Quarterly report pursuant to Section 13 or 15(d)

2. Revision of Prior Period Financial Statements

v3.20.1
2. Revision of Prior Period Financial Statements
3 Months Ended
Mar. 31, 2020
Accounting Changes and Error Corrections [Abstract]  
Revision of Prior Period Financial Statements

Note 2 – Revision of Prior Period Financial Statements

 

The Company corrected certain errors in its 2019 financial statements. In accordance with ASC 50-10-S99 and S55 (formerly Staff Accounting Bulletins (“SAB”) No. 99 and No. 108), Accounting Changes and Error Corrections, the Company concluded that these errors were not, individually, and in the aggregate, quantitatively or qualitatively, material to the financial statements in these periods.

 

On March 15, 2019, the Company acquired AVX Design & Integration Inc. Upon further review, we noticed that some revenue recognized immediately after the acquisition and before the financial statement reporting period were recognized prematurely. There were also some expense reclassifications between expense items. Consequently, revenue was overstated by $88,855, cost of revenue was understated by $9,603, selling expenses were overstated by $9,209, compensation – officers was understated by $3,325, professional fees was overstated by $4,875, and general and administrative expenses was understated by $197. The Company had accounted for these errors correctly on the audited year end financials.

 

The below discloses the effects of the revisions on the financial statements for the period reported.

 

 

 

 

 

Condensed consolidated statement of operation

    Previously reported       Revised
    For the three months ended       For the three months ended
    3/31/2019   Adjustment   3/31/2019
Revenue   $ 239,738     $ (88,855 )   $ 150,883  
Revenue - related party     3,000               3,000  
Total revenue     242,738       (88,855 )     153,883  
                         
Cost of Revenue     122,128       9,603       131,731  
                         
Gross Profit     120,610       (98,458 )     22,152  
                         
Operation Expenses:                        
Selling     9,209       (9,209 )      
Compensation - officers     31,675       3,325       35,000  
Research and development     62,004               62,004  
Professional fees     355,274       (4,875 )     350,399  
General and administrative     110,456       197       110,653  
Total Operating Expenses     568,618       (10,562 )     558,056  
                         
Loss from Operations     (448,008 )     (87,896 )     (535,904 )
                         
Other Income (Expense)                        
Interest income (expense), net     725               725  
Total other expense     725               725  
                         
Loss before income taxes     (447,283 )     (87,896 )     (535,179 )
                         
Tax expense                    
                         
Net Loss   $ (447,283 )   $ (87,896 )   $ (535,179 )

 

 

 

 

 

Condensed consolidated statement of cash flows

 

    Previously reported       Revised
    For the three months ended       For the three months ended
    3/31/2019   Adjustment   3/31/2019
Cash flows from operating activities:                        
Net Loss   $ (447,283 )     (87,896 )   $ (535,179 )
Adjustments to reconcile net loss to net cash from operating activities:                        
Inventories reserve     26,435               26,435  
Depreciation expense     32,925               32,925  
Amortization of right-of-use assets     2,033               2,033  
Stock-based compensation     35,999               35,999  
Changes in operating assets and liabilities:                        
Accounts receivable     (99,176 )             (99,176 )
Accounts receivable - related party     37,625               37,625  
Inventories     9,187               9,187  
Other receivable     (2,151 )             (2,151 )
Prepaid expenses     46,671               46,671  
Accounts payable and accrued liabilities     11,216       (959 )     10,257  
Accounts payable - related party     (4,921 )             (4,921 )
Other current liabilities     (7,210 )             (7,210 )
Customer deposit     (10,467 )     88,855       78,388  
Net cash flows used in operating activities     (369,117 )             (369,117 )
                         
Cash flows from investing activities:                        
Cash from acquisition     201,482               201,482  
Purchase of property and equipment     (181,121 )             (181,121 )
Cash paid for acquisition     (550,000 )             (550,000 )
Net cash flows used in investing activities     (529,639 )             (529,639 )
                         
Cash flows from financing activities:                        
Payment on long term debt and finance lease obligation     (2,021 )             (2,021 )
Net cash flows used in financing activities     (2,021 )             (2,021 )
                         
Net change in cash     (900,776 )             (900,776 )
                         
Cash beginning of period     4,455,751               4,455,751  
                         
Cash end of period   $ 3,554,975             $ 3,554,975  

 

There was no impact on the Company’s consolidated balance sheet.