Note 1. Nature of Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2014 |
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Note 1. Nature of Organization and Summary of Significant Accounting Policies | ' |
Note 1. Nature of Organization and Summary of Significant Accounting Policies |
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Organization |
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Thermal Tennis Inc. was organized as a Nevada corporation on August 25, 1999. On August 15, 2014, we entered into an Agreement and Plan of Merger to combine our business and activities with CannaSys, Inc., a privately held Colorado corporation focused on providing services to the cannabis industry (“CannaSys”), into a single entity (the “Merger”). CannaSys was originally formed on October 4, 2013, as a limited liability company, and converted to a corporation on June 26, 2014. Under the terms of the merger agreement, our wholly owned subsidiary formed to effectuate the Merger was merged with and into CannaSys, the surviving entity, which then became our wholly owned subsidiary. By operation of the Merger, which was effective August 15, 2014, all of the CannaSys outstanding common stock was converted into a total of 6,000,000 shares of our common stock, which constitutes 57.70% of our total issued and outstanding common stock. Our shareholders prior to the merger retained an aggregate of 4,398,088 shares of common stock. We had no outstanding options or warrants to purchase shares of common stock. |
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Due to the CannaSys shareholders controlling Thermal Tennis after the Merger, CannaSys was considered the accounting acquirer. The transaction was therefore recognized as a reverse acquisition of Thermal Tennis by CannaSys. The accompanying consolidated financial statements are those of CannaSys for all periods prior to the Merger. |
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In connection with the closing of the Merger and after meeting the requirements of the Securities Exchange Act of 1934, as amended, on November 12, 2014, we filed amended and restated articles of incorporation with the Nevada Secretary of State that: (i) changed our name to CannaSys, Inc.; (ii) increased our authorized capital stock to 80,000,000 shares, consisting of 75,000,000 shares of common stock and 5,000,000 shares of preferred stock; (iii) authorized 5,000,000 shares of preferred stock; and (iv) made other modernizing, nonmaterial changes to our articles of incorporation. Changing the corporate name to CannaSys, Inc. was a condition to the Merger transaction. The name change better reflects the nature of our principal business operations and will become effective in the OTC market when FINRA announces the effective date of the name change. We are in the process of applying for a new CUSIP number and trading symbol. |
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Nature of Business |
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We provide technology services in the ancillary space of the cannabis industry. We are a technology company and we do not produce, sell, or handle in any manner cannabis products. |
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As the current cannabis industry grows and gains momentum around the country, technology needs for the industry have been largely underserved. Our focus on this niche element of the industry creates many efficient and profitable tools for both industry owners and consumers. |
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Our business consists of two product concepts—CannaTrade and CannaCash—that together serve the entire cannabis industry from grower-wholesaler to end-user. |
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CannaTrade is a technology to facilitate a wholesale marketplace for cannabis and its related products by serving as a mobile and web-based service where licensed producers and retailers can make a market-rate-based exchange. CannaTrade’s real-time trading platform will be unique to the industry and ultimately will create an efficient marketplace as more states legalize marijuana. |
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CannaCash will create a reward points system and dynamic gift card program for recreational and medical cannabis consumers as well as a private label gift card. The technology program will allow retailers to create loyalty programs that can be effectively managed and to reach a broader consumer base. CannaCash will also provide consumers with an efficient way to populate a card with cash value and begin using the points-based rewards program. |
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Basis of Preparation |
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The accompanying unaudited interim consolidated financial statements have been prepared on the same basis as the annual audited financial statements and in accordance with accounting principles generally accepted in the United States for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. All intercompany transactions have been eliminated in consolidation. Operating results and cash flows for interim periods are not necessarily indicative of results that can be expected for the entire year. The information included in this report should be read in conjunction with our audited financial statements and notes thereto included in Exhibit 99.01 of Form 8-K filed August 21, 2014. |
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Principles of Consolidation |
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The accompanying consolidated financial statements include the accounts and transactions of CannaSys, the accounting acquirer, from the date of its inception on October 4, 2013, and refer to the consolidated entity after taking the Merger transaction into effect. |
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Going Concern |
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The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements, we have a limited operating history and have suffered operating losses since our inception (October 4, 2013). These factors, among others, raise substantial doubt regarding our ability to continue as a going concern. |
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Since inception, we have relied upon our officers and certain shareholders to contribute capital to maintain our limited operations. We cannot assure that we will be successful in raising additional capital, if required, to continue our operations. |
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Our consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and/or liabilities that might be necessary should we be unable to continue as a going concern. Our continuation as a going concern is dependent upon our ability to meet our obligations on a timely basis and, ultimately, to attain profitability. |
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Use of Estimates |
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The preparation of financial statements in accordance with generally accepted accounting principles permits management 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
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Cash and Cash Equivalents |
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We consider all highly liquid securities with original maturities of three months or less when acquired to be cash equivalents. We had no financial instruments that qualified as cash equivalents. |
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Fair Value of Financial Instruments |
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The carrying amounts of cash and current liabilities approximate fair value because of the short-term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. We do not hold or issue financial instruments for trading purposes and we do not use derivative instruments. |
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The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) clarifies that 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. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows: |
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· Level 1: Quoted prices in active markets for identical assets or liabilities. |
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· Level 2:Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability. |
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· Level 3:Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions. |
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The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. |
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Earnings (Loss) per Common Share |
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We report earnings (loss) per share using a dual presentation of basic and diluted earnings (loss) per share. Basic earnings (loss) per share excludes the impact of common stock equivalents. Diluted earnings (loss) per share uses the average market price per share when applying the treasury stock method in determining common stock equivalents. At September 30, 2014 and 2013, there were no variances between the basic and diluted loss per share as there were no potentially dilutive securities outstanding. |
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Income Taxes |
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We account for income taxes as required by the Income Tax Topic of the FASB ASC, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. |
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We have analyzed filing positions in all of the federal and state jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. We have identified our federal tax return and our state tax return in Colorado as “major” tax jurisdictions, as defined. We are not currently under examination by the Internal Revenue Service or any other jurisdiction. We believe that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material adverse effect on our financial condition, results of operations, or cash flow. Therefore, no reserves for uncertain income tax positions have been recorded. |
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Stock-based Compensation |
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Stock-based compensation is accounted for under ASC 718, “Share-Based Payment,” using the modified prospective method. ASC 718 requires the recognition of the cost of employee services received in exchange for an award of equity instruments in the financial statements and is measured based on the grant date fair value of the award. ASC 718 also requires the stock option compensation expense to be recognized over the period during which an employee is required to provide service in exchange for the award (generally the vesting period). |
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Fiscal Year-end |
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We operate on a December 31 year-end. |