| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of presentation and principles of consolidation Effective
September 29, 2018, following authorization by its shareholders, the Company withdrew its previous election to be regulated as
a BDC under the Investment Company Act of 1940, as amended, or the 1940 Act. Prior to such time, the Company was a closed-end, non-diversified management
investment company that had elected to be treated as a BDC under the 1940 Act. The
Company discontinued applying the guidance in FASB Accounting Standards Codification (ASC) Topic 946 - Financial Services –
Investment Company and shall account for the change in its status prospectively by accounting for its equity investments in accordance
with ASC Topics 320 - Investments—Debt and Equity Securities as of the date of the change in status. Additionally, the presentation
of the financial statements will be that of a commercial company rather than that of an investment company. In
accordance with ASC 946, the Company is making this change to it financial reporting prospectively, and not restating periods
prior to the Company's change in status to a non-investment company effective September 29, 2018. Accordingly, in this report,
the Company refers to both accounting in accordance with U.S. generally accepted accounting principles (GAAP) applicable to corporations
(Corporation Accounting), which applies commencing September 29, 2018 and to that applicable to investment companies under the
1940 Act (Investment Company Accounting) which applies to prior periods. However, pursuant to ASC 205 – Presentation of
Financial Statements, Section 205-10-50-1, "Changes Affecting Comparability", certain amounts in the 2018 financial
statements have been reclassified to conform to the 2019 presentation. These reclassifications primarily effect the presentation
of revenues and expenses in the statements of operations. The schedules of investments are not presented for the three months
ended March 31, 2018. The Company determined that there is no cumulative effect of the change from Investment Company Accounting
to Corporation Accounting on periods prior to those presented and that there is no effect on the Company's financial position
or results of operations as a result of this change. In
order to maintain its status as a non-investment company, the Company will now operate so as to fall outside the definition of
an "investment company" or within an applicable exception. The Company expects to continue to operate outside the
definition of an "investment company" as a company primarily engaged in the business of developing and selling apparel
products. All
adjustments (consisting of normal recurring items) necessary to present fairly the Company's financial position as of March
31, 2019, and the results of operations and cash flows for the periods ended March 31, 2019 and 2018 have been included. The results
of operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the full
year. The accounting policies and procedures employed in the preparation of these condensed consolidated financial statements
have been derived from the audited financial statements of the Company for the fiscal year ended December 31, 2018, which
are contained in the Company's Form 10-K as filed with the Securities and Exchange Commission ("SEC") on
April 4, 2019. Going
Concern These
unaudited condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying unaudited
condensed financial statements, the Company had a net loss and cash used in operations of $123,523 and $149,524 for the three
months ended March 31, 2019, respectively. Additionally, the Company had an accumulated deficit of $1,766,033 at March 31,
2019 and has not generated any revenues under its new business plan. These factors raise substantial doubt about the Company's
ability to continue as a going concern for a period of twelve months from the issuance date of this report. Management cannot
provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional
debt and/or equity capital. The Company is seeking to raise capital through additional debt and/or equity financings to fund its
operations in the future. If the Company is unable to raise additional capital or secure additional lending in the near future
to fund its business plan, management expects that the Company will need to curtail its operations. These unaudited condensed
financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts
and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Use
of Estimates The
preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States
of America 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. Making estimates requires management to exercise significant judgment. It is at least reasonably
possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited
condensed financial statements, which management considered in formulating its estimate could change in the near term due to one
or more future confirming events. Accordingly, the actual results could differ significantly from estimates. Significant estimates
during the three months ended March 31, 2019 include the collectability of notes receivable, the valuation of the Company's
equity investments, amortization period and valuation of intangibles, the estimates for obsolete inventory, assumptions used in
assessing impairment of long-term assets, valuation allowances for deferred tax assets and the fair value of shares issued services.
Cash
and Cash Equivalents The
Company considers all highly liquid investments with a maturity of three months or less when acquired to be cash equivalents.
The Company places its cash with high credit quality financial institutions. The Company's accounts at these institutions
are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000 or by the Securities Investor Protection
Corporation ("SIPC") up to $250,000. During 2019 and 2018, the Company had cash balances exceeding the FDIC and SIPC
insurance limit on interest bearing accounts. To reduce its risk associated with the failure of such financial institutions, the
Company evaluates at least annually the rating of the financial institutions in which it holds deposits. At March 31, 2019 and
December 31, 2018, the Company had approximately $0 and $86,700, respectively, of cash in excess of FDIC limits. Notes
Receivable The
Company recognizes an allowance for losses on notes receivable in an amount equal to the estimated probable losses net of recoveries.
The allowance is based on an analysis of historical bad debt experience, current note receivable aging, and expected future write-offs,
as well as an assessment of specific identifiable accounts considered at risk or uncollectible. The expense associated with the
allowance for doubtful accounts is recognized as general and administrative expense. Inventory Inventory,
consisting of finished goods, are stated at the lower of cost and net realizable value utilizing the first-in, first-out (FIFO)
method. A reserve is established when management determines that certain inventories may not be saleable. If inventory costs exceed
expected net realizable value due to obsolescence or quantities in excess of expected demand, the Company will record reserves
for the difference between the cost and the net realizable value. These reserves shall be recorded based on estimates and included
in cost of sales. Securities
Transactions Securities
transactions are recorded on a trade date basis. Securities transactions outside conventional channels, such as private transactions,
are recorded as of the date the Company obtains the right to demand the securities purchased or to collect the proceeds from a
sale, and incurs an obligation to pay for securities purchased or to deliver securities sold, respectively. The Company records
interest and dividend income on an accrual basis to the extent that the Company expects to collect such amounts. Commissions and
other costs associated with transactions involving securities, including legal costs, are included in the cost basis of purchases
and deducted from the proceeds of sales. Equity
Investments, at Cost Equity
investments, at cost of $12,766 at March 31, 2019 and December 31, 2018, comprised mainly of non-marketable capital stock and
stock warrants, are recorded at cost, as adjusted for other than temporary impairment write-downs and are evaluated for impairment
periodically. Prior to September 29, 2018, equity investments, at cost were recorded at fair value, represented as cost, plus
or minus unrealized appreciation or depreciation. The fair value of equity investments, at cost that had no ready market were
determined in good faith by the Board of Directors, based upon the financial condition and operating performance of the underlying
investee companies as well as general market trends for businesses in the same industry. Equity
Investments, at Fair Value Through
September 29, 2018, on a quarterly basis, the Board of Directors of the Company (the "Board"), in good faith, determined
the fair value of equity investments, at fair value in the following manner: Equity
securities which are listed on a recognized stock exchange are valued at the adjusted closing trade price on the last trading
day of the valuation period. For equity securities that carry a restriction inherent to the security, a restriction discount is
applied, as appropriate. Investments in warrants are valued at fair value using the Black-Scholes option pricing model. Investments
in securities which are convertible at a date in the future are valued assuming a full conversion into common shares and valued
based on the methodology for equity securities described above, or at the respective investment's face value, whichever
is a better indicator of fair value. Investments in unlisted securities are valued using a market approach net of the appropriate
discount for lack of marketability. Investments
without a readily determined market value were primarily valued using a market approach, an income approach, or both approaches,
as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical
or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts
(for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated
by current market expectations about those future amounts. In following these approaches, the types of factors that the Company
may take into account in fair value pricing the Company's investments include, as relevant: available current market data,
including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security
covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's
ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons
of financial ratios of peer companies that are public, M&A comparables, and enterprise values, among other factors. Because
there is not a readily available market value for some of the investments in its portfolio, the Company valued certain of its
portfolio investments at fair value as determined in good faith by the Board, as described herein. Due to the inherent uncertainty
of determining the fair value of investments that do not have a readily available market value, the fair value of the Company's
investments may fluctuate from period to period. Additionally, the fair value of the Company's investments differed significantly
from the values that would have been used had a readily available market existed for such investments and may differ materially
from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions
on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment
in a forced or liquidation sale, the Company could realize significantly less than the value at which the Company has recorded
it. Subsequent
to September 29, 2018, pursuant to ASC 320 – Investments – Debt and Equity Securities, the Company categorizes its
equity investments, fair value as an available for sale security since there is an active market in such equity investment. Available
for sale securities are carried at fair value with unrealized gains or losses included in income (expense). Realized gains
and losses are determined on a specific identification basis and are included in other income (expense). The Company reviews equity
investments for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts
may not be recovered. Net
Realized Gain or Loss and Net Change in Unrealized Appreciation or Depreciation of Equity Investments, at Fair Value Realized
gain or loss is recognized when an investment is disposed of and is computed as the difference between the Company's cost
basis and the net proceeds received from such disposition. Realized gains and losses on investment transactions are
determined by specific identification. Net change in unrealized appreciation or depreciation is computed as the difference between
the fair value of the investment and the cost basis of such investment, including any reversal of previously recorded unrealized
appreciation/depreciation when gains or losses are realized. Revenue
Recognition The
Company applies Accounting Standards Update ("ASU") 2014-09 and ASC Topic 606, Revenue from Contracts with Customers
The
Company records interest and dividend income on an accrual basis to the extent that the Company expects to collect such amounts. Stock-based
compensation Stock-based
compensation is accounted for based on the requirements of ASC 718 – "Compensation–Stock Compensation The
Company adopted Accounting Standards Update No. 2016-09 ("ASU 2016-09 "), Improvements to Employee Share-Based Payment
Accounting In
June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies several
aspects of the accounting for nonemployee share-based payment transactions by expanding the scope of the stock-based compensation
guidance in ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. ASU No. 2018-07
is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early
adoption is permitted, but entities may not adopt prior to adopting the new revenue recognition guidance in ASC 606. The Company
adopted ASU No. 2018-07 on January 1, 2019 and there was no cumulative effect of adoption. Upon
exercise of the stock options by the holder using the exercise methods delineated in the option contract, the Company issues new
shares from its unissued authorized shares. Income
Taxes Deferred
income tax assets and liabilities arise from temporary differences between the financial statements and tax basis of assets and
liabilities, as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Deferred
tax assets and liabilities are classified as current or non-current, depending upon the classification of the asset or liabilities
to which they relate. Deferred tax assets and liabilities not related to an asset or liability are classified as current or non-current
depending on the periods in which the temporary differences are expected to reverse. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized. The
Company follows the provisions of FASB ASC 740-10, "Uncertainty in Income Taxes". Certain recognition thresholds must
be met before a tax position is recognized in the financial statements. An entity may only recognize or continue to recognize
tax positions that meet a "more-likely-than-not" threshold. Net
(Loss) Income per Common Share Basic
(loss) income per share is computed by dividing net (loss) income available to common shareholders by the weighted average number
of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income available
to common shareholders by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive
securities outstanding during the period using the as-if converted method. Potentially dilutive securities which included convertible
preferred shares are excluded from the computation of diluted shares outstanding if they would have an anti-dilutive impact on
the Company's net losses. The following table presents a reconciliation of basic and diluted net (loss) income per share:
Three Months Ended March 31,
2019 2018
(Loss) Income per common share - basic:
Net (loss) income allocated to common stockholders $ (123,523 ) $ 17,549
Weighted average common shares outstanding - basic 23,417,818 50,082,441
Net (loss) income per common share - basic $ (0.01 ) $ 0.00
(Loss) Income per common share - diluted:
Net (loss) income allocated to common shareholders - diluted $ (123,523 ) $ 17,549
Weighted average common shares outstanding - basic 23,417,818 50,082,441
Effect of dilutive securities:
Convertible preferred stock - 2,000,000
Weighted average common shares outstanding – diluted 23,417,818 52,082,441
Net (loss) income per common share - diluted $ (0.01 ) $ 0.00 The
following potentially dilutive shares have been excluded from the calculation of diluted net loss per share as their effect would
be anti-dilutive for the three months ended March 31, 2019 and 2018:
March 31, 2019 March 31, 2018
Convertible preferred stock 2,000,000 - New
Accounting Pronouncements Accounting
standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have
a material impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated
to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
