| Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting
Policies Accounting Principles The accompanying unaudited consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the U.S. Securities and Exchange
Commission (the “SEC”). Accordingly, they do not contain all information and footnotes
required by GAAP for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated
financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position
of the Company as of September 30, 2021, and the results of operations and cash flows for the periods presented. The results of operations
for the three and nine months ended September 30, 2021, are not necessarily indicative of the operating results for the full fiscal year
or for any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements
and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with
the SEC on April 16, 2021. Principles of Consolidation The unaudited consolidated financial
statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All intercompany balances and transactions
have been eliminated. Use of Estimates The preparation
of financial statements in conformity with GAAP requires management to make significant estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the
reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Certain of these
estimates could be affected by external conditions, including those unique to the Company’s industries, and general economic conditions.
It is possible that these external conditions could have an effect on the Company’s estimates that could cause actual results to
differ materially from its estimates. The Company re-evaluates all of its accounting estimates at least quarterly based on these conditions
and records adjustments when necessary. Significant estimates relied
upon in preparing these consolidated financial statements include revenue recognition, accounts receivable reserves, inventory and related
reserves, valuations and purchase price allocations related to business combinations, expected future cash flows used to evaluate the
recoverability of long-lived assets, estimated fair values of long-lived assets used to record impairment charges related to intangible
assets and goodwill, amortization periods, accrued expenses, share-based compensation, and recoverability of the Company’s net
deferred tax assets and any related valuation allowance. Cash and Cash Equivalents The Company considers all short-term
highly liquid investments with an original maturity at the date of purchase of 3 months or less to be cash equivalents. The Company had
no cash equivalents at September 30, 2021, or December 31, 2020. Accounts Receivable Included in accounts
receivable on the consolidated balance sheets are amounts primarily related to customers. The Company estimates losses on receivables
based on known troubled accounts and historical experience of losses incurred. Receivables are considered impaired and written off when
it is probable that all contractual payments due will not be collected in accordance with the terms of the related agreement. Based on
experience and the judgment of management, there was no allowance for doubtful accounts as of September 30, 2021, and December 31, 2020. Inventories Inventories, which
consist of products held for resale, are stated at the lower of cost (determined using the first-in first-out method) and net realizable
value. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs to complete and dispose
of the product. If the Company identifies excess, obsolete or unsalable items, its inventories are written down to their realizable value
in the period in which the impairment is first identified. Shipping and handling costs incurred for inventory purchases and product shipments
are recorded in cost of sales in the Company’s consolidated statements of operations. Property and Equipment Property and equipment
are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the
assets. Furniture and fixtures are depreciated over the useful life of 7 years. Machinery, equipment, and computers are depreciated over
the useful life of 3 to 7 years. Leasehold improvements are depreciated over 2 years and were fully depreciated as of September 30, 2021.
Expenditures for additions and improvements are capitalized and repairs and maintenance are expensed as incurred. Goodwill and Intangible Assets Goodwill and intangible
assets that have indefinite useful lives are not amortized, but are evaluated for impairment annually or whenever events or changes in
circumstances indicate that their carrying value may not be recoverable. The Company records intangible assets at fair value, estimated
using a discounted cash flow approach. The Company amortizes intangible assets that have finite lives using either the straight-line
method or based upon estimated future cash flows to approximate the pattern in which the economic benefit of the assets will be utilized.
Amortization is recorded over estimated useful lives ranging from 5 to 20 years. The Company reviews
intangible assets subject to amortization at least annually to determine whether any adverse conditions exist or a change in circumstances
has occurred that would indicate impairment or a change in the remaining useful life. Conditions that would indicate impairment and trigger
a more frequent than quarterly impairment assessment include, but are not limited to, a significant adverse change in legal factors or
business climate that could affect the value of an asset or an adverse action or assessment by a regulator. If the carrying value of
an intangible asset exceeds its undiscounted cash flows, the Company will write down the carrying value to its fair value in the period
identified. The Company generally calculates fair value as the present value of estimated future cash flows to be generated by the asset
using a risk-adjusted discount rate. If the estimate of an intangible asset’s remaining useful life is changed, the Company will
amortize its remaining carrying value prospectively over its revised remaining useful life. The Company has conducted its annual impairment
test of goodwill during the fourth quarter of each year. The estimation of fair value requires significant judgment. There was no impairment
of intangible assets, long-lived assets or goodwill during the quarter ended September 30, 2021, or September 30, 2020. Loss resulting from an impairment
test will be reflected in operating income in the Company’s consolidated statements of operations. The annual impairment testing
process is subjective and requires judgment at many points. If these estimates or their related assumptions change, the Company may be
required to record impairment charges for these assets not previously recorded. Revenue Recognition The Company follows the Financial
Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 20l4-09, Revenue from
Contracts with Customers (Topic 606) Under ASU No. 2014-09, Company
recognizes revenue when a customer obtains control of promised goods or services, or when they are shipped to a customer, in an amount
that reflects the consideration that it expects to receive in exchange for them. The Company recognizes revenues following the five-step
model prescribed under ASU No. 2014-09: (a) it identifies a contract with a customer; (b) it identifies the performance obligations in
the contract; (c) it determines the transaction price; (d) it allocates the transaction price to the performance obligations in the contract;
and (e) it recognizes revenues when (or as) it satisfies its performance obligation. Revenues from product sales are
recognized when a customer obtains control of the Company’s product, which occurs at a point in time, typically upon shipment or
delivery to the customer. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization
period of the asset that it would have been recognized is 1 year or less or the amount is immaterial. Revenue from sales of items and
services sold by the Company for the three months ended September 30, 2021, and September 30, 2020, and the percentage of sales allocable
to each of them to the Company’s total revenues were as follows: Schedule of revenues
Three Months Ended September 30,
2021 2020
Revenues % Revenues %
GrowPods and related products $ 712,000 49 $ — —
Medtainers 343,010 24 353,958 53
Lighters 162,946 11 38,294 6
Humidity pack inserts 125,246 9 210,099 31
Shipping charges 37,017 3 16,448 2
Plastic lighter holders 28,670 2 19,388 3
Jars 22,626 2 14,789 2
Printing 12,615 < 1 10,675 2
Other products 7,607 < 1 8,201 1
Total revenues $ 1,451,737 100 $ 671,853 100 Revenue from sales of items
and services sold by the Company for the nine months ended September 30, 2021, and September 30, 2020, and the percentage of sales allocable
to each of them to the Company’s total revenues were as follows:
Nine Months Ended September 30,
2021 2020
Revenues % Revenues %
GrowPods and related products $ 2,182,000 53 $ — —
Medtainers 841,937 21 884,317 58
Lighters 374,805 9 80,192 5
Humidity pack inserts 362,909 9 402,470 26
Plastic lighter holders 94,038 2 47,251 3
Shipping charges 76,650 2 45,436 3
Other products 74,665 2 11,172 < 1
Jars 39,666 < 1 22,276 1
Printing 36,596 < 1 27,908 2
Total revenues $ 4,083,267 100 $ 1,521,022 100 The
following table presents the customer deposits payable balance and the significant activity affecting customer deposits during the
nine-month period ended September 30, 2021: Schedule
of customer deposits
Balance at December 31, 2020 $ 754,345
New customer deposits received 1,275,755
Revenue recognized from customer deposits (1,530,482 )
Balance at
September 30, 2021 $ 499,618 The Company follows ASU No. 2018-07 related
to equity-based payments, which requires that equity-based compensation be accounted for using a fair value method and recognized as
expense in the accompanying consolidated statements of operations. Equity-based compensation is recognized as compensation expense over
the applicable service or vesting period. See Note 7. Fair Value Measurements The Company has adopted Accounting
Standards Codification Topic 820, Fair Value Measurements, The estimated fair value of
certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, is carried
at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts
of the Company’s short- and long-term credit obligations approximate fair value because the effective yields on these obligations,
which include contractual interest rates taken together with other features, such as concurrent issuances of warrants and/or embedded
conversion options, are comparable to rates of returns for instruments of similar credit risk. ASC Topic
820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. ASC Topic 820 also establishes a fair-value hierarchy, which requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. ASC Topic 820 describes three levels of inputs that may be used to measure
fair value: Level 1 - Quoted prices in active
markets for identical assets or liabilities. Level 2 - Quoted prices for similar
assets and liabilities in active markets or inputs that are observable. Level 3 - Inputs that are unobservable
(for example cash flow modeling inputs based on assumptions). Advertising Advertising and marketing expenses are
charged to operations as incurred. Income Taxes The Company uses the asset and
liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes. ASC Topic 740.10.30 clarifies
accounting for uncertainty in income taxes recognized in an entity’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 Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods,
disclosure and transition. The Company has no material uncertain tax positions. Concentration of Credit Risk Financial instruments that potentially
subject the Company to concentrations of credit risk consist of cash accounts in financial institutions, which at times, may exceed the
federal deposit insurance coverage of $ 250,000 .
The Company has not experienced losses on these accounts and believes that it is not exposed to significant risks on such accounts. The
Company has not experienced losses on accounts receivable and the Company believes that it is not exposed to significant risks with respect
to them. Profit (Loss) per Share Basic profit (loss) per share
is calculated by dividing the Company’s net profit (loss) attributable to Common Stock by the basic weighted average number of
shares of Common Stock outstanding during the period. The diluted profit (loss) per share is calculated by dividing the Company’s
net profit (loss) attributable to Common Stock by the diluted weighted average number of shares outstanding during the period. Recent Accounting Pronouncements The
Company follows ASU 2016-02, Leases (Topic 842), In August 2020, FASB issued
ASU 2020-06, “ Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts
in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.”
In December 2019, FASB issued
ASU 2019-12 , Income Taxes In June
2016, FASB issued ASU 2016-13 regarding ASC Topic 326, “Measurement of Credit Losses on Financial Instruments.” This pronouncement
changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments
measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments
and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected
to be collected on the financial asset. Subsequently, FASB issued an amendment to clarify the implementation dates and items that fall
within the scope of this pronouncement. This standard is effective for fiscal years beginning after December 15, 2022, including interim
periods within those fiscal years. Management is currently evaluating the effect on the Company’s financial statements. The
Company does not believe there are any other recently issued, but not yet effective, accounting standards that would have a significant
impact on the Company’s financial position or results of operations. |
