The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
The accompanying notes are an integral part of the condensed consolidated financial statements
The accompanying notes are an integral part of the condensed consolidated financial statements
The accompanying notes are an integral part of the condensed consolidated financial statements
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) NATURE OF OPERATIONS
HD View 360 Inc, (the Company), was formed with an effective date of January 1, 2014, under the laws of the State of Florida. The Company design and installs closed-circuit television (CCTV) systems, using Analog, Internet Protocol and Serial Digital Interface technology. The Company also distributes network video recorders, HD cameras and accessories.
HD View Quick Fix Inc., (HDQF), was incorporated on May 18, 2016, under the laws of the State of Florida. It will be a combination of our installation company and a subscription based rapid response entity for computer/surveillance equipment repairs and is a wholly owned subsidiary.
HD View Technologies Inc., (HDVT), was incorporated on May 26, 2016, under the laws of the State of Florida. It will be a credit card/debit card merchant processor and is a wholly owned subsidiary.
SimpleFone Inc., (SFI), was incorporated on June 17, 2016, under the laws of the State of Florida. It will lease a telephone switch and sell/lease telephone equipment and telephone service and is a majority owned subsidiary.
(2) BASIS OF PRESENTATION AND USE OF ESTIMATES
a) Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles ("GAAP") in the United States of America ("U.S.") as promulgated by the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") and with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). The information included in the December 31, 2016 consolidated financial statements should be read in conjunction with Managements Discussion and Analysis and Results of Operations contained elsewhere in this report and the audited consolidated financial statements and accompanying notes in the Form 10-K filed with the U.S. Securities and Exchange Commission on March 31, 2017.
b) Principles of Consolidation
The accompanying condensed consolidated financial statements include the results of HD View 360 and its wholly and majority-owned subsidiaries. They have been prepared in accordance with Generally Accepted Accounting Principles ("GAAP") in the United States of America ("U.S.") as promulgated by the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") and with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC").
c) 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 of revenues and expenses during the reporting period. Actual results could differ from these estimates.
F-6
HD VIEW 360 INC
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(2) BASIS OF PRESENTATION AND USE OF ESTIMATES, continued
d) Cash and Cash Equivalents
The Company considers all highly liquid securities with original maturities of three months or less when acquired, to be cash equivalents. There were no financial instruments that qualified as cash equivalents at September 30, 2017 or December 31, 2016.
e) Revenue Recognition
The Company recognizes revenues when persuasive evidence of an arrangement exists, shipment has occurred, price is fixed or determinable, and collectability is reasonably assured. Product revenues are recognized when shipped to the customer. Revenues for installation services are recognized upon customer acceptance of completion of installation.
f) Shipping and Handling Costs
The Company generally does not charge its customers separately for shipping and handling. Shipping and handling costs are included in cost of product in the accompanying statements of income.
g) Accounts Receivable
Accounts receivable are stated net of allowance for doubtful accounts. The Company estimates an allowance based on experience with customers and judgment as to the likelihood of ultimate payment.
h) Inventories
Inventories are valued using the weighted average method. Cost is determined by the first-in, first-out method. Management establishes a valuation reserve for slow-moving items.
i) Property and Equipment
All property and equipment are recorded at cost and depreciated over their estimated useful lives, generally three, five or seven years, using the straight-line method. Upon sale or retirement, the cost and related accumulated depreciation are eliminated from their respective accounts, and the resulting gain or loss is included in the results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred.
j) Impairment of Long-Lived Assets
A long-lived asset is tested for impairment whenever events or changes in circumstances indicate that its carrying value amount may not be recoverable. An impairment loss is recognized when the carrying amount of the asset exceeds the sum of the undiscounted cash flows resulting from its use and eventual disposition. The impairment loss is measured as the amount by which the carrying amount of the long-lived assets exceeds its fair value.
F-7
HD VIEW 360 INC
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(2) BASIS OF PRESENTATION AND USE OF ESTIMATES, continued
k) Net Income (Loss) Per Share
Basic loss per share excludes dilution and is computed by dividing the loss attributable to stockholders by the weighted-average number of shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the Company. Diluted loss per share is computed by dividing the loss available to stockholders by the weighted average number of shares outstanding for the period and dilutive potential shares outstanding unless consideration of such dilutive potential shares would result in anti-dilution. There were no common stock equivalents for the three and nine months ended September 30, 2017 and 2016.
l) Income Taxes
The Company follows the provisions of ASC 740-10, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positins taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
As of September 30, 2017, the tax years 2016, 2015 and 2014 for the Company remain open for IRS audit. The Company has received no notice of audit or any notifications from the IRS for any of the open tax years.
m) Related Party Transactions
All transactions with related parties are in the normal course of operations and are measured at the exchange amount.
n) Recent Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires companies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time based on when control of goods and services transfer to a customer. As a result, we do not expect significant changes in the presentation of our financial statements. This ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and entities are permitted to apply either prospectively or retrospectively; early adoption is permitted. The Company does not expect adoption of this guidance to have a material effect on the Companys financial position, results of operations and cash flows.
F-8
HD VIEW 360 INC
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(2) BASIS OF PRESENTATION AND USE OF ESTIMATES, continued
n) Recent Accounting Pronouncements, continued
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The new standard principally affects accounting standards for equity investments, financial liabilities where the fair value option has been elected, and the presentation and disclosure requirements for financial instruments. Upon the effective date of the new standards, all equity investments in unconsolidated entities, other than those accounted for using the equity method of accounting, will generally be measured at fair value through earnings. There will no longer be an available-for-sale classification and therefore, no changes in fair value will be reported in other comprehensive income for equity securities with readily determinable fair values. The new guidance on the classification and measurement will be effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and early adoption is permitted. The Company is in the process of evaluating the impact of the adoption of ASU 2016-01 on the Companys financial position, results of operations and cash flows.
In February 2016, the FASB issued ASU 2016-02, Leases which, for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. The ASU is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The adoption of ASU 2016-02 is expected to result in the recognition of right to use assets and associated obligations on its balance sheet.
In March 2016, the FASB issued Accounting Standards Update 2016-08 Revenue from Contracts with Customers (Topic 606) to clarify implementation guidance on principal versus agent considerations (for reporting revenue on a gross or net basis). The ASU is an amendment to Topic 606, clarifies the implementation guidance, and requires an entity to account for revenue as an agent when another entity controls the specified good or service before that good or service is transferred to the customer. This ASU is effective for annual periods beginning after December 15, 2017. The Company is in the process of evaluating the impact of the adoption of ASU 2016-08 on the Companys financial position, results of operations and cash flows.
(3) STOCKHOLDERS EQUITY
At September 30, 2017 and December 31, 2016, the Company has 90,000,000 shares of par value $0.001 common stock authorized and 10,203,963 and 9,532,631 issued and outstanding, respectively. At September 30, 2017 and December 31, 2016, the Company has 10,000,000 shares of par value $0.001 preferred stock and zero issued and outstanding.
In January 2016, the Company issued 47,499 shares of common stock in exchange for $28,500 in cash. In December 2016, the Company issued 200,000 shares of common stock in exchange for $150,000 in cash.
In February 2017, the Company issued 7,999 shares of common stock in exchange for $6,000 in cash.
In July 2017, the Company issued 500,000 shares of common stock in exchange for $150,000 in cash and $100,000 subscription receivable. In August 2017, the Company issued 163,333 shares of common stock in exchange for $155,000 in cash.
F-9
HD VIEW 360 INC
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(4) COMMITMENTS AND CONTINGENCIES
a) Real Property Lease
The Company leases office and warehouse space with unrelated parties. During 2014, the Company executed a 1-year lease, with base rent of $2,200 per month, which was renewed on July 1, 2015. This lease required a monthly base rent payments of $2,310. This lease expired July 1, 2016, and was extended for one month. The Company relocated under a new two year lease effective July 1, 2016. The Company received a three month abatement in rent payments in exchange for completing certain leasehold improvements. These improvements were completed and the Company relocated on August 1, 2016. This lease requires a base rent of $3,063 per month. Rent expense of $8,040 and $8,040 was incurred during the three months ended September 30, 2017, and 2016, respectively. Rent expense of $24,120 and $23,697 was incurred during the nine months ended September 30, 2017, and 2016, respectively.
Future minimum lease payments under the office lease agreement are as follows:
|
| |
For the Years Ending December 31,
|
|
|
2017 - three months
|
$
|
9,556
|
2018 - nine months
|
|
28,668
|
|
|
|
Total minimum lease payments
|
|
38,224
|
Less: amount representing interest
|
|
-
|
Present value of net minimum lease payments
|
$
|
38,224
|
b) Vehicle Lease
The Company leased a certain vehicle under an agreement which is accounted for on the balance sheet as a capital lease. The lease called for monthly payments of $366, commencing July 2015.
In 2016, the vehicle was damaged in an accident and declared a total loss. As a result the Company recognized a gain on disposal in the fourth quarter of 2016.
c) Other
The Company is subject to asserted claims and liabilities that arise in the ordinary course of business. The Company maintains insurance policies to mitigate potential losses from these actions. In the opinion of management, the amount of the ultimate liability with respect to those actions will not materially affect the Companys financial position or results of operations.
(5) CONCENTRATIONS OF CREDIT RISK
a) Cash
The Company maintains its cash in bank deposit accounts, which may, at times, may exceed federally insured limits. The Company did not have cash balances in excess of FDIC insured limits at September 30, 2017, and were in excess of FDIC insured limits by $10,307 at December 31, 2016.
F-10