated company’s
historical financial statements. Accordingly, these financial statements reflect the financial position and operations of New You
LLC, except that the capital structure of New You LLC has been adjusted based on the ratio of common shares issued and units transferred
in accordance with the Share Exchange Agreement. Use
of Estimates The
preparation of 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 date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The Company’s significant estimates include estimates for future charge-backs, allowance for slow moving or obsolete inventory,
and stock-based compensation expense. Cash
and Cash Equivalents The
Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. As of December
31, 2019 and 2018, the Company had no cash equivalents. Credit
Card Receivables Credit
card receivable consists of only the amount due from the credit card processing companies. There is no need for an allowance for
doubtful accounts, since the system and processor makes sure that the transaction is successful prior to the sale being finalized.
Accordingly, no allowance was recorded as of December 31, 2019 or 2018. Inventory Inventory
consists of finished goods and is valued at the lower of cost or net realizable value. Cost is determined using the first in first
out (FIFO) method. Provision for potentially obsolete or slow moving inventory is made based on management analysis or inventory
levels and future sales forecasts. Prepaid
Expenses Prepaid
expenses consist of various payments that the Company has made in advance for goods or services to be received in the future. These
prepaid expenses primarily consist of deposits on inventory yet to be delivered or shipped. Property
and Equipment Property
and equipment are stated at cost, net of depreciation provided by use of a straight-line method over the estimated useful lives
of the assets, which is five years for vehicles and seven years for furniture and fixtures. The Company reviews property and equipment
for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. Impairment
of Long-Lived Assets We
evaluate the recoverability of long-lived assets in accordance with authoritative guidance on accounting for the impairment or
disposal of long-lived assets. We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate
that the carrying value of these assets may not be recoverable. Such impairment is recognized in the event the net book value of
such assets exceeds their fair value. No impairment of long-lived assets occurred during the years ended December 31, 2019 and
2018. Basic
and Diluted Net Loss Per Share Basic
net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of
common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is computed
by dividing the net loss attributable to common stockholders by the weighted-average number of common share equivalents outstanding
for the period determined using the treasury-stock method. For purposes of this calculation, the Company currently does not have
any deemed common share equivalents; therefore, its basic and diluted net loss per share calculations are the same. The following
table presents the computation of basic and diluted net loss per common share:
2019 2018
Historical Net loss per share
Numerator
Net Loss (1,692,298 ) (428,006 )
Denominator
Weighted-average common shares outstanding 27,514,330 8,218,053
Less: Weighted-average shares subject to repurchase (1,171,194 ) —
Denominator for basic and diluted net loss per share 26,343,136 8,218,053
Basic and diluted net loss per share $ (0.06 ) $ (0.05 ) Potentially
dilutive securities that are not included in the calculation of diluted net loss per share because their effect is anti-dilutive
are as follows (in common equivalent shares):
2019 2018
Restricted Stock 5,151,000 —
Revenue
Recognition Revenue
is recognized in accordance with ASC 606, Contracts with Customers, by analyzing exchanges with the Company’s customers and
Brand Partners using a five-step analysis that includes 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 recognizes revenue when the customer obtains control of the promised good and all performance obligations are met. Revenue
is recognized at an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those
services. The
Company records sales of finished products once the customer or Brand Partner places and pays for the order and the product is
shipped. Control is considered transferred when title and risk of loss have transferred to the customer, which is upon shipment
of the product. The Company treats shipping expenses as costs to fulfill a contract, so that revenue is recognized gross of shipping
expenses. The Company recognizes revenue net of sales taxes. The
Company and its Brand Partners agree to provide customers with a 100% satisfaction guaranteed policy that allows the customer sixty
days from the sales transaction to return the product and receive a 100% refund, and one year for a Brand Partner to get a 90%
refund, as long as the product remains in saleable condition and the Brand Partner or the Company have not cancelled the Brand
Partner agreement. The Company records an estimate for provisions of returns and other adjustments for each shipment, which is
netted with gross sales. The Company accounts for such provisions during the same period in which the related revenues are earned.
The Company has determined that the population of contracts with the Company’s customers and Brand Partners tends to be homogenous,
so that review of the contracts and estimate of various revenue related adjustments can be applied to the entire population. The
Company had customer returns of $79,090 for the year ended December 31, 2019 and $14,192 for the year ended December 31, 2018.
The Company has not recorded a reserve for returns at December 31, 2019, or 2018 since it does not believe such returns will be
material. As
of December 31, 2019, the Company did not have any in-process or prepaid sales orders or transactions that would require the recognition
of a contract liability. Cost
of Revenue Amounts
recorded as cost of revenue relate to direct product costs. Such costs are recorded when the associated revenue is recognized.
Our cost of revenue consists primarily of the cost of product, and the cost of product samples. Commission
Expense and Contract Acquisition Costs The
Company markets and sells its products through a multi-level marketing sales platform. Commissions are earned on product sales
to Brand Partners and customers at a rate of 10% for every transaction plus a specified spread on recurring sales. Brand Partners
earn a 5% commission on sales by other team members at lower levels up to nine levels below the Brand Partner. Brand Partners can
earn an additional bonus for customer sales and team sales. The team bonus is $400 for each time their team bonus volume reaches
a certain amount in a 30 day period. Brand Partners can also earn an initial bonus for qualifying customer purchases in the Brand
Partners’ first 30 days of 20% of the transaction value. The
Company treats commission payments as costs to obtain a contract in accordance with ASC 340, “Other Assets and Deferred Costs.”
Commissions are accrued upon shipment of the product to either the Brand Partner or the customer. Advertising
Expenses The
Company expenses advertising costs as incurred in accordance with ASC 720-35, “Other Expenses – Advertising Cost.”
Advertising expenses totaled $12,626 for the year ended December 31, 2019 and $15,817 for the year ended December 31, 2018. Income
Taxes The
Company provides for income taxes utilizing the asset and liability method of accounting. Under this method, deferred income taxes
are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and
their financial reporting amounts at each balance sheet date, based on enacted tax laws and statutory tax rates applicable to the
periods in which the differences are expected to affect taxable income. If it is determined that it is more likely than not that
future tax benefits associated with a deferred tax asset will not be realized, a valuation allowance is provided. The effect on
deferred tax assets and liabilities of a change in the tax rates is recognized in the statements of operations as an adjustment
to income tax expense in the period that includes the enactment date. Utilization of the net operating loss carry forwards and
credits may be subject to a substantial annual limitation due to ownership change limitations provided by Section 382 of the Internal
Revenue Code of 1986, as amended, and similar state provisions. ASC
Topic 740-10, Income Taxes, clarifies the accounting for uncertainty in income taxes recognized in the Company’s financial
statements in accordance with GAAP. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized.
Income tax positions that previously failed to meet the more-likely-than-not threshold are recognized in the first subsequent financial
reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not
threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The
Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income
tax expense. Stock
Compensation Expense ASC
718, Compensation – Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions.
Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such
as employee stock ownership plans and stock appreciation rights. Share-based payments to employees and non-employees, including
grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values
at the grant date. That expense is recognized over the period during which an employee is required to provide services in exchange
for the award, known as the requisite service period (usually the vesting period). The
Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC
505-50, Equity – Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based
on the fair grant date FV of equity instruments. The fair value of the share-based payment transaction is determined at the earlier
of performance commitment date or performance completion date. Share-based compensation expense for the year ended December 31,
2019 and 2018 was $677,604 and $0. Recently
Adopted Accounting Pronouncements FASB
ASU No. 2016-02 (Topic 842), “Leases” – Recently
Issued Accounting Pronouncements FASB
ASU No. 2019-12 Income Taxes - |
