| Summary of Significant Accounting Policies | NOTE 1 – Summary of Significant Accounting
Policies The significant accounting
policies of Health-Right Discoveries, Inc and its subsidiaries (collectively, the “Company”) were described in Note
1 to the audited consolidated financial statements included in the Company’s 2017 Annual Report on Form 10-K (“2017
Form 10-K”). There have been no significant changes in the Company’s significant accounting policies for the six months
ended June 30, 2018. Basis of Presentation The accompanying unaudited
condensed consolidated financial statements of the Company have been prepared in conformity with accounting principles generally
accepted in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations
of the Securities and Exchange Commission. Therefore, they do not include all information and footnotes normally included
in annual consolidated financial statements and should be read in conjunction with the consolidated financial statement and notes
thereto included in the 2017 Form 10-K for the year ended December 31, 2017. In the opinion of the Company’s management,
the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of
normal recurring accruals) to present the financial position of the Company as of June 30, 2018 and the results of operations and
cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2018 are not necessarily
indicative of the operating results for the full fiscal year or any future period. Use of Estimates The preparation of
the 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 dates of the financial statements
and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
Certain of the Company’s estimates could be affected by external conditions, including those unique to its industry, and
general economic conditions. It is possible that these external factors could have an effect on the Company’s estimates that
could cause actual results to differ from its estimates. The Company re-evaluates all of its accounting estimates at least quarterly
based on these conditions and record adjustments when necessary. Inventories Inventories, which
consist of the Company’s product held for resale, are stated at the lower of cost, determined using the first-in, first-out,
or net realizable value. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated
costs to complete and dispose of the product. If the Company identifies
excess, obsolete or unsalable items, its inventories are written down to their realizable value in the period in which the impairment
is first identified. Shipping and handling costs incurred for inventory purchases and product shipments are recorded in cost of
sales in the Company’s statements of operations. In the first and second quarters of 2018 and 2017, the Company recorded
a loss of $-0- due to management’s estimate of obsolete inventory. Property and Equipment Property and equipment are stated at cost.
Expenditures for additions are capitalized, repairs and maintenance are expensed as incurred. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets, which are as follows:
June 30, 2018 December 31, 2017
Machinery and equipment – 7 years $ 60,274 $ 19,195
Accumulated depreciation (11,087 ) (8,603 )
Total property and equipment $ 49,187 $ 10,592 Financial Instruments
and Fair Value Measurements The fair value of
a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing
parties, other than in a forced sale or liquidation. Fair value estimates are made at a specific point in time, based on relevant
market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters
of judgment, and therefore cannot be determined with precision. Accounting standards
define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or
most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.
Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be
used to measure fair value: Level 1 — quoted
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 for similar assets or liabilities;
quoted prices 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
following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:
● Cash and cash equivalents, restricted cash, operating lease related receivables, and accounts payable
● Goodwill, other intangible assets, and long-lived assets held and used: Stock-based compensation The Company recognizes
compensation expense for stock-based compensation in accordance with ASC Topic 718. For employee stock-based awards, the fair value
of the award is calculated on the date of grant using the Black-Scholes method for stock options and the quoted price of our common
stock for common shares; the expense is recognized over the service period for awards expected to vest. For non-employee stock-based
awards, the fair value of the award on the date of grant is calculated in the same manner as employee awards. However, the awards
are revalued at the end of each reporting period and the pro rata compensation expense is adjusted accordingly until such time
the nonemployee award is fully vested, at which time the total compensation recognized to date equals the fair value of the stock-based
award as calculated on the measurement date, which is the date at which the award recipient’s performance is complete. The
estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates
differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. Earnings (Loss)
Per Share Basic earnings (loss)
per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period.
Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding,
noted above. Recent Accounting Pronouncements Revenue Recognition As of January 1, 2018, the Company adopted
ASU 2014-09 and all subsequent ASUs that modified ASC 606. As part of the implementation process the Company performed an analysis
to identify accounting policies that needed to change and additional disclosures that are required. The Company considered factors
such as customer contracts with unique revenue recognition considerations, the nature and type of goods and services offered, the
degree to which contracts include multiple performance obligations or variable consideration, and the pattern in which revenue
is currently recognized, among other things. All of the Company’s revenue streams were evaluated, and similar performance
obligations resulted under the new standard. In addition, the Company considered recognition under the new standard and concluded
the timing of the Company’s revenue recognition will remain the same. The Company has also evaluated the changes in controls
and processes that are necessary to implement the new standard, and no material changes were required. CCI’s revenue
predominantly represents consulting services agreements, which included providing services to physicians for billing insurance
companies. The amounts reported as revenue are net of amounts remitted. EZ’s revenue
from the sale of products are recognized when the sale is consummated and title is transferred. The Company and customer enter
into an agreement which outlines the place and date of sale, purchase price, payment terms, and the assignment of rights and warranties
from the Company to the customer. Management has identified the promise in the sale contract to be the transfer of ownership of
the asset. Management believes the asset holds standalone value to the customer as it is not dependent on any other services for
functionality purposes and therefore is distinct within the context of the contract and as described in ASC 606-10. As such, management
has identified the transfer of the asset as the performance obligation. The transaction price is set at a fixed dollar amount per
fixed quantity (number of assets) and is explicitly stated in each contract. Sales revenue is based on a set price for a set number
of assets, which is allocated to the performance obligation discussed above, in its entirety. The Company has determined the date
of transfer to the customer to be the date the customer obtains control and title over the asset and the date which revenue is
to be recognized and payment is due. As such, there is no impact to the timing and amounts of revenue recognized for equipment
sales related to the implementation of ASC 606. Accounting for
Leases In February 2016,
the FASB issued an accounting standard update that amends the accounting guidance on leases. The intent of this ASU is to increase
transparency and comparability among organizations recognizing lease assets and lease liabilities on the balance sheet and disclosing
key information about leasing arrangements. Lessors will account for leases using an approach that is substantially equivalent
to existing U.S. GAAP for sales-type leases, direct financing leases and operating leases. Unlike current guidance, however, a
lease with collectability uncertainties may be classified as a sales-type lease. If collectability of lease payments, plus any
amount necessary to satisfy a lessee residual value guarantee, is not probable, lease payments received will be recognized as a
deposit liability and the underlying assets will not be derecognized until collectability of the remaining amounts becomes probable.
The ASU is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted, and must
be adopted using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest
comparative period in the financial statements. The Company plans to adopt this guidance on January 1, 2019, that standard’s
effective date, and is currently in the process of determining the impact that the updated accounting guidance will have on the
consolidated financial statements and related disclosures. Classification
of Certain Cash Receipts and Cash Payments In August 2016, the
FASB issued an accounting standard update that provides guidance on the following eight specific cash flow classification issues:
(1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon debt instruments or other debt instruments with
coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (3) contingent consideration
payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement
of corporate-owned life insurance policies, including bank-owned life insurance policies; (6) distributions received from equity
method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application
of the predominance principle. Current GAAP does not include specific guidance on these eight cash flow classification issues.
The amendments of this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption permitted.
We will adopt this accounting standard update effective January 1, 2018. The provisions of this update will not have a material
impact on our consolidated statements of cash flows. Tax Cuts and
Jobs Act In February 2018,
the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain
Tax Effects from Accumulated Other Comprehensive Income” to address stakeholder concerns about the guidance in current U.S.
GAAP that requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax laws or rates with the
effect included in income from continuing operations in the reporting period that includes the enactment date. The amendments in
this Update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects
resulting from the Tax Cuts and Jobs Act. The Company is currently evaluating the timing, methods and impact of adopting this new
standard on the consolidated financial statements. |
