Annual report pursuant to Section 13 and 15(d)

Note 2 Summary of Significant Accounting Policies

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Note 2 Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2013
Notes  
Note 2 Summary of Significant Accounting Policies

Note 2 Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of Drywave Technologies, Inc. and its sole wholly owned subsidiary.  All intercompany accounts and transactions have been eliminated in consolidation. 

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the financial statements and the accompanying notes. Such estimates and assumptions impact, among others, the following: assessment of the recoverability of long-lived assets and the valuation allowance for deferred tax assets due to continuing and expected future losses.

 

Cash and cash equivalents

 

All cash and short-term investments with original maturities of three months or less are considered cash and cash equivalents, since they are readily convertible to cash. These short-term investments are stated at cost, which approximates fair value.

 

Property and equipment

 

The Company has no property or equipment at this time. 

 

Due to Related Party

 

Due to related party represents an obligation to pay for goods or services that were used in the ordinary course of business and paid for by a related party on the Company’s behalf.  Due to related party is classified as a current liability as payment is due within one year or less.

 

 

Revenue Recognition

 

The Company recognizes revenue when it is realized or realizable and earned.  We consider revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collection is reasonably assured.

 

Advertising expenses

 

Advertising costs are expensed when incurred.  No advertising was conducted during the years ended December 31, 2013 and 2012.

 

Income taxes

 

Income taxes are accounted for in accordance with ASC 740, using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  The Company is currently filing its income tax returns on the cash basis.  The change in controlling stockholders did not result in a tax event.  The Company has not recognized an adjustment for uncertain income tax positions as there are no positions that the Company feels are more-likely-than-not to be sustained.  The Company recognizes interest and penalties, if any, as a component of income tax expense.  No interest or penalties have been recorded as of December 31, 2013 and 2012.  The Company is still subject to income tax examinations for all federal and Colorado taxes since inception.

 

Earnings (loss) per share

 

The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.

 

On July 16, 2013, the Company executed a 22.75 for 1 stock split.  As a result of the split, each outstanding share of the Company before the split represents 22.75 shares of common stock after the split.   All share and per share amounts have been retroactively restated to reflect the split.

 

Financial Instruments

 

The carrying value of the Company’s financial instruments, as reported in the accompanying balance sheet, approximates fair value due to their short term maturity.

 

Stock based compensation

 

The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.

 

Reclassification

 

Certain amounts reported in prior years in the financial statements have been reclassified to conform to the current year’s presentation.

 

Recent Accounting Pronouncements

 

There are no recent accounting pronouncements that are expected to have an effect on the Company’s financial statements.