UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 20172020

Commission file number 000-50331

REALSOURCE RESIDENTIAL, INC.CalEthos, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (801) 601-2700code: (714) 352-5315

Securities registered under Section 12(b) of the Act:

Securities registered under Section 12(g) of the Act:

Common Stock, $0.001 par value

(Title of class)

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [  ] No [X]

Indicate by checkmark whether the registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss. (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]

Indicate by checkmarkcheck mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [X] No [  ]

The aggregate market value of the voting and non-voting common stock, other than shares held by persons who may be deemed affiliates of the registrant, as of June 30, 2020, the last day of the registrant’s most recently completed second fiscal quarter, was $283,524.48, computed by reference to the closing sales price for the registrant’s common stock on June 30, 2017,2020, as reported on the The OTC Pink Market, was approximately $389,249.Market.

As of March 23, 2018,May 31, 2021, there were 15,719,64512,960,621 outstanding shares of the registrant’s common stock, of the registrant, par value $0.001 per share.

RealSource Residential,CalEthos, Inc.

Annual Report on Form 10-K

For the Fiscal-Year Ended December 31, 20172020

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information set forthThe statements contained in this Annual Report on Form 10-K, includingreport with respect to our financial condition, results of operations and business that are not historical facts are “forward-looking statements”. Forward-looking statements can be identified by the use of forward-looking terminology, such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “seek”, “estimate”, “project”, “could”, “may” or the negative thereof or other variations thereon, or by discussions of strategy that involve risks and uncertainties. Management wishes to caution the reader of the forward-looking statements that any such statements that are contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein may address or relatethis report reflect our current beliefs with respect to future events and expectationsinvolve known and as such constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. Statements which areunknown risks, uncertainties and other factors, including, but not historical reflect our current expectationslimited to, economic, competitive, regulatory, technological, key employees, and projections about our future results, performance, liquidity, financial condition, prospects and opportunities and are based upon information currently available to us and our management and their interpretation of what is believed to be significantgeneral business factors affecting our business, including many assumptions regarding future events. Suchoperations, markets, growth, services, products and other factors, some of which are described in this report and some of which are discussed in our other filings with the Securities and Exchange Commission. These forward-looking statements includeare only estimates or predictions. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of risks facing our company, and actual events may differ from the assumptions underlying the statements that have been made regarding among other things:anticipated events.

Important factors to consider in evaluating any forward-looking statements include:

Forward-looking

These risk factors should be considered in connection with any subsequent written or oral forward-looking statements which involve assumptionsthat we or persons acting on our behalf may issue. All written and describeoral forward looking statements made in connection with this report that are attributable to our future plans, strategies, and expectations,company or persons acting on our behalf are generally identifiable by use of the words “may,” “should,” “would,” “could,” “scheduled,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative of these words or other variations on these words or comparable terminology. Actual results, performance, liquidity, financial condition and results of operations, prospects and opportunities could differ materially and perhaps substantially from those expressedexpressly qualified in or impliedtheir entirety by these forward-looking statements as a result of various risks,cautionary statements. Given these uncertainties, and other factors. These statements may be found under the section of this Annual Report entitled “Risk Factors” as well as inwe caution investors not to unduly rely on our other public filings.

In light of these risks and uncertainties of our business, there can be no assurance that the forward-looking statements contained herein will in fact occur. Readers should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, weWe do not undertake noany obligation to review or confirm analysts’ expectations or estimates or to release publicly update or reviseany revisions to any forward-looking statements whetherto reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as a result of new information, future events, changed circumstancesrequired by applicable law or any other reason.regulation.

Notwithstanding the above, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), expressly state that the safe harbor for forward-looking statements does not apply to companies that issue penny stock. If, as now, we are considered to be an issuer of penny stock, the safe harbor for forward-looking statements may not apply to us at certain times.

Throughout this report, unless otherwise designated, the terms “we,” “us,” “our,” “the Company” and “our company” refer to CalEthos, Inc., a Nevada corporation. All amounts are in U.S. Dollars, unless otherwise indicated.

Item 1. Business.1.Business.

Corporate History and Recent Developments

We were incorporated pursuant to the laws of the State of Nevada on March 20, 2002 under the name Integrated Brand Solutions Inc., and on February 6, 2006, we changed our name to Upstream Biosciences Inc. From 2006 to December 2009, our company operated as a biotechnology company, and from 2010 until May 2013, our company had no operating business.

On May 24, 2013, our then majority stockholders sold their interests in our company (consisting of 10,778,081 shares of our common stock, representing approximately 90% of the issued and outstanding voting securities of our company) to RealSource Acquisition Group, LLC, a Utah limited liability company, (“RSAG”), and Chesterfield Faring Ltd., a New York corporation, in consideration of an aggregate of $175,000 in cash. RSAG is affiliated with The RealSource Group, a group of affiliated real estate brokerage and management companies based in Salt Lake City, Utah. Onon July 11, 2013, we changed our corporate name by merging with our newly formed, wholly owned subsidiary calledto RealSource Residential, Inc., a Nevada corporation, and we remained as the surviving corporation under the name “RealSource Residential, Inc.” The merger was effective on July 15, 2013 and was approved by the Financial Industry Regulatory Authority on August 5, 2013.

Our initial business strategy in 2013 was to build our company into a publicly held and tradedengage in various real estate investment trust (a “REIT”) by combining a portfolio of multi-family properties owned by RealSource Properties, LLC and its clients into one operating entityrelated businesses. However, in a traditional “UPREIT” structure and leveraging the experience of our management team and The RealSource Group. Based on recommendations of our investment advisors, we determined in 2016 that a more optimal capital raising and operational structure for such properties is to combine the target properties into a privately held portfolio and perhaps form a private REIT. Since we disposed of all of our real estate and other assets during 2016and continued operations as described below, at present we have nomeaningful assets or operations, and we are thus currently a “shellpublic “shell” company.”

We may engage in efforts to identifyOn September 12, 2018, M1 Advisors, LLC, a Delaware limited liability company controlled by Michael Campbell, our current Chief Executive Officer and merge with or otherwise acquire an unaffiliated operating company or businessa director of any kind, although we retain the ability to utilize our company as a public vehicle(“M1 Advisors”), acquired from certain then majority stockholders of our company an aggregate of 440,256 shares (after giving effect to the subsequent reverse stock split described below) of our common stock, which shares represented approximately 70% of the issued and outstanding shares of capital stock of our company at that time, for real estate-related activities.aggregate cash payments amounting to $260,000.

On December 9, 2013, we consummatedSeptember 12, 2018, following the closing of a private placement offering (the “2013 Private Placement”)the change of 231 units (or “Units”) for $10,000 per Unit, for aggregate gross proceeds of $2,310,000. Each Unit consisted of: (i)control transaction described above, we entered into a $10,000 face value 12% Series A Senior Unsecured Convertible Promissory NotePreferred Stock Purchase Agreement (the “Preferred Purchase Agreement”) with M1 Advisors, Piers Cooper, our former President and director, and the other investors who were signatories thereto (collectively, the “Notes”Purchasers”). Pursuant to the Preferred Purchase Agreement, the Purchasers purchased from us an aggregate of 15,600,544 shares of Series A preferred stock, par value $0.001 per share (“Series A Preferred Stock”), for an aggregate purchase price of $15,600.54, or $0.001 per share. Of the shares sold, 9,320,414 shares were purchased by M1 Advisors and (ii) one detachable Common Stock Purchase Warrant (collectively, the “Warrants”), each to purchase 10,0004,674,330 shares (the “Warrant Shares”)were purchased by Mr. Cooper. All of our common stock. The Notes accrued interest at 12% per year and had a maturity datesuch shares of December 9, 2015.

The Notespreferred stock were convertibleconverted into shares of our common stock at $0.50 per share (subjecton December 20, 2018.

After the consummation of the change of control transaction and the sale of the Series A Preferred Stock on September 12, 2018 (the “Change of Control Transactions”), our company remained a shell company with no operating business. As a result of the September 12, 2018 transactions, our current executive officers and directors acquired effective control of our company and, in connection with such transactions, our board of directors determined to customary adjustments for stock splits and similar transactions) and would automatically convert into sharesestablish our company in the rapidly-growing legal cannabis industry, initially in the State of California. In order to fund such proposed business plan, we intend to raise additional funds from investors by issuing our common stock, atpreferred stock and/or debt securities to fund future operations, including the then applicable conversion price in the event that the 90-day trading volume weighted average price per share of the common stock exceeds $1.50 per share at any time during the term of the Notes.

Each Warrant included within each Unit granted to each investor the right, for a period of five (5) years from the closing of the 2013 Private Placement to subscribe for 10,000 shares of our common stock (i.e. 50% warrant coverage) at an exercise price equal to $2.00 per share. The exercise price of the Warrants is subject to adjust on the same terms as provided for in the Notes. As of the date of this report, an aggregate of 2,310,000 shares of our common stock are available for issuance assuming full exercise of the Warrants.

In connection with the closing of the 2013 Private Placement, we entered into definitive subscription agreements (the “Subscription Agreements”) with twenty-nine (29) accredited investors (the “Holders”). The Subscription Agreements contained customary representations, warranties and covenants.

Proceeds from the 2013 Private Placement were used to (i) acquire, on December 10, 2013 a $2.85 million face value subordinated mortgage note secured by the Cambridge Apartments in Gulfport, Mississippi (“Cambridge”) for approximately $1,073,000 (the “B Note”) and (ii) fund (in the amount of approximately $465,000) certain costs associated with a refinancing of the senior mortgage indebtedness encumbering Cambridge (which refinancing occurred concurrently with our acquisition of the B Note). Immediately upon our acquisition of the B Note, we entered into a Right of First Refusalmanufacturing facilities and Option Agreement with RS Cambridge Apartments, LLC (“RS Cambridge”), owners of Cambridge (the “Option Agreement”), pursuant to which we converted the B Note into a right of first refusal and option (the “Option”) in the amount of approximately $1,538,000 (the “Option Payment”). The Option afforded us the right to acquire Cambridge within five (5) years after the closing of the 2013 Private Placement at the fair value of Cambridge as we negotiated with RS Cambridge. Under the Option, if RS Cambridge received an offer to purchase Cambridge during the option period, we would have had a right of first refusal to purchase Cambridge on the same terms as the offer. Had we elected not to match the offer, the Option Payment was required to be repaid upon the sale of Cambridge to the other buyer. In February 2016, RS Cambridge sold Cambridge. We elected not to exercise our right of first refusal and the cost of the Option plus accrued interest was paid to us.equipment.

On June 10, 2014,August 28, 2018, we invested $375,000filed a Certificate of Change to acquire an approximate 19% interest in RS Bakken One, LLC, a newly-formed affiliated entity, which in turn acquired two properties in North Dakota, one near Williston and one in Watford City and had a combined acquisition priceour Articles of $5,700,000. Concurrently, we purchased an option for $25,000 that allows us to acquire 100%Incorporation with the Secretary of these two properties after one year for a purchase price of not less than $7,000,000, or not more than $8,000,000. Under termsState of the Amendment discussed below, effective June 1, 2016 the ownership in RS Bakken One was transferredState of Nevada to RSRT Holdings, LLC, which is owned by the Holders.

On October 24, 2014, we invested $100,000 to become an approximate 3.876% member in a newly formed entity called RS Heron Walk Apartments, LLC (“RSHWA”), an affiliated entity which acquired the Heron Walk Apartments in Jacksonville, Florida (“Heron Walk”). Our investment in the Heron Walk apartments, through(i) reduce our ownership in RSHWA, carries an 8% cumulative preferred return under the terms of the RSHWA operating agreement, with projected higher expected average cash-on-cash and internal rates of return. Under terms of the Amendment discussed above, effective April 1, 2016 the ownership in RSHWA was transferred to RSRT Holdings, LLC, which is owned by the Holders as described below.

On January 15, 2016, each of the Holders entered into a separate Amendment to Note and Warrant (the “Amendment”) to modify certain terms and provisions of the Notes and Warrants, such Amendment being effective as of December 9, 2015, the original maturity date of the Notes. The Amendment was entered into given the maturity of the Notes to memorialize the agreements of the Company and each Holder with respect to the Notes and the Warrants held by such Holder.

Pursuant to the Amendment, the term of the Notes was extended by six months to June 9, 2016 (the “Maturity Date”). The Amendment also provided for the mandatory conversion of a portion of the interest accrued under the Note as of December 9, 2015 into shares of our common stock (the “Mandatory Conversion”). The number ofauthorized shares of common stock from 100,000,000 shares to be issued upon the Mandatory Conversion4,000,000 shares and (ii) to each Holder equaled each Holder’s pro rata portion of interest owed on such Holder’s Note converted at $0.10 per share. A total of 3,744,000effectuate a stock combination or reverse stock split whereby every 25 outstanding shares of our common stock were issuedconverted into one share of common stock. This amendment became effective on August 30, 2018. All share and per share amounts in February 2016.this Report have been restated to give effect to such reverse stock split.

On December 31, 2015,20, 2018, we held an asset consistingfiled a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of the State of Nevada to (i) change our corporate name from “RealSource Residential, Inc.” to “CalEthos, Inc.” and (ii) to increase our authorized shares of common stock from 4,000,000 shares to 100,000,000 shares. This amendment became effective immediately upon filing on December 20, 2018.

Plan of Operations

Immediately prior to the consummation of the Change of Control Transactions, our company was a deposit (the “Cambridge Deposit”) onshell company with no operating business. As a result of the Cambridge property. Cambridge was owned by RS Cambridge, an entity controlled and partially owned by the Chairman, President and CEOChange of Control Transactions, Mr. Campbell acquired control of our company. The Amendment further providedIt is the current intention of Mr. Campbell for our company to develop and manufacture a next generation high-performance computer system that inis scalable, upgradeable and cost effective for processing cryptocurrencies, tokens and blockchain-based transactions. In order to fund our proposed business plan, we intend to raise funds from investors by issuing common stock, preferred stock and/or debt securities. Upon the event that, prior to the Maturity Date, RS Cambridge sold Cambridge, thus generating a return of the Cambridge Deposit to the Company, we would, within thirty (30) daysconsummation of such sale, prepay, without penalty, a portion of each Note equal to each Holder’s pro rata portion of the Cambridge Deposit. Cambridge was sold to a third party in February 2016fundraising efforts and the Cambridge Deposit plus accrued interest was paidcommencement of such operations, it is expected that our company will cease being a shell company.

To enter into our proposed new business, we may seek to us. With the proceeds, we then redeemed the Notes plusacquire one or more other companies that have businesses that are synergistic to our proposed business or to acquire all or a portion of the accruedassets of such businesses. We may also engage employees, consultants or third parties to assist us in developing our own products or services.

This discussion of our proposed business is purposefully general and is not meant to be restrictive of our virtually unlimited discretion to search for and enter into potential business opportunities. Management anticipates that, initially, we may be able to participate in only one potential business venture because we have nominal assets and limited financial resources. This lack of diversification should be considered a substantial risk to our shareholders because it will not permit us to offset potential losses from one venture against gains from another.

We may seek a business opportunity with entities that have recently commenced operations, or that wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.

We anticipate that the selection of a business opportunity in which to participate will be complex and extremely risky. Due to general economic conditions, rapid technological advances being made in some industries and shortages of available capital. Our management believes there are numerous firms seeking the perceived benefits of a publicly-registered corporation. Such perceived benefits may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, and providing liquidity (subject to restrictions of applicable statutes) for all shareholders, among other factors. Available business opportunities may occur in many different segments of the cryptocurrency or blockchain industry and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

Our officers have only limited experience in managing a shell company similar to ours and will rely upon their own efforts in accomplishing our business purposes. Nevertheless, we anticipate we will locate and make contact with possible target businesses primarily through the efforts of our officers and directors, who will meet personally with existing management and key personnel, visit and inspect material facilities, assets, products and services belonging to such prospects, and undertake such further reasonable investigation as they deem appropriate. Management has a network of business contacts, including our outside lawyers and accountants, and believes that prospective target businesses will be referred to us through this network.

We also anticipate that prospective target businesses will be brought to our attention from various other non-affiliated sources, including securities broker-dealers, investment bankers, venture capitalists, bankers, and other members of the financial community. We have neither the present intention, nor does the present potential exist for us, to consummate a business combination with a target business in which our management or their affiliates or associates directly or indirectly have a pecuniary interest, as requiredalthough no existing corporate policies would prevent this from occurring. We may engage the services of professional firms that specialize in finding business acquisitions and pay a finder’s fee or other compensation.

The analysis of new business opportunities will be undertaken by, or under the Amendment.supervision of, our officers and directors. In analyzing prospective business opportunities, management will consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services that may be available and the depth of that management; the potential for further research, development or exploration; specific risk factors not now foreseeable but that then may be anticipated to impact the proposed activities of our company; the potential for growth or expansion; the potential for profit; the perceived public recognition of, or acceptance of, products, services or trades; name identification; the regulatory landscape relating to the proposed business; and other relevant factors. Our officers and directors expect to meet personally with management and key personnel of the business opportunity as part of their investigation. To the extent possible, we intend to utilize written reports and investigation to evaluate the above factors. We will not acquire or merge with any company for which audited financial statements cannot be obtained within a reasonable period of time after closing of the proposed transaction. Our limited funds and the lack of full-time management, however, will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a target business before we commit our capital or other resources thereto. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like which would be desirable if we had more funds available. We will be particularly dependent in making decisions upon information provided by the promoter, owner, sponsor or others associated with the business opportunity seeking our participation.

Also

We will not restrict our search to any specific kind of business, but we may acquire a venture that is in its preliminary or development stage, which is already in operation, or in essentially any stage of its corporate life. It is impossible to predict at this time the status of any business in which we may become engaged, in that such business may need to seek additional capital, may desire to have its shares publicly traded, or may seek other perceived advantages which we may offer.

It is anticipated that we will incur expenses in the implementation of the business plan described herein, and such expenses may be substantial. However, we currently have only limited capital with which to pay these anticipated expenses.

The time and costs required to select and evaluate a target business (including conducting a due diligence review) and to structure and consummate the business combination (including negotiating relevant agreements and preparing requisite documents for filing pursuant to applicable securities laws and state “blue sky” and corporation laws) cannot presently be ascertained with any degree of certainty. Our officers and directors only devote a limited portion of their time to the Amendment, we agreed with each Holder that, by no later than February 15, 2016, we would establish a new limited liabilityoperations of our company, (“Newco 1”) and, assign to Newco 1: (a) a $100,000 equity investment (the “Heron Equity”) previously made by us in RSHWA and (b) a $400,000 equity investment (“Bakken Equity”) previously made by us in the two properties in North Dakota described above. This investment consistedaccordingly, consummation of a $375,000 investment in RS Bakken One Investors, LLCbusiness combination may require a greater period of time than if they devoted their full time to our company’s affairs. However, our officers and directors will devote such time as they deem reasonably needed.

In implementing a $25,000 optionstructure for a particular business opportunity, we may become a party to a merger, consolidation, reorganization, joint venture or licensing agreement with another corporation or entity. We may also acquire the two properties within a specific rangestock or assets of an existing business. Upon the consummation of a purchase prices. The Amendment providestransaction, it is possible that each Holderour present management and shareholders will no longer be given a pro rata portion (based on the aggregate principalin control of our company. In addition, our directors may, as part of the Notes held by such Holder)terms of the equityacquisition transaction, resign and be replaced by new directors without a vote of our current shareholders or may sell their stock in Newco 1, entitling each Holder to a pro rata portion of all cash flows, profits and losses generated by Newco 1’s holdings of the Bakken Equity and the Heron Equity. Each Holder similarly agreed that such Holder shall have no voting, management, consent or approval rights whatsoever over the business or operations of Newco 1 (save as required by law),our company. Any and all such rights are vestedsales will only be made in us or our affiliates as the sole managing member of Newco 1. Each Holder agreed to enter into a customary limited liability company operating agreement relating to Newco1 to memorialize the foregoing. We formed Newco 1 on February 5, 2016compliance with the name RSRT Holdings, LLCsecurities laws of the United States and each Holder signed the operating agreement.any applicable state.

Finally,It is anticipated that any securities issued in any such reorganization will be issued in reliance upon exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of its transaction, we may agree to register all or a part of such securities immediately after the Amendment providestransaction is consummated or at specified times thereafter. If such registration occurs, of which there can be no assurance, it will be undertaken by the surviving entity after we have successfully consummated a merger or acquisition and we are no longer considered a “shell” company. Until such time as this occurs, we do not intend to register any additional securities. The issuance of substantial additional securities and their potential sale into any trading market that may develop in our securities may have a depressive effect on the value of our securities in the future, if such a market develops, of which there is no assurance.

As a general rule, federal and state tax laws and regulations have a significant impact upon the structuring of business combinations. We will evaluate the possible tax consequences of any prospective business combination and will endeavor to structure a business combination so as to achieve the most favorable tax treatment for us, the target company and their respective stockholders. However, there can be no assurance that the Warrants held by such Holder were amendedInternal Revenue Service (“IRS”) or relevant state tax authorities will ultimately assent to (i) reduceour tax treatment of a particular consummated business combination.

To the exercise priceextent the IRS or any relevant state tax authorities ultimately prevail in recharacterizing the tax treatment of a business combination, there may be adverse tax consequences to us, the target business and their respective stockholders. Tax considerations as well as other relevant factors will be evaluated in determining the precise structure of a particular business combination, which could be effected through various forms of a merger, consolidation or stock or asset acquisition.

While the actual terms of a transaction to which we may be a party cannot be predicted, it may be expected that the parties to the business transaction will find it desirable to avoid the creation of a taxable event and thereby structure the acquisition in a so-called “tax-free” reorganization under Sections 368(a) (1) or 351 of the Warrants from $2.00Internal Revenue Code of 1986, as amended (the “Code”). In order to $0.50 per Warrant Share and (ii) to extendobtain tax-free treatment under the expiration timeCode, it may be necessary for the owners of the Warrants from December 9, 2018target business to December 9, 2020.own 80% or more of the voting stock of the surviving entity. In such event, our shareholders would retain less than 20% of the issued and outstanding shares of the surviving entity, which would result in significant dilution in the equity of such shareholders. Nonetheless, there can be no assurance that the IRS or relevant state tax authorities will ultimately assent to our tax treatment of a particular consummated business combination.

Our Current Business

Our initial business strategy wasWith respect to buildany merger or acquisition, negotiations with the Company into a public REIT by combining a portfolio of multi-family properties owned by RealSource Properties, LLC and its clients into one operating entity in a traditional UPREIT structure and leveragingtarget company’s management is expected to focus on the experiencepercentage of our management team and The RealSource Group. Based on recommendations of our investment advisors we have determinedcompany that the target properties shouldcompany shareholders would acquire in exchange for all of their shareholdings in the target company. Depending upon, among other things, the target company’s assets and liabilities, it is possible that our shareholders will hold a substantially lesser percentage ownership interest in our company following any merger or acquisition. The percentage ownership may be combined intosubject to significant reduction in the event we acquire a private portfolio, raise additional equitytarget company with substantial assets. Any merger or acquisition effected by us can be expected to expandhave a significant dilutive effect on the asset valuepercentage of shares held by our then shareholders.

We will participate in a business opportunity only after the negotiation and execution of appropriate written agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require some specific representations and warranties by all of the portfolioparties thereto, will specify certain events of default, will detail the terms of closing and perhaps formthe conditions which must be satisfied by each of the parties prior to and after such closing, will outline the manner of bearing costs, including costs associated with our attorneys and accountants, will set forth remedies on default and will include miscellaneous other terms.

As stated hereinabove, we will not acquire or merge with any entity that cannot provide independent audited financial statements within a private REIT. Sincereasonable period of time after closing of the proposed transaction. We are subject to all of the reporting requirements included in the Exchange Act. Included in these requirements is the affirmative duty to file independent audited financial statements as part of our Current Report on Form 8-K to be filed with the Securities and Exchange Commission upon consummation of a merger or acquisition, as well as the audited financial statements included in our annual report on Form 10-K. If such audited financial statements are not available at closing, or within time parameters necessary to insure our compliance with the requirements of the Exchange Act, or if the audited financial statements provided do not conform to the representations made by the candidate to be acquired in the closing documents, the closing documents will provide that the proposed transaction will be voidable, at the discretion of our present we have nomeaningful assetsmanagement.

We do not intend to provide our security holders with any complete disclosure documents, including audited financial statements, concerning an acquisition or operations, we are thus currently a “shell company.” We maymerger candidate and its business prior to the consummation of any acquisition or merger transaction.

Our company will remain an insignificant participant among the firms that engage in effortsthe acquisition of business opportunities in the cryptocurrency and blockchain industry, particularly in the State of California. There are many established venture capital and financial concerns that have significantly greater financial and personnel resources and technical expertise than we have. In view of our combined extremely limited financial resources and limited management availability, we will continue to identifybe at a significant competitive disadvantage compared to our competitors.

We have had in the past, and mergecontinue to have, discussions with an operating company, althoughpotential acquisition targets, or merger or acquisition partners, and while we retain the abilitydo not have a definitive agreement in place with any potential acquisition target or partner to utilizedo so, we anticipate issuing shares of our companycommon stock, and possibly preferred stock, as part of any merger or acquisition with a public vehicle for real estate-related activities.merger or acquisition partner.

Competition

As we currently have no operations, this section is not applicable.

Intellectual Property

We own the following registered internet domain names:

www.realsourceresidential.com

www.realsourceres.com

The information contained on our website (www.realsourceresidential.com) does not form part of this Annual Report.Currently we have no intellectual property.

Employees

We currently do not have any employees except forand our officers and directors. These officers take no salary.

Suppliers

We have no suppliers other than for services suchdirectors are serving our company as legal, accountingconsultants and filing requirements.independent contractors.

Item 1A. Risk1A.Risk Factors.

Investing in our securities involves a high degree of risk. Before deciding whether to invest in our securities, you should consider carefully the risks and uncertainties described below. There may be other unknown or unpredictable economic, business, competitive, regulatory or other factors that could have material adverse effects on our future results. If any of these risks actually occurs, our business, business prospects, financial condition or results of operations could be seriously harmed. This could cause the trading price of our common stock to decline, resulting in a loss of all or part of your investment. Please also read carefully the section above entitled “Cautionary Note Regarding Forward-Looking Statements.”

Risks Relating to Our Company and its Business

We are a shell company, and our lack of assets and current prospects makes it difficult for you to evaluate our future performance.

Although our original plan beginning in 2013 was to accumulate real estate assets and form a REIT, as of the date of this Annual Report we have nomeaningful assets or operations, and are thus currently a “shell company.” We may engage in efforts to identify and merge with an operating company, although we retain the ability to utilize our company as a public vehicle for real estate-related activities. We may be unable to find an operating company to acquire or may be unable to acquire suitable properties, operate our businesses or achieve our investment objectives as planned or at all. If we do not acquire assets, you would likely lose any of your investment in us.

We have a near term need for capital and will need to raise additional capital in order to maintain our company.

Even if our sole corporate purpose presently is to merge with an operating company, this activity still requires operating capital to maintain our status as a publicly reporting and trading company. As of the date hereof, we have limited cash resources and may be unable to meet our current operating expenses for the next 12 months without borrowing funds, and there is no assurance that we can do so. Additional sources of financing might not be available on favorable terms, if at all, particularly if we acquire an operating company or seek to use our company to again try and acquire real estate assets. There is no assurance that we will be able to raise the additional needed to fund our business. If we are not able to raise such sufficient capital, our continued operations will be in significant jeopardy, which would lead to a significant decrease in the value of your investment or even the loss of your entire investment.

Moreover, any additional sources of financing will likely involve the issuance of our equity securities, which would have a dilutive effect on your investment. Included in these equity securities could be shares of preferred stock which our board of directors has the discretion to designate, which could give new investors that hold such preferred stock rights which are senior to the holders of our common stock.

Our independent registered public accounting firm has expressed doubt about our ability to continue as a going concern.

Our financial statements included in this Annual Report have been prepared under the assumption that we will continue as a going concern. Our independent registered public accounting firm has issued a report that included an explanatory paragraph referring to our recurring net losses and accumulated deficit and expressing substantial doubt in our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to launch our business, obtain additional equity financing or other capital, and, ultimately, to generate revenue. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. However, if we are unable to launch our business, or if adequate funds are not available to us when we need it, and we are unable to generate revenue, we will be required to curtail our operations which would, in turn, further raise substantial doubt about our ability to continue as a going concern.

Our officers, directors and affiliates are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating to which entity a particular business opportunity should be presented.

Our executive officers, directors and affiliates are, or may in the future become, affiliated with entities (including The RealSource Group of companies) that are engaged in a similar business to ours. Our officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe certain fiduciary duties. As a result, our executive officers, directors and affiliates may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and as a result, a potential business opportunity may be presented to another entity prior to its presentation to us.

Our management is currently and will be employed on a part-time basis for the foreseeable future and will have outside business interests that will require their time and attention and may interfere with their ability to devote all of their time to our business, which may adversely affect our business and operations.

Since our business will be limited until we either find a suitable business combination partner or elect to acquire a critical mass of properties, all of our employees, including our executive officers, will be employed for the foreseeable future on a part-time basis and will have outside business interests that could require substantial time and attention. For example, our executive officers and directors are all associated with The RealSource Group and devote significant time to such affairs. We cannot accurately predict the amount of time and attention that will be required of our officers and directors to perform their ongoing duties related to outside business interests. The inability of our officers and directors to devote sufficient time to managing our business could have a material adverse effect on our business and operations.

We may suffer from delays in locating suitable investments or business combination partners, or may be unable to acquire otherwise suitable investments or businesses, which could adversely affect our growth prospects and results of operations.

Our ability to achieve our business goals and create any value for our stockholders depends upon our ability to locate, obtain financing for and consummate the acquisition of properties or business that we believe are suitable for acquisition. There is a risk that we will be unable to acquire investments or businesses on financially attractive terms or at all. If we fail to acquire such investments or businesses, the value of the company and your investment in the company will be materially impaired and you could lose the entire amount of your investment. Moreover, as our company is controlled by members of the RealSource Group, investors will have little or no say over the future direction of our company, including what assets or businesses we may acquire, or whether we elect to continue as a shell company for a long period of time.

Additionally, as a public company, we are subject to the ongoing reporting requirements under the Securities Exchange Act of 1934, as amended (the Exchange Act). Pursuant to the Exchange Act, we may be required to file with the SEC financial statements of properties or businesses we acquire. To the extent any required financial statements are not available or cannot be obtained, we may not be able to acquire the property or business. As a result, we may be unable to acquire certain properties or businesses that otherwise would be suitable investments, which would impair the value of our company and your investment in our company.

We may become subject to litigation, which could have an adverse effect on our financial condition, results of operations, cash flow and per share trading price of our common stock.

In the future we may become subject to litigation, including claims relating to our operations, properties, offerings, and otherwise in the ordinary course of business. Some of these claims may result in significant defense costs and potentially significant judgments against us, some of which are not, or cannot be, insured against. We generally intend to vigorously defend ourselves; however, we cannot be certain of the ultimate outcomes of any claims that may arise in the future. Resolution of these types of matters against us may result in our having to pay significant fines, judgments, or settlements, which, if uninsured, or if the fines, judgments, and settlements exceed insured levels, could adversely impact our earnings and cash flows, thereby having an adverse effect on our financial condition, results of operations, cash flow and per share trading price of our common stock. Certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flows, expose us to increased risks that would be uninsured, and/or adversely impact our ability to attract officers and directors.

Risks Associated with Our Securities Generally

There has been a very limited market for our common stock, and an active trading market for our common stock may not develop.

To date, there has been a very limited public market for our common stock, and there is a risk that no active trading market will develop or be sustained. In addition, the market value of our common stock could be substantially affected by the nature of any assets or businesses we may acquire and general market conditions, all of which investors have little or no control over. There is a significant risk that a limited market for our common stock will continue for the foreseeable future, which could adversely impact the

Even if an active market for our common stock develops, the market price and trading volume of our common stock may be volatile.

Even if an active trading market develops for our common stock, the per share trading price of our common stock may be volatile. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur. If the per share trading price of our common stock declines significantly, you may be unable to resell your shares. There is a risk that the per share trading price of our common stock will fluctuate or decline significantly in the future. Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common stock include:

In addition, the market price for our common stock may also be affected by our ability to meet or exceed expectations of analysts or investors. Any failure to meet these expectations, even if minor, may have a material adverse effect on the market price of our common stock.

Ownership may become diluted if we issue new shares of stock or other securities.

To raise necessary capital to maintain and grow our business, we expect to conduct financings in the future through the issuance of additional shares of stock or other securities. We may issue common stock, convertible debt or preferred stock pursuant to a subsequent public offerings or private placements, or to sellers of properties we directly or indirectly acquire instead of, or in addition to, cash consideration. If you do not participate in any future stock issuances, you will experience dilution in your ownership.

The requirements of being a public company may strain our resources and divert management’s attention.

As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934 (the Exchange Act), the Sarbanes-Oxley Act, the Dodd-Frank Act and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. We may need to hire more employees in the future or engage outside consultants to comply with these requirements, which will increase our costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.

Due to our status as a “shell company”, there may be significant restrictions on your ability to sell shares of our common stock.

If a company is a “shell company” as defined under applicable SEC rules, restricted shares cannot be sold in reliance on SEC Rule 144 until the shareholder has satisfied a one-year holding period (as opposed to a six month holding period for non-shell companies). Since we were a “shell company”, holders of restricted shares in our company may be required to hold their common stock for a full year from acquisition, which would preclude them from selling such shares in the open market and otherwise significantly impair your ability to sell such shares. As such, such holders may be unable to react to movements in the price of our shares.

Our officers and directors will control our company for the foreseeable future, including the outcome of matters requiring shareholder approval.

Our officers and directors directly or indirectly own approximately 75% of our outstanding shares of common stock. Consequently, they will have the ability, acting alone, to control the election of our directors and the outcome of corporate actions requiring shareholder approval, such as: (i) a merger or a sale of our company, (ii) a sale of all or substantially all of our assets, and (iii) amendments to our articles of incorporation and bylaws. This concentration of voting power and control could have a significant effect in delaying, deferring or preventing an action that might otherwise be beneficial to our other shareholders and be disadvantageous to our shareholders with interests different from those of our officers and directors.

If we fail to maintain an effective system of integrated internal controls, we may not be able to accurately report our financial results.

Effective internal and disclosure controls are necessary for us to provide reliable financial reports and effectively prevent fraud and to operate as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed. As part of our ongoing monitoring of internal controls, we may discover material weaknesses or significant deficiencies in our internal controls. As a result of weaknesses that may be identified in our internal controls, we may also identify certain deficiencies in some of our disclosure controls and procedures that we believe require remediation. If we discover weaknesses, we will make efforts to improve our internal and disclosure controls, but there is a risk that we may be unable to make any improvements. Our failure to maintain effective controls or timely effect any necessary improvement of our internal and disclosure controls could harm operating results or cause us to fail to meet our reporting obligations, which could affect our ability to remain a public company. Ineffective internal and disclosure controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the per share trading price of our common stock.

Our common stock may be considered a “penny stock,” and thereby be subject to additional sale and trading regulations that may make it more difficult to sell.

Our common stock, which is currently and will be for the foreseeable future quoted for trading on the OTC Bulletin Board and/or The OTC Pink Market operated by OTC Markets Group, Inc., may be considered to be a “penny stock” if it does not qualify for one of the exemptions from the definition of “penny stock” under applicable SEC rules. Our common stock may be a “penny stock” if it meets one or more of the following conditions: (i) the stock trades at a price less than $5.00 per share; (ii) it is not traded on a “recognized” national exchange; or (iii) is issued by a company that has been in business less than three years with net tangible assets less than $5 million. The principal result or effect of being designated a “penny stock” is that securities broker-dealers participating in sales of our common stock will be subject to the “penny stock” regulations set forth in Rules 15-2 through 15g-9 promulgated under the Exchange Act. For example, Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document at least two business days before effecting any transaction in a penny stock for the investor’s account. Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to: (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult and time consuming for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

We have identified material weaknesses related to our internal control over financial reporting and concluded that our internal control over financial reporting and disclosure controls and procedures were ineffective as of December 31, 2017. These material weaknesses remain unremedied, which could continue to impact our ability to report results of operations and financial condition accurately and in a timely manner.

We have identifiedare a number of material weaknesses in our internal control over financial reporting. Our management assessed the effectiveness of our internal control over financialsmaller reporting and disclosure controls and procedurescompany, as at December 31, 2017 pursuant to Section 404defined by Rule 12b-2 of the Sarbanes-Oxley Act of 2002 and the related SEC rules and concluded that our internal control over financial reporting and disclosure controls and procedures were ineffective. We have concluded that four material weaknesses existed as at December 31, 2017 which are set out in Item 9A under the heading “Controls and Procedures”. Although we intend to remediate such material weaknesses as set out in Item 9A, we have not yet been able to address these material weaknesses and they may continue to remain unremedied for some time, which could adversely impact the accuracy and timeliness of future reports and filings we make to the SEC and could have a material adverse effect on our business, results of operations, financial condition and liquidity.

FINRA’s sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission (see above for a discussion of penny stock rules), FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

If we are deemed an “investment company” under the Investment Company Act of 1940, it could have a material adverse effect on our business.

We do not expect to operate as an “investment company” under the Investment Company Act of 1940, as amended (the Investment Company Act). However, the analysis relating to whether a company qualifies as an investment company can involve technical and complex rules and regulations. If we own assets that qualify as “investment securities” as such term is defined under the Investment Company Act and the value of such assets exceeds 40% of the value of our total assets, we could be deemed to be an investment company and beare not required to registerprovide the information under the Investment Company Act. Registered investment companies are subject to a variety of substantial requirements that could significantly impact our operations. The costs and expenses we would incur to register and operate as an investment company, as well as the limitations placed on our operations, could have a material adverse impact on our operations and your investment return. In order to operate in a manner to avoid being required to register as an investment company we may be unable to sell assets we would otherwise want to sell or we may need to sell assets we would otherwise wish to retain. In addition, we may also have to forgo opportunities to acquire interests in companies or entities that we would otherwise want to acquire.this item.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

We do not own any real property. Our executive offices are located at 2089 E Fort Union Blvd; Salt Lake City, UT 84121. Our principal executive office is currently provided by The RealSource Grouplocated at no cost.11753 Willard Avenue, Tustin, California 92782, in the office of Michael Campbell, our Chief Executive Officer. We are not charged rent for the use of this space. We believe this space is adequateour existing facilities are sufficient for our anticipatedcurrent operations.

Item 3. Legal Proceedings.

We know of no material active or pending legal proceeding against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation where such claim or action involves damages for more than 10% of our current assets as of December 31, 2017. Additionally, there were no proceedings in which any of our company’s directors, officers, or affiliates, or any registered or beneficial shareholders holding more than 5% of our voting securities, is an adverse party or has a material interest adverse to our company’s interest as of December 31, 2017.litigation.

Item 4. Mine Safety Disclosures.

Not Applicable.

PART II

Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity Securities.

Our common stock is listed for quotation on the OTC Pink Market under the trading symbol “RSRT”“BUUZ”. Trading in theour common stock in the over-the-counter market has been limited and the quotations set forth below are not necessarily indicative of actual market conditions.values. The following table sets forth, for the periods indicated, the high and low closing prices for each quarter within the last two fiscal years ended December 31, 20172020 as reported by the quotation service operated by the OTCQB Marketplace.OTC Markets Group. All quotations for the OTCQB MarketplaceOTC Pink Market reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.