| Summary of Significant Accounting Policies | Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES Basis of Presentation The accompanying financial statements were
prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”). Use of Estimates The preparation of financial statements in
conformity with US GAAP requires management to make certain 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 from those estimates. Significant estimates include
collectability of accounts receivable, accounts payable, sales returns and recoverability of long-term assets. Cash Cash consists of deposits in one large national
bank. At December 31, 2016 and 2015, the Company had $11,766 and $81,984 in cash in the United States. The Company has not experienced
any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. Property, Plant & Equipment Property, plant and equipment is stated at
cost and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term.
The estimated useful lives of our property and equipment are generally as follows: tools and equipment, five years; vehicles and
parts, three years; leasehold improvements, lesser of lease term or life of related asset; and furniture and fixtures, seven years. As of December 31, 2016 and 2015, Property,
plant and equipment consisted of the following:
2016 2015
Furniture and furnishings $ 14,303 $ 14,303
Leasehold improvements 18,184 18,184
Vehicle and parts 76,045 80,045
Tools and equipment 22,494 22,494
Total 131,026 135,026
Less: Accumulated depreciation (66,076 ) (29,644 )
Property, plant and equipment, net $ 64,950 $ 105,382 Depreciation expense was $39,258 and $21,628
for the years ended December 31, 2016 and 2015, respectively. Fair Value of Financial Instruments For certain of the Company’s financial
instruments, including cash accounts payable, accrued liabilities, short-term debt and derivative liability, the carrying amounts
approximate their fair values due to their short maturities. We adopted ASC Topic 820, “Fair Value Measurements and Disclosures,”,
which requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,”
defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure
requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities
each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between
the origination of such instruments and their expected realization and their current market rate of interest. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and
the lowest priority to unobservable inputs (level 3 measurements). The three levels of valuation hierarchy are defined as follows: Level 1 inputs to the valuation methodology
are quoted prices for identical assets or liabilities in active markets. Level 2 inputs to the valuation methodology
include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability,
either directly or indirectly, for substantially the full term of the financial instrument. Level 3 inputs to the valuation methodology
are unobservable in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as
valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The Company analyzes all financial instruments
with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815. We have recorded the conversion option on few
notes as a derivative liability as a result of the variable conversion price, which in accordance with U.S. GAAP, prevents them
from being considered as indexed to our stock and qualified for an exception to derivative accounting. We recognize derivative instruments as either
assets or liabilities on the accompanying balance sheets at fair value. We record changes in the fair value of the derivatives
in the accompanying statement of operations. Assets and liabilities measured at fair value
are as follows as of December 31, 2016:
Total Level 1 Level 2 Level 3
Liabilities
Derivative liability $ 270,075 $ - $ - $ 270,075
Total liabilities measured at fair value $ 270,075 $ - $ - $ 270,075 The following is a reconciliation of the derivative
liability for which Level 3 inputs were used in determining the approximate fair value:
Balance as of December 31, 2015 $ -
Fair value of derivative liabilities issued 242,450
Loss on change in derivative liability 27,625
Balance as of December 31, 2016 $ 270,075 Earnings Per Share (EPS) Basic EPS is computed by dividing income available
to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar
to basic net income per share except that the denominator is increased to include the number of additional common shares that would
have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common
shares were dilutive. Diluted EPS is based on the assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and the if-converted method
for the outstanding convertible preferred shares. Under the treasury stock method, options and warrants are assumed to be exercised
at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common
stock at the average market price during the period. Under the if-converted method, convertible outstanding instruments are assumed
to be converted into common stock at the beginning of the period (or at the time of issuance, if later). During the years ended
December 31, 2016 and 2015, the Company incurred losses. Therefore, the effect of any common stock equivalents is anti- dilutive
during those periods. The following table sets for the computation
of basic and diluted earnings per share for years ended December 31, 2016 and 2015:
Basic and diluted 2016 2015
Net loss $ (1,033,117 ) $ (728,924 )
Weighted average number of shares in computing basic and diluted net loss
Basic 34,687,943 33,553,057
Diluted 34,687,943 33,553,057
Net loss per share basic and diluted
Basic and diluted $ (0.03 ) $ (0.02 ) Revenue Recognition Revenue is recognized when persuasive evidence
of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Revenue generally
is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. Cost of Sales Cost of sales consists primarily of inventory
costs, as well as warehousing costs (including the cost of warehouse labor), shipping, importation duties and charges, third party
royalties, and product sampling. Advertising and Marketing Costs Costs incurred for producing and communicating
advertising and marketing are expensed when incurred and included in selling general and administrative expenses. Advertising and
marketing expense amounted to $172,841 and $16,764 for the years ended December 31, 2016 and 2015, respectively. Operating Overhead Expense Operating overhead expense consists primarily
of payroll and benefit related costs, rent, depreciation and amortization, professional services, and meetings and travel. Income Taxes The Company utilizes FASB Accounting Standards
Codification (ASC) Topic 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that were included in the financial statements or tax returns. Under this method, deferred income
taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and
their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods
in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce
deferred tax assets to the amount expected to be realized. The Company follows FASB Interpretation No.
48, Accounting for Uncertainty in Income Taxes, (codified in FASB ASC Topic 740). When tax returns are filed, it is likely that
some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about
the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position
is recognized in the financial statements in the period during which, based on all available evidence, management believes it is
more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes,
if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not
recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon
settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the
amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets
along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated
with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative
expenses in the statements of income. At December 31, 2016 and 2015, the Company
had not taken any significant uncertain tax positions on its tax returns for period ended December 31, 2016 and prior years or
in computing its tax provision for 2016. Management has considered its tax positions and believes that all of the positions taken
by the Company in its Federal and State tax returns are more likely than not to be sustained upon examination. The Company is subject
to examination by U.S. Federal and State tax authorities from inception to present, generally for three years after they are filed. Concentration of Credit Risk Cash is mainly maintained by one highly qualified
institution in the United States. At various times, such amounts are in excess of federally insured limits. Management does not
believe that the Company is subject to any unusual financial risk beyond the normal risk associated with commercial banking relationships.
The Company has not experienced any losses on our deposits of cash. Risks and Uncertainties The Company is subject to risks from, among
other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements,
rapidly changing customer requirements, limited operating history and the volatility of public markets. Recently Issued Accounting Pronouncements In August 2016, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230):
Classification of Certain Cash Receipts and Cash Payments. This update addresses a diversity in practice in how certain cash receipts
and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other
Topics. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15,
2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We adopted
this ASU in 2016 and the implementation did not have a material impact on our financial position or statement of operations. In August 2014, the FASB issued Accounting
Standards Update No. 2014-15, “ Presentation of Financial Statements – Going Concern” Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” substantial doubt, Reclassification Certain prior year amounts have been reclassified
for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations
or cash flow. |
