2. Revision of Prior Period Financial Statements

3 Months Ended

Mar. 31, 2020

Accounting Changes and Error Corrections [Abstract]

Revision of Prior Period Financial Statements

Note 2 – Revision of Prior Period Financial Statements

The Company corrected certain errors in its 2019 financial statements. In accordance with ASC 50-10-S99 and S55 (formerly Staff Accounting Bulletins (“SAB”) No. 99 and No. 108), Accounting Changes and Error Corrections, the Company concluded that these errors were not, individually, and in the aggregate, quantitatively or qualitatively, material to the financial statements in these periods.

On March 15, 2019, the Company acquired AVX Design & Integration Inc. Upon further review, we noticed that some revenue recognized immediately after the acquisition and before the financial statement reporting period were recognized prematurely. There were also some expense reclassifications between expense items. Consequently, revenue was overstated by $88,855, cost of revenue was understated by $9,603, selling expenses were overstated by $9,209, compensation – officers was understated by $3,325, professional fees was overstated by $4,875, and general and administrative expenses was understated by $197. The Company had accounted for these errors correctly on the audited year end financials.

The below discloses the effects of the revisions on the financial statements for the period reported.

Condensed consolidated statement of operation

	Previously reported						Revised
	For the three months ended						For the three months ended
	3/31/2019			Adjustment			3/31/2019
Revenue	$	239,738		$	(88,855	)	$	150,883
Revenue - related party		3,000						3,000
Total revenue		242,738			(88,855	)		153,883
Cost of Revenue		122,128			9,603			131,731
Gross Profit		120,610			(98,458	)		22,152
Operation Expenses:
Selling		9,209			(9,209	)		–
Compensation - officers		31,675			3,325			35,000
Research and development		62,004						62,004
Professional fees		355,274			(4,875	)		350,399
General and administrative		110,456			197			110,653
Total Operating Expenses		568,618			(10,562	)		558,056
Loss from Operations		(448,008	)		(87,896	)		(535,904	)
Other Income (Expense)
Interest income (expense), net		725						725
Total other expense		725						725
Loss before income taxes		(447,283	)		(87,896	)		(535,179	)
Tax expense		–						–
Net Loss	$	(447,283	)	$	(87,896	)	$	(535,179	)

Condensed consolidated statement of cash flows

	Previously reported						Revised
	For the three months ended						For the three months ended
	3/31/2019			Adjustment			3/31/2019
Cash flows from operating activities:
Net Loss	$	(447,283	)		(87,896	)	$	(535,179	)
Adjustments to reconcile net loss to net cash from operating activities:
Inventories reserve		26,435						26,435
Depreciation expense		32,925						32,925
Amortization of right-of-use assets		2,033						2,033
Stock-based compensation		35,999						35,999
Changes in operating assets and liabilities:
Accounts receivable		(99,176	)					(99,176	)
Accounts receivable - related party		37,625						37,625
Inventories		9,187						9,187
Other receivable		(2,151	)					(2,151	)
Prepaid expenses		46,671						46,671
Accounts payable and accrued liabilities		11,216			(959	)		10,257
Accounts payable - related party		(4,921	)					(4,921	)
Other current liabilities		(7,210	)					(7,210	)
Customer deposit		(10,467	)		88,855			78,388
Net cash flows used in operating activities		(369,117	)					(369,117	)
Cash flows from investing activities:
Cash from acquisition		201,482						201,482
Purchase of property and equipment		(181,121	)					(181,121	)
Cash paid for acquisition		(550,000	)					(550,000	)
Net cash flows used in investing activities		(529,639	)					(529,639	)
Cash flows from financing activities:
Payment on long term debt and finance lease obligation		(2,021	)					(2,021	)
Net cash flows used in financing activities		(2,021	)					(2,021	)
Net change in cash		(900,776	)					(900,776	)
Cash beginning of period		4,455,751						4,455,751
Cash end of period	$	3,554,975					$	3,554,975

There was no impact on the Company’s consolidated balance sheet.