Note
1. 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.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash
equivalents consisted of money market funds. At December 31, 2017, 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 December 31, 2017 that the software has not yet reached
the stage of technological feasibility.
Revenue
Recognition
In
general, the Company will 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
will be 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.
Research
and Development
The
cost of research and development is charged to expense when incurred.
Net
Loss Per Common Share
Basic
net (loss) income per common share is calculated using the weighted average common shares outstanding during each reporting period.
Diluted net (loss) income 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 December 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.
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 December 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 May 2014, the Financial Accounting Standards
Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive
revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace
it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue
based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure
about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant
judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective
for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods
beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either
retrospectively or as a cumulative-effect adjustment as of the date of adoption. We do not expect that the adoption of ASU 2014-09
will have any significant impact on our operating cash flows.
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 present or future financial statements.
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 December 31, 2017, the Company
incurred a net loss of approximately $700,000. In addition, the Company has minimal 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 consolidated 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 at December 31, 2017 and 2016:
|
|
2017
|
|
|
2016
|
|
Computer equipment
|
|
$
|
10,514
|
|
|
$
|
10,514
|
|
Less: accumulated depreciation
|
|
|
(10,514
|
)
|
|
|
(7,854
|
)
|
|
|
$
|
0
|
|
|
$
|
2,660
|
|
Depreciation
expense was $2,660 and $3,505 for the years ended December 31, 2017 and 2016, respectively.
Note
4. STOCKHOLDERS’ EQUITY
Common
stock
The Company has authorized 100,000,000 shares
of no par value common stock. At December 31, 2017, the number of shares of common stock issued was 21,443,752.
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 anytime 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 its 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
|
|
|
21
|
%
|
Effect of operating losses
|
|
|
(21
|
)%
|
|
|
|
0
|
%
|
At December 31, 2017, the Company has a net
operating loss carryforward of approximately $690,000 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 2034. The deferred tax asset relating to the operating loss
carryforward has been fully reserved at December 31, 2017 and 2016. The change in the valuation allowance was approximately $82,000
and $95,000 for the years ended December 31, 2017 and 2016, respectively. 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.