We have audited the accompanying balance sheet
of OptiLeaf, Incorporated (the “Company”) as of December 31, 2020, the related statement of operations, stockholders’ equity
(deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2020, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally
accepted in the United States.
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s
significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Note
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
OptiLeaf
Incorporated (“OptiLeaf” or the “Company”) was incorporated in Florida in August 2014. The Company has been in
the infancy stage since inception and has generated minimal sales to date. The Company plans to develop, market and sell integrated software
and hardware to the agriculture industry for the seamless tracking and management of growth, task automation and sale of their clients’
products.
Cash
and Cash Equivalents
The Company considers all highly liquid investments
with an original maturity of three months or less to be cash equivalents. Cash equivalents consisted of money market funds. At December
31, 2020, the Company had $33,655 cash on hand and no cash equivalents.
Accounts
Receivable
The
Company had $0 and $7,590 of trade accounts receivable at December 31, 2020 and 2019. The Company reviews the accounts receivable, at
least quarterly, and, if appropriate, records an allowance for doubtful accounts. All uncollectable accounts receivable at December 31,
2020 were fully impaired. No impairment was required for the accounts receivable at December 31, 2019.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
Property
and Equipment
Property
and equipment are stated at cost. Depreciation is provided over the estimated useful lives (3 years) of the related assets using the
straight-line depreciation method.
Maintenance
and repairs are charged to operations when incurred. Betterments and improvements are capitalized. When property and equipment are sold
or otherwise disposed of, the asset account and related accumulated depreciation account are reduced, and any gain or loss is included
in operations.
Capitalized
Software Development Costs
Software
development costs are expensed as incurred until technological feasibility of the product is established. Development costs incurred
subsequent to technological feasibility will be capitalized and amortized on a straight-line basis over the estimated economic life of
the product. Capitalization of computer software costs will be discontinued when the computer software product is available to be sold,
leased, or otherwise marketed. Amortization will begin when the product is available for release to customers. Management has determined
as of December 31, 2020 that the software has not yet reached the stage of technological feasibility. The Company has not maintained
specific cost records, but estimates that approximately $53,000 and $46,000 has been expensed for software development during the years
ended December 31, 2020 and 2019 respectively.
OptiLeaf,
Incorporated
Notes
to Financial Statements
For
the Year Ended December 31, 2020
Revenue
Recognition%
Effective
July 1, 2018, the Company adopted Revenue from Contracts with Customers (Topic 606) (“ASC 606”). The new guidance sets forth
a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate
numerous industry-specific pieces of revenue recognition guidance that have historically existed in US GAAP. The underlying principle
of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services
to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires
more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting
guidance. The Company adopted ASC 606 using the modified retrospective method, which did not have an impact on its financial statements.
In accordance with the guidance in FASB Topic ASC 605, Revenue Recognition , the Company recognizes revenue
when (a) persuasive evidence of an arrangement exists, (b) delivery has occurred or services have been rendered, (c) the fee is fixed
or determinable, and (d) collectability is reasonable assured.
Research
and Development
The
cost of research and development is charged to expense when incurred.
Net
Loss per Common Share
Basic
net (loss) income per common share is calculated using the weighted average common shares outstanding during each reporting period. Diluted
net (loss) income per common share adjusts the weighted average common shares for the potential dilution that could occur if common stock
equivalents (convertible debt and preferred stock, warrants, stock options and restricted stock shares and units) were exercised or converted
into common stock. There were no common stock equivalents at December 31, 2020 and 2019.
Income
Taxes
Deferred
income taxes are recognized for the tax consequences related to temporary differences between the carrying amount of assets and liabilities
for financial reporting purposes and the amounts used for tax purposes at each year end, based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recognized when,
based on the weight of all available evidence, it is considered more likely than not that all, or some portion, of the deferred tax assets
will not be realized. Income tax expense is the sum of current income tax plus the change in deferred tax assets and liabilities.
ASC
740, Income Taxes, requires a company to first determine whether it is more likely than not (which is defined as a likelihood of more
than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing
authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more likely
than not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized
upon effective settlement with a taxing authority.
The
Federal and state income tax returns of the Company for 2020, 2019 and 2018 are subject to examination by the internal Revenue Service
and state taxing authorities for three (3) years from the date filed.
Equity
instruments granted to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the fair value
of equity instruments with performance criteria is the date that each performance commitment for such equity instrument is satisfied
or there is a significant disincentive for non-performance.
Fair
Value of Financial Instruments
Pursuant
to ASC No. 820, “Fair Value Measurement and Disclosures”, the Company is required to estimate the fair value of all financial
instruments included on its balance sheet as of December 31, 2020 and December 31, 2019. The Company’s financial instruments consist
of accounts payable and accrued expenses. The Company considers the carrying value of such amounts in the financial statements to approximate
their fair value due to the short-term nature of these financial instruments.
OptiLeaf,
Incorporated
Notes
to Financial Statements
For
the Year Ended December 31, 2020
Recent
Accounting Pronouncements
In
February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize most lease liabilities
on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The update states
that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use
the underlying asset for the lease term. The update is effective for interim and annual periods beginning after December 15, 2018, and
early adoption is permitted. The impact of this guidance will result in the recognition of assets and liabilities for leases that the
Company enters into in the future. It has no impact on the Company’s financial statements for the years ended December 31, 2020
and 2019.
Effective
July 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows (Topic 230): Classification
of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which provides clarification on classifying a variety of activities
within the statement of cash flows. The Company determined the adoption of ASU 2016-15 did not have a material impact on its consolidated
financial statements.
Other
recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public
Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s
present or future financial statements.
Note
2. GOING CONCERN
The
Company’s financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction
of liabilities in the normal course of business.
The
Company has experienced losses, from operations, during its infancy stage, as a result of the investment necessary to achieve its operating
plan, which is long-range in nature. For the period from inception through December 31, 2020, the Company incurred accumulated losses
of $870,254 compared to a cumulative loss through December 31, 2019, of $873,867. For the year ended December 31, 2020, primarily as
the result of $29,153 of rent forgiveness by landlords, the net loss of $17,429 incurred for the year ended December 31, 2019 was converted
to income of $3,613 for the year ended December 31, 2020. The Company had positive working capital of $8,107 compared to a negative working
capital of $7,867 for the year ended December 31, 2019. These conditions raise substantial doubt about the Company’s ability to
continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification
of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
During
the year ended December 31, 2020 the Company used $21,127 for operating expenses compared to $15,796 during the year ended December 31,
2019. During the year ended December 31, 2020, the Company received $10,487 from the Payroll Protection Plan, $43,800 from the Small
Business Administration, $20,000 from related parties and repaid a $40,000 loan payable compared to the receipt of $25,000 from the sale
of common stock, during the year ended December 31, 2019.
OptiLeaf,
Incorporated
Notes
to Financial Statements
For
the Year Ended December 31, 2020
The
ability of the Company to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations or on
the ability of the Company to obtain necessary financing to fund ongoing operations. Management believes that its current and future
plans enable it to continue as a going concern for the next twelve months.
To
meet these objectives, the Company continues to seek other sources of financing in order to support existing operations and expand the
range and scope of its business. However, there are no assurances that any such financing can be obtained on acceptable terms and timely
manner, if at all. The failure to obtain the necessary working capital would have a material adverse effect on the business prospects
and, depending upon the shortfall, the Company may have to curtail or cease its operations.
The
accompanying financial statements do not include any adjustment to the recorded assets or liabilities that might be necessary should
the Company have to curtail operations or be unable to continue in existence.
Note
3. RELATED PARTY TRANSACTIONS
On January 18, 2018 and March 27, 2018 two officers
and directors loaned the Company $30,000 and $15,000 respectively. $40,000 of the $45,000 was repaid on December 21, 2019 by the transfer
of 1,000,000 common shares, valued at $40,000 to the lenders. During the year ended December 31, 2020, the two related party shareholders
made additional unsecured loans, to the Company, totaling $20,000. This loan was repaid, including interest of $276, on April 15, 2021.
Common
stock
The Company has authorized 100,000,000 of no par
value common stock. At December 31, 2020, the number of shares of common stock issued was 21, 943,753 and 21, 777,086 on December 31,
2019.
On
March 4, 2019 the Company issued, for cash, to one investor, 166,667 restricted common shares for $25,000, recorded at a cost of $1.00
per share.
Treasury
stock
On
September 20, 2016, the Board of Directors authorized the Company to repurchase one million shares of common stock for $40,000. These
treasury stock shares may, at any time, be canceled upon the Board of Directors approval. The Board has not made such election. On December
31, 2020 the 1,000,000 treasury shares were issued to two related parties to repay $40,000 of a loan that they had made to the Company.
Note
5. CONCENTRATION CREDIT RISK
At
December 31, 2020 the Company had fully impaired all accounts receivable. At December 31, 2019 there were two non – related customers
that owed 26% and 20% of total accounts receivable and three unrelated customers that owed 12% each of total accounts receivable. .
The
Company maintains its cash balances in a local financial institution which at times may exceed the $250,000 amount insured by the Federal
Deposit Insurance Corporation (FDIC).
Note
6. COMMITMENTS AND CONTINGENCIES
On
August 10, 2018 the Company leased its offices for six years, payable at the rate of $2,000 per month, plus the Company’s pro rata
share of operating expenses. No payments were made and the lease was terminated without any liability. Lease costs $29,153, recorded
in previous years and subsequently forgiven during 2020 were reversed during the 2020 fiscal year.
OptiLeaf,
Incorporated
Notes
to Financial Statements
For
the Year Ended December 31, 2020
Note
7. INCOME TAXES
The
Company accounts for income taxes under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) No. 740, Income Taxes (“ASC 740”). Under ASC 740, 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. 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 Tax
Cuts and Jobs Act of 2017 changed the top corporate tax rate from 35% to one rate of 21%. This rate will be effective for corporations
whose tax year begins after January 1, 2018, and it is a permanent change. Under ASC 740, the effect of a change in tax rates on
deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The resulting amendments
to IRC Section 172 disallow the carryback of net operating losses but allow for the indefinite carryforward of those net operating losses.
Pursuant to Section 172(e)(2) of the statute, the amended carryback and carryover rules apply to any net operating loss arising
in a taxable year ending after December 31, 2017. In addition to the carryover and carryback changes, the Act also introduces a limitation
on the amount of net operating losses that a corporation may deduct in a single tax year under section 172(a) equal to the lesser of
the available net operating loss carryover or 80 percent of a taxpayer’s pre-NOL deduction taxable income (the “80-percent
limitation”). This limitation applies only to losses arising in tax years that begin after December 31, 2017 based upon section
172(e) (1) of the amended statute.
The
new tax bill reduced the federal income tax rate for corporations from 35% to 21%.
At December 31, 2020, the Company has a net operating
loss carryforward of approximately $870,254 for Federal and state purposes. This loss will be available to offset future taxable income.
If not used, this carryforward will begin to expire in 2035. The deferred tax asset relating to the operating loss carryforward has been
fully reserved at December 31, 2020 and 2019. The change in the valuation allowance was approximately ($3,859) for the year ended December
31, 2020 compared to $3,124 for the year ended December 31, 2019.. The principal difference between the operating loss for income tax
purposes and reporting purposes is disallowed meals and entertainment and a temporary difference in depreciation expense. (
Utilization
of the Company’s net operating losses may be subject to substantial annual limitation if the Company experiences a 50% change in
ownership, as provided by the Internal Revenue Code and similar state provisions. Such an ownership change would substantially increase
the possibility of net operating losses expiring before complete utilization.
Cumulative loss December 31, 2020 and 2019
|
|
$
|
(870,254
|
)
|
|
$
|
(873,867
|
)
|
|
|
December 31
|
|
|
|
|
2020
|
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Deferred tax benefits
|
|
$
|
(182,753
|
)
|
|
$
|
(183,512
|
)
|
Valuation allowanve
|
|
|
180,053
|
|
|
|
183,512
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
Note
8. SUBSEQUENT EVENTS
On
February 2, 2021 the Company entered into an agreement, with a $50,000 deposit, to sell, for a total of $250,000, the Company’s
intellectual property and some physical assets to an unrelated party, with the balance to be paid by instalments through July 1, 2021.
As of the date of these financial statements, some of the remaining payments have not been made. No demand or other action has been taken
at this time, to collect those amounts.