NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2015
NOTE 1 – ORGANIZATION, NATURE OF BUSINESS
AND GOING CONCERN
(A) Organization
ABV Consulting, Inc. (“The
Company”) was originally organized in the State of Nevada on October 15, 2013. The Company provides merchandising and consulting
services to Craft beer brewers and distributors as well as providing marketing support within the craft beer industry to retailers
and other organizations as needed. While the Company does not directly produce alcoholic beverages, it provides services to help
businesses in the industry improve their marketing, sales and operations.
(B) Going Concern
As of December 31, 2015,
the Company had an accumulated deficit of $112,071 and used cash in operations of $57,111 for the year ended December 31, 2015.
Losses have principally occurred as a result of the substantial resources required for professional fees and general and administrative
expenses associated with our operations.
These conditions raise
substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any
adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications
of liabilities that may result from the outcome of these uncertainties. Management believes that the actions presently being taken
to obtain additional funding and implement its strategic plan provides the opportunity for the Company to continue as a going concern.
(C) Risks and Uncertainties
The Company is a business
whose planned principal operations is to provide merchandising and consulting services to the Craft beer brewers and distributors
as well as providing marketing support within the craft beer industry. The Company is currently conducting research and development
activities to operationalize certain high-risk environments.
During the last year, the
Company has continued to communicate with breweries, retailers and other key players in the industry and increasing our online
presence through our blog, facebook and twitter pages. The Company also continues to seek additional funding to continue to expand
our presence in the industry.
The Company's activities
are subject to significant risks and uncertainties, including failing to secure any consulting agreements and additional funding.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(A) Cash and Cash
Equivalents
The Company considers investments
that have original maturities of three months or less when purchased to be cash equivalents.
(B) Use of Estimates
in Financial Statements
The presentation of financial
statements in conformity with accounting principles generally accepted in the United States of America 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 from those estimates. Significant estimates during the periods covered by these financial statements include the valuation
of deferred tax asset and imputed compensation costs.
(C) Fair value measurements
and Fair value of Financial Instruments
The Company adopted ASC Topic
820, Fair Value Measurements. ASC Topic 820 clarifies the definition of fair value, prescribes methods for measuring fair value,
and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1-Inputs are unadjusted
quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2-Inputs are unadjusted
quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities
in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by
observable market data.
Level 3-Inputs are unobservable
inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing
the asset or liability based on the best available information.
(D) Revenue Recognition
The Company recognizes revenue
on arrangements in accordance with FASB ASC No. 605, “Revenue Recognition”. In all cases, revenue is recognized
only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability
of the resulting receivable is reasonably assured.
(E) Segments
The Company operates in one
segment and therefore segment information is not presented.
(F) Loss Per Share
The basic loss per share
is calculated by dividing the Company's net loss available to common shareholders by the weighted average number of common shares
during the period. The diluted loss per share is calculated by dividing the Company's net loss available to common shareholders
by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding
is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. As of December 31, 2015 and 2014,
the company has no dilutive securities.
(G) Income Taxes
The Company accounts for
income taxes under FASB Codification Topic 740-10-25 ("ASC 740-10-25"). Under ASC 740-10-25, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases. 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 ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.
The Company’s income tax expense differs
from the “expected” tax expense for federal income tax purpose by applying the Federal & State blended rate of
40.59% as follows:
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Expected income tax (benefit) expense at the statutory rate of 40.59%
|
|
$
|
(17,020
|
)
|
|
$
|
(22,134
|
)
|
Tax effect of expenses that are not deductible for income tax purposes (net of other amounts deductible for tax purposes)
|
|
|
2,446
|
|
|
|
2,639
|
|
Change in valuation allowance
|
|
|
14,574
|
|
|
|
19,496
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
The components of deferred income taxes are as
follows:
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Deferred income tax asset:
|
|
|
|
|
|
|
Net operating loss carryforwards
|
|
$
|
38,460
|
|
|
$
|
23,886
|
|
Valuation allowance
|
|
|
(38,460
|
)
|
|
|
(23,886
|
)
|
Deferred income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
As of December 31, 2015, the Company has
a net operating loss carry forward of approximately $73,300 available to offset future taxable income through 2035. This results
in deferred tax assets of approximately $38,460 as of December 31, 2015. The valuation allowance at December 31, 2015
was approximately $38,460. The change in the valuation allowance for the year ended December 31, 2015 was an increase of $14,574.
Tax returns for the years ended December 31, 2015, 2014 and 2013 are subject to examination by the Internal Revenue Service.
(H) Reclassification
Certain amounts from prior
periods have been reclassified to conform to the current period presentation
NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS
In June 2014, FASB issued
Accounting Standards Update (“ASU”) No. 2014-09, “
Revenue from Contracts with Customers”.
The update
gives entities a single comprehensive model to use in reporting information about the amount and timing of revenue resulting from
contracts to provide goods or services to customers. The proposed ASU, which would apply to any entity that enters into contracts
to provide goods or services, would supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most
industry-specific guidance throughout the Industry Topics of the Codification. Additionally, the update would supersede some cost
guidance included in Subtopic 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts. The update removes
inconsistencies and weaknesses in revenue requirements and provides a more robust framework for addressing revenue issues and more
useful information to users of financial statements through improved disclosure requirements. In addition, the update improves
comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets and simplifies the
preparation of financial statements by reducing the number of requirements to which an entity must refer. The update is effective
for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. This updated
guidance is not expected to have a material impact on our results of operations, cash flows or financial condition.
In June 2014, FASB issued
Accounting Standards Update (“ASU”) No. 2014-12, “
Compensation – Stock Compensation (Topic 718); Accounting
for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service
Period”.
The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in
which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service
period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service
period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards
with performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective
for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted.
The effective date is the same for both public business entities and all other entities.
Entities may apply the amendments
in this ASU either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards
with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements
and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update
as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to
the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight
in measuring and recognizing the compensation cost. This updated guidance is not expected to have a material impact on our results
of operations, cash flows or financial condition.
In August 2014, the
FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern
(Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”.
Currently, there is no guidance in U.S. GAAP about management’s responsibility toevaluate whether there is substantial doubt
about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this
Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote
disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating
and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a
definition of the term
substantial doubt,
(2) require an evaluation every reporting period including interim periods, (3)
provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial
doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures
when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial
statements are issued (or available to be issued).
The amendments in this Update
are effective for public entities for annual periods ending after December 15, 2016. Early adoption is permitted. The effect
of adoption of this standard is not expected to have a material effect on the Company.
No other accounting
pronouncements issued by FASB (including the Emerging Issues Task Force), the AICPA and the SEC, did not or are not believed by
the Company management, to have a material impact on the Company’s present or future financial statements.
NOTE 4 – NOTE PAYABLE – RELATED
PARTY
On April 21, 2015 the Company
entered into an unsecured promissory note in the amount of $20,000 with its Chief Executive Officer. The note is due on April 21,
2017 and bears interest at a rate of 2% per annum. Accrued interest at December 31, 2015 amounted to $278.
On October 8, 2015 the Company
entered into an unsecured promissory note in the amount of $15,000 with its Chief Executive Officer. The note is due on October
8, 2017 and bears interest at a rate of 2% per annum. Accrued interest at December 31, 2015 amounted to $69.
NOTE 5 – STOCKHOLDERS EQUITY
The Company is authorized
to issue up to 100,000,000 shares of common stock, par value $0.0001 and 10,000,000 preferred shares of blank check shares par
value $0.0001.
During the period ended December
31, 2013, the Company issued 200,000 shares of common stock for a subscription of $20,000 under a private placement agreement.
The subscription receivable was collected in January 2014.
In December 2013 the Company’s
founder paid $814 on behalf of the Company. The amount was recorded as a contribution of capital.
During the year ended December 31,
2014 the Company completed the private placement of 333,000 shares of common stock for proceed of $33,300. The Company paid offering
expenses of $1,525.
During the years ended December
31, 2015 and 2014 the Company imputed compensation of $6,500 and $6,500 for services provided by its Chief Executive Officer.