| Nature of Business and Significant Accounting Policies | Note 1. Nature of Business
and Significant Accounting Policies NATURE OF BUSINESS: SOLEI SYSTEMS, INC. (“Company”)
was organized October 26, 2004 under the laws of the State of Florida. On October 20, 2017, the Company acquired Clinical &
Herbal Innovations, Inc. (CHII) a Georgia corporation, in a share exchange. The transaction was treated as a capital transaction
where the Company was treated as a non-business entity; therefore, the accounting for the merger was identical to that resulting
from a reverse merger except that no goodwill or other intangible assets were recorded. For accounting purposes, CHII was treated
as the accounting acquirer and has been presented as the continuing entity. The historical financial statements are those of CHII
except for the shareholder equity portion and are reported in this Report on a consolidated basis with the Company along with the
financial statements of CareClix, Inc. A majority of the common stock of the Company
is owned by Charles Scott, who controls the shareholder vote as a result. Mr. Scott is also Chairman and Chief Executive Officer. The Company is a holding Company which had
a wholly-owned subsidiary, CHII, for the entire quarter ended June 30, 2019 and a second wholly-owned subsidiary, CareClix, Inc.
commencing April 12, 2019. CHII is a supplement development Company with a proprietary product that is distributed primarily through
the Internet. The majority shareholder of the Company licenses the product to CHII. CareClix, Inc. is a Virginia corporation formed
by the Company in April 2019 to receive proprietary and patent pending telemedicine operating software acquired by the Company. In early 2019, the Company entered into an
agreement to acquire the proprietary CareClix™ operating software, and pending patent for that software, the domain name
and trademark for the software and certain related incidental tangible assets of KB Medical Systems, LLC, an unrelated Company
and the developer of the proprietary CareClix™ operating systems for telemedicine providers. The acquisition was closed April
12, 2019. Under the terms of the acquisition agreement, the Company formed a new, wholly-owned subsidiary CareClix, Inc., to acquire
the CareClix™ operating software and pending patent and commenced a new operating business with the assets following the
acquisition. The Company did not acquire cash, accounts receivables, or any other assets, any liabilities of KB Medical, and no
customer lists, although certain customers of KB Medical continued working with the Company after the acquisition because they
were already using the CareClix™ operating software acquired by the Company. One of the two founders of KB Medical, Dr. John
Korangy, and one other employee of KB Medical also joined the Company. KB Medical continued its existence after the acquisition
at tis own original office location and the Company relocated the acquired assets to its location in Virginia. In the accompanying
financial statements, the acquisition has been treated as a business combination under ASC 805. See Business Combination. In April, 2019, immediately following the closing
of the acquisition of the CareClix™ software and related assets, Dr. John Korangy was appointed as a member of the Board
of Directors of the Company and as President and CEO of the CareClix, Inc. subsidiary. Dr. Korangy is a Board Certified vvc who
has spent his entire career involved with developing and implementing telehealth systems. As a founder of CareClix he helped develop
one of the most robust telehealth platforms in the world. Dr. Korangy completed his medical degree at the George Washington University
where he also obtained a Masters in Public Health. He went on to complete his medical training at Georgetown University, as well
as at the National Institutes of Health. Dr. Korangy has authored many papers and speaks nationally about virtual medical care
and deploying telemedicine within healthcare. BASIS FOR CONSOLIDATION The financial statements of the Company, including
the consolidated Balance Sheets for the periods ended June 30, 2019 and December 31, 2018 and the Statements of Operations, Statements
of Shareholders’ Deficits and Statements of Cash Flows for the three and six month periods ended June 30, 2019 and 2018,
were prepared on a consolidated basis with the wholly-owned subsidiaries, Clinical and Herbal Innovations, Inc. and CareClix, Inc.
and all intercompany activities were eliminated in the consolidation. During the periods ended June 30, 2019 and 2018, there were
no intercompany activities and the equity of the subsidiaries was eliminated in the consolidation. The financial statements included
in this Report should be read in conjunction with the audited financial statements and footnotes for the fiscal year ended December
31, 2018 as reported in the Form 10-K filed by the Company for that period. ESTIMATES The preparation of financial statements in
conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those
estimates. RECLASSIFICATION An account payable in the amount of $15,750
is due for services provided in 2017 in connection with the development of the Company web site by Josh Flood, current
President and a director of the Company. The payable was reclassified from the December 31, 2018 audited financial statements as
a related party payable in the included financial statements to conform to current year presentation. CASH AND CASH EQUIVALENTS We consider highly liquid investments with
maturity of three months or less cash equivalents. There were no cash equivalents as of June 30, 2019 and December 31, 2018. INVENTORY Inventory is stated at lower of cost or net
realizable value (on a first in-first out basis). The inventory consists of finished goods supplements in 90 count and 120 count
bottles. Inventory is also supplied to testing facilities to verify the potency and composition of the supplements. The Company
continues to closely monitor its inventory balances and to assess for obsolescence. There was no obsolescence considered necessary
at June 30, 2019 and 2018, respectively. Inventory as of June 30, 2019 and December
31, 2018 was $38,883 and $41,770, respectively. BUSINESS
COMBINATION In April, 2019, the Company completed the acquisition
of certain assets of KB Medical Systems, LLC, an unaffiliated Company for a total consideration of $1,900,000, of which $1,000,000
was paid in cash at closing and the balance of which will be paid in the future in shares of unregistered common stock of the Company
based on the five day trailing average closing market price of the common stock on the date which is six months after closing.
KB Medical Systems, LLC remained in existence after closing and will continue its separate business operations at its original
offices in Washington, DC. The assets acquired did not include a majority of the assets of KB Medical as reported on its closing
date balance sheet, and were acquired free of any and all liabilities of KB Medical Systems, LLC. The primary asset acquired was
the CareClix™ software, the CareClix™ trademark and domain name and the patent pending on the CareClix™ software,
which are all interrelated and considered by management in essence as a single asset; the remaining assets acquired were incidental
to the principal purchase. Following the acquisition, which was legally
structured as an asset acquisition, the acquired assets were contributed by the Company to a newly formed Virginia subsidiary corporation,
CareClix, Inc., incorporated for that purpose. CareClix, Inc. has commenced new operations at the offices of the Company in Virginia
with new marketing, management and finance staff and one of the two founders and only one former employee of KB Medical Systems,
Inc. have been employed by CareClix, Inc. Based on the terms of the acquisition, the
Company evaluated the proper accounting treatment for this acquisition to determine if the acquisition should be treated for accounting
purposes as an acquisition of assets, or as a business combination. under ASC 805. The Company has concluded initially that, since
some, but not all, of the customers of KB Medical Systems became customers of the Company, due to the fact that they were already
using the CareClix™ Software acquired by the Company, and to the accounting guidance that indicates that separate intangible
assets acquired in an acquisition transaction are to be treated as separate assets and not a single asset, ASC 805 would require
the transaction to be reported as a business combination. ASC 805 mandates the evaluation of the inputs and outputs of each separate
asset acquired with an allocation of the total purchase price to all assets acquired, including good will or going concern value.
In this evaluation, the Company has concluded that the patent pending, trademark and domain name have minimal value as separate
assets apart from the software, and that any good will value is minimal apart from the software itself. Accordingly, the Company
has reported the acquisition as business combination initially, subject to further review and possibly seeking advice form the
SEC accounting staff. and has allocated the total purchase price among the respective fair values or replacement values of the
various assets. The allocations are based on management’s best estimate of values based on replacement values, but the Company
reserves the right to re-evaluate the assets and allocation over the next 12 months, as permitted in ASC 805:
CareClix
Software $ 1,500,000
Computer
Equipment $ 50,000
Furniture
and equipment $ 3,000
Medical
Equipment $ 27,000
Patent
application and rights thereto $ 50,000
CareClix
domain name (CareClix.com) $ 100,000
CareClix
trademark and trade name $ 120,000
Goodwill $ 50,000
Total
Assets acquired $ 1,900,000 The Company has not included audited financial
statements for KB Medical Systems, LLC in this quarterly report due to the uncertainty over the proper reporting of the transaction
and due to the lack of access to financial records of KB Medical Systems, LLC, which continued after closing as an independent,
unrelated entity. PROPERTY AND EQUIPMENT Property and equipment are stated at cost and
depreciated over appropriate estimated useful lives. In 2016, the Company purchased a website for $15,750. The website is being
amortized over a 60-month expected useful life. In addition, certain tangible and intangible assets were acquired by the Company
on April 12, 2019 and contributed to CareClix, Inc., as noted above in Business Combination, and are all being amortized or depreciated
over their remaining useful lives. Depreciation and amortization for the six-month
periods ended June 30, 2019 and 2018 were $46,053 and $1,575, respectively. LEASE ACCOUNTING The Company currently subleases space in
a commercial property leased by an affiliate of the principal shareholder of the Company and the Company Chairman. The
occupancy is of approximately 51 percent of the total leasehold space, and the Company sublease payment is 51 percent of the
total lease due under the main lease. The sublease had been on a month- to-month basis with no written lease agreement while
the Company determines its long term office needs in the light of planned acquisitions and expansion; however, the Company
has entered into a one year short-term lease for the property, with no option for renewal or purchase, effective January 1,
2019 in order to clarify the lease accounting under Accounting Standards Codification 842, Leases, issued by the Financial
Accounting Standards Board. As a month-to-month, short-term operating lease with no variable lease payments or purchase or
renewal option, the Company is electing not to create a Right of Use Balance Sheet Asset for the lease, and no Lease
Liability Balance Sheet entry and instead will report the short-term lease payments monthly as accrued, as lease expense. As
the Company needs become clear over the fiscal year and if the Company determines that it would like to remain in the current
premises thereafter or instead to lease other premises, the Company then will attempt to negotiate a longer term commercial
lease at that time, and thereafter will account for any such lease in accordance with ASC 842. RESEARCH AND DEVELOPMENT All research and development costs are expensed
as incurred and classified in selling, general and administrative expense. Total research and development expenses were $0 and
$20 for the three-month periods ended June 30, 2019 and 2018, respectively. ACCRUED EXPENSES The Company has retained the services of medical
doctors provided through CareClix Network, LLC, an unrelated entity, as part of its telemedicine services. The Company pays CareClix
Network LLC on a monthly basis for the services provided during each month. The Company is billed for these services on the 15 th FAIR VALUE OF FINANCIAL INSTRUMENTS FASB ASC 820 “FAIR VALUE MEASUREMENTS
AND DISCLOSURES,” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted
accounting principles and expands disclosure about fair value measurements. FASB ASC 820 establishes a three-tier fair value hierarchy
which prioritizes the inputs used in measuring fair value as follows. Level 1. Observable inputs such as quoted prices
in active markets; Level 2. Inputs, other than the quoted prices
in active markets, that are observable either directly or indirectly, and Level 3. Unobservable inputs in which there
is little or no market data which requires the reporting entity to develop its own assumptions. Except as noted below under Convertible Notes,
the Company does not have any assets or liabilities measured at fair market value on a recurring basis at June 30, 2019 and December
31, 2018. The Company did not have any fair value adjustments for assets or liabilities measured at fair market value on a nonrecurring
basis during the three-month periods ended June 30, 2019 and 2018. CONVERTIBLE NOTES The Company commenced a private offering of
convertible debt in the total principal amount of up to $3,000,000 in April 2019. The Company closed on a total of $1,680,000 in
convertible notes, and the offering has been closed. As issued, the convertible notes bear interest at 6 percent per annum and
may be converted at the election of the holder into common stock of the Company at a conversion price per share equal to 50 percent
of the closing price of the stock at the time of a conversion election. No conversions are permitted during the first 6 months
after issue. The notes mature on October 31, 2019. Due to the conversion feature of the convertible
notes, the Company evaluated the proper accounting and reporting treatment for the favorable conversion feature of the notes. After
review of the accounting guidance, the Company concluded that the notes should be reflected as Share Settled Debt at fair value Each
of the convertible notes (the “Notes”) settles by providing the holder with a variable number of the
Company’s shares with an aggregate fair value determined by reference to the debt principal outstanding. Because the
value that the holder receives at settlement does not vary with the value of the Company’s equity shares, the
settlement provision is not considered a conversion option for financial accounting purposes. Rather, these Notes are
recognized as share-settled debt at fair value. To illustrate the fact that the debt is settled with a variable number of
shares for a fixed dollar amount: If the Company’s stock price is $2.00 at conversion date, the holder will convert at
$1.00 (50% of market) per share and receive 1,680,000 shares, valued at $3,360,000. If the Company stock price is $5.00 at
conversion date, the holder will convert at $2.50 (50% of market) per share and receive 672,000 shares, valued at the same
$3,360,000. The Convertible
Notes total $1,680,000, and settle at a premium of $1,680,000 in common stock. The Company therefore recorded a Premium Liability
of $1,680,000 in addition to the $1,680,000 in principal debt amount, with the Premium Liability reported as Other Interest Expense
for the three months ended June 30, 2019. REVENUE RECOGNITION We recognize revenue from product sales or
services rendered under ASC 606, which directs that revenue should be recognized when the promised
goods or services are transferred to the customer. The amount of revenue recognized should equal the total consideration expected
to be received in return for the goods or services. ASC 606 creates a five-step approach that should be applied when determining
the amount and timing of revenue recognition.
· Step 1: Identify the contract with a customer
· Step 2: Identify the performance obligations in the contract
· Step 3: Determine the transaction price
· Step 4: Allocate the transaction price to the performance obligations
in the contract
· Step 5: Recognize revenue when (or as) the entity satisfies a performance
obligation The Company and its subsidiaries currently
maintain three separate lines of revenue; revenue from sales of product by Clinical and Herbal Innovations; revenues from use of
the recently acquired CareClix software by third parties (Software as a Service or SaaS); and revenues from patient consultations
through the CareClix telemedicine system. The revenues from these three lines of business are recognized as follows: Product Sales SaaS Telemedicine Revenues Approximately 40 percent of the Company revenues
for the three and six months ended June 30, 2019 were derived from one customer. Since the CareClix, Inc. telemedicine operation
commenced in mid-April, 2019, the accounts receivable of the subsidiary are less than 75 days old and there do not appear to be
any uncollectible accounts as of June 30, 2019, or to the date of this report. Accordingly, no allowance for bad debts has been
established and will not be established until the subsidiary has more experience with its receivables collections. ADVERTISING The Company follows the policy of charging
the costs of advertising to expense as incurred. Advertising expense for the three-month periods ended June 30, 2019 and 2018 was
$0 and $20, respectively. INCOME TAXES The Company accounts for income taxes under
FASB ASC 740 “INCOME TAXES.” Under the asset and liability method of FASB ASC 740, deferred tax asset and liabilities
are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or
settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income
in the period the enactment occurs. A valuation allowance is provided for certain deferred tax asset if it is more likely than
not that the Company will not realize tax assets through future operations. GOING CONCERN The Company’s financial statements are
prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”),
which contemplates the Company’s continuation as a going concern. The Company incurred operating losses of $402,659 during
the year ended December 31, 2018 and had an accumulated deficit of $1,772,492 as of December 31, 2018. The Company incurred additional
operating losses of $2,066,910 in the six months ended June 30, 2019. Management intends to raise additional operating
funds through equity and/or debt offerings. However, there can be no assurance management will be successful in its endeavors.
There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient
cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing
necessary to support its working capital requirements. To the extent that funds generated from operations and any private placements,
public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance
can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate
working capital is not available to the Company, it may be required to curtail or cease its operations. Although the Company successfully raised a
total of $1,680,000 in funds from a private offering of convertible debt in April 2019 (See, Convertible Notes), a total of $1,000,000
of that funding was used for the cash payment portion of the consideration for the acquisition of the CareClix software and related
assets from KB Medial Systems, LLC and additional funds will be required for operations and expansion of the business of the Company. Due to uncertainties related to these matters,
there exists a substantial doubt about the ability of the Company to continue as a going concern. The accompanying consolidated
financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or
the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. RECENT ACCOUNTING PRONOUNCEMENTS The Company evaluates new pronouncements as
issued and evaluates the effect of adoption on the Company at the time. The Company has determined that recently adopted accounting
pronouncements will not have a material impact on the financial statements. |
