Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2021 | Jul. 31, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2021 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-50331 | |
Entity Registrant Name | CalEthos, Inc. | |
Entity Central Index Key | 0001174891 | |
Entity Tax Identification Number | 98-0371433 | |
Entity Incorporation, State or Country Code | NV | |
Entity Address, Address Line One | 11753 Willard Avenue | |
Entity Address, City or Town | Tustin | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92782 | |
City Area Code | (714) | |
Local Phone Number | 352-5315 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | true | |
Entity Common Stock, Shares Outstanding | 14,470,621 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 8,000 | |
Prepaid expenses | 2,000 | |
Total Current Assets | 8,000 | 2,000 |
Total Assets | 8,000 | 2,000 |
CURRENT LIABILITIES: | ||
Accounts payable | 430,000 | 611,000 |
Convertible promissory notes, net | 757,000 | 703,000 |
Notes payable | 110,000 | 11,000 |
Total Current Liabilities | 1,297,000 | 1,325,000 |
Total Liabilities | 1,297,000 | 1,325,000 |
STOCKHOLDERS’ DEFICIT | ||
Preferred stock value | ||
Common stock par value $0.001: 100,000,000 shares authorized; 14,470,621 and 16,634,951 shares issued and outstanding | 15,000 | 17,000 |
Additional paid-in capital | 9,530,000 | 8,744,000 |
Stock subscription receivable | (2,000) | (2,000) |
Accumulated deficit | (10,832,000) | (10,082,000) |
Total Stockholders’ Deficit | (1,289,000) | (1,323,000) |
Total Liabilities and Stockholders’ Deficit | 8,000 | 2,000 |
Series A Convertible Preferred Stock [Member] | ||
STOCKHOLDERS’ DEFICIT | ||
Preferred stock value | ||
Total Stockholders’ Deficit |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2021 | Dec. 31, 2020 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | |
Common Stock, Shares Authorized | 100,000,000 | |
Common Stock, Shares, Outstanding | 14,470,621 | 16,634,951 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 3,600,000 | 3,600,000 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Statement [Abstract] | ||||
Revenues | ||||
Operating Expenses | ||||
Professional fees | 633,000 | 60,000 | 706,000 | 192,000 |
General and administrative expenses | 3,000 | 3,000 | 5,000 | 45,000 |
Operating expenses | 636,000 | 63,000 | 711,000 | 237,000 |
Loss from operations | (636,000) | (63,000) | (711,000) | (237,000) |
Other expenses | ||||
Financing cost | (22,000) | (33,000) | (39,000) | (197,000) |
Loss on extinguishment of series A convertible preferred stock | (138,000) | |||
Total other expenses | (22,000) | (33,000) | (39,000) | (335,000) |
Loss before provision for income taxes | (658,000) | (96,000) | (750,000) | (572,000) |
Provision for income taxes | ||||
Net loss | (658,000) | (96,000) | (750,000) | (572,000) |
Other comprehensive income (loss) | ||||
Comprehensive loss | $ (658,000) | $ (96,000) | $ (750,000) | $ (572,000) |
Net loss per share | $ (0.04) | $ (0.01) | $ (0.04) | $ (0.03) |
Weighted average common shares outstanding: Basic and diluted | 17,468,785 | 16,634,951 | 17,052,285 | 16,634,951 |
Condensed Statements of Stockho
Condensed Statements of Stockholders' Deficit (Unaudited) - USD ($) | Series A Convertible Preferred Stock [Member] | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Stock Subscription Receivable [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 17,000 | $ 8,750,000 | $ (2,000) | $ (9,326,000) | $ (561,000) | ||
Beginning balance, shares at Dec. 31, 2019 | 85,975 | 16,634,951 | |||||
Conversion of series A convertible preferred stock to convertible promissory notes | (119,000) | (119,000) | |||||
Conversion of series A convertible preferred Stock to convertible promissory notes, shares | (85,975) | ||||||
Debt premium on issuance of convertible promissory notes for conversion of series A convertible preferred stock | 58,000 | 58,000 | |||||
Fair value of warrants issued with the conversion of series A convertible preferred stock | 52,000 | 52,000 | |||||
Net loss | (476,000) | (476,000) | |||||
Ending balance, value at Mar. 31, 2020 | $ 17,000 | 8,741,000 | (2,000) | (9,802,000) | (1,046,000) | ||
Ending balance, shares at Mar. 31, 2020 | 16,634,951 | ||||||
Beginning balance, value at Dec. 31, 2019 | $ 17,000 | 8,750,000 | (2,000) | (9,326,000) | (561,000) | ||
Beginning balance, shares at Dec. 31, 2019 | 85,975 | 16,634,951 | |||||
Net loss | (572,000) | ||||||
Ending balance, value at Jun. 30, 2020 | $ 17,000 | 8,742,000 | (2,000) | (9,898,000) | (1,141,000) | ||
Ending balance, shares at Jun. 30, 2020 | 16,634,951 | ||||||
Beginning balance, value at Mar. 31, 2020 | $ 17,000 | 8,741,000 | (2,000) | (9,802,000) | (1,046,000) | ||
Beginning balance, shares at Mar. 31, 2020 | 16,634,951 | ||||||
Relative fair value of warrants issued with convertible promissory notes | 1,000 | 1,000 | |||||
Net loss | (96,000) | (96,000) | |||||
Ending balance, value at Jun. 30, 2020 | $ 17,000 | 8,742,000 | (2,000) | (9,898,000) | (1,141,000) | ||
Ending balance, shares at Jun. 30, 2020 | 16,634,951 | ||||||
Beginning balance, value at Dec. 31, 2020 | $ 17,000 | 8,744,000 | (2,000) | (10,082,000) | (1,323,000) | ||
Beginning balance, shares at Dec. 31, 2020 | 16,634,951 | ||||||
Relative fair value of warrants issued with convertible promissory notes | 3,000 | 3,000 | |||||
Stock options issued for services | 52,000 | 52,000 | |||||
Stocks issued from debt forgiveness | 98,000 | 98,000 | |||||
Stocks issued for debt forgiveness, shares | 75,000 | ||||||
Additional capital from debt forgiven | 68,000 | 68,000 | |||||
Net loss | (92,000) | (92,000) | |||||
Ending balance, value at Mar. 31, 2021 | $ 17,000 | 8,965,000 | (2,000) | (10,174,000) | (1,194,000) | ||
Ending balance, shares at Mar. 31, 2021 | 16,709,951 | ||||||
Beginning balance, value at Dec. 31, 2020 | $ 17,000 | 8,744,000 | (2,000) | (10,082,000) | (1,323,000) | ||
Beginning balance, shares at Dec. 31, 2020 | 16,634,951 | ||||||
Net loss | (750,000) | ||||||
Ending balance, value at Jun. 30, 2021 | $ 15,000 | 9,530,000 | (2,000) | (10,832,000) | (1,289,000) | ||
Ending balance, shares at Jun. 30, 2021 | 14,470,621 | ||||||
Beginning balance, value at Mar. 31, 2021 | $ 17,000 | 8,965,000 | (2,000) | (10,174,000) | (1,194,000) | ||
Beginning balance, shares at Mar. 31, 2021 | 16,709,951 | ||||||
Stocks returned | $ (4,000) | 4,000 | |||||
Stocks returned, sharse | (3,674,330) | ||||||
Stocks issued on exercise of warrants | $ 2,000 | 2,000 | |||||
Stocks issued on exercise of warrants, shares | 1,435,000 | ||||||
Net loss | (658,000) | (658,000) | |||||
Stock options issued for services | 561,000 | 561,000 | |||||
Ending balance, value at Jun. 30, 2021 | $ 15,000 | $ 9,530,000 | $ (2,000) | $ (10,832,000) | $ (1,289,000) | ||
Ending balance, shares at Jun. 30, 2021 | 14,470,621 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash flows from operating activities | ||
Net loss | $ (750,000) | $ (572,000) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Amortization of convertible promissory note discounts | 7,000 | 183,000 |
Loss on extinguishment of convertible preferred stock | 86,000 | |
Fair value of warrants issued for extinguishment of preferred stock | 52,000 | |
Fair value of equity based compensation | 575,000 | |
Changes in operating assets and liabilities: | ||
Prepaid expenses | 2,000 | |
Accounts payable and accrued expenses | 23,000 | 110,000 |
Net cash used in operating activities | (143,000) | (141,000) |
Cash flows from financing activities | ||
Proceeds from the issuance of convertible promissory notes | 50,000 | 20,000 |
Proceeds from the issuance of notes | 99,000 | |
Proceeds from the exercise of warrants | 2,000 | |
Net cash provided by financing activities | 151,000 | 20,000 |
Net increase (decrease) in cash | 8,000 | (121,000) |
Cash, beginning of period | 123,000 | |
Cash, end of period | 8,000 | 2,000 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | ||
Cash paid for income taxes | ||
Non-cash investing and financing activities | ||
Relative fair value of warrants issued with convertible promissory notes | 3,000 | |
Accrued equity compensation granted | 38,000 | |
Common stock issued from forgiven debt | 98,000 | |
Additional capital from forgiven debt | 68,000 | |
Conversion of series A preferred stock to convertible promissory notes | 147,000 | |
Fair value of warrants issued with the conversion of series A convertible preferred stock | 52,000 | |
Debt premium on issuance of convertible promissory notes for conversion of series A convertible preferred stock | $ 58,000 |
ORGANIZATION AND ACCOUNTING POL
ORGANIZATION AND ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND ACCOUNTING POLICIES | Note 1 – Organization And Accounting Policies ORGANIZATION AND ACCOUNTING POLICIES CalEthos, Inc. (the “Company”) (fka RealSource Residential, Inc.) was incorporated on March 20, 2002 under the laws of the State of Nevada. Since the second quarter of 2016, the Company has been a “shell” company, as defined in Rule 12b-2 under the Exchange Act. Change in Control On May 16, 2018, certain majority stockholders of the Company, including certain former directors and officers of the Company, entered into a stock purchase agreement dated May 16, 2018 (the “Control Purchase Agreement”) with RealSource Acquisition Group, LLC, a Utah limited liability company (“RealSource Acquisition”), whereby RealSource Acquisition agreed to purchase an aggregate of 11,006,356 440,256 180,000 80,000 Effective on the Closing Date, and in accordance with the amended and restated bylaws of the Company and the requirements of the Control Purchase Agreement, (a) each of Michael S. Anderson, Nathan W. Hanks and V. Kelly Randall resigned as directors of the Company, (b) Michael Campbell, the sole member of M1 Advisors, and Piers Cooper were elected to the Company’s board of directors, and (c) Mr. Hanks also resigned as president and chief executive officer of the Company, Mr. Randall also resigned as chief operating office and chief financial officer of the Company, Mr. Campbell was appointed the chief executive officer of the Company and Piers Cooper was appointed president of the Company. On the Closing Date, the Company entered into a series A preferred stock purchase agreement dated as of the Closing Date (the “Preferred Purchase Agreement”) with M1 Advisors, which is an entity controlled by Michael Campbell, the Company’s chief executive officer and a director of the Company at such time, Piers Cooper, the Company’s president and a director of the Company at such time, the members of RealSource Acquisition, and the other investors who were signatories thereto (collectively, the Purchasers”). Pursuant to the Preferred Purchase Agreement, the Company sold to the Purchasers an aggregate of 15,600,544 16,000 0.001 9,320,414 4,674,330 1,195,000 Immediately following the above transactions, an aggregate of 15,600,544 630,207 60.14 28.80 On December 20, 2018, all outstanding shares of Founder Preferred Stock was converted in to shares of the Company’s common stock on a one-for-one basis pursuant to the terms of the Founder Preferred Stock. Business Activity Following the change in control, as described above, the board of directors determined to establish the Company in the rapidly-growing cannabis industry, initially in the State of California. It is the current intention of the board of directors for our company to develop and manufacture a next generation high-performance computer system that is 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 consummation of such fundraising efforts and the commencement of such operations, it is expected that our company will cease being a shell company. Financial Statement Presentation The accompanying unaudited condensed financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures, normally included in financial statements prepared in accordance with GAAP, have been condensed or omitted. GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021. The balance sheet as of December 31, 2020 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements. For further information, refer to the financial statements and notes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2020. The notes to the unaudited condensed financial statements are presented on a going concern basis unless otherwise noted. Basis of Presentation The accompanying condensed financial statements have been prepared assuming that the Company will continue as a going concern. The Company has no established operations. The Company incurred a net loss of approximately $ 750,000 for the six months ended June 30, 2021 and had an accumulated deficit of approximately $ 10,832,000 as of June 30, 2021. The Company has financed its activities principally through debt and equity financing and shareholder contributions. Management expects to incur additional losses and cash outflows in the foreseeable future in connection with its operating activities. The Company’s condensed financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is subject to a number of risks similar to those of other similar stage companies, including dependence on key individuals; successful development, marketing and branding of products; uncertainty of product development and generation of revenues; dependence on outside sources of financing; risks associated with research and development; dependence on third-party suppliers and collaborators; protection of intellectual property; and competition with larger, better-capitalized companies. Ultimately, the attainment of profitable operations is dependent on future events, including obtaining adequate financing to fund its operations and generating a level of revenues adequate to support the Company’s cost structure. The Company will need to raise debt or equity financing in the future in order to continue its operations and achieve its growth targets. However, there can be no assurance that such financing will be available in sufficient amounts and on acceptable terms, when and if needed, or at all. The precise amount and timing of the funding needs cannot be determined accurately at this time, and will depend on a number of factors, including market demand for the Company’s products and services, the success of product development efforts, the timing of receipts for customer deposits, the management of working capital, and the continuation of normal payment terms and conditions for purchase of goods and services. The Company believes its cash balances and cash flow from operations will not be sufficient to fund its operations and growth for the next twelve months from the Debt Discounts The Company accounts for debt discounts originating in connection with conversion features that remain embedded in the related notes in accordance with ASC 470-20, Debt with Conversion and Other Options Earnings Per Share We use ASC 260, “ Earnings Per Share There were 1,525,214 1,734,214 Recent Accounting Pronouncements Changes to accounting principles are established by the Financial Accounting Standards Board’s (“FASB”) in the form of Accounting Standards Update (“ASU”) to the FASB’s Codification. We consider the applicability and impact of all ASUs on our financial position, results of operations, cash flows, or presentation thereof. The Company reviewed all recently issued pronouncement in 2021, but not yet effective, and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on the Company’s financial condition or the results of its operations. |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 6 Months Ended |
Jun. 30, 2021 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | Note 2 – Accounts Payable and Accrued Liabilities ACCOUNTS PAYABLE AND ACCRUED LIABILITIES The following table summarizes the Company’s accounts payable and accrued expense balances as of the date indicated: SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES June 30, 2021 December 31, 2020 Trade payables $ 320,000 $ 316,000 Accrued liabilities 37,000 255,000 Interest payable 73,000 40,000 Accounts payable and accrued expenses $ 430,000 $ 611,000 |
CONVERTIBLE PROMISSORY NOTES
CONVERTIBLE PROMISSORY NOTES | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE PROMISSORY NOTES | Note 3 – Convertible Promissory Notes CONVERTIBLE PROMISSORY NOTES During the period ended June 30, 2021, the Company issued convertible promissory notes in the amount of $ 55,000 50,000 5,000 10 1.00 Immediately upon a Dilutive Issuance, the Conversion Rate will be reduced to the amount of the consideration per share received by the Company in such Dilutive Issuance. Events of default include failure to issue conversion shares, the occurrence of a breach or default under any other agreement, any money judgment, writ or similar process entered or filed against the Company or any of its property or other assets for more than $ 100,000 In connection with the issuance of the Notes, the Company issued to the purchasers of the Notes stock purchase warrants (the “Warrants”) to purchase an aggregate of 27,500 1.50 In accordance with ASC 470 - Debt 3,000 0 7,000 The Company determined that the conversion feature of the Notes would not be an embedded feature to be bifurcated and accounted for as a derivative in accordance with ASC 818-15, Derivatives and Hedging As of June 30, 2021 and December 31, 2020, the convertible promissory notes consisted of the following: SCHEDULE OF CONVERTIBLE PROMISSORY NOTES June 30, 2021 December 31, 2020 Principal amount $ 763,000 $ 708,000 Original issue discount (4,000 ) (3,000 ) Warrant discount (2,000 ) (2,000 ) Net balance $ 757,000 $ 703,000 Interest expense on default convertible notes was $ 30,000 and $ 14,000 for the six months ended June 30, 2021 and 2020. |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2021 | |
Notes Payable | |
NOTES PAYABLE | Note 4 – Notes Payable NOTES PAYABLE On January 11, 2021, the Company issued promissory note with a principal value of $ 15,000 . The interest on the Note shall accrue, beginning from the date of issuance, at an interest rate of 8 % per annum. The principal and any accrued interest are payable on or before March 11, 2022 (maturity date). During any event of default under the Note, the interest rate shall increase to 10 % per annum (default interest). Events of default include failure to pay principal or interest, breach of covenants, breach of representations and warranties, borrower’s assignment of substantial part of its property or business, any money judgment, writ, or similar process shall be entered or filed against the borrower or any subsidiary of the borrower or any of its properties or other assets for more than $ 100,000 , bankruptcy, liquidation of business, and cessation of operations. On February 19, 2021, the Company issued promissory note with a principal value of $ 25,000 10 February 19, 2022 15 On April 22, 2021, the Company issued a promissory note with a principal value of $ 50,000 10 April 22, 2022 15 On April 5, 2021, the Company issued a promissory note with a principal value of $ 8,550 8 July 5, 2021 8 Interest expense on notes amounting to $ 3,000 0 |
STOCKHOLDERS DEFICIT
STOCKHOLDERS DEFICIT | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
STOCKHOLDERS DEFICIT | Note 5 – Stockholders Deficit STOCKHOLDERS DEFICIT In January 2021, Piers Cooper, our President and a member of our Board of Directors, resigned as an officer and director of our company (“Termination Agreement”). As part of the Termination Agreement, Mr. Cooper’s agreed to return 3,674,330 In February 2021, the Company signed a new consulting agreement that granted one of its shareholders an option to purchase 750,000 0.001 52,000 37,000 15,000 In March 2021, the CEO agreed to forgive approximately $ 68,000 In March 2021, the CFO agreed to reduce amounts due to him from approximately $ 128,000 30,000 98,000 75,000 30,000 In May 2021, the Company signed a letter of understanding that granted one of its shareholders an option to purchase 300,000 0.001 561,000 In May 2021, an option holder exercised three options for 385,000 750,000 300,000 0.001 2,000 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Note 6 – Subsequent Events SUBSEQUENT EVENTS The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The management of the Company determined the following reportable non-adjusting events: Subsequent to June 30, 2021, the Company issued two (2) additional Notes for total cash proceeds of $ 30,000 . In July 2021, the Company issued a promissory note for cash amounting to $ 25,000 10 July 1, 2022 The principal and accrued interest is payable in a single installment on or before the maturity date. In the event of default, the interest rate of the note shall increase to 15% per annum and computed on the basis of the actual number of days elapsed and a 365-day or 366-day year. In July 2021, the Company issued a promissory note for cash amounting to $ 5,000 8 October 12, 2021 The principal and accrued interest is payable in a single installment on or before the maturity date. In the event of default, the interest rate of the note shall increase to 8% per annum and computed on the basis of the actual number of days elapsed and a 365-day or 366-day year. The promissory note issued April 5, 2021, for the principal amount of $ 8,550 July 5, 2021 |
ORGANIZATION AND ACCOUNTING P_2
ORGANIZATION AND ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Change in Control | Change in Control On May 16, 2018, certain majority stockholders of the Company, including certain former directors and officers of the Company, entered into a stock purchase agreement dated May 16, 2018 (the “Control Purchase Agreement”) with RealSource Acquisition Group, LLC, a Utah limited liability company (“RealSource Acquisition”), whereby RealSource Acquisition agreed to purchase an aggregate of 11,006,356 440,256 180,000 80,000 Effective on the Closing Date, and in accordance with the amended and restated bylaws of the Company and the requirements of the Control Purchase Agreement, (a) each of Michael S. Anderson, Nathan W. Hanks and V. Kelly Randall resigned as directors of the Company, (b) Michael Campbell, the sole member of M1 Advisors, and Piers Cooper were elected to the Company’s board of directors, and (c) Mr. Hanks also resigned as president and chief executive officer of the Company, Mr. Randall also resigned as chief operating office and chief financial officer of the Company, Mr. Campbell was appointed the chief executive officer of the Company and Piers Cooper was appointed president of the Company. On the Closing Date, the Company entered into a series A preferred stock purchase agreement dated as of the Closing Date (the “Preferred Purchase Agreement”) with M1 Advisors, which is an entity controlled by Michael Campbell, the Company’s chief executive officer and a director of the Company at such time, Piers Cooper, the Company’s president and a director of the Company at such time, the members of RealSource Acquisition, and the other investors who were signatories thereto (collectively, the Purchasers”). Pursuant to the Preferred Purchase Agreement, the Company sold to the Purchasers an aggregate of 15,600,544 16,000 0.001 9,320,414 4,674,330 1,195,000 Immediately following the above transactions, an aggregate of 15,600,544 630,207 60.14 28.80 On December 20, 2018, all outstanding shares of Founder Preferred Stock was converted in to shares of the Company’s common stock on a one-for-one basis pursuant to the terms of the Founder Preferred Stock. |
Business Activity | Business Activity Following the change in control, as described above, the board of directors determined to establish the Company in the rapidly-growing cannabis industry, initially in the State of California. It is the current intention of the board of directors for our company to develop and manufacture a next generation high-performance computer system that is 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 consummation of such fundraising efforts and the commencement of such operations, it is expected that our company will cease being a shell company. |
Financial Statement Presentation | Financial Statement Presentation The accompanying unaudited condensed financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures, normally included in financial statements prepared in accordance with GAAP, have been condensed or omitted. GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021. The balance sheet as of December 31, 2020 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements. For further information, refer to the financial statements and notes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2020. The notes to the unaudited condensed financial statements are presented on a going concern basis unless otherwise noted. |
Basis of Presentation | Basis of Presentation The accompanying condensed financial statements have been prepared assuming that the Company will continue as a going concern. The Company has no established operations. The Company incurred a net loss of approximately $ 750,000 for the six months ended June 30, 2021 and had an accumulated deficit of approximately $ 10,832,000 as of June 30, 2021. The Company has financed its activities principally through debt and equity financing and shareholder contributions. Management expects to incur additional losses and cash outflows in the foreseeable future in connection with its operating activities. The Company’s condensed financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is subject to a number of risks similar to those of other similar stage companies, including dependence on key individuals; successful development, marketing and branding of products; uncertainty of product development and generation of revenues; dependence on outside sources of financing; risks associated with research and development; dependence on third-party suppliers and collaborators; protection of intellectual property; and competition with larger, better-capitalized companies. Ultimately, the attainment of profitable operations is dependent on future events, including obtaining adequate financing to fund its operations and generating a level of revenues adequate to support the Company’s cost structure. The Company will need to raise debt or equity financing in the future in order to continue its operations and achieve its growth targets. However, there can be no assurance that such financing will be available in sufficient amounts and on acceptable terms, when and if needed, or at all. The precise amount and timing of the funding needs cannot be determined accurately at this time, and will depend on a number of factors, including market demand for the Company’s products and services, the success of product development efforts, the timing of receipts for customer deposits, the management of working capital, and the continuation of normal payment terms and conditions for purchase of goods and services. The Company believes its cash balances and cash flow from operations will not be sufficient to fund its operations and growth for the next twelve months from the |
Debt Discounts | Debt Discounts The Company accounts for debt discounts originating in connection with conversion features that remain embedded in the related notes in accordance with ASC 470-20, Debt with Conversion and Other Options |
Earnings Per Share | Earnings Per Share We use ASC 260, “ Earnings Per Share There were 1,525,214 1,734,214 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Changes to accounting principles are established by the Financial Accounting Standards Board’s (“FASB”) in the form of Accounting Standards Update (“ASU”) to the FASB’s Codification. We consider the applicability and impact of all ASUs on our financial position, results of operations, cash flows, or presentation thereof. The Company reviewed all recently issued pronouncement in 2021, but not yet effective, and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on the Company’s financial condition or the results of its operations. |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Payables and Accruals [Abstract] | |
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES | The following table summarizes the Company’s accounts payable and accrued expense balances as of the date indicated: SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES June 30, 2021 December 31, 2020 Trade payables $ 320,000 $ 316,000 Accrued liabilities 37,000 255,000 Interest payable 73,000 40,000 Accounts payable and accrued expenses $ 430,000 $ 611,000 |
CONVERTIBLE PROMISSORY NOTES (T
CONVERTIBLE PROMISSORY NOTES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF CONVERTIBLE PROMISSORY NOTES | As of June 30, 2021 and December 31, 2020, the convertible promissory notes consisted of the following: SCHEDULE OF CONVERTIBLE PROMISSORY NOTES June 30, 2021 December 31, 2020 Principal amount $ 763,000 $ 708,000 Original issue discount (4,000 ) (3,000 ) Warrant discount (2,000 ) (2,000 ) Net balance $ 757,000 $ 703,000 |
ORGANIZATION AND ACCOUNTING P_3
ORGANIZATION AND ACCOUNTING POLICIES (Details Narrative) - USD ($) | Aug. 16, 2018 | May 16, 2018 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||||
Preferred stock, shares outstanding | 0 | 0 | 0 | ||||||
Preferred stock, shares issued | 0 | 0 | 0 | ||||||
Common stock, shares outstanding | 14,470,621 | 14,470,621 | 16,634,951 | ||||||
Net Income (Loss) Attributable to Parent | $ 658,000 | $ 92,000 | $ 96,000 | $ 476,000 | $ 750,000 | $ 572,000 | |||
Retained Earnings (Accumulated Deficit) | $ 10,832,000 | $ 10,832,000 | $ 10,082,000 | ||||||
Common share equivalents | 1,525,214 | 1,734,214 | |||||||
Control Purchase Agreement [Member] | |||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||||
Aggregate purchasers shares | 11,006,356 | ||||||||
Number of shares after reserve stock split | 440,256 | ||||||||
Purchase price of shares | $ 180,000 | ||||||||
Payment made as consideration | $ 80,000 | ||||||||
Preferred Purchase Agreement [Member] | |||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||||
Aggregate purchasers shares | 15,600,544 | ||||||||
Purchase price of shares | $ 16,000 | ||||||||
Purchase price per share | $ 0.001 | $ 0.001 | |||||||
Common stock, shares outstanding | 630,207 | 630,207 | |||||||
Common stock, shares issued | 630,207 | 630,207 | |||||||
Preferred Purchase Agreement [Member] | Founder Preferred Stock [Member] | |||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||||
Preferred stock, shares outstanding | 15,600,544 | 15,600,544 | |||||||
Preferred stock, shares issued | 15,600,544 | 15,600,544 | |||||||
Preferred Purchase Agreement [Member] | M One Advisors [Member] | |||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||||
Aggregate purchasers shares | 9,320,414 | ||||||||
Percentage of shares issued and outstanding | 60.14% | 60.14% | |||||||
Preferred Purchase Agreement [Member] | Mr Cooper [Member] | |||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||||
Aggregate purchasers shares | 4,674,330 | ||||||||
Percentage of shares issued and outstanding | 28.80% | 28.80% | |||||||
Preferred Purchase Agreement [Member] | Members Of Realsource Acquisition [Member] | |||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||||
Aggregate purchasers shares | 1,195,000 |
SCHEDULE OF ACCOUNTS PAYABLE AN
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Trade payables | $ 320,000 | $ 316,000 |
Accrued liabilities | 37,000 | 255,000 |
Interest payable | 73,000 | 40,000 |
Accounts payable and accrued expenses | $ 430,000 | $ 611,000 |
SCHEDULE OF CONVERTIBLE PROMISS
SCHEDULE OF CONVERTIBLE PROMISSORY NOTES (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Short-term Debt [Line Items] | ||
Original issue discount | $ (5,000) | |
Convertible Notes Payable [Member] | ||
Short-term Debt [Line Items] | ||
Principal amount | 763,000 | $ 708,000 |
Original issue discount | (4,000) | (3,000) |
Warrant discount | (2,000) | (2,000) |
Net balance | $ 757,000 | $ 703,000 |
CONVERTIBLE PROMISSORY NOTES (D
CONVERTIBLE PROMISSORY NOTES (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Convertible promissory note | $ 55,000 | |
Proceed from convertible debt | 50,000 | $ 20,000 |
Debt original issue discount | $ 5,000 | |
Debt instruments, interest rate | 10.00% | |
Debt instruments, conversion price | $ 1 | |
Events of default description | Immediately upon a Dilutive Issuance, the Conversion Rate will be reduced to the amount of the consideration per share received by the Company in such Dilutive Issuance. Events of default include failure to issue conversion shares, the occurrence of a breach or default under any other agreement, any money judgment, writ or similar process entered or filed against the Company or any of its property or other assets for more than $100,000, bankruptcy filing, application for the appointment of a custodian, trustee or receiver, insolvency, the Company’s common stock delisted, or dissolution, winding up, or termination of the business of the Company. | |
Issuance of warrant price per share | $ 0.001 | |
Relative fair value of warrants issued with convertible promissory notes | $ 3,000 | |
Beneficial conversion feature | 0 | |
Amortization expenses | 7,000 | |
Interest Expense, Debt | 30,000 | $ 14,000 |
Warrant [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Indebtedness for borrowed money maximum limit | $ 100,000 | |
Issuance of warrants to purchase of common stock | 27,500 | |
Issuance of warrant price per share | $ 1.50 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | Apr. 22, 2021 | Apr. 05, 2021 | Feb. 19, 2021 | Jan. 11, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Schedule of Capitalization, Long-term Debt [Line Items] | ||||||
Debt instrument, interest rate | 10.00% | |||||
Interest expense | $ 30,000 | $ 14,000 | ||||
Promissory Note [Member] | ||||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||||
Debt instrument, face amount | $ 50,000 | $ 8,550 | $ 25,000 | $ 15,000 | ||
Debt instrument, interest rate | 10.00% | 8.00% | 10.00% | 8.00% | ||
Debt instrument, maturity date | Apr. 22, 2022 | Jul. 5, 2021 | Feb. 19, 2022 | Mar. 11, 2022 | ||
Increase in interest rate | 15.00% | 8.00% | 15.00% | 10.00% | ||
Interest expense | $ 3,000 | $ 0 | ||||
Promissory Note [Member] | Borrower [Member] | ||||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||||
Debt Instrument, Periodic Payment | $ 100,000 |
STOCKHOLDERS DEFICIT (Details N
STOCKHOLDERS DEFICIT (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Feb. 28, 2021 | Jan. 31, 2021 | Mar. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | May 31, 2021 | May 01, 2021 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Remaining liability paid for cash | $ 30,000 | ||||||
Common stock, shares authorized | 100,000,000 | ||||||
Common stock, par or \sStated value per share | $ 0.001 | ||||||
Share-based compensation arrangement by share-based payment award, options | $ 561,000 | ||||||
Class of warrant exercise price | $ 0.001 | ||||||
Proceeds from stock options exercised | $ 2,000 | ||||||
Share-based Payment Arrangement, Tranche One [Member] | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Number of share options exercised | 385,000 | ||||||
Share-based Payment Arrangement, Tranche Two [Member] | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Number of share options exercised | 750,000 | ||||||
Share-based Payment Arrangement, Tranche Three [Member] | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Number of share options exercised | 300,000 | ||||||
Chief Executive Officer [Member] | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Debt forgiveness | $ 68,000 | ||||||
Reduction amount | $ 98,000 | ||||||
Number of shares issued | 75,000 | ||||||
Chief Executive Officer [Member] | Minimum [Member] | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Due to related party | $ 128,000 | ||||||
Chief Executive Officer [Member] | Maximum [Member] | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Due to related party | $ 30,000 | ||||||
Termination Agreement [Member] | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Return of shares | 3,674,330 | ||||||
New Consulting Agreement [Member] | Shareholder [Member] | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Option to purhase shares | 750,000 | ||||||
Share price | $ 0.001 | ||||||
Fair value of options | $ 52,000 | ||||||
Option expense | $ 15,000 | $ 37,000 | |||||
Letterof Understanding [Member] | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Common stock, shares authorized | 300,000 | ||||||
Common stock, par or \sStated value per share | $ 0.001 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Apr. 22, 2021 | Apr. 05, 2021 | Feb. 19, 2021 | Jan. 11, 2021 | Aug. 04, 2021 | Jul. 31, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Subsequent Event [Line Items] | ||||||||
Proceeds from Notes Payable | $ 99,000 | |||||||
Debt instrument, interest rate | 10.00% | |||||||
Four Additional Notes [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Proceeds from Notes Payable | $ 30,000 | |||||||
Promissory Notes [Member] | Subsequent Event [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Debt instrument, face amount | $ 25,000 | |||||||
Debt instrument, interest rate | 10.00% | |||||||
Debt instrument, maturity date | Jul. 1, 2022 | |||||||
Debt instrument, description | The principal and accrued interest is payable in a single installment on or before the maturity date. In the event of default, the interest rate of the note shall increase to 15% per annum and computed on the basis of the actual number of days elapsed and a 365-day or 366-day year. | |||||||
Promissory Note [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Debt instrument, face amount | $ 50,000 | $ 8,550 | $ 25,000 | $ 15,000 | ||||
Debt instrument, interest rate | 10.00% | 8.00% | 10.00% | 8.00% | ||||
Debt instrument, maturity date | Apr. 22, 2022 | Jul. 5, 2021 | Feb. 19, 2022 | Mar. 11, 2022 | ||||
Promissory Note [Member] | Subsequent Event [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Debt instrument, face amount | $ 5,000 | |||||||
Debt instrument, interest rate | 8.00% | |||||||
Debt instrument, maturity date | Oct. 12, 2021 | |||||||
Debt instrument, description | The principal and accrued interest is payable in a single installment on or before the maturity date. In the event of default, the interest rate of the note shall increase to 8% per annum and computed on the basis of the actual number of days elapsed and a 365-day or 366-day year. | |||||||
April 5, 2021 Promissory Note [Member] | Subsequent Event [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Debt instrument, face amount | $ 8,550 | |||||||
Debt instrument, maturity date | Jul. 5, 2021 |