Note 2 - Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Notes

Note 2 - Significant Accounting Policies

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Cash and cash equivalents

Cash equivalents are highly liquid investments with an original maturity of three months or less.

Revenue recognition

The Company’s financial statements are prepared under the accrual method of accounting. Revenues are recognized when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured. This occurs only when the product is ordered and subsequently shipped.

Inventories 

Inventories are stated at cost utilizing the weighted average method of valuation and consist of raw materials and finished goods.

Allowance for doubtful accounts

We establish the existence of bad debts through a review of several factors including historical collection experience, current aging status of the customer accounts, and financial condition of our customers.

Property and equipment

Property and equipment are carried at the cost of acquisition or construction and depreciated over the estimated useful lives of the assets. Costs associated with repair and maintenance are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of our property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are 7 to 13 years.

Impairment of long-lived assets

The Company will review the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical-cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized.

An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. Fair value is estimated based upon either discounted cash flow analysis or estimated salvage value.   As of December 31, 2012 and 2013, the firm has not had to recognize an impairment loss.

Research and development

Costs incurred in connection with the development of new products and manufacturing methods are charged to selling, general and administrative expenses as incurred. During the years ended December 31, 2012 and 2013, $20,826 and $2,155, respectively, were expensed as research and development costs.

Income taxes

Prior to December 3, 2012, the firm was structured as an LLC and all the losses were allocated to the Member. Since conversion, the Corporation has operating losses, which are a carry forward against any income tax liability.  Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse.

Basic and diluted net loss per share

Basic net loss per common share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding during the period.  Diluted net loss per share is determined by dividing the net loss by the sum of (1) the weighted average number of common shares outstanding and (2) if not anti-dilutive, the effect of stock awards determined utilizing the treasury stock method. The dilutive effect of the outstanding awards for the years ended December 31, 2013 and 2012 was 0 shares.

Stock based compensation

We account for stock based compensation in accordance with FASB ASC 718 which requires companies to measure the cost of employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. For stock-based awards granted on or after January 1, 2012 stock-based compensation expense will be recognized on a straight-line basis over the requisite service period.  Until such  time as a public market exists for the shares; or until  such  time as a reasonable price can  be determined,  the valuation  will be determined with reference to contemporaneous sales of stock for cash or  the value of service rendered.

Financial instruments

The carrying amount of our financial instruments, consisting of cash equivalents, short-term investments, account and notes receivable, accounts and notes payable, short-term borrowings and certain other liabilities, approximate their fair value due to their relatively short maturities. The carrying amount of our long-term debt approximates fair value since the stated rate of interest approximates a market rate of interest.

Concentrations

During 2013, the Company received approximately 23%, 36% and 14% of its revenues, respectively, from three separate customers.  During 2012, approximately 68% of revenue was concentrated among three customers.

Recently issued accounting pronouncements

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.