| Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Use of Estimates The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, 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. The Company bases its estimates on historical experience and on various other assumptions that
are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions. Accounts Receivable Accounts receivable are recorded
when invoices are issued and are presented in the balance sheet net of the allowance for doubtful accounts. The allowance for doubtful
accounts is estimated based on the Company’s historical losses, the existing economic conditions in the construction industry,
and the financial stability of its customers. Accounts are written off as uncollectible after collection efforts have failed. In
addition, the Company does not generally charge interest on past-due accounts or require collateral. At June 30, 2018 and December
31 2017, there was no allowance for doubtful accounts required. Property and Equipment, and Depreciation Property and equipment are stated
at cost. Depreciation is generally provided using the straight-line method over the estimated useful lives of the related assets.
Leasehold improvements are amortized on a straight-line basis over the shorter of the remaining term of the lease or the estimated
useful life of the improvement. Repairs and maintenance that do not
improve or extend the lives of the property and equipment are charged to expense as incurred. Goodwill and Identifiable Intangible
Assets Goodwill represents the excess of
the aggregate of the following (1) consideration transferred, (2) the fair value of any non-controlling interest in the acquire,
and (3) if the business combination is achieved in stages, the acquisition-date fair value of our previously held equity interest
in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. Identifiable
intangible assets consist primarily of customer lists and relationships, non-compete agreements and technology based intangibles
and other contractual agreements. The Company amortizes finite lived identifiable intangible assets over the shorter of their stated
or statutory duration or their estimated useful lives, generally ranging from 3 to 15 years, on a straight-line basis to their
estimated residual values and periodically reviews them for impairment. Total identifiable intangible assets comprised 39% of our
consolidated total assets at June 30, 2018. There were no intangible assets or goodwill at June 30, 2017. The Company uses the acquisition
method of accounting for all business combinations and does not amortize goodwill or intangible assets with indefinite useful lives.
Goodwill and intangible assets with indefinite useful lives are tested for possible impairment annually during the fourth quarter
of each fiscal year or more frequently if events or changes in circumstances indicate that the asset might be impaired. Comprehensive Income (Loss) Comprehensive income (loss) consists
of two components, net income (loss) and other comprehensive income (loss). The Company’s other comprehensive income (loss)
is comprised of foreign currency translation adjustments. Advertising Costs Advertising costs are charged to
expense during the period in which they are incurred. Advertising expense for the three months ended June 30, 2018 and 2017 was
$1,068 and $524, respectively. For the six months ended June 30, 2018 and 2017, advertising expense was $2,240 and $2,146, respectively. Foreign Currency Translation The Company translates its foreign
subsidiary’s assets and liabilities denominated in foreign currencies into U.S. dollars at current rates of exchange as of
the balance sheet date and income and expense items at the average exchange rate for the reporting period. Translation adjustments
resulting from exchange rate fluctuations are recorded in accumulated other comprehensive income. The Company records gains and
losses from changes in exchange rates on transactions denominated in currencies other than each reporting location’s functional
currency in net income (loss) for each period . Revenue Recognition On January 1, 2018, the Company adopted
ASU 2014-09, “Revenue from Contracts with Customers” (Topic 606) using the modified retrospective method applied to
those contracts which were not completed as of December 31, 2017. Results for reporting periods beginning January 1, 2018 are presented
under Topic 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect
for the prior period. Under Topic 606 requirements, the
Company recognizes revenue from the installation or construction of projects over time using the cost-based input method. The Company
accounts for a contract when: (i) it has approval and commitment from both parties, (ii) the rights of the parties are identified,
(iii) payment terms are identified, (iv) the contract has commercial substance, and (v) collectability of consideration is probable.
The Company considers the start of a project to be when the above criteria have been met and the Company either has written authorization
from the customer to proceed or an executed contract. The Company uses the total costs
incurred on the project relative to the total expected costs to satisfy the performance obligation. The input method involves measuring
the resources consumed, labor hours expended, costs incurred, time lapsed, or machine hours used relative to the total expected
inputs to the satisfaction of the performance obligation. Costs incurred prior to actual contract (i.e. design, engineering, procurement
of material, etc.) should not be recognized as the client does not have control of the good/service provided. When the estimate
on a contract indicates a loss, or claims against costs incurred reduce the likelihood of recoverability of such costs, the Company
records the entire estimated loss in the period the loss becomes known. Project contracts typically provide for a schedule of billings
or invoices to the customer based on the Company’s job to date percentage of completion of specific tasks inherent in the
fulfillment of its performance obligation(s). The schedules for such billings usually do not precisely match the schedule on which
costs are incurred. As a result, contract revenue recognized in the statement of operations can and usually does differ from amounts
that can be billed or invoiced to the customer at any point during the contract. Amounts by which cumulative contract revenue recognized
on a contract as of a given date exceed cumulative billings and unbilled receivables to the customer under the contract are reflected
as a current asset in the Company’s balance sheet under the captions “Costs and estimated earnings in excess of billings”
and “Unbilled accounts receivable.” Amounts by which cumulative billings to the customer under a contract as of a given
date exceed cumulative contract revenue recognized on the contract are reflected as a current liability in the Company’s
balance sheet under the caption “Billings in excess of costs and estimated earnings.” Revenue from service or short term
contracts is recognized currently as the work is performed. Time and materials are accordingly charged to the customer at completion
of the job. The Company recognizes service or short term contract revenues when there is persuasive evidence of an arrangement,
delivery has occurred or services are rendered, the sales price is determinable, and collectability is reasonably assured. Revenue
is typically recorded once all performance obligations have been satisfied. Sales are recorded net of discounts and returns, which
historically have not been material. Cash and Cash Equivalents Cash and cash equivalents includes
cash in bank and money market funds as well as other highly liquid investments with an original maturity of three months or less.
The Company had no cash equivalents as of June 30, 2018 or December 31 2017. At times during the three and six months ended June
30, 2018 and 2017, balances exceeded the FDIC insurance limit of $250,000. Stock-Based Compensation The Company recognizes expense for
its stock-based compensation based on the fair value of the awards at the time they are granted. We estimate the value of stock
option awards on the date of grant using the Black-Scholes model. The determination of the fair value of stock-based payment awards
on the date of grant is affected by our stock price as well as assumptions regarding a number of complex and subjective variables.
These variables include our expected stock price volatility over the term of the awards, expected term, risk-free interest rate,
expected dividends and expected forfeiture rates. The forfeiture rate is estimated using historical option cancellation information,
adjusted for anticipated changes in expected exercise and employment termination behavior. Our outstanding awards do not contain
market or performance conditions. Sales and Use Tax The Company collects sales tax in
various jurisdictions. Upon collection from customers, it records the amount as a payable to the related jurisdiction. On a periodic
basis, it files a sales tax return with the jurisdictions and remits the amount indicated on the return. Income Taxes The Company uses the asset and liability
method of accounting for income taxes pursuant to FASB ASC 740, Income Taxes The determination of the Company’s
provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex
tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability
of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company’s financial statements
only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from
taxing authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes in
the financial statements as appropriate. Accrued interest and penalties related to income tax matters are classified as a component
of income tax expense. The Company recognizes and measures
its unrecognized tax benefits in accordance with ASC 740. Under that guidance, management assesses the likelihood that tax positions
will be sustained upon examination based on the facts, circumstances and information, including the technical merits of those positions,
available at the end of each period. The measurement of unrecognized tax benefits is adjusted when new information is available,
or when an event occurs that requires a change. The Company did not
identify any material uncertain tax positions. The Company did not recognize any interest or penalties for unrecognized tax benefits. The federal income
tax returns of the Company are subject to examination by the IRS, generally for the three years after they are filed. The Company’s
2017, 2016 and 2015 income tax returns are still open for examination by the taxing authorities. Fair Value of Financial
Instruments Except
for the Company’s earn-out liability, the carrying value of cash and cash equivalents, accounts payable and accrued liabilities,
and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these
instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized
or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future
cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities
have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.
● Level 1—quoted prices in active markets for identical assets and liabilities;
● Level 2—observable market based inputs or unobservable inputs that are corroborated by market data; and
● Level 3—significant unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The table below presents a reconciliation
of the fair value of the Company’s contingent earn-out obligations that use significant unobservable inputs (Level 3).
Balance at December 31, 2017 $ -
Earn-out liability from acquisition of PVBJ Inc. 175,318
Payments -
Adjustments to fair value 6,738
Balance at June 30, 2018 $ 182,056 The Company values
earn-out obligations using a probability weighted discounted cash flow method. This fair value measurement is based on significant
unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. This analysis reflects
the contractual terms of the purchase agreements (e.g., minimum and maximum payments, length of earn-out periods, manner of calculating
any amounts due, etc.) and utilizes assumptions with regard to future cash flows, probabilities of achieving such future cash flows
and a discount rate. The contingent earn-out obligations are measured at fair value each reporting period and changes in estimates
of fair value are recognized in earnings. Net
Income (Loss) Per Common Share The Company computes
basic net income (loss) per share by dividing net income (loss) per share available to common stockholders by the weighted average
number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings
per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive
securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. The
computation of diluted loss per share excludes dilutive securities for the six months ended June 30, 2018 and 2017 because their
inclusion would be anti-dilutive. Potentially dilutive securities excluded from the computation of basic and diluted net loss
per share for the three months ended June 30, 2018 and 2017 are as follows:
June 30, 2018 June 30, 2017
Convertible debt 533,333 -
Options to purchase common stock 900,000 1,000,000
Totals 1,433,333 1,000,000 |
