| Summary of Significant Accounting Policies | Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES Unaudited Interim Financial Information The accompanying unaudited condensed financial
statements have been prepared in accordance with the SEC’s requirements for Form 10-Q and, in the opinion of management,
contain all adjustments, of a normal and recurring nature, which are necessary for a fair statement of (i) the condensed balance
sheets at March 31, 2017 and December 31, 2016; (ii) the condensed statements of operations for the three month periods ended March
31, 2017 and 2016; and (iii) the condensed statements of cash flows for the three month periods ended March 31, 2017 and 2016.
However, the accompanying unaudited condensed financial statements do not include all information and notes required by accounting
principles generally accepted in the United States of America (“U.S. GAAP”). The Condensed balance sheet, included
in this report, as of December 31, 2016 was derived from the 2016 audited financial statements, but does not include all disclosures
required by U.S. GAAP. These unaudited interim condensed financial
statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on April 17, 2017. 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 and Cash Equivalents Cash consists of deposits in one large national
bank. At March 31, 2017 and December 31, 2016, the Company had $17,904 and $11,766 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 March 31, 2017 and December 31, 2016,
Property, plant and equipment consisted of the following:
March 31, 2017 December 31, 2016
Furniture & furnishings $ 14,303 $ 14,303
Leasehold improvements 18,184 18,184
Vehicle and parts 76,045 76,045
Tools and equipment 22,494 22,494
Total 131,027 131,026
Less: Accumulated depreciation (75,539 ) (66,076 )
Property, plant and equipment, net $ 55,488 $ 64,950 Depreciation expense was $9,463 and $9,900
for the three months ended March 31, 2017 and 2016, respectively. Impairment of Long-Lived Assets and Assets The Company reviews long-lived assets to be
held and used for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset, an impairment
loss is recorded. No impairment losses were recognized for the three months ended March 31, 2017 and 2016. 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 March 31, 2017:
Total Level 1 Level 2 Level 3
Liabilities
Derivative liability $ 257,100 $ - $ - $ 257,100
Total liabilities measured at fair value $ 257,100 $ - $ - $ 257,100 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, 2016 $ 270,075
Fair value of derivative liabilities issued 137,118
Change in derivative liability (150,093 )
Balance as of March 31, 2017 $ 257,100 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 three months
ended March 31, 2017 and 2016, 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 three months ended March 31, 2017 and 2016:
2017 2016
Basic and diluted
Net loss $ (48,588 ) $ (159,856 )
Weighted average number of shares in computing basic and diluted net loss
Basic 37,318,395 33,750,797
Diluted 37,318,395 33,750,797
Net loss per share basic and diluted
Basic and diluted $ (0.00 ) $ (0.00 ) 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 $0 and $11,841 for the three months ended March 31, 2017 and 2016, respectively. 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. Foreign Currency Risk Any significant changes in foreign currency exchange
rates may have significant impact on Company’s future financial statements upon fulfilling certain purchase commitments in
accordance to the license agreement disclosed in Note 5. 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. |
