Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Organization
OptiLeaf
Incorporated ("OptiLeaf" or the "Company") was incorporated in Florida in August 2014. The Company has been
in the development stage since inception and has not generated any sales to date. The Company plans to develop, market and sell
integrated software and hardware to the agriculture industry for the seamless tracking and management of growth, task automation
and sale of their clients' products.
Basis of Presentation
The accompanying unaudited condensed
financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial
information. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance
with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such principles and regulations of
the Securities and Exchange Commission for Form 10-Q. All adjustments, consisting of normal recurring adjustments, have been made
which, in the opinion of management, are necessary for a fair presentation of the results of interim periods. The results of operations
for such interim periods are not necessarily indicative of the results that may be expected for a full year. The unaudited condensed
financial statements contained herein should be read in conjunction with the audited financial statements and notes thereto for
the year ended December 31, 2016
Cash and Cash Equivalents
The Company considers all highly liquid
investments with an original maturity of three months or less to be cash equivalents. At March 31, 2017 and December 31, 2016,
the Company had no cash equivalents.
Use
of Estimates
The
preparation 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 amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Property
and Equipment
Property
and equipment are stated at cost. Depreciation is provided over the estimated useful lives (3 years) of the related assets using
the straight-line depreciation method.
Maintenance
and repairs are charged to operations when incurred. Betterments and improvements are capitalized. When property and equipment
are sold or otherwise disposed of, the asset account and related accumulated depreciation account are reduced, and any gain or
loss is included in operations.
Capitalized
Software Development Costs
Software
development costs are expensed as incurred until technological feasibility of the product is established. Development costs incurred
subsequent to technological feasibility will be capitalized and amortized on a straight-line basis over the estimated economic
life of the product. Capitalization of computer software costs will be discontinued when the computer software product is available
to be sold, leased, or otherwise marketed. Amortization will begin when the product is available for release to customers. Management
has determined as of March 31, 2017 that the software has not yet reached the stage of technical feasibility.
Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Revenue Recognition
In general, the Company record revenue
when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price
to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria
for the various revenues streams of the Company:
Revenue is recognized at the time the product
is delivered or services are performed. Provision for sales returns will be estimated based on the Company's historical return
experience. Revenue will be presented net of returns.
Allowance for Doubtful Accounts
The Company maintains an allowance for doubtful accounts which
represents its best estimate of probable losses inherent in the accounts receivable balance. The Company evaluates specific accounts
when it becomes aware of a situation where a customer may not be able to meet its financial obligations due to deterioration of
its liquidity or financial viability, credit ratings, or bankruptcy. The Company periodically adjusts this allowance based upon
its review and assessment of each category of receivables. As of March 31, 2017, the allowance for doubtful accounts was $0.
Research
and Development
The
cost of research and development is charged to expense when incurred.
Net Loss Per Common Share
Basic net loss per common share is calculated
using the weighted average common shares outstanding during each reporting period. Diluted net loss per common share adjusts the
weighted average common shares for the potential dilution that could occur if common stock equivalents (convertible debt and preferred
stock, warrants, stock options and restricted stock shares and units) were exercised or converted into common stock. There were
no common stock equivalents at March 31, 2017 and 2016.
Income
Taxes
Deferred
income taxes are recognized for the tax consequences related to temporary differences between the carrying amount of assets and
liabilities for financial reporting purposes and the amounts used for tax purposes at each year end, based on enacted tax laws
and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation
allowance is recognized when, based on the weight of all available evidence, it is considered more likely than not that all, or
some portion, of the deferred tax assets will not be realized. Income tax expense is the sum of current income tax plus the change
in deferred tax assets and liabilities.
ASC
740, Income Taxes, requires a company to first determine whether it is more likely than not (which is defined as a likelihood
of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming
that taxing authorities will examine the position and have full knowledge of all relevant information. A tax position that meets
this more likely than not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty
percent likely to be realized upon effective settlement with a taxing authority.
The
Federal and state income tax returns of the Company for 2016, 2015 and 2014 are subject to examination by the internal Revenue
Service and state taxing authorities for three (3) years from the date filed.
Stock-Based
Compensation
The
Company accounts for equity instruments issued to employees in accordance with ASC 718, Compensation - Stock Compensation. ASC
718 requires all share-based compensation payments to be recognized in the financial statements based on the fair value using
an option pricing model. ASC 718 requires forfeitures to be estimated at the time of grant and revised in subsequent periods if
actual forfeitures differ from initial estimates.
Equity
instruments granted to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the
fair value of equity instruments with performance criteria is the date that each performance commitment for such equity instrument
is satisfied or there is a significant disincentive for non-performance.
Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Fair
Value of Financial Instruments
Pursuant
to ASC No. 820, "Fair Value Measurement and Disclosures", the Company is required to estimate the fair value of
all financial instruments included on its balance sheet as of March 31, 2017 and December 31, 2016. The Company's financial
instruments consist of accounts payable and accrued expenses. The Company considers the carrying value of such amounts in the
financial statements to approximate their fair value due to the short-term nature of these financial instruments.
Recent
Pronouncements
In
February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which requires lessees to recognize most lease liabilities
on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The update
states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for
the right to use the underlying asset for the lease term. The update is effective for interim and annual periods beginning after
December 15, 2018, and early adoption is permitted. The impact of this guidance will result in the recognition of assets and liabilities
for leases that the Company enters into in the future.
Other recent accounting pronouncements
issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities
and Exchange Commission did not or are not believed by management to have a material impact on the Company's financial position
or results of operations.
Note
2. GOING CONCERN
The
Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction
of liabilities in the normal course of business.
The
Company has experienced a loss from operations during its development stage as a result of its investment necessary to achieve
its operating plan, which is long-range in nature. For the period from August 11, 2014 (inception) to March 31, 2017, the Company
incurred a net loss of approximately $544,000. In addition, the Company has just started revenue generating 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 relating to the recoverability and classification of recorded asset amounts, or amounts and classification
of liabilities that might result from this uncertainty.
The
ability of the Company to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations
or on the ability of the Company to obtain necessary financing to fund ongoing operations. Management believes that its current
and future plans enable it to continue as a going concern for the next twelve months.
To
meet these objectives, the Company continues to seek other sources of financing in order to support existing operations and expand
the range and scope of its business. However, there are no assurances that any such financing can be obtained on acceptable terms
and timely manner, if at all. The failure to obtain the necessary working capital would have a material adverse effect
on the business prospects and, depending upon the shortfall, the Company may have to curtail or cease its operations.
The accompanying unaudited condensed
financial statements do not include any adjustment to the recorded assets or liabilities that might be necessary should the Company
have to curtail operations or be unable to continue in existence.
Note
3. COMPUTER EQUIPMENT (NET)
Equipment is recorded at cost and consisted of the following:
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Computer equipment
|
|
$
|
10,514
|
|
|
$
|
10,514
|
|
Less: accumulated depreciation
|
|
|
(8,730
|
)
|
|
|
(7,854
|
)
|
|
|
$
|
1,784
|
|
|
$
|
2,660
|
|
Depreciation expense was $876 for each
of the quarters ended March 31, 2017 and 2016.
Note
4. STOCKHOLDERS' EQUITY
Common
stock
The
Company has authorized 100,000,000 shares of no par value common stock. At March 31, 2017, the number of shares of common stock
issued was 20,210,419.
Treasury
stock
On
September 20, 2016, the Board of Directors authorized the Company to repurchase one million shares of common stock for
$40,000. These treasury stock shares may at any time be canceled upon the Board of Directors approval. The Board has not made
such election.
Note
5. CONCENTRATION CREDIT RISK
The
Company maintains its cash balances in a local financial institution which at times may exceed the $250,000 amount insured by
the Federal Deposit Insurance Corporation (FDIC).
Note
6. COMMITMENTS AND CONTINGENCIES
The Company leases its offices in a
month to month arrangement. The monthly minimum lease payments are $1,144 plus a pro rata share of operating expenses.
Note
7. INCOME TAXES
The
provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before
provision for income taxes. The sources and tax effects of the differences are as follows:
Income tax provision at the federal statutory rate
|
|
|
15
|
%
|
Effect of operating losses
|
|
|
(15
|
)%
|
|
|
|
0
|
%
|
At March 31, 2017, the Company has a net
operating loss carryforward of approximately $544,000 for Federal and state purposes. This loss will be available to offset future
taxable income. If not used, this carryforward will begin to expire in 2035. The deferred tax asset relating to the operating loss
carryforward has been fully reserved at March 31, 2017 and December 31, 2016. The change in the valuation allowance was approximately
$281,000 for the year ended December 31, 2016. The principal difference between the operating loss for income tax purposes and reporting
purposes is disallowed meals and entertainment and a temporary difference in depreciation expense.
Utilization
of the Company's net operating losses may be subject to substantial annual limitation if the Company experiences a 50% change
in ownership, as provided by the Internal Revenue Code and similar state provisions. Such an ownership change would substantially
increase the possibility of net operating losses expiring before complete utilization.