NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Organization, Nature of Business and Trade Name
Bioscience Neutraceuticals, Inc. (the Company) was incorporated in the State of Nevada on June 15, 2010 under the name JobLocationMap Inc. Bioscience Neutraceuticals, Inc.’s principal business objective is developing and marketing an online map application. The Company is located at 500 North Michigan Avenue #600, Chicago, Illinois.
The Company’s activities are subject to significant risks and uncertainties including failing to secure additional funding to operationalize the Company’s future operations. The Company is currently evaluating and reviewing the future course of business.
Recent Developments
On July 10, 2017, the Company acquired all of the shares of Bio Health Products Inc. a Nevada corporation, in exchange for 5,000 shares of the Company’s common stock, whereby Bio Health Products Inc. became a wholly owned subsidiary of the Company. Bio Health Products Inc. had previously acquired the assets of Essential Oils, a sole proprietorship. Bio Health Products Inc. was owned by Liang Chen, the CEO of the Company.
As these transactions are between entities under common control, the Company has reported the results of operations for the period in a manner similar to a pooling of interests and has consolidated financial results since the initial date in which the above companies were under common control. Assets and liabilities were combined on their carrying values and no recognition of goodwill was made. The Company has presented earnings per share based on the new parent company shares issued to the former shareholders of the Company.
Merger with subsidiary and name change
On November 14, 2018, our board of directors approved an agreement and plan of merger to merge with our wholly-owned subsidiary, Bioscience Neutraceuticals, Inc. a Nevada corporation, to effect a name change from JobLocationMap, Inc. to Bioscience Neutraceuticals, Inc. Our company will remain the surviving entity.
Articles of Merger to effect the merger and change of name were filed with the Nevada Secretary of State with an effective date of December 12, 2018.
Disposal of business
On October 1, 2018, the Company disposed of online application business. The change of the business qualified as a discontinued operation of the Company and accordingly, the Company has excluded results of the operations from its Consolidated Statements of Operations to present this business in discontinued operations. Refer to Note 9 for further details.
Reverse Stock Split
On January 18, 2019, a majority of our shareholders approved a reverse stock split on a basis of 40 old shares for one (1) new share of our issued and outstanding common stock. The reverse split has been reviewed by the Financial Industry Regulatory Authority and has been approved for filing with an effective date of February 7, 2019. All share and per share information in these financial statements retroactively reflect this stock distribution.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. These financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances have been eliminated.
Use of Estimates
The preparation of financial statements in 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. A change in managements’ estimates or assumptions could have a material impact on Bioscience Neutraceuticals, Inc.’s financial condition and results of operations during the period in which such changes occurred. Actual results could differ from those estimates. Bioscience Neutraceuticals, Inc.’s financial statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition and results of operations for the periods presented.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with maturity of three months or less to be cash equivalents.
Inventory
The Company’s inventory consists of oil products. All inventory is finished goods. Inventories are stated at the lower of cost or market value. Inventory is stored off-site and held by a third party. The Company utilizes last-in first-out for inventory items held. Items determined to be obsolete are reserved for. The Company provides for the possible inability to sell its inventories by providing an excess inventory reserve. As at December 31, 2018, the Company determined that no reserve was required.
Goodwill
We account for goodwill in accordance with ASC 350
”Intangibles-Goodwill and Other”
(“ASC 350”). ASC 350 requires that goodwill with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. In addition, ASC 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment test requires judgment, including the identification of reporting units; assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgments required to estimate the fair value of reporting units include estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions or the occurrence of one or more confirming events in future periods could cause the actual results or outcomes to materially differ from such estimates and could also affect the determination of fair value and/or goodwill impairment at future reporting dates.
During the year ended December 31, 2017, we determined that the carrying value of goodwill exceeded its fair value at the measurement date, requiring step two in the impairment test process. The fair value of the goodwill was determined primarily using an income approach based on the present value of discounted cash flows. We determined the implied fair value of goodwill was substantially below the carrying value of the reporting unit’s goodwill. Accordingly, we recognized a goodwill impairment loss of $87,896, which resulted in goodwill of $0 as of December 31, 2017.
Revenue Recognition
Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
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·
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identify the contract with a customer;
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·
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identify the performance obligations in the contract;
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·
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determine the transaction price;
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·
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allocate the transaction price to performance obligations in the contract; and
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·
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recognize revenue as the performance obligation is satisfied.
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Under these criteria, this generally means that the Company recognizes revenue when its products are delivered to customers in accordance with the sales terms.
Cost of Goods Sold
Cost of goods sold includes the following expenses; inventory and various expenses related to sell the products through third party services.
Fair Value of Financial Instruments
The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1
– Quoted prices in active markets for identical assets or liabilities.
Level 2
– Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3
– Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.
In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments.
As of December 31, 2018 and 2017 the carrying value of cash and cash equivalent, accounts payable and loans that are required to be measured at fair value, approximated fair value due to the short-term nature and maturity of these instruments.
Beneficial Conversion Feature
For conventional convertible debt where the rate of conversion is below market value, the Corporation records a Beneficial Conversion Feature (the “BCF”) and related debt discount.
When the Company records a BCF, the intrinsic value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument (offset to additional paid-in capital) and amortized to interest expense over the life of the debt.
Income Taxes
The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes.
Recent Accounting Pronouncements
Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
NOTE 3 – GOING CONCERN
The Company’s consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.
Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to laws or regulations. Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of business.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the Nature of Business and Trade Name paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.
During the next year, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with research and development. The Company may experience a cash shortfall and be required to raise additional capital.
Historically, it has mostly relied upon internally generated funds and funds from the sale of shares of stock to finance its operations and growth. Management may raise additional capital through future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse effect upon it and its shareholders.
In the past year, the Company funded operations by using cash proceeds received through the issuance of common stock and loan from related party. For the coming year, the Company plans to continue to fund the Company through debt and securities sales and issuances until the company generates enough revenues through the operations as stated above.
NOTE 4 – EQUITY
The Company has authorized 100,000,000 shares of common stock with a par value of $0.0001 and 50,000,000 shares of preferred stock with a par value of $0.0001.
Preferred stock
As of December 31, 2018 and 2017, there was no shares issued and outstanding.
Common stock
On July 10, 2017, the Company issued 5,000 shares to acquire all of the shares of Bio Health Products Inc. (Note 1).
242,516 shares of common stock were issued and outstanding as of December 31, 2018 and 2017.
NOTE 5 – NOTE PAYABLE
On June 9, 2017, the Company issued note payable of $7,500 to a third party. The note is a 40 % interest bearing promissory note that is payable on demand. During the year ended December 31, 2018 and 2017, the Company recognized interest expense of $4,693 and $1,693, respectively.
On August 14, 2017, the Company issued note payable of $20,000 to a third party. The note is a 40 % interest bearing promissory note that is payable on demand. During the year ended December 31, 2018 and 2017, the Company recognized interest expense of $11,065 and $3,065, respectively.
On March 31, 2018, the Company issued note payable of $3,957 to a third party. The note is a 57% interest bearing promissory note that is payable on March 31, 2023. During the year ended December 31, 2018, the Company recognized interest expense of $1,699.
As of December 31, 2018 and 2017, the Company owed notes payable of $27,500 and $27,500 and long-term notes payable of $3,957 and $0, respectively.
NOTE 6 – CONVERTIBLE NOTE PAYABLE
On December 31, 2017, the Company issued a convertible note of $4,875 with a conversion price of $0.01. The convertible note is unsecured, bears interest at 57% per annum, has no maturity date and due on demand. The Company recorded a discount on the convertible note due to a beneficial conversion feature of $4,875 and amortized $4,875 for the year ended December 31, 2017. As of December 31, 2018 and 2017, the Company had a convertible note of $4,875. During the year ended December 31, 2018 and 2017, the Company recognized interest expense of $2,787 and $8, respectively.
On December 31, 2017, the Company issued a convertible note of $6,803 with a conversion price of $0.01. The convertible note is unsecured, bears interest at 57% per annum, has no maturity date and due on demand. The Company recorded a discount on the convertible note due to a beneficial conversion feature of $6,803 and amortized $6,803 for the year ended December 31, 2017. As of December 31, 2018 and 2017, the Company had a convertible note of $6,803. During the year ended December 31, 2018 and 2017, the Company recognized interest expense of $3,888 and $11, respectively.
On December 31, 2017, the Company issued a convertible note of $11,200 with a conversion price of $0.005. The convertible note is unsecured, bears interest at 50% per annum, has no maturity date and due on demand. The Company recorded a discount on the convertible note due to a beneficial conversion feature of $11,200 and amortized $11,200 for the year ended December 31, 2017. As of December 31, 2018 and 2017, the Company had a convertible note of $11,200. During the year ended December 31, 2018 and 2017, the Company recognized interest expense of $5,615 and $15, respectively.
As of December 31, 2018 and 2017, the Company owed convertible notes payable of $22,878 and $22,878 and accrued interest of $12,290 and $34, respectively.
NOTE 7 – RELATED TRANSACTIONS
Due to related parties
During the year ended December 31, 2018, related party loans of $17,762 were forgiven by the Company’s shareholder and recorded to additional paid in capital.
During the year ended December 31, 2017, the Company received loans from the previous Related Party Directors of $6,300 to pay for operating expenses. Prior to the sale of their shares, the loans to the two previous Related Party Directors were $21,107. Upon completion of the share purchase agreements between the two previous Related Party Directors and the new CEO, the $14,807 was forgiven, and recorded to additional paid-in capital.
During the year ended December 31, 2018 and 2017, the current CEO loaned the Company $45,814 and $49,825 for operational expenses and acquisition of subsidiary and the Company repaid $3,159, and $0, respectively.
During the year ended December 31, 2017, the former officer of the subsidiary advanced $1,083 for operational expenses and repaid $8,010, respectively.
As of December 31, 2018 and 2017, related party loan payable outstanding is $100,172 and $75,279, respectively.
NOTE 8 – INCOME TAXES
For the year ended December 31, 2018, the Company has incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is $186,328 at December 31, 2018 and will expire beginning in the year 2032.
The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 21% to the net loss before provision for income taxes for the years ended December 31, 2018 and 2017 are as follows:
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For the Year Ended
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December 31,
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2018
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2017
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Income tax expense (benefit) at statutory rate
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$
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(10,998
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)
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$
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(13,288
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)
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Change in valuation allowance
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10,998
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13,288
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Income tax expense
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$
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-
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$
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-
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|
Net deferred tax assets consist of the following components as of December 31, 2018 and 2017:
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December 31,
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December 31,
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2018
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2017
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NOL Carryover
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$
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39,129
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$
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28,131
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Valuation allowance
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(39,129
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)
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(28,131
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)
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Net deferred tax asset
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$
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-
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$
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-
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Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of $133,956 for federal income tax reporting purposes could be subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.
The Company has no uncertain tax positions that require the Company to record a liability.
The Company had no accrued penalties and interest related to taxes as of December 31, 2018.
NOTE 9 – DISCONTINUED OPERATIONS
During the year ended December 31, 2018, the Company disposed of online map application business. The change of the business qualified as a discontinued operation of the Company and accordingly, the Company has excluded results of the operations from its Consolidated Statements of Operations to present this business in discontinued operations.
As a result of disposal of our business, the Company recorded loss on disposal of assets and liabilities of $4,033.
The following table shows the results of operations which are included in the gain from discontinued operations:
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Year Ended
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December 31,
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2018
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2017
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Revenue
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$
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6,163
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|
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7,761
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|
Cost of goods
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(8,257
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)
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(5,907
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)
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Gross profit
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(2,094
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)
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1,854
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General and administration
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5,906
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|
|
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2,696
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Professional
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250
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|
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11,200
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Impairment loss
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|
-
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|
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87,896
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Operating loss
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(8,250
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)
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|
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(99,938
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)
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Debt forgiveness
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|
|
-
|
|
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1,554
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|
Income tax provision
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|
|
-
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|
|
|
-
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Loss from discontinued operations, net of tax
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(8,250
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)
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(98,384
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)
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The following table summarizes the carrying amounts of the assets and liabilities from discontinued operations as of December 31, 2018 and 2017, respectively.
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December 31
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December 31,
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2018
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2017
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Cash and cash equivalents
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$
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-
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$
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1,488
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Inventory
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|
-
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3,201
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Total Assets from discontinued operations
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$
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-
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$
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4,689
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Accounts payable and accrued liabilities
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$
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-
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$
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1,014
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Total Liabilities from discontinued operations
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$
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-
|
|
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$
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1,014
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NOTE 10 – SUBSEQUENT EVENT
The Company evaluated all events or transactions that occurred after December 31, 2018, through the date of this filing. The Company determined that it does not have any subsequent event requiring recording or disclosure in the financial statements for the year ended December 31, 2018.