Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Jun. 30, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | RC-1, Inc. | |
Entity Central Index Key | 0001665598 | |
Document Type | 10-K | |
Document Period End Date | Dec. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Public Float | $ 696,500 | |
Entity Common Stock, Shares Outstanding | 13,929,581 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2018 | |
Entity Small Business | true | |
Entity Emerging Growth | false | |
Entity Ex Transition Period | false | |
Entity Shell Company | false |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash | $ 50,596 | $ 60,342 |
Prepaid rent, current portion | 60,000 | 60,000 |
Note receivable - related party | 0 | 75,000 |
Interest receivable - related party | 0 | 4,145 |
Total current assets | 110,596 | 199,487 |
Property and Equipment - net | 43,526 | 44,166 |
Prepaid rent, net of current portion | 0 | 60,000 |
Total long-term assets | 43,526 | 104,166 |
Total Assets | 154,122 | 303,653 |
Current liabilities | ||
Accounts payable | 56,792 | 39,080 |
Accrued liabilities - related party | 90,264 | 30,464 |
Line of credit, current portion | 75,000 | 0 |
Due to related parties, current portion | 68,014 | 122,164 |
Accrued interest payable | 37,418 | 29,918 |
Accrued interest - related parties | 118,816 | 107,734 |
Common stock issuable, current portion | 120,000 | 60,000 |
Total current liabilities | 566,304 | 389,360 |
Line of credit, net of current portion | 0 | 75,000 |
Due to related parties, net of current portion | $ 300 | $ 49,647 |
Common stock issuable, net of current portion | 0 | 60,000 |
Total long-term liabilities | $ 300 | $ 184,647 |
Total Liabilities | 566,604 | 574,007 |
Stockholders' Deficit | ||
Preferred stock, $.001 par value; 10,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock, $.0001 par value; 190,000,000 shares authorized; 13,929,581 issued and outstanding | 1,392 | 1,392 |
Additional paid in capital | 2,877,562 | 2,877,562 |
Accumulated deficit | (3,291,436) | (3,149,308) |
Total Stockholders' Deficit | (412,482) | (270,354) |
Total Liabilities and Stockholders' Deficit | $ 154,122 | $ 303,653 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0010 | $ 0.0010 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 190,000,000 | 190,000,000 |
Common stock, shares issued | 13,929,581 | 13,929,581 |
Common stock, shares outstanding | 13,929,581 | 13,929,581 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | $ 163,500 | $ 155,000 |
Race expenses | 10,274 | 40,178 |
Consulting - related parties | 66,533 | 92,250 |
General and administrative | 150,833 | 92,025 |
Professional fees | 59,407 | 47,703 |
Total operating expenses | 287,047 | 272,156 |
Loss from operations | 123,547 | (117,156) |
Other expenses: | ||
Interest expense - unrelated parties | (7,500) | (7,500) |
Interest expense - related parties | (11,081) | (22,340) |
Interest income - related parties | 4,917 | 4,145 |
Total other income (expense) | (18,581) | (25,695) |
Loss before income taxes | (142,128) | (142,851) |
Provision for income tax | 0 | 0 |
Net loss | $ (142,128) | $ (142,851) |
Net loss per share (Basic and fully diluted) | $ (0.01) | $ (0.01) |
Weighted average number of common shares outstanding | 13,929,581 | 10,747,298 |
Consulting Fees [Member] | ||
Revenues | $ 13,500 | $ 0 |
Consulting Fees - Related Parties [Member] | ||
Revenues | 150,000 | 454,000 |
Sponsorships - Related Parties [Member] | ||
Revenues | $ 0 | $ 101,000 |
Statement of Changes in Stockho
Statement of Changes in Stockholders' Deficit - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2016 | 7,929,581 | |||
Beginning balance, value at Dec. 31, 2016 | $ 792 | $ 2,244,829 | $ (3,006,457) | $ (760,836) |
Sale of vehicle in exchange for cancellation of common stock, shares | (833,333) | |||
Sale of vehicle in exchange for cancellation of common stock, value | $ (83) | (86,584) | (86,667) | |
Asset purchased in exchange for stock, shares | 333,333 | |||
Asset purchased in exchange for stock, shares | $ 33 | 49,967 | 50,000 | |
Shares issued to lessor under terms of facility lease agreement, shares | 400,000 | |||
Shares issued to lessor under terms of facility lease agreement, value | $ 40 | 59,960 | 60,000 | |
Conversion of related party debt to stock, shares | 4,000,000 | |||
Conversion of related party debt to stock, value | $ 400 | 399,600 | 400,000 | |
Conversion of accrued fees to related party to stock, shares | 2,100,000 | |||
Conversion of accrued fees to related party to stock, value | $ 210 | 209,790 | 210,000 | |
Net loss | (142,851) | (142,851) | ||
Ending balance, shares at Dec. 31, 2017 | 13,929,581 | |||
Ending balance, value at Dec. 31, 2017 | $ 1,392 | 2,877,562 | (3,149,308) | (270,354) |
Net loss | (142,128) | (142,128) | ||
Ending balance, shares at Dec. 31, 2018 | 13,929,581 | |||
Ending balance, value at Dec. 31, 2018 | $ 1,392 | $ 2,877,562 | $ (3,291,436) | $ (412,482) |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (142,128) | $ (142,851) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation | 11,653 | 15,834 |
Non-cash rent expense | 60,000 | 60,000 |
Changes in Operating Assets and Liabilities | ||
Decrease in accounts receivable | 0 | 15,000 |
(Increase) decrease in note receivable | 75,000 | (75,000) |
(Increase) decrease in interest receivable | 4,145 | (4,145) |
Increase in accounts payable | 17,712 | 11,602 |
Increase in accrued liabilities - related party | 59,800 | 44,162 |
Increase in accrued interest - unrelated parties | 7,500 | 7,500 |
Increase in accrued interest - related parties | 11,082 | 22,340 |
Net cash provided by (used in) operating activities | 104,764 | (45,558) |
Cash Flows From Investing Activities: | ||
Purchase of assets | (11,013) | 0 |
Net cash used in investing activities | (11,013) | 0 |
Cash Flows From Financing Activities: | ||
Proceeds from line of credit to related parties | 166,683 | 268,000 |
Repayments on line of credit to related parties | (270,180) | (212,000) |
Net Cash (used in) provided by financing activities | (103,497) | 56,000 |
Net (Decrease) Increase In Cash | (9,746) | 10,442 |
Cash At The Beginning Of The Year | 60,342 | 49,900 |
Cash At The End Of The Year | 50,596 | 60,342 |
Schedule of Non-Cash Investing and Financing Activities | ||
Cash paid for interest | 0 | 0 |
Cash paid for income taxes | 0 | 0 |
Supplemental Disclosure | ||
Assumption of debt by related party | 0 | 0 |
Stock received for sale of assets | 0 | (86,667) |
Assets acquired for issuance of stock | 0 | 50,000 |
Related party debt converted to stock | 0 | 400,000 |
Related party accounts payable converted to stock | $ 0 | $ 210,000 |
1. Organization and Description
1. Organization and Description of Business Operations | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business Operations | NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS OPERATIONS RC-1, Inc. (the “Company”), was incorporated in the State of Nevada on May 14, 2009. The Company has generated only limited revenues from its activities in the racing business. R-Course Promotions, LLC was formed in the State of California on October 30, 2007. On June 1, 2009, in a merger classified as a transaction between parties under common control, the sole membership interest owner in R-Course Promotions, LLC exchanged 125,000 membership interests for 1,786 common shares in RC-1, Inc. Subsequent to the consummation of the merger, R-Course Promotions, LLC ceased to exist. The results of operations of RC-1, Inc. and R-Course Promotions, LLC have been combined from October 30, 2007 forward through the date of merger. The Company is a motorsports marketing business focused primary in road racing events in North America utilizing NASCAR type competition equipment. On March 4, 2014, the Company declared a reverse stock split of 1 share for 70 shares outstanding. The authorized number of shares was increased to 200,000,000 and the par value was changed to $.0001 per share. All references to the number of shares have been retroactively restated to reflect the split, to all periods presented. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). 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 those estimates. Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. The Company maintains cash with a commercial bank. The deposits are made with a reputable financial institution and the Company does not anticipate realizing any losses from these deposits. Accounts Receivable Accounts receivable are recognized net of allowances for doubtful accounts, based on historical experience and other available evidence. Accounts receivable are written off when management determines they are uncollectible. The Company wrote off $15,000 of related party receivable during 2017. Property and equipment Property and equipment are recorded at cost and depreciated under the straight line method over each item's estimated useful life. The Company uses a 5 year life for racecars and equipment, 7 years for furniture and fixtures. Long-Lived Assets In accordance with FASB ASC 360, “Property, Plant, and Equipment” which establishes the accounting for impairment of long-lived tangible and intangible assets other than goodwill, the Company reviews for impairment when facts or circumstances indicate that the carrying value of long-lived assets to be held and used may not be recoverable. If such facts or circumstances are determined to exist, an estimate of the undiscounted future cash flows produced by the long-lived asset, or the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on various valuation techniques, including the discounted value of estimated future cash flows. The Company reports impairment cost as a charge to operations at the time it is identified. During the years ended December 31, 2017 and 2016 the Company determined that there was no impairment of long-lived assets. Financial Instruments The Company measures its financial assets and liabilities in accordance with the requirements of FASB ASC 825 “Financial Instruments”. The carrying values of its accounts payable, note payable (current portion), line of credit, accrued expenses, and other current liabilities approximate fair value due to the short-term maturities of these instruments. Revenue Recognition The Company adopted ASU 2014-09, “Revenue from Contracts with Customers” on January 1, 2018, using the modified retrospective method, which did not have a material impact on the timing and amount of product revenues. The new revenue recognition standard prescribes a five-step model that focuses on transfer of control and entitlement to payment when determining the amount of revenue to be recognized. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company’s revenues accounted for under ASC 606 do not require significant estimates or judgments based on the nature of the Company’s revenue. The Company’s contracts do not include multiple performance obligations or variable consideration. Income tax The Company accounts for income taxes pursuant to FASB ASC 740, “Income Taxes”. Under FASB ASC 740 deferred income taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. 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. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. FASB ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under FASB ASC 740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. At December 31, 2018 and 2017, there were no unrecognized tax benefits. Net loss per share The Company utilizes FASB ASC 260, “Earnings per Share.” Basic earnings per share is computed by dividing earnings (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include additional common share equivalents available upon exercise of stock options and warrants using the treasury stock method. Dilutive common share equivalents include the dilutive effect of in-the-money share equivalents, which are calculated based on the average share price for each period using the treasury stock method, excluding any common share equivalents if their effect would be anti-dilutive. For the years ended December 31, 2018 and 2017, there were no potentially dilutive shares outstanding. Products and services, geographic areas and major customers The Company earns revenue from race purses, race event consulting and the occasional sale of racecars, but does not separate sales from different activities into operating segments. Concentrations of debt financing The Company has line of credit agreements with companies owned and operated by the Company’s CEO and majority shareholder. See Note 7 for further discussion of line of credit terms and relationships. Stock based compensation The Company accounts for employee and non-employee stock awards under FASB ASC 718, “Compensation – Stock Compensation”, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. Recent Accounting Pronouncements Management does not believe that any recently issued, but not yet effective, accounting standards, if adopted, will have a material effect on the financial statements. |
3. Going Concern
3. Going Concern | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | NOTE 3. GOING CONCERN These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company's ability to continue as a going concern is contingent upon its ability to achieve and maintain profitable operations, and the Company’s ability to raise additional capital as required. These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty. |
4. Fixed Assets
4. Fixed Assets | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets | NOTE 4. FIXED ASSETS Fixed asset values recorded at cost are as follows: December 31, 2018 December 31, 2017 Racecars & Equipment $ 61,013 $ 50,000 Less: Accumulated depreciation (17,487 ) (5,834 ) Fixed assets, net $ 43,526 $ 44,166 During 2017, the Company sold one and purchased two Racecars in nonmonetary transactions. Depreciation expense was $11,653 and $15,834 for the years the years ended December 31, 2018 and 2017, respectively. |
5. Lines of Credit
5. Lines of Credit | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Lines of Credit | NOTE 5. LINES OF CREDIT December 31, 2018 December 31, 2017 TVP Investments, LLC $ 75,000 $ 75,000 Less: current portion (75,000 ) – Long-term portion $ – $ 75,000 On October 15, 2012, the Company entered into a revolving line of credit agreement with TVP Investments, LLC, a Georgia Limited Liability Company in the amount up to $500,000. The line of credit is unsecured, bears interest of 10% and has a maturity date of December 31, 2019. As of December 31, 2018, and 2017, the Company had accrued interest on this line of credit in the amounts of 37,418 and 29,818, respectively. The Company has a business line of credit up to $3,000 with Well Fargo bank. The line of credit is unsecured with a variable interest rate of approximately 18.0%. The balance due of this line of credit was zero as of December 31, 2018 and 2017. |
6. Stockholders' Equity
6. Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 6. STOCKHOLDERS’ EQUITY In January 2017, the Company entered into a 36-month warehouse lease with Rick Ware Leasing, LLC, payable in 1,200,000 shares of the Company’s common stock (400,000 shares annually). As of December 31, 2018, 400,000 shares had been issued under this agreement. See Note 7 for equity transactions with related parties. |
7. Related Party Transactions
7. Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 7. RELATED PARTY TRANSACTIONS Consulting expense to related parties On January 1, 2015, the Company extended for three years a previous consulting agreement with a company owned and operated by the CEO and majority shareholder to provide consulting services in the motor sports marketing industry. The agreement was extended for another three years on December 31, 2018. The consulting agreement requires a $5,000 monthly fee and can be terminated by either party pursuant to a 60 day notice. On July 3, 2017, $210,000 of the accrued fees were converted into 2,100,000 shares of stock at a value of $0.10 per share. As of December 31, 2018, and 2017, the Company had an accrued liability balance due to this related party of $90,000 and $30,000, respectively. Accrued liabilities to related parties During race events, the Company charges various event related expenses to credit cards of the majority shareholder. These expenses are recorded as accounts payable to related parties at the time the charges are made and reimbursed at the conclusion of the event. The Company had a balance due of $264 and $464 as of December 31, 2018 and 2017, respectively. Due to related parties On October 1, 2009, the Company entered into a line of credit agreement for up to $600,000 with a related party owned and operated by the CEO and majority shareholder that also provides motor sports marketing industry consulting services to the Company as needed. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. The loan bears interest at eight percent (8%) per annum. On July 3, 2017, $200,000 of the balance due was converted into 2,000,000 shares of stock at a value of $0.10 per share. As of December 31, 2018, and 2017, the Company owed $68,014 and $122,164, respectively, in operating advances from this related party. As of December 31, 2018, and 2017, the Company had accrued interest on this line of credit in the amounts of $35,315 and $28,026, respectively. On August 5, 2013, the Company entered into a line of credit agreement for up to $500,000 with a related party owned and operated by the CEO and majority shareholder. On January 1, 2017 the line of credit was extended to $600,000. The line bears interest at 8% per annum and has a maturity date of August 1, 2020. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. On July 3, 2017, $200,000 of the balance due was converted into 2,000,000 shares of stock at a value of $0.10 per share. As of December 31, 2018, and 2017, the Company owed $300 and $49,647, respectively, in operating advances to this related party. As of December 31, 2018, and 2017, the Company had accrued interest on this line of credit in the amounts of $83,501 and $79,708, respectively. Other related party transactions On March 25, 2017, the Company transferred a Ford Mustang to the shareholder from whom it was previously purchased from in exchange for 833,333 shares of common stock, which were cancelled. On May 25, 2017, the Company purchased two racecars from the same shareholder in exchange for 333,333 shares of common stock. The racecars were valued at $50,000. On July 1, 2017, the Company issued 400,000 shares of common stock to Rick Ware Leasing, LLC under the terms of a lease agreement for warehouse space. On April 25, 2017, the Company entered into a sponsorship agreement with Dashub, Inc., a company for whom the majority shareholder serves on the board of directors. The agreement was for $81,000, of which $6,000 was paid at signing. The remaining $75,000 was converted to a note bearing interest at 8% maturing in October 2018. The note can be converted into 75,000 shares of the Company any time prior to the maturity date. As part of the agreement, the Company received warrants to purchase 24,999 shares of Dashub, Inc. at $1.00 per share. The warrants expire April 30, 2018. On the maturity date Dashub was unable to pay the loan, which fell into default. The balance of the loan and accrued interest was written off. A bad debt expense of $79,145 is included in general and administrative expense on the income statement. |
8. Income Taxes
8. Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 8. INCOME TAXES The following table presents the current and deferred income tax provision (benefit) for federal and state income taxes: 2018 2017 Current tax provision: Federal $ – $ – Deferred tax provision (benefit): Federal (72,769 ) (868 ) Change in valuation allowance 72,769 868 Total provision for income tax $ – $ – Current income taxes are based upon the year’s income taxable for federal and state tax reporting purposes. Deferred income taxes (benefits) are provided for certain income and expenses, which are recognized in different periods for tax and financial reporting purposes. Deferred tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the period in which the differences are expected to affect taxable income. The Company’s deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers would be limited under the Internal Revenue Code should a significant change in ownership occur within a three-year period. The tax effects of temporary differences that give rise to deferred tax assets and liabilities are summarized as follows at December 31: 2018 2017 Deferred tax assets: Operating losses $ 99,838 $ 196,068 Accrued related party expenses 88,255 68,977 Accrued related party interest 24,916 20,617 Total deferred tax assets: 213,009 285,662 Deferred tax liabilities: Depreciation differences 20,893 20,777 Total deferred tax liabilities 20,893 20,777 Net deferred tax asset 192,116 264,885 Less: valuation allowance (192,116 ) (264,885 ) Net deferred income tax asset $ – $ – At December 31, 2018 and 2017, the Company had net operating loss carryforwards of $1,668,875 and $1,741,494 respectively, which begin to expire in 2029. In assessing the ability to realize the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carry back and carry forward policies) and the projected future taxable income and tax planning strategies in making this assessment. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those deferred tax assets and liabilities are expected to be realized or settled. Management records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely-than-not to be realized. Based on management’s analysis, they concluded not to retain a deferred tax asset since it is uncertain whether the Company can utilize this asset in future periods. Therefore, they have established a full reserve against this asset. The change in the valuation allowance in 2018 and 2017 was approximately $(72,769) and $868, respectively. The reconciliation of the income tax benefit is computed at the U.S. federal statutory rate as follows at December 31: 2018 2017 U.S. federal statutory tax rate 21.00% 34.00% Change in valuation allowance -21.00% -34.00% Total 0.00% 0.00% The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2018, and 2017, the Company had no accrued interest and penalties related to uncertain tax positions. The Company is subject to taxation in the U.S. The state of Nevada does not impose an income tax on corporations. Tax years for 2014 and forward are subject to examination by tax authorities. The Company is not currently under examination by any tax authority. On December 22, 2017, President Trump signed into law the "Tax Cuts and Jobs Act" ("TCJA") that significantly reformed the Internal Revenue Code of 1986, as amended. The TCJA reduces the corporate tax rate to 21 percent beginning with the years starting January 1, 2018. Because a change in tax law is accounted for in the period of enactment, the deferred tax assets and liabilities have been adjusted to the newly enacted U.S. corporate rate, however, there is no related impact to the tax expense as the deferred tax assets and deferred tax liabilities were fully valued for both years ending December 31, 2018 and 2017. |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Use of Estimates | 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 those estimates. |
Cash and cash equivalents | Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. The Company maintains cash with a commercial bank. The deposits are made with a reputable financial institution and the Company does not anticipate realizing any losses from these deposits. |
Accounts Receivable | Accounts Receivable Accounts receivable are recognized net of allowances for doubtful accounts, based on historical experience and other available evidence. Accounts receivable are written off when management determines they are uncollectible. The Company wrote off $15,000 of related party receivable during 2017. |
Property and equipment | Property and equipment Property and equipment are recorded at cost and depreciated under the straight line method over each item's estimated useful life. The Company uses a 5 year life for racecars and equipment, 7 years for furniture and fixtures. |
Long-lived assets | Long-Lived Assets In accordance with FASB ASC 360, “Property, Plant, and Equipment” which establishes the accounting for impairment of long-lived tangible and intangible assets other than goodwill, the Company reviews for impairment when facts or circumstances indicate that the carrying value of long-lived assets to be held and used may not be recoverable. If such facts or circumstances are determined to exist, an estimate of the undiscounted future cash flows produced by the long-lived asset, or the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on various valuation techniques, including the discounted value of estimated future cash flows. The Company reports impairment cost as a charge to operations at the time it is identified. During the years ended December 31, 2017 and 2016 the Company determined that there was no impairment of long-lived assets. |
Financial Instruments | Financial Instruments The Company measures its financial assets and liabilities in accordance with the requirements of FASB ASC 825 “Financial Instruments”. The carrying values of its accounts payable, note payable (current portion), line of credit, accrued expenses, and other current liabilities approximate fair value due to the short-term maturities of these instruments. |
Revenue recognition | Revenue Recognition The Company adopted ASU 2014-09, “Revenue from Contracts with Customers” on January 1, 2018, using the modified retrospective method, which did not have a material impact on the timing and amount of product revenues. The new revenue recognition standard prescribes a five-step model that focuses on transfer of control and entitlement to payment when determining the amount of revenue to be recognized. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company’s revenues accounted for under ASC 606 do not require significant estimates or judgments based on the nature of the Company’s revenue. The Company’s contracts do not include multiple performance obligations or variable consideration. |
Income tax | Income tax The Company accounts for income taxes pursuant to FASB ASC 740, “Income Taxes”. Under FASB ASC 740 deferred income taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. 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. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. FASB ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under FASB ASC 740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. At December 31, 2018 and 2017, there were no unrecognized tax benefits. |
Net loss per share | Net income (loss) per share The Company utilizes FASB ASC 260, “Earnings per Share.” Basic earnings per share is computed by dividing earnings (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include additional common share equivalents available upon exercise of stock options and warrants using the treasury stock method. Dilutive common share equivalents include the dilutive effect of in-the-money share equivalents, which are calculated based on the average share price for each period using the treasury stock method, excluding any common share equivalents if their effect would be anti-dilutive. For the years ended December 31, 2018 and 2017, there were no potentially dilutive shares outstanding. |
Products and services, geographic areas and major customers | Products and services, geographic areas and major customers The Company earns revenue from race purses, race event consulting and the occasional sale of racecars, but does not separate sales from different activities into operating segments. |
Concentrations of debt financing | Concentrations of debt financing The Company has line of credit agreements with companies owned and operated by the Company’s CEO and majority shareholder. See Note 7 for further discussion of line of credit terms and relationships. |
Stock-based compensation | Stock based compensation The Company accounts for employee and non-employee stock awards under FASB ASC 718, “Compensation – Stock Compensation”, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Management does not believe that any recently issued, but not yet effective, accounting standards, if adopted, will have a material effect on the financial statements. |
4. Fixed Assets (Tables)
4. Fixed Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of fixed assets | December 31, 2018 December 31, 2017 Racecars & Equipment $ 61,013 $ 50,000 Less: Accumulated depreciation (17,487 ) (5,834 ) Fixed assets, net $ 43,526 $ 44,166 |
5. Lines of Credit (Tables)
5. Lines of Credit (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Lines of credit table | December 31, 2018 December 31, 2017 TVP Investments, LLC $ 75,000 $ 75,000 Less: current portion (75,000 ) – Long-term portion $ – $ 75,000 |
8. Income Taxes (Tables)
8. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision for income tax | 2018 2017 Current tax provision: Federal $ – $ – Deferred tax provision (benefit): Federal (868 ) (868 ) Change in valuation allowance 868 868 Total provision for income tax $ – $ – |
Schedule of deferred taxes | 2018 2017 Deferred tax assets: Operating losses $ 99,838 $ 196,068 Accrued related party expenses 88,255 68,977 Accrued related party interest 24,916 20,617 Total deferred tax assets: 213,009 285,662 Deferred tax liabilities: Depreciation differences 20,893 20,777 Total deferred tax liabilities 20,893 20,777 Net deferred tax asset 192,116 264,885 Less: valuation allowance (192,116 ) (264,885 ) Net deferred income tax asset $ – $ – |
Reconciliation of income tax expense | 2018 2017 U.S. federal statutory tax rate 21.00% 34.00% Change in valuation allowance -21.00% -34.00% Total 0.00% 0.00% |
2. Summary of Significant Acc_3
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accounts receivable written off | $ 15,000 | |
Impairment of long-lived assets | $ 0 | 0 |
Unrecognized tax benefits | $ 0 | $ 0 |
Potentially dilutive shares | 0 | 0 |
Racecars and equipment [Member] | ||
Property and equipment useful lives | 5 years | |
Furniture and Fixtures [Member] | ||
Property and equipment useful lives | 7 years |
4. Fixed Assets (Details)
4. Fixed Assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Abstract] | ||
Racecars & Equipment | $ 61,013 | $ 50,000 |
Less: Accumulated depreciation | (17,487) | (5,834) |
Fixed assets, net | $ 43,526 | $ 44,166 |
4. Fixed Assets (Details Narrat
4. Fixed Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 11,653 | $ 15,834 |
5. Lines of Credit (Details)
5. Lines of Credit (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Lines of credit | $ 75,000 | $ 75,000 |
Lines of credit, current portion | (75,000) | 0 |
Lines of credit, long-term portion | 0 | 75,000 |
TVP Investments [Member] | ||
Lines of credit | $ 75,000 | $ 75,000 |
5. Lines of Credit (Details Nar
5. Lines of Credit (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2018 | |
Accrued interest | $ 29,918 | $ 37,418 |
Line of credit balance | 75,000 | 0 |
Line of Credit [Member] | ||
Accrued interest | $ 29,818 | 37,418 |
TVP Investments [Member] | ||
Line of credit initiation date | Oct. 15, 2012 | |
Line of credit maximum amount | 500,000 | |
Line of credit interest rate | 10.00% | |
Line of credit expiration date | Dec. 31, 2019 | |
Wells Fargo [Member] | ||
Line of credit maximum amount | 3,000 | |
Line of credit interest rate | 18.00% | |
Line of credit balance | $ 0 | $ 0 |
6. Stockholders' Equity (Detail
6. Stockholders' Equity (Details Narrative) | 12 Months Ended |
Dec. 31, 2017shares | |
Rick Ware Leasing [Member] | |
Stock issued for lease, shares | 400,000 |
7. Related Party Transactions (
7. Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Consulting expense | $ 66,533 | $ 92,250 |
Conversion of accrued fees to related party to stock, value | 210,000 | |
Accounts payable, related party | 90,264 | 30,464 |
Due to related parties | 68,014 | 122,164 |
Asset purchased in exchange for stock, value | 50,000 | |
Note receivable - related party | 0 | 75,000 |
Bad debt written off | $ 15,000 | |
Rick Ware Leasing [Member] | ||
Shares issued to lessor under terms of facility lease agreement, shares | 400,000 | |
Consulting Agreement [Member] | CEO and Majority Shareholder [Member] | ||
Conversion of accrued fees to related party to stock, shares | 2,100,000 | |
Conversion of accrued fees to related party to stock, value | $ 210,000 | |
Accounts payable, related party | 90,000 | 30,000 |
Event Related Expenses [Member] | CEO and Majority Shareholder [Member] | ||
Accounts payable, related party | 264 | 464 |
Credit Line [Member] | Related to CEO [Member] | ||
Due to related parties | 68,014 | $ 122,164 |
Line of credit initiation date | Oct. 1, 2009 | |
Line of credit maximum amount | 600,000 | |
Line of credit interest rate | 8.00% | |
Accrued interest | 35,315 | $ 28,026 |
Loan converted to stock, amount converted | $ 200,000 | |
Loan converted to stock, shares issued | 2,000,000 | |
Credit Line 2 [Member] | Related to CEO [Member] | ||
Due to related parties | $ 300 | $ 49,647 |
Line of credit initiation date | Aug. 5, 2013 | |
Line of credit maximum amount | $ 600,000 | |
Line of credit interest rate | 8.00% | |
Line of credit expiration date | Aug. 1, 2020 | |
Accrued interest | $ 83,501 | 79,708 |
Loan converted to stock, amount converted | $ 200,000 | |
Loan converted to stock, shares issued | 2,000,000 | |
Ford Mustang Transfer [Member] | ||
Sale of vehicle in exchange for cancellation of common stock, shares | 833,333 | |
Two Racecars [Member] | ||
Asset purchased in exchange for stock, shares | 333,333 | |
Asset purchased in exchange for stock, value | $ 50,000 | |
Sponsorship Agreement [Member] | Dashub [Member] | ||
Note receivable - related party | $ 75,000 | |
Proceeds from sponsorship agreement | $ 6,000 | |
Note receivable interest rate | 8.00% | |
Note receivable maturity date | Oct. 31, 2018 | |
Warrants received | 24,999 | |
Warrant expiration date | Apr. 30, 2018 | |
Bad debt written off | $ 79,145 |
8. Income Taxes (Details - Tax
8. Income Taxes (Details - Tax provision) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Current tax provision: Federal | $ 0 | $ 0 |
Deferred tax provision (benefit): Federal | (72,769) | (868) |
Change in valuation allowance | 72,769 | 868 |
Provision for income taxes | $ 0 | $ 0 |
8. Income Taxes (Details - Defe
8. Income Taxes (Details - Deferred taxes) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Operating losses | $ 99,838 | $ 196,068 |
Accrued related party expenses | 88,255 | 68,977 |
Accrued related party interest | 24,916 | 20,617 |
Total deferred tax assets: | 213,009 | 285,662 |
Deferred tax liabilities: | ||
Depreciation differences | 20,893 | 20,777 |
Total deferred tax liabilities | 20,893 | 20,777 |
Net deferred tax asset | 192,116 | 264,885 |
Less: valuation allowance | (192,116) | (264,885) |
Net deferred income tax asset | $ 0 | $ 0 |
8. Income Taxes (Details - Ta_2
8. Income Taxes (Details - Tax reconciliation) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Effective Income Tax Reconciliation | ||
U.S. federal statutory tax rate | 21.00% | 34.00% |
Change in valuation allowance | (21.00%) | (34.00%) |
Total | 0.00% | 0.00% |
8. Income Taxes (Details Narrat
8. Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforward | $ 1,668,875 | $ 1,741,494 |
NOL beginning expiration date | Dec. 31, 2029 | |
Change in valuation allowance | $ 72,769 | $ 868 |