DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Mar. 28, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-K | |
Entity Registrant Name | UAS Drone Corp. | |
Entity Central Index Key | 1,638,911 | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2017 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2,017 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 1,172,544 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Public Float | $ 0 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash | $ 343 | |
Inventories, net | 5,111 | 9,852 |
Prepaid expense | 28,824 | 26,250 |
Total current assets | 34,278 | 36,102 |
Total assets | 34,278 | 36,102 |
CURRENT LIABILITIES: | ||
Bank overdraft | 13 | |
Accounts payable | 22,586 | 15,212 |
Accrued expenses | 86,824 | 51,123 |
Note payable | 19,804 | 19,804 |
Note payable related party, net | 60,190 | 26,107 |
Convertible notes payable | 450,015 | 400,010 |
Total current liabilities | 639,419 | 512,269 |
Total liabilities | 639,419 | 512,269 |
STOCKHOLDERS' DEFICIT: | ||
Common stock, $0.0001 par value: 100,000,000 shares authorized; 1,172,544 shares issued and outstanding at December 31, 2017 and 2016 | 117 | 117 |
Additional paid-in capital | 143,046 | 122,964 |
Accumulated deficit | (748,304) | (599,248) |
Total stockholders' deficit | (605,141) | (476,167) |
Total liabilities and stockholders' deficit | $ 34,278 | $ 36,102 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Common stock par value | $ 0.0001 | $ 0.0001 |
Common stock authorized | 100,000,000 | 100,000,000 |
Common stock issued | 1,172,544 | 1,172,544 |
Common stock outstanding | 1,172,544 | 1,172,544 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Revenue | $ 5,000 | |
Cost of Revenue | ||
Cost of sales | 4,741 | |
Total cost of revenue | 4,741 | |
Gross profit | 259 | |
OPERATING EXPENSES: | ||
General and administrative | 45,082 | 44,840 |
Impairment of inventory | 11,376 | |
Research and development | 4,740 | |
Professional fees | 64,771 | 207,312 |
Total operating expenses | 109,853 | 268,268 |
LOSS FROM OPERATIONS | (109,594) | (268,268) |
OTHER EXPENSE: | ||
Interest expense | (39,462) | (30,906) |
Total other expense | (39,462) | (30,906) |
LOSS BEFORE INCOME TAXES | (149,056) | (299,174) |
INCOME TAXES | ||
NET LOSS | $ (149,056) | $ (299,174) |
BASIC AND DILUTED LOSS PER COMMON SHARE | $ (0.13) | $ (0.26) |
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 1,172,544 | 1,161,427 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock [Member] | Additional Paid In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2015 | $ 112 | $ 10,371 | $ (300,074) | $ (289,591) |
Balance, shares at Dec. 31, 2015 | 1,116,700 | 1,116,700 | ||
Sale of common stock | $ 2 | 38,764 | $ 38,766 | |
Sale of common stock, shares | 25,844 | 25,844 | ||
Grant of stock options for board services | 20,020 | $ 20,020 | ||
Issuance of stock options for board services | $ 3 | 52,497 | 52,500 | |
Issuance of stock options for board services, shares | 30,000 | |||
Award of common stock for board services | 20,020 | |||
Discount on loan from stockholder | 1,312 | 1,312 | ||
Net loss | (299,174) | (299,174) | ||
Balance at Dec. 31, 2016 | $ 117 | 122,964 | (599,248) | $ (476,167) |
Balance, shares at Dec. 31, 2016 | 1,172,544 | 1,172,544 | ||
Grant of stock options for board services | 18,402 | $ 18,402 | ||
Award of common stock for board services | 18,402 | |||
Discount on loan from stockholder | 1,680 | 1,680 | ||
Net loss | (149,056) | (149,056) | ||
Balance at Dec. 31, 2017 | $ 117 | $ 143,046 | $ (748,304) | $ (605,141) |
Balance, shares at Dec. 31, 2017 | 1,172,544 | 1,172,544 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (149,056) | $ (299,174) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Issuance of stock options for board services | 18,402 | 20,020 |
Award of common stock for board services | 52,500 | |
Allowance for obsolete inventory | 7,524 | |
Lower of cost or market inventory | 3,852 | |
Imputed interest expense | 2,754 | 237 |
Change in assets and liabilities: | ||
Prepaid expenses and insurance finance, net | (2,573) | (680) |
Inventory | 4,741 | 4,740 |
Accounts payable | 7,374 | 2,606 |
Accrued expense | 35,701 | 28,323 |
Net Cash Used in Operating Activities | (82,657) | (180,052) |
Cash Flows from Financing Activities: | ||
Overdraft on bank account | (13) | 13 |
Advances from stockholder | 48,008 | 37,182 |
Re-Payment of advances from stockholder | (15,000) | (10,000) |
Proceeds from convertible note payable | 50,005 | 100,010 |
Net Cash Provided by Financing Activities | 83,000 | 127,211 |
Net Increase (decrease) in Cash | 343 | (14,075) |
Cash at Beginning of Year | 14,075 | |
Cash at End of Year | 343 | |
Cash paid during the years for: | ||
Interest | 1,006 | 846 |
Income taxes | ||
Supplemental Disclosures of Non-Cash Investing and Financing Activities: | ||
Issuance of note payable for prepaid insurance | $ 28,098 | $ 28,098 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | NOTE 1 DESCRIPTION OF BUSINESS UAS Drone Corp. (the Company) was incorporated under the laws of the State of Nevada on February 4, 2015. The Company began limited operations on February 11, 2015. Prior to the Companys formation, the operations were functioning under Unlimited Aerial Systems, LLP (UAS LLP). UAS LLP was formed under the laws of the State of Louisiana on August 22, 2014. Effective March 31, 2015, the Company completed a reverse merger with UASLLP. The reverse merger was accounted for as a reverse capitalization. Accordingly, the accompanying consolidated financial statements represent the historical assets, liabilities, and results of operations of UAS LLP. The Company is engaged in the production and sale of Unmanned Aerial Systems, commonly referred to as drones. The Companys principal operations will include the production and sale of drones. The Company will work with law enforcement agencies and tailor its products to the specific needs of the law enforcement community and has entered into two agreements with Havis for the manufacturing and distribution of the Companys products. The Company also has an arrangement with a drone flight training group, under which management is gaining key operational and performance data to improve the product and make it more appealing to our core customer demographic. The Company expects to generate revenues and related cash flows from the sale of its drones through these arrangements as well as other channels. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting These consolidated financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States. The Companys financial statements are prepared using the accrual method of accounting. The Company has elected a December 31 fiscal year end. Principles of consolidation The accompanying consolidated financial presented reflect the accounts of UAS Drone Corp. and UAS LLP. All significant inter-company transactions have been eliminated in consolidation. Use of Estimates and Assumptions The preparation of 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include evaluation of obsolete inventory, valuation of stock options granted and valuation for awards of common stock. Cash and Cash Equivalents Inventory Inventory consists of the Companys finished goods and is stated at the lower of cost or market, using the FIFO method of inventory, net of reserves for excess, obsolete, damaged, or slow-moving items. Inventory consists of the following: 2017 2016 Raw materials $ 4,320 $ 4,320 Finished goods 10,452 15,193 Allowance for obsolescence (9,661) (9,661) Total inventory $ 5,111 $ 9,852 During the year ended December 31, 2017 and 2016, the Company recorded impairment charges of $0 and $7,524, respectively. Revenue Recognition The Company is in the business of selling unmanned aerial systems (Drones). The sale of drones are recognized upon shipment of the product only if no significant Company obligations remain, the fee is fixed or determinable, and collection is received or the resulting receivable is deemed probable. On October 21, 2015, the Company entered into two agreements with a distributor who will provide both manufacturing and distribution services for its products to the law enforcement sector in the United States. The manufacturing agreement has a five-year term with successive three-year renewal terms, and provides a framework for development of marketing materials, warranty and service programs, training, and risk mitigation, among other material terms. Upon termination of the agreement, the Company shall repurchase any or all merchantable inventory of the Quadrotor drones on hand with the distributor at the prices paid to UAS. During the years ended December 31, 2017 and 2016, the Company did not sell any products to this distributor. Fair Value of Financial Instruments The carrying value of the Companys financial instruments, consisting of accounts payable, convertible debt and notes payable approximate their fair value due to the short-term maturity of such instruments. Unless otherwise noted, it is managements opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial statements. Income Taxes A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. When required, the Company records a liability for unrecognized tax positions, defined as the aggregate tax effect of differences between positions taken on tax returns and the benefits recognized in the financial statements. Tax positions are measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. No tax benefits are recognized for positions that do not meet this threshold We recognize interest and penalties related to unrecognized tax benefits on the interest expense line and other expense line, respectively, in the accompanying consolidated statement of operations. Accrued interest and penalties are included on the related liability lines in the unaudited condensed consolidated balance sheet. Loss per Share The basic loss per share is calculated by dividing our net loss by the weighted average number of common shares during the period. The diluted earnings (loss) per share is calculated by dividing our net loss by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. For the year ended December 31, 2017, the Company has 1,217,181 shares underlying the convertible debt, and 45,000 vested stock options, which have been excluded from the calculation of diluted loss per share because their impact was anti-dilutive. For the year ended December 31, 2016, the Company has 1,106,703 shares underlying the convertible debt, and 25,000 vested stock options, which have been excluded from the calculation of diluted loss per share because their impact was anti-dilutive. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under U.S. generally accepted accounting principles. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. On July 9 2015, the FASB agreed to delay the effective date by one year; accordingly, the new standard is effective for us beginning in the first quarter of 2018 and we expect to adopt it at that time. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. This standard is not expected to have a material effect on the Companys financial position, results of operations and cash flows. In February 2016, the FASB issued changes to the accounting for leases that primarily affect presentation and disclosure requirements. The new standard will require the recognition of a right to use asset and underlying lease liability for operating leases with an initial life in excess of one year. This standard is effective for us beginning in the first quarter of 2019. We have not yet determined the impact of the new standard on our consolidated financial statements. Recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on the Companys present or future financial statements. Research and Development The Company expenses research and development costs as incurred. Research and Development costs totaled $0 and $4,740 for the years ended December 31, 2017 and 2016, respectively. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 3 RELATED PARTY TRANSACTIONS During 2017, a stockholder of the Company loaned $48,008 to the company without a set maturity date and zero percent interest. The Company recorded a discount of $1,680 on the loan, which was classified as Additional Paid in Capital, and recorded interest expense of $1,680 during 2017. The balance due to the shareholder is $60,190 as of December 31, 2017. During 2016, a stockholder of the Company loaned $37,182 to the company without a set maturity date and zero percent interest. The Company recorded a discount of $1,312 on the loan, which was classified as Additional Paid in Capital, and recorded interest expense of $237 during 2016. The balance due to the shareholder is $26,107 as of December 31, 2016. |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 4 NOTES PAYABLE On April 1, 2015, the Company closed a Subscription Agreement by which one institutional investor purchased an 8% Convertible Debenture having a total principal amount of $300,000, convertible into common shares of the Company at $0.33 per share and maturing April 1, 2017. The Company determined that the embedded conversion option did not require bifurcation and liability treatment because the underlying shares were not readily convertible to cash. The Company estimated the fair value of the underlying common stock and determined that the convertible note did not include a beneficial conversion feature. As of December 31, 2017 and 2016, the balance of this convertible note payable was $300,000. On April 1, 2016, the Company closed an Additional Advance Agreement by which one institutional investor purchased an 8% Convertible Debenture having a total principal amount of $100,010, convertible into common shares of the Company at $1.55 per share and maturing April 1, 2017. The Company determined that the embedded conversion option did not require bifurcation and liability treatment because the underlying shares were not readily convertible to cash. The Company estimated the fair value of the underlying common stock and determined that the convertible note did not include a beneficial conversion feature. As of December 31, 2017 and 2016, the balance of these convertible notes payable were $100,010. On January 27, 2017, the Company closed a convertible debenture by which one institutional investor purchased an 8% Convertible Debenture having a total principal amount of $50,005, convertible into common shares of the Company at $1.55 per share and maturing August 1, 2018. The Company determined that the embedded conversion option did not require bifurcation and liability treatment because the underlying shares were not readily convertible to cash. The Company estimated the fair value of the underlying common stock and determined that the convertible note did not include a beneficial conversion feature. As of December 31, 2017, the balance of this convertible note payable was $50,005. On September 23, 2017, the Company financed the premium for directors and officers insurance. The Company borrowed $28,098 at 5.54% interest, and the note will be repaid in 10 equal installments of $2,882. As of December 31, 2017, the balance of the note payable was $19,804. On September 23, 2016, the Company financed the premium for directors and officers insurance. The Company borrowed $28,098 at 5.54% interest, and the note will be repaid in 10 equal installments of $2,882. As of December 31, 2016, the balance of the note payable was $19,804. |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
EQUITY | NOTE 5 EQUITY Common Stock The Company has authorized 100,000,000 shares of common stock, $0.0001 par value. During the year ended December 31, 2016, the Company sold 25,844 shares of the Companys common stock at $1.50 a share, for proceeds of $38,766. On January 19, 2016, 25,000 shares of common stock were awarded to the CEO recording expense of $37,500. On March 4, 2016, the company issued the 10,000 shares of common stock awarded to a board member recording and $15,000 of expense for the services provided. As of December 31, 2016, the Company accrued liabilities of $3,300 for refunds that will be returned to prospective investors. These amounts remain unpaid as of December 31, 2017 and are included in accrued expenses on the accompanying consolidated balance sheet. Stock Options During 2017, the Company granted a board member 20,000 stock options at $1.50, which vested on the date of grant, and during 2016, the Company granted a board member 20,000 stock options $1.50 that vested on the date of grant. The fair value of option granted during the years ended December 31, 2017 and 2016 was determined using the Black-Scholes option valuation model. The significant weighted average assumptions relating to the valuation of the Companys Stock Options for the year ended December 31, 2017 and 2016 were as follows: 2017 2016 Dividend yield 0% 0% Expected life 3.0 yrs. 3.0 yrs. Expected volatility 105.75% 110.74% Risk-free interest rate 1.50 1.62% 0.71 1.47% A summary of the options activity for the years ended December 31, 2017 and 2016 are as follows: For the Years Ended December 31, 2017 and 2016 Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January 1, 2016 5,000 $ 1.50 3.0 years $ Granted 20,000 $ 1.50 3.0 years Outstanding at December 31, 2016 25,000 $ 1.50 2.43 years Granted 20,000 $ 1.50 3.0 years Outstanding at end of year 45,000 $ 1.50 1.96 years Outstanding at end of year 45,000 $ 1.50 1.96 years Exercisable at end of year 45,000 $ 1.50 1.96 years The total intrinsic value of options as of December 31, 2017 was $0. Intrinsic value is measured using the fair market value at the date of exercise (for shares exercised) or at December 31, 2017 (for outstanding options), less the applicable exercise price. During 2017 and 2016, the company recorded $18,402 and $20,020, respectively of non-cash compensation expense related to the vested stock options issued to a Director. |
CONFLICTS OF INTEREST
CONFLICTS OF INTEREST | 12 Months Ended |
Dec. 31, 2017 | |
CONFLICTS OF INTEREST [Abstract] | |
CONFLICTS OF INTEREST | NOTE 6 CONFLICTS OF INTEREST The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such person(s) may face a conflict in selecting between the Company and his other business interests. The Company has not formulated a policy for the resolution of such conflicts. |
GOING CONCERN
GOING CONCERN | 12 Months Ended |
Dec. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
GOING CONCERN | NOTE 7 GOING CONCERN The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company recognized $5,000 of revenue in 2017 and net losses for the year ended December 31, 2017 and 2016. These conditions raise substantial doubt about the Companys ability to continue as a going concern. The Companys continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing as may be required and ultimately to attain profitability. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management is planning to raise additional funds through debt or equity offerings. There is no guarantee that the Company will be successful in these efforts. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 8 - INCOME TAXES The Company accounts for income taxes in accordance with FASB ASC Topic 740, Accounting for Income Taxes On December 22, 2017, the Tax Cuts and Jobs Act (the Act) was signed into law. The Act decreases the U.S. corporate federal income tax rate from a maximum of 35% to a flat 21% effective January 1, 2018. The impact of the re-measurement on the Corporations net deferred tax asset, as of December 31, 2017, was an approximately $55,124 decrease in deferred tax assets, with a corresponding decrease in the Companys valuation allowance, and no impact on income tax expense. The Act also includes a number of other provisions including, among others, the elimination of net operating loss carrybacks and limitations on the use of future losses, the repeal of the Alternative Minimum Tax regime and the repeal of the domestic production activities deduction. These provisions are not expected to have a material effect on the Corporation. Given the significant complexity of the Act and anticipated additional implementation guidance from the Internal Revenue Service, further implications of the Act may be identified in future periods. The components of income tax expense (benefit) for the years ended December 31, 2017 and 2016 consist of the following: 2017 2016 Deferred tax benefit: Federal $ (5,005) $ 101,622 State 4039 10,850 Increase in valuation allowance 966 (112,472) Deferred tax benefit $ - $ - A reconciliation of income tax expense at the federal statutory rate to income tax expense at the companys effective rate for the years ended December 31: 2017 2016 Computed tax at the expected statutory rate $ (5,005) $ (101,640) State and local income taxes, net of federal 4,039 (10,850) Revaluation of deferred tax assets for change in Federal Tax Rate (55,124) - Other non-deductible expenses - 18 Change in Valuation allowance (54,158) 112,472 Income tax expense/(benefit) $ - $ - The temporary differences, and carryforwards gave rise to the following deferred tax assets at December 31, 2017 and 2016: 2017 2016 Deferred tax assets: Allowance for obsolete inventory $ 542 $ 4,440 Common stock awarded for services 3,802 25,400 Stock options granted for services 5,231 8,376 Net operating loss carryforward 104,151 187,015 Total deferred tax assets 113,726 225,231 Valuation allowance (113,726) (225,231) Net deferred tax assets $ - $ - |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 9 - SUBSEQUENT EVENTS During January and February of 2018, a stockholder of the Company advanced $10,787 to the Company for operating purposes. |
SUMMARY OF SIGNIFICANT ACCOUN16
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Accounting These consolidated financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States. The Companys financial statements are prepared using the accrual method of accounting. The Company has elected a December 31 fiscal year end. |
Principles of consolidation | Principles of consolidation The accompanying consolidated financial presented reflect the accounts of UAS Drone Corp. and UAS LLP. All significant inter-company transactions have been eliminated in consolidation. |
Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include evaluation of obsolete inventory, valuation of stock options granted and valuation for awards of common stock. |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Inventory | Inventory Inventory consists of the Companys finished goods and is stated at the lower of cost or market, using the FIFO method of inventory, net of reserves for excess, obsolete, damaged, or slow-moving items. Inventory consists of the following: 2017 2016 Raw materials $ 4,320 $ 4,320 Finished goods 10,452 15,193 Allowance for obsolescence (9,661) (9,661) Total inventory $ 5,111 $ 9,852 During the year ended December 31, 2017 and 2016, the Company recorded impairment charges of $0 and $7,524, respectively. |
Revenue Recognition | Revenue Recognition The Company is in the business of selling unmanned aerial systems (Drones). The sale of drones are recognized upon shipment of the product only if no significant Company obligations remain, the fee is fixed or determinable, and collection is received or the resulting receivable is deemed probable. On October 21, 2015, the Company entered into two agreements with a distributor who will provide both manufacturing and distribution services for its products to the law enforcement sector in the United States. The manufacturing agreement has a five-year term with successive three-year renewal terms, and provides a framework for development of marketing materials, warranty and service programs, training, and risk mitigation, among other material terms. Upon termination of the agreement, the Company shall repurchase any or all merchantable inventory of the Quadrotor drones on hand with the distributor at the prices paid to UAS. During the years ended December 31, 2017 and 2016, the Company did not sell any products to this distributor. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying value of the Companys financial instruments, consisting of accounts payable, convertible debt and notes payable approximate their fair value due to the short-term maturity of such instruments. Unless otherwise noted, it is managements opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial statements. |
Income Taxes | Income Taxes A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. When required, the Company records a liability for unrecognized tax positions, defined as the aggregate tax effect of differences between positions taken on tax returns and the benefits recognized in the financial statements. Tax positions are measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. No tax benefits are recognized for positions that do not meet this threshold We recognize interest and penalties related to unrecognized tax benefits on the interest expense line and other expense line, respectively, in the accompanying consolidated statement of operations. Accrued interest and penalties are included on the related liability lines in the unaudited condensed consolidated balance sheet. |
Loss per Share | Loss per Share The basic loss per share is calculated by dividing our net loss by the weighted average number of common shares during the period. The diluted earnings (loss) per share is calculated by dividing our net loss by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. For the year ended December 31, 2017, the Company has 1,217,181 shares underlying the convertible debt, and 45,000 vested stock options, which have been excluded from the calculation of diluted loss per share because their impact was anti-dilutive. For the year ended December 31, 2016, the Company has 1,106,703 shares underlying the convertible debt, and 25,000 vested stock options, which have been excluded from the calculation of diluted loss per share because their impact was anti-dilutive. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under U.S. generally accepted accounting principles. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. On July 9 2015, the FASB agreed to delay the effective date by one year; accordingly, the new standard is effective for us beginning in the first quarter of 2018 and we expect to adopt it at that time. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. This standard is not expected to have a material effect on the Companys financial position, results of operations and cash flows. In February 2016, the FASB issued changes to the accounting for leases that primarily affect presentation and disclosure requirements. The new standard will require the recognition of a right to use asset and underlying lease liability for operating leases with an initial life in excess of one year. This standard is effective for us beginning in the first quarter of 2019. We have not yet determined the impact of the new standard on our consolidated financial statements. Recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on the Companys present or future financial statements. |
Research and Development | Research and Development The Company expenses research and development costs as incurred. Research and Development costs totaled $0 and $4,740 for the years ended December 31, 2017 and 2016, respectively. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Inventory | Inventory consists of the following: 2017 2016 Raw materials $ 4,320 $ 4,320 Finished goods 10,452 15,193 Allowance for obsolescence (9,661) (9,661) Total inventory $ 5,111 $ 9,852 |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Schedule of Fair Value Assumptions | The significant weighted average assumptions relating to the valuation of the Companys Stock Options for the year ended December 31, 2017 and 2016 were as follows: 2017 2016 Dividend yield 0% 0% Expected life 3.0 yrs. 3.0 yrs. Expected volatility 105.75% 110.74% Risk-free interest rate 1.50 1.62% 0.71 1.47% |
Schedule of Stock Option Activity | A summary of the options activity for the years ended December 31, 2017 and 2016 are as follows: For the Years Ended December 31, 2017 and 2016 Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January 1, 2016 5,000 $ 1.50 3.0 years $ Granted 20,000 $ 1.50 3.0 years Outstanding at December 31, 2016 25,000 $ 1.50 2.43 years Granted 20,000 $ 1.50 3.0 years Outstanding at end of year 45,000 $ 1.50 1.96 years Outstanding at end of year 45,000 $ 1.50 1.96 years Exercisable at end of year 45,000 $ 1.50 1.96 years |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Expense (Benefit) | The components of income tax expense (benefit) for the years ended December 31, 2017 and 2016 consist of the following: 2017 2016 Deferred tax benefit: Federal $ (5,005) $ 101,622 State 4039 10,850 Increase in valuation allowance 966 (112,472) Deferred tax benefit $ - $ - |
Schedule of Reconciliation of Income Taxes | A reconciliation of income tax expense at the federal statutory rate to income tax expense at the companys effective rate for the years ended December 31: 2017 2016 Computed tax at the expected statutory rate $ (5,005) $ (101,640) State and local income taxes, net of federal 4,039 (10,850) Revaluation of deferred tax assets for change in Federal Tax Rate (55,124) - Other non-deductible expenses - 18 Change in Valuation allowance (54,158) 112,472 Income tax expense/(benefit) $ - $ - |
Schedule of Deferred Tax Assets and Liabilities | The temporary differences, and carryforwards gave rise to the following deferred tax assets at December 31, 2017 and 2016: 2017 2016 Deferred tax assets: Allowance for obsolete inventory $ 542 $ 4,440 Common stock awarded for services 3,802 25,400 Stock options granted for services 5,231 8,376 Net operating loss carryforward 104,151 187,015 Total deferred tax assets 113,726 225,231 Valuation allowance (113,726) (225,231) Net deferred tax assets $ - $ - |
SUMMARY OF SIGNIFICANT ACCOUN20
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Impairment of inventory | $ 0 | $ 7,524 |
Research and development | $ 4,740 | |
Convertible Debt Securities [Member] | ||
Anti-dilutive securities | 1,217,181 | 1,106,703 |
Stock Option [Member] | ||
Anti-dilutive securities | 45,000 | 25,000 |
SUMMARY OF SIGNIFICANT ACCOUN21
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Inventory) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | ||
Raw materials | $ 4,320 | $ 4,320 |
Finished goods | 10,452 | 15,193 |
Allowance for obsolescence | (9,661) | (9,661) |
Total inventory | $ 5,111 | $ 9,852 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | ||
Advances from stockholder | $ 48,008 | $ 37,182 |
Majority Shareholder [Member] | ||
Related Party Transaction [Line Items] | ||
Advances from stockholder | 48,008 | 37,182 |
Due to related party | $ 60,190 | $ 26,107 |
Interest rate | 0.00% | 0.00% |
Discount | $ 1,680 | $ 1,312 |
Interest expense | $ 1,680 | $ 237 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | 1 Months Ended | |||||||||||
Sep. 30, 2017 | Jan. 31, 2017 | Sep. 30, 2016 | Apr. 30, 2016 | Apr. 30, 2015 | Dec. 31, 2017 | Sep. 23, 2017 | Jan. 27, 2017 | Dec. 31, 2016 | Sep. 23, 2016 | Apr. 01, 2016 | Apr. 01, 2015 | |
Debt Instrument [Line Items] | ||||||||||||
Convertible note payable, current | $ 450,015 | $ 400,010 | ||||||||||
Note payable | 19,804 | 19,804 | ||||||||||
Convertible Debt [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Interest rate | 8.00% | 8.00% | 8.00% | |||||||||
Face amount | $ 50,005 | $ 100,010 | $ 300,000 | |||||||||
Conversion price | $ 1.55 | $ 1.55 | $ 0.33 | |||||||||
Maturity date | Jan. 27, 2017 | Apr. 1, 2017 | Apr. 1, 2017 | |||||||||
Notes Payable, Other Payables [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Interest rate | 5.54% | 5.54% | ||||||||||
Face amount | $ 28,098 | $ 28,098 | ||||||||||
Installment term | 10 months | 10 months | ||||||||||
Installment amount | $ 2,882 | $ 2,882 | ||||||||||
Note payable | 19,804 | 19,804 | ||||||||||
Note One [Member] | Convertible Debt [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Convertible note payable, current | 300,000 | 300,000 | ||||||||||
Note Two [Member] | Convertible Debt [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Convertible note payable, current | 100,010 | $ 100,010 | ||||||||||
Note Three [Member] | Convertible Debt [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Convertible note payable, current | $ 50,005 |
EQUITY (Narrative) (Details)
EQUITY (Narrative) (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Mar. 04, 2016 | Jan. 19, 2016 | Oct. 01, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | |
Common stock authorized | 100,000,000 | 100,000,000 | |||
Common stock par value | $ 0.0001 | $ 0.0001 | |||
Issuance of common stock, shares | 25,844 | ||||
Issuance of common stock, share price | $ 1.50 | ||||
Proceed from sale of common stock | $ 38,766 | ||||
Award of common stock for board services | $ 18,402 | 20,020 | |||
Accrued liabilities for refunds to prospective investors | 0 | $ 3,300 | |||
Exercised, intrinsic value | $ 0 | ||||
Granted | 20,000 | 20,000 | |||
Granted, exercise price | $ 1.50 | $ 1.50 | |||
Chief Executive Officer [Member] | |||||
Award of common stock for board services, shares | 25,000 | ||||
Award of common stock for board services | $ 37,500 | ||||
Board Member [Member] | |||||
Award of common stock for board services, shares | 10,000 | 15,000 | |||
Granted | 20,000 | 20,000 | |||
Granted, exercise price | $ 1.50 | $ 1.50 |
EQUITY (Schedule of Fair Value
EQUITY (Schedule of Fair Value Assumptions) (Details) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Dividend yield | 0.00% | 0.00% |
Expected life | 3 years | 3 years |
Expected volatility | 105.75% | 110.74% |
Minimum [Member] | ||
Risk-free interest rate | 1.50% | 0.71% |
Maximum [Member] | ||
Risk-free interest rate | 1.62% | 1.47% |
EQUITY (Schedule of Stock Optio
EQUITY (Schedule of Stock Option Activity) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Shares | ||
Outstanding at beginning of year | 25,000 | 5,000 |
Granted | 20,000 | 20,000 |
Outstanding at end of year | 45,000 | 25,000 |
Outstanding at end of year | 45,000 | |
Exercisable at end of year | 45,000 | |
Weighted Average Exercise Price | ||
Outstanding at beginning of year | $ 1.50 | $ 1.50 |
Granted | 1.50 | 1.50 |
Outstanding at end of year | 1.50 | $ 1.50 |
Outstanding at end of year | 1.50 | |
Exercisable at end of year | $ 1.50 | |
Weighted Average Remaining Contractual Term | ||
Outstanding | 2 years 5 months 5 days | 3 years |
Granted | 3 years | 3 years |
Outstanding at end of year | 1 year 11 months 15 days | 2 years 5 months 5 days |
Exercisable at end of year | 1 year 11 months 15 days | |
Aggregate Intrinsic Value | ||
Outstanding | ||
Vested at end of year | ||
Exercisable at end of year |
GOING CONCERN (Details)
GOING CONCERN (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Risks and Uncertainties [Abstract] | |
Revenue recognized | $ 5,000 |
INCOME TAXES (Narrative) (Detai
INCOME TAXES (Narrative) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred tax assets | $ 113,726 | $ 225,231 |
Deferred tax liabilities | 542 | 4,440 |
Valuation allowance | 113,726 | 225,231 |
Change in valuation allowance | $ 112,759 | $ 112,472 |
Minimum [Member] | ||
Federal Income tax rate | 21.00% | |
Maximum [Member] | ||
Federal Income tax rate | 35.00% |
INCOME TAXES (Schedule of Incom
INCOME TAXES (Schedule of Income Tax Expense (Benefit)) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred tax benefit: | ||
Federal | $ (5,005) | $ 101,622 |
State | 4,039 | 10,850 |
Increase in valuation allowance | 966 | (112,472) |
Income tax expense/(benefit) |
INCOME TAXES (Schedule of Recon
INCOME TAXES (Schedule of Reconciliation of Income Taxes) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Computed tax at the expected statutory rate | $ (5,005) | $ (101,640) |
State and local income taxes, net of federal | 4,039 | (10,850) |
Revaluation of deferred tax assets for change in Federal Tax Rate | (55,124) | |
Other non-deductible expenses | 18 | |
Change in Valuation allowance | (54,158) | 112,472 |
Income tax expense/(benefit) |
INCOME TAXES (Schedule of Defer
INCOME TAXES (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Allowance for obsolete inventory | $ 542 | $ 4,440 |
Common stock awarded for services | 3,802 | 25,400 |
Stock options granted for services | 5,231 | 8,376 |
Net operating loss carryforward | 104,151 | 187,015 |
Total deferred tax assets | 113,726 | 225,231 |
Valuation allowance | (113,726) | (225,231) |
Net deferred tax assets |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Feb. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Subsequent Event [Line Items] | |||
Advances from related party | $ 48,008 | $ 37,182 | |
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Advances from related party | $ 10,787 |