General form of registration statement for all companies including face-amount certificate companies

10. Restatement

v3.8.0.1
10. Restatement
12 Months Ended
Dec. 31, 2017
Accounting Changes and Error Corrections [Abstract]  
Restatement

The Company reevaluated inventory for slow moving and reserved a portion of slow moving inventory for obsolescence.

 

In 2015 the Company entered into a business combination with an entity under common control. The accounting treatment for such business combination should have been recorded at carry value, similar to pooling of interest. The Company corrected the error in the accounting treatment of the transaction. In 2016, the Company recorded sales transactions net of cost of goods sold in error. The restatement corrected the error.

 

Also, certain account classifications have been modified. Related party accounts receivable and accounts payable have been reclassified to their own line for disclosure purpose. See below for result of 2016 restatement and reclassification.

 

    Previous reported               Restated  
    12/31/2016     Adjustment         12/31/2016  
ASSETS                
CURRENT ASSETS                            
Cash and cash equivalents   $ 340,073       (2 )       $ 340,071  
Accounts receivable     35,896       (10,332 )   {a}     25,564  
Accounts receivable - related party           10,332     {a}     10,332  
Inventories, net     104,832       (36,337 )   {b}     68,495  
Prepaid expenses     7,962                   7,962  
Total Current Assets     488,763                 452,424  
                             
Property and equipment, net     8,517                 8,517  
                             
Other assets:                            
Deposits     24,726                 24,726  
                             
Total assets:   $ 522,006               $ 485,667  
                             
LIABILITIES AND STOCKHOLDERS’ EQUITY                            
Current Liabilities:                            
Accounts payable and accrued liabilities   $ 372,912       (4,399 )   {c}   $ 368,513  
Customer deposit     57,726       4,400     {c}     62,126  
Income taxes payable     800                 800  
Total Current Liabilities     431,438                   431,439  
Non-current Liabilities                            
Deferred rent     468                 468  
                             
Total Liabilities     431,906                   431,907  
                             
Commitments and Contingencies                            
Stockholders' Equity:                            
Common stock, par value $0.001 per share, 75,000,000 shares authorized; 34,574,706 shares issued and outstanding as of December 31, 2017 and 2016, respectively     34,575                 34,575  
Additional paid-in capital     713,239       658,379     {d}     1,371,618  
Accumulated deficit     (657,714 )     (694,719 )   {e}     (1,352,433 )
Total stockholders' equity     90,100                   53,760  
                             
Total Liabilities and Stockholders' Equity   $ 522,006                 $ 485,667  

 

{a} The Company reclassified related party accounts receivable and payable balance into its own line item.

 

{b}The Company reserved $36,337 for slow moving inventory items.

 

{c} Customer deposit of $4,400 was reclassified out from accounts payable to correctly record in customer deposit.

 

{d} The Company and Perfecular Inc. entered into merger agreement on December 30, 2015. The two entities are merger under common control. Per ASC 805-50-45, entities merger under common control should be recorded using book value and retained earnings is carried into the consolidated financial statements. The Company erroneously eliminated Perfecular Inc.’s retained earnings through consolidation. An adjustment is made to properly record investment made to the merger and record retained earnings of Perfecular Inc.

 

{e} Accumulated adjustment effect in result of inventory reserve and adjustment to properly recorded investment made to the merger.

 

    Previously reported               Restated  
    12/31/2016     Adjustment         12/31/2016  
                       
Revenue   $ 337,496       778,723     {f}   $ 1,116,219  
Revenue - related party           5,759     {g}     5,759  
Total revenue     337,496                   1,121,978  
                             
Cost of Revenue     57,128       809,431     {f}{h}     866,559  
                             
Gross Profit     280,368                   255,419  
                             
Operation Expenses:                            
Compensation - officers     121,385                   121,385  
Research and development     201,899                   201,899  
Professional fees     142,956                   142,955  
General and administrative     257,365       (1,155 )   {g}     256,210  
Total Operating Expenses     723,605                   722,449  
                             
Loss from Operations     (443,237 )                 (467,030 )
                             
Other Income (Expense)                            
Interest expense, net     (203 )     300     {g}     97  
Other income     5,736       (5,148 )   {g}     588  
Other expense     (1,600 )     1,012     {g}     (588 )
Total other expense     3,933                   91  
                             
Loss before income taxes     (439,304 )                 (466,939 )
                             
Income tax provision     1,600       (1,105 )   {j}     495  
                             
Net Loss   $ (440,904 )               $ (467,434 )
                             
Weight Average Number of Common Shares Outstanding - Basic and Diluted     34,574,706                   34,574,706  
                             
Net Loss per common share                            
Basic and diluted   $ (0.01 )               $ (0.01 )

 

{f} The Company previously recorded shipment of sales shipped directly from vendor to customer as net of cost of goods sold. The Company corrected the error by recording sales at gross amount and separately record cost of goods sold amount.

 

{g} Other income and other expenses items were reclassified to other income statement accounts. Refund of rent expense of $1,155 was reclassified from other income to general and administrative expenses. Other expenses items including interest expense and cost of sales were reclassified to their respective accounts. Interest expense was reclassified from other income.

 

{h} The Company reserved $36,337 for slow moving inventory items into cost of goods sold.

 

{i}Income tax refund was reclassified from other income to income tax expense.

 

    Previously
reported
              Restated  
    12/31/2016     Adjustment         12/31/2016  
                       
Cash flows from operating activities:                            
Net Loss   $ (440,904 )     (26,530 )       $ (467,434 )
Adjustments to reconcile net loss to net cash used in operating activities:                            
Inventory reserve           26,528     {j}     26,528  
Depreciation expense     1,130                   1,130  
Changes in Operating Assets and Liabilities:                            
Accounts receivable     70,993       10,332     {k}     81,325  
Accounts receivable - related party           (10,332 )   {k}     (10,332 )
Inventories     (53,258 )                 (53,258 )
Prepaid expenses     6,999                   6,999  
Accounts payable and accrued liabilities     96,987       (4,402 )   {l}     92,585  
Customer deposit     (82,303 )     4,400     {l}     (77,903 )
Deferred rent     (443 )                 (443 )
Net cash flows used in operating activities     (400,799 )                 (400,803 )
                             
Cash flows from investing activities:                            
Purchase of property and equipment     (8,239 )                 (8,239 )
Net cash flows used in investing activities     (8,239 )                 (8,239 )
                             
Cash flows from financing activities:                            
Repayment to related parties     (63,369 )                 (63,368 )
Repayment to shareholders     (19,533 )                 (19,534 )
Net cash flows provided by (used in) financing activities     (82,902 )                 (82,902 )
                             
Net Change in Cash and Cash Equivalents     (491,940 )                 (491,944 )
                             
Cash and cash equivalents - Beginning of Period     832,015                   832,015  
                             
Cash and cash equivalents - End of Period   $ 340,071                 $ 340,071  

 

{j} The Company reserved $36,337 for slow moving inventory items into cost of goods sold.

 

{k} The Company reclassified related party accounts receivable and payable balance into its own line item.

 

{l} Customer deposit of $4,400 was reclassified out from accounts payable to correctly record in customer deposit.