Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Apr. 14, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | RC-1, Inc. | |
Entity Central Index Key | 0001665598 | |
Document Type | 10-K | |
Document Period End Date | Dec. 31, 2019 | |
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 | 2019 | |
Entity Small Business | true | |
Entity Emerging Growth | false | |
Entity Shell Company | false | |
Interactive data current | Yes | |
Entity file number | 333-210960 | |
State of incorporation | NV |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash | $ 50,106 | $ 50,596 |
Prepaid rent | 0 | 60,000 |
Note receivable - related party | 50,000 | 0 |
Interest receivable - related party | 892 | 0 |
Total current assets | 100,998 | 110,596 |
Property and Equipment - net | 7,157 | 43,526 |
Total long-term assets | 7,157 | 43,526 |
Total Assets | 108,155 | 154,122 |
Current liabilities | ||
Accounts payable | 29,668 | 56,792 |
Accrued liabilities - related party | 161,601 | 90,264 |
Line of credit, current portion | 75,000 | 75,000 |
Line of credit to related parties | 18,964 | 68,014 |
Accrued interest payable | 44,918 | 37,418 |
Accrued interest - line of credit to related parties | 119,471 | 118,816 |
Total current liabilities | 449,622 | 446,304 |
Line of credit to related parties, net of current portion | 0 | 300 |
Total long-term liabilities | 0 | 300 |
Total Liabilities | 449,622 | 446,604 |
Stockholders' Deficit | ||
Preferred stock, $.001 par value; 10,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock, $.001 par value;190,000,000 shares authorized; 13,929,581 issued and outstanding | 13,930 | 13,930 |
Additional paid in capital | 2,865,024 | 2,865,024 |
Common stock issuable | 120,000 | 120,000 |
Accumulated deficit | (3,340,421) | (3,291,436) |
Stockholders' Deficit | (341,467) | (292,482) |
Total Liabilities and Stockholders' Deficit | $ 108,155 | $ 154,122 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, par value | $ .001 | $ .001 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, shares authorized | 190,000,000 | 190,000,000 |
Common stock, par value | $ .001 | $ .001 |
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, 2019 | Dec. 31, 2018 | |
Revenues | $ 110,508 | $ 163,500 |
Race Expenses | 0 | 10,274 |
Consulting - related parties | 60,000 | 66,533 |
General and administrative | 73,679 | 155,750 |
Professional fees | 38,550 | 59,407 |
Total operating expenses | 172,229 | 291,964 |
Loss from operations | (61,721) | (128,464) |
Other (expense) income: | ||
Interest expense - unrelated parties | (7,500) | (7,500) |
Interest expense - related parties | (656) | (11,081) |
Interest income - related parties | 892 | 4,917 |
Gain on sale of assets - related party | 20,000 | 0 |
Total other (expense) income | 12,736 | (13,664) |
Loss before income taxes | (48,985) | (142,128) |
Income tax provision | 0 | 0 |
Net loss | $ (48,985) | $ (142,128) |
Net loss per share (basic and diluted) | $ 0 | $ (0.01) |
Weighted average number of common shares outstanding (basic and diluted) | 13,929,581 | 13,929,581 |
Consulting Fees [Member] | ||
Revenues | $ 0 | $ 13,500 |
Consulting Fees - Related Parties [Member] | ||
Revenues | $ 110,508 | $ 150,000 |
Condensed Statement of Stockhol
Condensed Statement of Stockholders' Equity - USD ($) | Common Stock | Additional Paid-In Capital | Common Stock Issuable | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2017 | 13,929,581 | ||||
Beginning balance, value at Dec. 31, 2017 | $ 13,930 | $ 2,865,024 | $ 120,000 | $ (3,149,308) | $ (150,354) |
Net loss for the period | (142,128) | (142,128) | |||
Ending balance, shares at Dec. 31, 2018 | 13,929,581 | ||||
Ending balance, value at Dec. 31, 2018 | $ 13,930 | 2,865,024 | 120,000 | (3,291,436) | (292,482) |
Net loss for the period | (48,985) | (48,985) | |||
Ending balance, shares at Dec. 31, 2019 | 13,929,581 | ||||
Ending balance, value at Dec. 31, 2019 | $ 13,930 | $ 2,865,024 | $ 120,000 | $ (3,340,421) | $ (341,467) |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (48,985) | $ (142,128) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation | 6,369 | 11,653 |
Non-cash rent expense | 60,000 | 60,000 |
Gain on sale of assets | (20,000) | 0 |
Changes in Operating Assets and Liabilities | ||
Decrease in note receivable | 0 | 75,000 |
(Increase) Decrease in interest receivable | (892) | 4,145 |
(Decrease) Increase in accounts payable | (27,124) | 17,713 |
Increase in accrued liabilities - related party | 71,337 | 59,800 |
Increase in accrued interest - unrelated parties | 7,500 | 7,500 |
Increase in accrued interest - related parties | 655 | 11,081 |
Net cash provided by (used in) operating activities | 48,860 | 104,764 |
Cash Flows From Investing Activities: | ||
Purchase of assets | 0 | (11,013) |
Net cash used in investing activities | 0 | (11,013) |
Cash Flows From Financing Activities: | ||
Proceeds from line of credit to related parties | 215,000 | 166,683 |
Repayments on line of credit to related parties | (264,350) | (270,180) |
Net cash provided by (used) in financing activities | (49,350) | (103,497) |
Net Decrease In Cash | (490) | (9,746) |
Cash At The Beginning Of The Year | 50,596 | 60,342 |
Cash At The End Of The Year | 50,106 | 50,596 |
Schedule of Non-Cash Investing and Financing Activities | ||
Assets sold for note receivable | 50,000 | 0 |
Supplemental Disclosure | ||
Cash paid for interest | 0 | 0 |
Cash paid for income taxes | $ 0 | $ 0 |
1. Organization and Description
1. Organization and Description of Business Operations | 12 Months Ended |
Dec. 31, 2019 | |
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. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
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. 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, 2019 and 2018 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. The majority of revenues are from consulting services provided at events which range from one day to one week in length. The Company also earns revenues from entering their race cars into events whereby there is a money purse for finishing positions. The revenues from these events are recognized upon completion of the contracted services. In the event that the Company’s revenues are for services provided under contracts greater than one month in length, the contracts will be billed in total at the onset of the contact period, and to the extent that billings exceed revenue earned, the Company will record such amount as deferred revenue until the performance obligations are met. Revenue will be recognized on these contracts in the period the services are provided under the contract. Expenses associated with providing the services are recognized in the period the services are provided which coincides with when the revenue is earned. Income tax The Company adopted section 740-10-25 of the FASB ASC (“Section 740-10-25”) with regards to the uncertainty in income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded on the financial statements. Under section 740-10-25, the Company may recognize the tax benefits from the uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on the de-recognition, classification, interest and penalties on income taxes, accounting in the interim periods and requires increased disclosures. The Company had no material adjustments to its assets and/or liabilities for unrecognized income tax benefits according to the provisions of section 740-10-25. 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, 2019 and 2018, 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, 2019 and 2018, 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. Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through December 31, 2019. The Company has a concentration of credit risk note with a related party and majority shareholder. See Note 7 for further discussion of these sources. Concentration of revenue sources The Company has a concentration of revenue sources with companies owned and operated by the Company’s CEO. See Note 7 for further discussion of these sources. 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 The FASB issued ASC 842 related to the reporting of lease agreements effective for fiscal years beginning after December 15, 2018. This pronouncement requires the classification of leases into categories that define how they are reported on the balance sheet and statement of operations. Leases with terms of less than twelve months may be excluded from the provisions of ASC 842 at the election of the Company. The only lease arrangement of the Company terminated December 31, 2019 and is not subject to the provisions of ASC 842. The standard did not have a material impact on the Company’s financial statements as the Company’s only lease as of January 1, 2019 was for 12 remaining months. Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on the accompanying consolidated financial statements. |
3. Going Concern
3. Going Concern | 12 Months Ended |
Dec. 31, 2019 | |
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. The loss from operations was $61,721 and the accumulated deficit was $3,340,421 for the period ended December 31, 2019. 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. Property and Equipment
4. Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 4. PROPERTY & EQUIPMENT Property & Equipment values recorded at cost are as follows: December 31, 2019 December 31, 2018 Racecars & Equipment $ 11,013 $ 61,013 Less: Accumulated depreciation (3,856 ) (17,487 ) Property & Equipment, net $ 7,157 $ 43,526 Depreciation expense was $6,369 and $11,653 for the years the years ended December 31, 2019 and 2018, respectively. |
5. Lines of Credit
5. Lines of Credit | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Lines of Credit | NOTE 5. LINES OF CREDIT December 31, 2019 December 31, 2018 TVP Investments, LLC $ 75,000 $ 75,000 Less: current portion (75,000 ) (75.000 ) Long-term portion $ – $ – 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, 2023. As of December 31, 2019, and 2018, the Company had accrued interest on this line of credit in the amounts of $44,918 and $37,418, respectively. Interest expense of $7,500 was reported on the statement of operations for the years ended December 31 2019 and 2018. 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% and a maturity date of July 2022. The balance due of this line of credit was zero as of December 31, 2019 and 2018. |
6. Stockholders' Equity
6. Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 6. STOCKHOLDERS’ EQUITY In January 2017, the Company entered into a 36-month warehouse lease with related party Rick Ware Leasing, LLC, payable in 1,200,000 shares of the Company’s common stock valued at $180,000. Rent expense of $60,000 was reflected as rent expense on the statement of operations in each year. The agreement called for 400,000 shares to be issued and the $60,000 was considered prepaid December 31, 2018. In July 2017, 400,000 shares were issued. As of December 31, 2019, the remaining 800,000 shares valued at $120,000 have not been issued and are reported within stockholders deficit on the balance sheet. The lease agreement expired December 31, 2019 and was not renewed. See Note 7 for equity transactions with related parties. |
7. Related Party Transactions
7. Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 7. RELATED PARTY TRANSACTIONS Consulting revenue from related parties On February 15, 2019, the Company entered into a three-year contract to provide marketing and branding consulting services to a related party. The majority shareholder of the client is also a shareholder in the Company. Consulting fees recognized for the years ended December 31, 2019 was $110,508. 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. As of December 31, 2019, and 2018, the Company had an accrued liability balance due to this related party of $161,601 and $90,264, 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 $11,801 and $264 as of December 31, 2019 and 2018, respectively. Line of credit 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 line of credit bears interest at eight percent (8%) per annum with a maturity date of December 31, 2023. As of December 31, 2019, and 2018, the Company owed $18,664 and $68,014, respectively, in operating advances from this related party. As of December 31, 2019, and 2018, the Company had accrued interest on this line of credit in the amounts of $35,929 and $35,513, respectively. Interest expense of $614 and $7,289 was reported on the statement of operations for the years ended December 31, 2019 and 2018, 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. This loan is collateralized by all of the property owned by the Company located in California. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. As of December 31, 2019, and 2018, the Company owed $300 and $600, respectively, in operating advances to this related party. As of December 31, 2019, and 2018, the Company had accrued interest on this line of credit in the amounts of $83,543 and $83,501, respectively. Interest expense of $42 and $3,792 was reported on the statement of operations for the years ended December 31, 2019 and 2018, respectively. Note receivable – related party On June 1, 2019, the Company sold two racecars to a related party for $50,000 resulting in a gain of $20,000. The racecars had been purchased from the same party in 2017. The interest rate on the note is 1% per annum and payments of $1,000 per month beginning August of 2019 and increasing to $4,778 per month in March 2020, with a final payment of $525 due in December of 2020. |
8. Income Taxes
8. Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
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: 2019 2018 Current tax provision: Federal $ – $ – Deferred tax provision (benefit): Federal (81,282 ) (72,769 ) Change in valuation allowance 81,282 72,769 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 that give rise to deferred tax assets and liabilities are summarized as follows at December 31: 2019 2018 Deferred tax assets: Operating losses $ 51,925 $ 99,838 Accrued related party expenses 33,936 88,255 Accrued related party interest 25,089 24,916 Total deferred tax assets: 110,950 213,009 Deferred tax liabilities: Depreciation differences 116 20,893 Total deferred tax liabilities 116 20,893 Net deferred tax asset 110,834 192,116 Less: valuation allowance (110,834 ) (192,116 ) Net deferred income tax asset $ – $ – At December 31, 2019 and 2018, the Company had net operating loss carryforwards of $1,587,593 and $1,668,875 respectively, of which approximately $1,500,000 begin to expire in 2029 and the remainder is carried forward indefinitely. 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 2019 and 2018 was approximately $(81,282) and $(71,769), respectively. The reconciliation of the income tax benefit is computed at the U.S. federal statutory rate as follows at December 31: 2019 2018 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, 2019, and 2018, 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. |
9. Subsequent Events
9. Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 9. SUBSEQUENT EVENT On January 29, 2020 the company acquired a 2016 Audi IMSA sport car from Rick Ware Racing, LLC, a related party for $300,000. The seller and the Company agreed to lease back the Audi to Rick Ware Racing, LLC for a period of 24 months commencing February 15, 2020 requiring a monthly lease payment of $14,125 per month and the return and cancellation of common stock held by the lessee of 200,000 shares valued at $0.15 per share. COVID-19 Management has concluded that the COVID-19 outbreak in 2020 may have a significant impact on business in general, but the potential impact on the Company is not currently measurable. Due to the level of risk this virus may have on the global economy, it is at least reasonably possible that it could have an impact on the operations of the Company in the near term that could materially impact the Company’s financials. Management has not been able to measure the potential financial impact on the Company but will review commercial and federal financing options should the need arise. |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
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. |
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, 2019 and 2018 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. The majority of revenues are from consulting services provided at events which range from one day to one week in length. The Company also earns revenues from entering their race cars into events whereby there is a money purse for finishing positions. The revenues from these events are recognized upon completion of the contracted services. In the event that the Company’s revenues are for services provided under contracts greater than one month in length, the contracts will be billed in total at the onset of the contact period, and to the extent that billings exceed revenue earned, the Company will record such amount as deferred revenue until the performance obligations are met. Revenue will be recognized on these contracts in the period the services are provided under the contract. Expenses associated with providing the services are recognized in the period the services are provided which coincides with when the revenue is earned. |
Income tax | Income tax The Company adopted section 740-10-25 of the FASB ASC (“Section 740-10-25”) with regards to the uncertainty in income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded on the financial statements. Under section 740-10-25, the Company may recognize the tax benefits from the uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on the de-recognition, classification, interest and penalties on income taxes, accounting in the interim periods and requires increased disclosures. The Company had no material adjustments to its assets and/or liabilities for unrecognized income tax benefits according to the provisions of section 740-10-25. 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, 2019 and 2018, there were no unrecognized tax benefits. |
Net loss per share | 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, 2019 and 2018, 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. |
Concentration of Credt Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through December 31, 2019. The Company has a concentration of credit risk note with a related party and majority shareholder. See Note 7 for further discussion of these sources. |
Concentration of revenue sources | Concentration of revenue sources The Company has a concentration of revenue sources with companies owned and operated by the Company’s CEO. See Note 7 for further discussion of these sources. |
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 The FASB issued ASC 842 related to the reporting of lease agreements effective for fiscal years beginning after December 15, 2018. This pronouncement requires the classification of leases into categories that define how they are reported on the balance sheet and statement of operations. Leases with terms of less than twelve months may be excluded from the provisions of ASC 842 at the election of the Company. The only lease arrangement of the Company terminated December 31, 2019 and is not subject to the provisions of ASC 842. The standard did not have a material impact on the Company’s financial statements as the Company’s only lease as of January 1, 2019 was for 12 remaining months. Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on the accompanying consolidated financial statements. |
4. Fixed Assets (Tables)
4. Fixed Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of fixed assets | Fixed asset values recorded at cost are as follows: December 31, 2019 December 31, 2018 Racecars & Equipment $ 11,013 $ 61,013 Less: Accumulated depreciation (3,856 ) (17,487 ) Fixed assets, net $ 7,157 $ 43,526 |
5. Lines of Credit (Tables)
5. Lines of Credit (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Lines of credit table | December 31, 2019 December 31, 2018 TVP Investments, LLC $ 75,000 $ 75,000 Less: current portion (75,000 ) (75.000 ) Long-term portion $ – $ – |
8. Income Taxes (Tables)
8. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision for income tax | 2019 2018 Current tax provision: Federal $ – $ – Deferred tax provision (benefit): Federal (81,282 ) (72,769 ) Change in valuation allowance 81,282 72,769 Total provision for income tax $ – $ – |
Schedule of deferred taxes | 2019 2018 Deferred tax assets: Operating losses $ 51,925 $ 99,838 Accrued related party expenses 33,936 88,255 Accrued related party interest 25,089 24,916 Total deferred tax assets: 110,950 213,009 Deferred tax liabilities: Depreciation differences 116 20,893 Total deferred tax liabilities 116 20,893 Net deferred tax asset 110,834 192,116 Less: valuation allowance (110,834 ) (192,116 ) Net deferred income tax asset $ – $ – |
Reconciliation of income tax expense | The reconciliation of the income tax benefit is computed at the U.S. federal statutory rate as follows at December 31: 2019 2018 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, 2019 | Dec. 31, 2018 | |
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 |
3. Going Concern (Details Narra
3. Going Concern (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Loss from operations | $ (61,721) | $ (128,464) |
Accumulated deficit | $ (3,340,421) | $ (3,291,436) |
4. Property and Equipment (Deta
4. Property and Equipment (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Abstract] | ||
Racecars & Equipment | $ 11,013 | $ 61,013 |
Less: Accumulated depreciation | (3,856) | (17,487) |
Property and equipment, net | $ 7,157 | $ 43,526 |
4. Property and Equipment (De_2
4. Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 6,369 | $ 11,653 |
5. Lines of Credit (Details)
5. Lines of Credit (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Lines of credit, current portion | $ (75,000) | $ (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, 2019 | Dec. 31, 2018 | |
Interest expense | $ 7,500 | $ 7,500 |
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, 2023 | |
Accrued interest | $ 44,918 | 37,418 |
Interest expense | 7,500 | 7,500 |
Wells Fargo [Member] | ||
Line of credit maximum amount | $ 3,000 | |
Line of credit interest rate | 18.00% | |
Line of credit expiration date | Jul. 31, 2022 | |
Line of credit balance | $ 0 | $ 0 |
6. Stockholders' Equity (Detail
6. Stockholders' Equity (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($)shares | |
Equity [Abstract] | |
Stock to be issued for lease agreement, shares | shares | 800,000 |
Stock to be issued for lease agreement, value | $ | $ 120,000 |
7. Related Party Transactions (
7. Related Party Transactions (Details Narrative) - USD ($) | 5 Months Ended | 12 Months Ended | |
Jun. 01, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Accounts payable, related party | $ 161,601 | $ 90,264 | |
Due to related parties | 18,964 | 68,014 | |
Interest expense | 7,500 | 7,500 | |
Note receivable | 50,000 | 0 | |
Gain on sale of asset | 20,000 | 0 | |
Consulting Agreement [Member] | Consulting Revenue Related Party [Member] | |||
Consulting revenue from related parties | 110,508 | ||
Consulting Agreement [Member] | CEO and Majority Shareholder [Member] | |||
Accounts payable, related party | 161,601 | 90,264 | |
Event Related Expenses [Member] | CEO and Majority Shareholder [Member] | |||
Accounts payable, related party | 11,801 | 264 | |
Credit Line [Member] | Related to CEO [Member] | |||
Due to related parties | $ 18,664 | 68,014 | |
Line of credit initiation date | Oct. 1, 2009 | ||
Line of credit maximum amount | $ 600,000 | ||
Line of credit interest rate | 8.00% | ||
Line of credit expiration date | Dec. 31, 2023 | ||
Accrued interest | $ 35,929 | 35,513 | |
Interest expense | 614 | 7,289 | |
Credit Line 2 [Member] | Related to CEO [Member] | |||
Due to related parties | $ 300 | 600 | |
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 | $ 83,543 | 83,501 | |
Interest expense | $ 42 | $ 3,792 | |
Two Racecars [Member] | |||
Note receivable | $ 50,000 | ||
Gain on sale of asset | $ 20,000 | ||
Interest rate | 1.00% |
8. Income Taxes (Details - Tax
8. Income Taxes (Details - Tax provision) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Current tax provision: Federal | $ 0 | $ 0 |
Deferred tax provision (benefit): Federal | (81,282) | (72,769) |
Change in valuation allowance | 81,282 | 72,769 |
Provision for income taxes | $ 0 | $ 0 |
8. Income Taxes (Details - Defe
8. Income Taxes (Details - Deferred taxes) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Operating losses | $ 51,925 | $ 99,838 |
Accrued related party expenses | 33,936 | 88,255 |
Accrued related party interest | 25,089 | 24,916 |
Total deferred tax assets: | 110,950 | 213,009 |
Deferred tax liabilities: | ||
Depreciation differences | 116 | 20,893 |
Total deferred tax liabilities | 116 | 20,893 |
Net deferred tax asset | 110,834 | 192,116 |
Less: valuation allowance | (110,834) | (192,116) |
Net deferred income tax asset | $ 0 | $ 0 |
8. Income Taxes (Details - Ta_2
8. Income Taxes (Details - Tax reconciliation) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
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, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforward | $ 1,587,593 | $ 1,668,875 |
NOL beginning expiration date | Dec. 31, 2029 | |
Change in valuation allowance | $ (81,282) | $ (71,769) |
NOL carryforward with expiration | 1,500,000 | |
NOL carryforward indefinate | $ 87,593 |