OWC Pharmaceutical Research (OWCP) 10-Q 18 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	3 Months Ended
	Mar. 31, 2017	Jun. 30, 2016
Document and Entity Information:
Entity Registrant Name	OWC Pharmaceutical Research Corp.
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Trading Symbol	owcp
Amendment Flag	false
Entity Central Index Key	1,431,934
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding	144,719,287
Entity Public Float		$ 1,020,446
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1

OWC Pharmaceutical Research Cor

OWC Pharmaceutical Research Corp. and Subsidiary - Consolidated Balance Sheets		Mar. 31, 2017USD ($)	Dec. 31, 2016USD ($)
Current Assets:
Cash and cash equivalents		$ 2,048,146	$ 472,282
Other current assets		13,662	354,053
Total current assets		2,061,808	826,335
Property and equipment		13,703	15,073
Total assets		2,075,511	841,408
Current Liabilities:
Accounts payable		5,063	7,694
Other current liabilities		43,420	38,086
Deferred revenues		$ 100,000	$ 100,000
Current portion of long-term debt (Note 4)		300,000	0
Total current liabilities		$ 448,483	$ 145,780
Non-recourse loan (Note 4)		0	250,000
Total liabilities		$ 448,483	$ 395,780
Stockholders' equity:
Preferred stock	[1]	0	0
Common stock	[2]	1,447	1,395
Additional paid-in capital		14,302,693	11,039,102
Common stock subscriptions receivable		$ (395,011)	$ (395,011)
Services receivable		(901,290)	(592,083)
Accumulated deficit		$ (11,393,830)	$ (9,958,465)
Accumulated other comprehensive income		13,019	6,050
Total stockholders' equity (deficit)		1,627,028	100,988
Total liabilities and stockholders' equity		$ 2,075,511	$ 496,768
[1]	$0.0001 par value. Authorized 20,000,000 shares: none issued and outstanding at March 31, 2017 and December 31, 2016.
[2]	$0.0001 par value. Authorized 500,000,000 shares: 144,819,287 and 139,447,782 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively.

OWC Pharmaceutical Research Co3

OWC Pharmaceutical Research Corp. and Subsidiary - Consolidated Statements of Operations	3 Months Ended
	Mar. 31, 2017USD ($)$ / sharesshares	Mar. 31, 2016USD ($)$ / sharesshares
Consolidated Statements of Operations
Revenues	$ 0	$ 0
Research and development	34,016	37,043
General and administrative	1,401,349	221,556
Total operating expenses	1,435,365	258,599
Operating loss	$ (1,435,365)	$ (258,599)
Other expense:
Financing expenses, net	0	(55,789)
Net loss	$ (1,435,365)	$ (314,388)
Other comprehensive income (loss):
Foreign currency translation adjustments	6,969	11,633
Comprehensive net loss	$ (1,428,396)	$ (302,755)
Basic and diluted per share amounts:
Basic and diluted net loss | $ / shares	$ (0.01)	$ 0
Weighted average shares outstanding (basic and diluted) | shares	143,028,447	81,460,843

OWC Pharmaceutical Research Co4

OWC Pharmaceutical Research Corp. and Subsidiary - Consolidated Statements of Changes in Stockholders' Equity (Deficit) - 3 months ended Mar. 31, 2017	Common Stock, Share	Common Stock, Amount	Additional Paid-In Capital	Subscription Receivable	Accumulated Deficit	Services Receivable	Accumulated Other Comprehensive Loss	Total Shareholders' Equity (Deficit)
Balance at Dec. 31, 2016	139,447,782	1,395	11,039,102	(395,011)	(9,958,465)	(592,083)	6,050	100,988
Stock based compensation			1,057,904					1,057,904
Financial instruments issued for services to be received	300,000	3	488,170			(488,173)
Amortization of services receivable						178,966		178,966
Stock issued upon exercise of warrants (Note 3C)	601,117	6	66,660					66,666
Stock issued for cash at $0.13 together with detachable warrants	904,924	9	117,631					117,640
Stock issued for cash at $0.17 together with detachable warrants	588,237	6	99,994					100,000
Stock issued for cash at $0.25 together with detachable warrants	520,000	5	129,995					130,000
Stock issued for cash at $0.50 together with detachable warrants	1,734,000	17	866,983					867,000
Stock issued for cash at $0.70 together with detachable warrants	623,227	6	436,254					436,260
Foreign currency translation adjustments							6,969	6,969
Net loss					(1,435,365)			(1,435,365)
Balance at Mar. 31, 2017	144,719,287	1,447	14,302,693	(395,011)	(11,393,830)	(901,290)	13,019	1,627,028

OWC Pharmaceutical Research Co5

OWC Pharmaceutical Research Corp. and Subsidiary - Consolidated Statements of Cash Flows	3 Months Ended
	Mar. 31, 2017USD ($)	Mar. 31, 2016USD ($)
Cash flows from operating activities:
Net loss	$ (1,435,365)	$ (314,388)
Adjustments to reconcile net loss to net cash used in operating activites:
Foreign currency translation adjustments	$ 6,969	$ 11,633
Adjustments to convertible loans	0	54,791
Depreciation expense	2,450	2,389
Amortization of services receivable	178,966	0
Stock-based compensation	1,057,904	8,074
Changes in net assets and liabilities:
(Increase) decrease in accounts receivable		$ (4,045)
(Increase) decrease in other assets	$ (4,249)	(1,820)
Increase (decrease) in accounts payable	(2,631)	(19,004)
Increase (decrease) in deferred revenues	0	100,000
Increase (decrease) in other liabilities	5,334	2,192
Net cash provided by (used in) operating activities	$ (190,622)	$ (160,178)
Cash flows from investing activities:
Purchase of equipment	(1,080)	(1,860)
Net cash prodided by (used in) investing activities	$ (1,080)	$ (1,860)
Cash flows from financing activities:
Proceeds from issuance of common stock and warrants	1,650,900	0
Proceeds from exercise of warrants	$ 66,666	$ 0
Proceeds of debt borrowings	50,000	71,250
Net cash provided by financing activities	$ 1,767,566	$ 71,250
Change in cash	$ 1,575,864	$ (90,788)
Cash at beginning of period	472,282	357,161
Cash at end of period	2,048,146	266,373
Supplemental information on financing activities not involving cash flows:
Debt discount arising from derivatives	0	41,974
Net share settlement of warrants exercise	130,000	0

Note 1 - General

Note 1 - General	3 Months Ended
	Mar. 31, 2017
Notes
Note 1 - General	NOTE 1 - GENERAL A. Organizational Background OWC Pharmaceutical Research Corp. ("OWCP" or the "Company") is a Delaware corporation and was incorporated under the laws of the State of Delaware on March 7, 2008. On July 6, 2014 the Company established a wholly-owned subsidiary, One World Cannabis Ltd. ("OWC" or the "Israeli subsidiary") under the laws of the State of Israel. The Company is a medical cannabis research and development company that applies conventional pharmaceutical research protocols and disciplines to the field of medical cannabis with the objective of establishing a leadership position in the research and development of medical cannabis therapies, products and delivery technologies. The Company is currently engaged in the research and development of cannabis-based medical products (the "Product Prospects") for the treatment of multiple myeloma, psoriasis and fibromyalgia as well as development of a cannabis soluble tablet delivery system that may have applications for other indications. The Company also provides consulting services to governmental and private entities to assist them with developing and implementing tailor-made comprehensive medical cannabis programs. B. Liquidity and going concern uncertainty The development and commercialization of the Company's product is expected to require substantial expenditures. The Company has not yet generated material revenues from operations, and therefore is dependent upon external sources for financing its operations. As of March 31, 2017, the Company has an accumulated deficit of $11,393,830, and its stockholders' equity is $1,627,028. In addition, in each year since its inception the Company reported losses and negative cash flows from operating activities. Management considered the significance of such conditions in relation to the Company's ability to meet its current and future obligations and determined that such conditions raise substantial doubt about the Company's ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. Until such time as the Company generates sufficient revenue to fund its operations (if ever), the Company plans to finance its operations through the sale of equity or equity-linked securities and/or debt securities and, to the extent available, short-term and long-term loans. There can be no assurance that the Company will succeed in obtaining the necessary financing to continue its operations as a going concern. During the first three months of 2017, the Company raised a total amount of approximately $1,650,900 (net of related expenses), from the issuance of units that included Common Stock and warrants. In addition, during 2017 the Company received $66,666 through the exercise of warrants and $50,000 from debt. C. Risk factors As described in the above paragraph, the Company has a limited operating history and faces a number of risks and uncertainties, including risks and uncertainties regarding continuation of the development process, demand and market acceptance of the Company's products, the effects of technological changes, competition and the development of products by competitors. Additionally, other risk factors also exist, such as the ability to manage growth and the effect of planned expansion of operations on the Company's future results and the availability of necessary financing. In addition, the Company expects to continue incurring significant operating costs and losses in connection with the development and marketing of its products. The Company has not yet generated material revenues from its operations to fund its activities and therefore is dependent on the receipt of additional funding from its stockholders and/ or new investors in order to continue its operations. D. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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 the estimates. As applicable to these condensed consolidated financial statements, the most significant estimates and assumptions relate to (i) stock-based compensation (ii) the going concern assumptions.

Note 2 - Summary of Significant

Note 2 - Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2017
Notes
Note 2 - Summary of Significant Accounting Policies	NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Basis of Presentation Accounting Principles The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with our consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") related to interim financial statements. As permitted under those rules, certain information and footnote disclosures normally required or included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are considered necessary to present fairly the results of the Company's financial position and operating results for the interim periods. All such adjustments are of a normal recurring nature. The results for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any other interim period or for any future period. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiary. All intercompany balances and transactions have been eliminated in consolidation. B. Reclassifications Certain reclassifications from the prior year presentation have been made to conform to the current year presentation. These reclassifications did not have material impact on the Company's equity, net assets, results of operations or cash flows. C. Recently Issued Accounting Standards 1. Effective January, 2017, the Company adopted Accounting Standards Update (ASU) No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which changes how deferred taxes are classified in organizations' balance sheets. The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, all deferred tax assets and liabilities will be required to be classified as noncurrent. The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods (i.e., in the first quarter of 2017 for calendar year-end companies).Early adoption is permitted for all entities as of the beginning of an interim or annual reporting period. The guidance may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively (i.e., by reclassifying the comparative balance sheet). If applied prospectively, entities are required to include a statement that prior periods were not retrospectively adjusted. If applied retrospectively, entities are also required to include quantitative information about the effects of the change on prior periods. The adoption of this ASU did not have a significant impact on the condensed consolidated financial statements. 2. Effective January, 2017, the Company adopted Accounting Standards Update (ASU) No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The amendments also simplify two areas specific to private companies. For public business entities, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period periods (i.e., in the first quarter of 2017 for calendar year-end companies). The adoption of this ASU did not have a significant impact on the condensed consolidated financial statements. 3. In May 2014, The FASB issued Accounting Standard Update 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 also requires entities to disclose sufficient information, both quantitative and qualitative, to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. During 2016, the FASB issued several Accounting Standard Updates that focuses on certain implementation issues of the new revenue recognition guidance including Narrow-Scope Improvements and Practical Expedients, Principal versus Agent Considerations and Identifying Performance Obligations and Licensing. An entity should apply the amendments in this ASU using one of the following two methods: 1. Retrospectively to each prior reporting period presented with a possibility to elect certain practical expedients, or, 2. Retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If an entity elects the latter transition method, it also should provide certain additional disclosures. For a public business entity, the amendments in ASU 2014-09 (including the amendments introduced through recent ASU's) are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period (the first quarter of fiscal year 2018 for the Company). Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company intends to adopt ASU 2014-09 as of January 1, 2018. The Company is in the process of evaluating the impact of ASU 2014-09 on its revenue streams and selling contracts, if any, and on its financial reporting and disclosures. Management is expecting to complete the evaluation of the impact of the accounting and disclosure changes on the business processes, controls and systems throughout 2017. Since the Company did not report so far, material revenues, management believes that the adoption of ASU 2014-09 will not have significant impact on its financial statements.

Note 3 - Events During The Peri

Note 3 - Events During The Period	3 Months Ended
	Mar. 31, 2017
Notes
Note 3 - Events During The Period	NOTE 3 - EVENTS DURING THE PERIOD A. Common stock and Warrants Issued for cash 1. During the first quarter of 2017, the Company received $117,640 through a placement of 904,924 common stock units to four investors for the offering price of $0.13 per unit. Each unit consisted of one share of common stock and two (one "G" and one "H") warrants to purchase common stock. The 904,924 "G" warrants are exercisable at $0.25 and expire two years from the date of issuance. The 904,924 "H" warrants are exercisable at $0.40 and expire three years from the date of issuance. Such warrants were classified within stockholders' equity. 2. During the first quarter of 2017, the Company received $100,000 through a placement of 588,237 common stock units to three investors for the offering price of $0.17 per unit. Each unit consisted of one share of common stock and one "H" warrant to purchase common stock. The 588,237 "H" warrants are exercisable at $0.40 and expire three years from the date of issuance. Such warrants were classified within stockholders' equity. 3. During the first quarter of 2017, the Company received $130,000 through a placement of 520,000common stock units to five investors for the offering price of $0.25 per unit. Each unit consisted of one share of common stock and one "I" warrant to purchase common stock. The 520,000 "I" warrants are exercisable at $0.50 and expire two years from the date of issuance. Such warrants were classified within stockholders' equity. 4. During the first quarter of 2017, the Company received $867,000 through a placement of 1,734,000 common stock units to twenty investors for the offering price of $0.50 per unit. Each unit consisted of one share of common stock and one "K" warrant to purchase common stock. The 1,734,000 "K" warrants are exercisable at $1.00 and expire eighteen months from the date of issuance. Such warrants were classified within stockholders' equity. 5. During the first quarter of 2017, the Company received $436,260 through a placement of 623,227 common stock units to eleven investors for the offering price of $0.70 per unit. Each unit consisted of one share of common stock and one "L" warrant to purchase common stock. The 623,227 "L" warrants are exercisable at $1.40 and expire eighteen months from the date of issuance. Such warrants were classified within stockholders' equity. B. Stock-based compensation 1. During the first quarter of 2017 the Company issued 300,000 fully vested shares of the Company common stock and 400,000 warrants (200,000 "G" warrants with exercise price of $0.25and 200,000 "H" warrants with exercise price of $0.40) to consultant as payment for services. As the equity instruments issued are fully vested and non-forfeitable, the fair value of the grant was recognized as an increase to stockholders' equity at the measurement date with an offsetting amount as a deduction from stockholders' equity within the caption "Services receivable". This amount will be recognized as consulting expense over the terms of the agreements. The shares were valued at the closing price as of the date of the agreements ($0.67) and resulted in current recognition of $33,592 in consulting services expense and $167,408 as future services receivable. This amount will be recognized as consulting expense over the terms of the agreement. The warrants were valued using the Black-Scholes-Merton pricing model to estimate the fair value of $153,963 and resulted in current recognition of $32,902 in additional consulting services expense and $121,061 as additional future services receivable. This amount will be recognized as consulting expense over the terms of the agreement. The Black-Sholes-Merton pricing model assumptions used are as follows: expected dividend yield of 0%; risk-free interest rate of 0.10% - 0.11%; expected volatility of 282%, and warrant exercise period based upon the stated terms. See also C1 bellow. 2. Under additional Consulting agreement executed in November of 2016 the Company became obligated to issue 100,000 additional shares to the consultant as of February 28, 2017. The shares were valued at $262,000 and were issued during April, 2017. 3. During the three months ended March 31, 2017 the Company issued 350,000"E" warrants that are exercisable at $0.25 and expire two years from the date of issuance to purchase the Company's common stock to two unrelated parties as payment for services. The aggregate fair value of the warrants was $133,210. As the equity instruments issued are fully vested and non-forfeitable, the fair value of the grant was recognized as an increase to stockholders' equity at the measurement date with an offsetting amount as a deduction from stockholders' equity within the caption "Services receivable". This amount will be recognized as consulting expense over the terms of the agreements. The Company recognized $28,467 in current expense and $104,743 remains as services receivable as of March 31, 2017. The Company used the Black-Scholes-Merton pricing model to estimate the fair value. The Black-Sholes-Merton pricing model assumptions used are as follows: expected dividend yield of 0%; risk-free interest rate of 0.10%-.0.11%; expected volatility of 282%, and warrant exercise period based upon the stated terms. C. Exercise of Warrants 1. In March, 2017, the consultant mentioned in Note 3B1 above exercised their 400,000 warrants and acquired 334,450 shares of common stock in accordance with the original terms of the warrant agreement. The exercise of the warrants was made on a net share settlement basis and resulted in delivery to the Company of 65,550 shares by the consultant for a total exercise price of $130,000, based on the average market value of the common shares for the ten-day period preceding the date of exercise. 2. During the first quarter of 2017 the Company received $66,666 through the exercise of 266,666 warrants to purchase 266,667 shares of common stock. The warrants carried an exercise price of $0.25.

Note 4 - Subsequent Events

Note 4 - Subsequent Events	3 Months Ended
	Mar. 31, 2017
Notes
Note 4 - Subsequent Events	NOTE 4 - SUBSEQUENT EVENTS As previously discussed in Note 6 of the consolidated financial statements as at December 31, 2016, OWC received $50,000 from Medmar LLC ("Medmar") during February 2017. On April 21, 2017, OWC served written notice to Medmar of OWC's determination to prepay the non-recourse loan by Medmar to OWC in the principal amount of $300,000. OWC has elected to exercise what it believes is its absolute right to terminate certain distribution rights granted to Medmar under the loan agreement. As a result of the Company exercising its right to terminate the distribution rights, the loans from Medmar are no longer considered by the company to be non-recourse, and the entire amount of the obligation has been classified as a current liability as of March 31, 2017.

Note 1 - General_ B. Liquidity

Note 1 - General: B. Liquidity and Going Concern Uncertainty (Policies)	3 Months Ended
	Mar. 31, 2017
Policies
B. Liquidity and Going Concern Uncertainty	B. Liquidity and going concern uncertainty The development and commercialization of the Company's product is expected to require substantial expenditures. The Company has not yet generated material revenues from operations, and therefore is dependent upon external sources for financing its operations. As of March 31, 2017, the Company has an accumulated deficit of $11,393,830, and its stockholders' equity is $1,627,028. In addition, in each year since its inception the Company reported losses and negative cash flows from operating activities. Management considered the significance of such conditions in relation to the Company's ability to meet its current and future obligations and determined that such conditions raise substantial doubt about the Company's ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. Until such time as the Company generates sufficient revenue to fund its operations (if ever), the Company plans to finance its operations through the sale of equity or equity-linked securities and/or debt securities and, to the extent available, short-term and long-term loans. There can be no assurance that the Company will succeed in obtaining the necessary financing to continue its operations as a going concern. During the first three months of 2017, the Company raised a total amount of approximately $1,650,900 (net of related expenses), from the issuance of units that included Common Stock and warrants. In addition, during 2017 the Company received $66,666 through the exercise of warrants and $50,000 from debt.

Note 1 - General_ C. Risk Facto

Note 1 - General: C. Risk Factors (Policies)	3 Months Ended
	Mar. 31, 2017
Policies
C. Risk Factors	C. Risk factors As described in the above paragraph, the Company has a limited operating history and faces a number of risks and uncertainties, including risks and uncertainties regarding continuation of the development process, demand and market acceptance of the Company's products, the effects of technological changes, competition and the development of products by competitors. Additionally, other risk factors also exist, such as the ability to manage growth and the effect of planned expansion of operations on the Company's future results and the availability of necessary financing. In addition, the Company expects to continue incurring significant operating costs and losses in connection with the development and marketing of its products. The Company has not yet generated material revenues from its operations to fund its activities and therefore is dependent on the receipt of additional funding from its stockholders and/ or new investors in order to continue its operations.

Note 1 - General_ D. Use of Est

Note 1 - General: D. Use of Estimates (Policies)	3 Months Ended
	Mar. 31, 2017
Policies
D. Use of Estimates	D. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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 the estimates. As applicable to these condensed consolidated financial statements, the most significant estimates and assumptions relate to (i) stock-based compensation (ii) the going concern assumptions.

Note 2 - Summary of Significa13

Note 2 - Summary of Significant Accounting Policies: Accounting Principles (Policies)	3 Months Ended
	Mar. 31, 2017
Policies
Accounting Principles	Accounting Principles The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with our consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") related to interim financial statements. As permitted under those rules, certain information and footnote disclosures normally required or included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are considered necessary to present fairly the results of the Company's financial position and operating results for the interim periods. All such adjustments are of a normal recurring nature. The results for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any other interim period or for any future period.

Note 2 - Summary of Significa14

Note 2 - Summary of Significant Accounting Policies: Principles of Consolidation (Policies)	3 Months Ended
	Mar. 31, 2017
Policies
Principles of Consolidation	Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiary. All intercompany balances and transactions have been eliminated in consolidation.

Note 2 - Summary of Significa15

Note 2 - Summary of Significant Accounting Policies: B. Reclassifications (Policies)	3 Months Ended
	Mar. 31, 2017
Policies
B. Reclassifications	B. Reclassifications Certain reclassifications from the prior year presentation have been made to conform to the current year presentation. These reclassifications did not have material impact on the Company's equity, net assets, results of operations or cash flows.

Note 2 - Summary of Significa16

Note 2 - Summary of Significant Accounting Policies: C. Recently Issued Accounting Standards (Policies)	3 Months Ended
	Mar. 31, 2017
Policies
C. Recently Issued Accounting Standards	C. Recently Issued Accounting Standards 1. Effective January, 2017, the Company adopted Accounting Standards Update (ASU) No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which changes how deferred taxes are classified in organizations' balance sheets. The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, all deferred tax assets and liabilities will be required to be classified as noncurrent. The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods (i.e., in the first quarter of 2017 for calendar year-end companies).Early adoption is permitted for all entities as of the beginning of an interim or annual reporting period. The guidance may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively (i.e., by reclassifying the comparative balance sheet). If applied prospectively, entities are required to include a statement that prior periods were not retrospectively adjusted. If applied retrospectively, entities are also required to include quantitative information about the effects of the change on prior periods. The adoption of this ASU did not have a significant impact on the condensed consolidated financial statements. 2. Effective January, 2017, the Company adopted Accounting Standards Update (ASU) No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The amendments also simplify two areas specific to private companies. For public business entities, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period periods (i.e., in the first quarter of 2017 for calendar year-end companies). The adoption of this ASU did not have a significant impact on the condensed consolidated financial statements. 3. In May 2014, The FASB issued Accounting Standard Update 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 also requires entities to disclose sufficient information, both quantitative and qualitative, to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. During 2016, the FASB issued several Accounting Standard Updates that focuses on certain implementation issues of the new revenue recognition guidance including Narrow-Scope Improvements and Practical Expedients, Principal versus Agent Considerations and Identifying Performance Obligations and Licensing. An entity should apply the amendments in this ASU using one of the following two methods: 1. Retrospectively to each prior reporting period presented with a possibility to elect certain practical expedients, or, 2. Retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If an entity elects the latter transition method, it also should provide certain additional disclosures. For a public business entity, the amendments in ASU 2014-09 (including the amendments introduced through recent ASU's) are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period (the first quarter of fiscal year 2018 for the Company). Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company intends to adopt ASU 2014-09 as of January 1, 2018. The Company is in the process of evaluating the impact of ASU 2014-09 on its revenue streams and selling contracts, if any, and on its financial reporting and disclosures. Management is expecting to complete the evaluation of the impact of the accounting and disclosure changes on the business processes, controls and systems throughout 2017. Since the Company did not report so far, material revenues, management believes that the adoption of ASU 2014-09 will not have significant impact on its financial statements.