NOTES TO FINANCIAL STATEMENTS
NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION
Lollipop Corporation is a Delaware corporation (the “Corporation”), incorporated under the laws of the State of Delaware on November 17, 2011. The Corporation is in the development stage as defined by Accounting Standards Codification 915 (ASC 915), “Accounting and Reporting by Development Stage Enterprises”, the Company is devoting substantially all of its efforts to development of business plans. The business plan of the Corporation is; the distribution of sports nutritional supplements.
Basis of Presentation
The Company maintains its accounting records on an accrual basis in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).
These financial statements are presented in US dollars.
Fiscal Year End
The Corporation has adopted a fiscal year end of December 31.
Unaudited Interim Financial Statements
The interim financial statements of the Company as of June 30, 2014, and for the periods then ended, and cumulative from inception, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of June 30, 2014, and the results of its operations and its cash flows for the periods ended June 30, 2014, and cumulative from inception. These results are not necessarily indicative of the results expected for the calendar year ending December 31, 2014. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States. Refer to the Company’s audited financial statements as of December 31, 2013, filed with the SEC, for additional information, including significant accounting policies.
Going concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As at June 30, 2014, the Company has a loss from operations of $25,161 an accumulated deficit of $51,634 and has earned no revenues since inception. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending December 31, 2014.
The ability of the Company to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. In response to these problems, management intends to raise additional funds through public or private placement offerings.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 or revenues and expenses during the reporting period. Actual results could differ from those estimates.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies are set out below, these policies have been consistently applied to the period presented, unless otherwise stated:
Cash and cash equivalents
Cash and equivalents include investments with initial maturities of three months or less. The Company maintains its cash balances at credit-worthy financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000.
Property, plant and equipment
The Company does not own any property, plant and equipment.
Earnings per share
The Company computes net loss per share in accordance with ASC 260, "Earnings per Share" ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all potential dilutive common shares, which comprise options granted to employees. As at June 30, 2014, the Company had no potentially dilutive shares.
Income taxes
Income taxes are accounted for in accordance with ASC Topic 740, “Income Taxes.” Under the asset and liability method, deferred tax assets and liabilities are recognized for the future consequences of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases (temporary differences). Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are recovered or settled. Valuation allowances for deferred tax assets are established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
NOTE 3 – STOCKHOLDER’S EQUITY
Common Stock
On December 7, 2011, the Corporation issued 875,000 shares of common stock to the two directors of the Corporation at a price of $0.016 per share, for $14,000, for initial capital (stock subscription receivable). The proceeds from this stock issuance was received on November 14, 2012.
On September 3, 2013, the Corporation issued 157,428 shares of common stock to various stockholders at a price of $0.25 per share, for $39,357 (stock subscription receivable). The proceeds from this stock issuance was received in the Company's bank account on October 18, 2013 net of professional fees.
NOTE 4 – INCOME TAXES
The provision (benefit) for income taxes for the six month periods ended June 30, 2014 and 2013 were as follows (assuming a 15% effective tax rate):
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2014
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2013
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$
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$
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Current Tax Provision
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Federal-
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Taxable income
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Total current tax provision
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-
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-
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-
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-
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Deferred Tax Provision
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Federal-
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Loss carry forwards
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3,774
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1,997
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Change in valuation allowance
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(3,774
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)
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(1,997
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)
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Total deferred tax provision
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-
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-
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The Company had deferred income tax assets as of June 30, 2014 and December 31, 2013 as follows:
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2014
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2013
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$
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$
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Loss carry forwards
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7,745
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3,971
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Less - Valuation allowance
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(7,745
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)
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(3,971
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)
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-
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-
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The Company provided a valuation allowance equal to the deferred income tax assets for periods ended June 30, 2014 and December 31, 2013 because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.
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As of June 30, 2014, the Company had approximately $51,634 in tax loss carryforwards that can be utilized future periods to reduce taxable income, and expire by the year 2034.
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The Company did not identify any material uncertain tax positions. The Company did not recognize any interest or penalties for unrecognized tax benefits.
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The federal income tax returns of the Company are subject to examination by the IRS, generally for three years after they are filed.
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NOTE 5 – FAIR VALUE MEASUREMENTS
In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements”. The objective of SFAS 157 (ASC 820) is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS 157 (ASC 820) defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 (ASC 820) applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements.
The Company has various financial instruments that must be measured under the new fair value standard including: cash in bank. The Company currently does not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:
- Level 1:
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Quoted prices in active markets for identical instruments;
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- Level 2:
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Other significant observable inputs (including quoted prices in active markets for similar instruments);
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- Level 3:
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Significant unobservable inputs (including assumptions in determining the fair value of certain investments).
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