Accounting for Uncertainty in Income Taxes

ASC 740 clarifies the accounting for uncertainty in income taxes recognized in the Company's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

ASC 740 also provides guidance on de-recognition and measurement of a tax position taken or expected to be taken in a tax return. The adoption of ASC 740 did not have a material effect on the Company.  The Company files income tax returns in the U.S. federal jurisdiction and several states. The Company's federal income tax returns for tax years 2011 and beyond remain subject to examination by the Internal Revenue Service. The Company's state income tax returns for various years remain subject to examination by each state's taxing authority.

The Company did not have unrecognized tax benefits as of June 30, 2017 and 2016 and does not expect this to change significantly over the next 12 months. In connection with the adoption of ASC 740, the Company will recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. The Company has not accrued interest or penalties related to uncertain tax positions as of June 30,2017.

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NOTES TO FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2017 and 2016

Use of Estimates

The preparation of these financial statements in conformity with GAAP 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.  Such management estimates include the recoverability of equipment. Actual results could differ from those estimates.  

The Company recognizes revenues when persuasive evidence of an arrangement exists; delivery has occurred; price is fixed or determinable; and collectability of the related receivable is reasonably assured, which is primarily at the completion of the patient visit.

Concentration of Providers

During the six months ended June 30, 2017 and 2016, the Company utilized the services of nine and five doctors, which accounted for approximately 84% and 79% of the total cost of services provided

Rent

The Company leases its office on a month to month basis. Total rent expense during the six months ended June 30, 2017 and 2016 was $7,656 and $5,929, respectively.

Marketing, Advertising and Promotion Expense

Marketing costs are expensed as incurred and are included in the accompanying statements of income. Marketing costs were approximately $24,600 and $5,920 as of June 30, 2017 and 2016, respectively.

Fair Value Measurements

The Company has categorized its assets and liabilities recorded at fair value based upon the fair value hierarchy specified by GAAP.  All assets and liabilities are recorded at historical cost which approximates fair value, and therefore, no items were valued according to these inputs.

The levels of fair value hierarchy are as follows:

1.Level 1 inputs utilize unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access;
 

2.Level 2 inputs utilize other-than-quoted prices that are observable, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs such as interest rates and yield curves that are observable at commonly quoted intervals; and
 

3.Level 3 inputs are unobservable and are typically based on our own assumptions, including situations where there is little, if any, market activity. 

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.  In such cases, the Company categorizes such financial asset or liability based on the lowest level input that is significant to the fair value measurement in its entirety.  The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

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NOTES TO FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2017 and 2016

Both observable and unobservable inputs may be used to determine the fair value of positions that are classified within the Level 3 category.  All assets and liabilities are at cost which approximates fair value and there are not items that were required to be valued on a non-recurring basis.

Pending Accounting Pronouncements

There have been no recent accounting pronouncements issued which are expected to have a material effect on the Company’s financial statements. Management continues to monitor and review recently issued accounting guidance upon issuance.

In May 2014, the FASB issued updated guidance that supersedes the current revenue recognition guidance, including industry-specific guidance. The updated guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for interim and annual periods beginning after December 15, 2017, and early adoption is not permitted. In July 2015, the FASB decided to delay the effective date of this updated guidance until December 15, 2018. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. The Company is currently evaluating the expected impact of the updated guidance.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments. This ASU provides clarification regarding how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The issues addressed in this ASU that will affect us is classifying debt prepayments or debt extinguishment costs and contingent consideration payments made after a business combination. This update is effective for annual and interim periods beginning after December 15, 2017, and interim periods within that reporting period and is to be applied using a retrospective transition method to each period presented. Early adoption

is permitted. The adoption of this ASU is not expected to have a material impact on our financial position, results of operations and related disclosures.

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. Current U.S. GAAP requires an entity to separate deferred income tax liabilities and assets into current and

noncurrent amounts in a classified statement of financial position. To simplify the presentation of deferred income taxes, the amendments in this update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this update apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update. The amendments in this update will align the presentation of deferred income tax assets and liabilities with International Financial Reporting Standards (IFRS) and are effective for fiscal years after December 15, 2016, including interim periods within those annual periods. The adoption of this ASU as of January 1, 2017 did not have a material impact on our financial statements and related disclosures.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This ASU 2014-15 describes how an entity should assess its ability to meet obligations and sets rules for how this information should be disclosed in the consolidated financial statements. The standard provides accounting guidance that will be used along with existing auditing standards. The ASU 2014-15 is effective for the annual period ending after December 15, 2016. Early application is permitted. The adoption of this ASU as of January 1, 2017 did not have a material impact on our financial statements and related disclosures.

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NOTES TO FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2017 and 2016

NOTE 3 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The lack of historical profitable operations causes significant doubt about the ability of the Company to continue as a going concern.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern. Management anticipates that it will be able to raise additional working capital through the sale of 51% of the Company (see Note 8).

The ability of the Company to continue as a going concern is dependent on its ability to raise adequate capital to fund operating losses until it is able to engage in profitable business operations. To the extent financing is not available, the Company may not be able to, or may be delayed in, developing its services and meeting its obligations. The Company will continue to evaluate its projected expenditures relative to its available cash and to evaluate additional means of financing in order to satisfy its working capital and other cash requirements. The accompanying financial statements do not reflect any adjustments that might result from the outcome of these uncertainties.

NOTE 4 – COMMITMENTS AND CONTINGENGIES

Legal Proceedings

From time to time, the Company may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. The Company is not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on its business, prospects, financial condition or results of operations.

Guarantees and Indemnities

From time to time the Company enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily relate to (i) certain real estate leases, under which the Company may be required to indemnify property owners for environmental or other liabilities and other claims arising from the Company's use of the applicable premises: and (ii) certain agreements with the Company's officers, directors and employees, under which the Company may be required to indemnify such persons for liabilities arising out of their employment relationship. The terms of such obligations vary by contract and, in most instances; a specific or maximum dollar amount is not explicitly stated therein. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted. No claims have been asserted and no liabilities have been recorded for these indemnities on the Company's balance sheets.

NOTE 5 – RELATED PARTY TRANSACTIONS

There are no significant related party transactions. Officers/shareholders received salaries from the Company in the first six months of 2017 in the amount of $49,733. As of June 30, 2017 and 2016, the Company owed approximately $4,000 and $18,000 to its officers/shareholders for unreimbursed business expenses, respectively.

NOTE 6 – SHAREHOLDERS’ EQUITY

The Company has 5,000 shares common stock, authorized, issued, and outstanding.

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NOTES TO FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2017 and 2016

NOTE 7 – FAIR VALUE MEASUREMENT

The carrying amounts, at face value or cost plus accrued interest, approximate fair value because of the short maturity of these instruments for cash, accounts receivable, accounts payable and accrued expenses.

NOTE 8 – SUBSEQUENT EVENTS

On July 27, 2017, the Company sold 51% of its common shares, 2,550 shares, par $0.001, to Cannabis Sativa, Inc. effective August 1, 2017 for considedration of up to $4,590,000 of Cannabis Sativa, Inc. common stock.  The purchase agreement contains various contingent payment provisions, including minimum revenue requirements of the Company. Additionally, Cannabis Sativa, Inc. committed to providing a revolving line of credit to the Company totaling $500,000 at 5% interest per annum.    As of November 10, 2017, the Company has received $200,000.

The Company has evaluated and determined that no other events have occurred subsequent to the balance sheet date and through November 10, 2017 the date of issuance of these financial statements, which would require inclusion or disclosure in its financial statements other than as described in the accompanying notes.

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