Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 16, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | Edge Data Solutions, Inc. | |
Entity Central Index Key | 0001614826 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 8,321,079 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Balance Sheets
Balance Sheets - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 63,549 | $ 14,453 |
Accounts receivable | 3,193 | |
Other current assets | 2,516 | |
Prepaid expense | 8,452 | |
Total Current Assets | 77,710 | 14,453 |
Non-Current Assets: | ||
Right of use asset - finance lease | 32,412 | |
Deferred offering costs | 13,500 | |
Property and equipment, net | 118,593 | |
Security deposit | 7,753 | |
Total Non-Current Assets | 172,258 | |
TOTAL ASSETS | 249,968 | 14,453 |
Current Liabilities: | ||
Accounts payable | 138,861 | 163,360 |
Accrued expenses | 29,241 | 10,980 |
Deferred revenue | 1,035 | |
Convertible notes payable, short-term | 610,000 | 200,000 |
Advances from related parties | 45,131 | 88,429 |
Lease liability - finance, current portion | 15,315 | |
Accrued compensation - related party | 41,000 | |
Total Current Liabilities | 839,583 | 503,769 |
Non-Current Liabilities: | ||
Lease liability - finance, non-current portion | 20,005 | |
Total Non-Current Liabilities | 20,005 | |
Total Liabilities | 859,588 | 503,769 |
Commitments and Contingencies (Note 10) | ||
Stockholders' Deficiency: | ||
Preferred stock | ||
Common stock, $0.0001 par value; 150,000,000 shares authorized, 8,321,079 and 5,651,217 issued and outstanding as of September 30, 2020 and December 31, 2019, respectively. | 832 | 565 |
Additional paid-in capital | 633,499 | 55,817 |
Accumulated deficit | (1,257,951) | (559,698) |
Total Stockholders' Deficiency | (609,620) | (489,316) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY | 249,968 | 14,453 |
Class A Super Majority Voting Preferred Stock [Member] | ||
Stockholders' Deficiency: | ||
Preferred stock | 7,000 | 7,000 |
Class C Convertible Preferred Non-Voting Stock [Member] | ||
Stockholders' Deficiency: | ||
Preferred stock | $ 7,000 | $ 7,000 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 8,321,079 | 5,651,217 |
Common stock, shares outstanding | 8,321,079 | 5,651,217 |
Class A Super Majority Voting Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 7,000,000 | 7,000,000 |
Preferred stock, shares outstanding | 7,000,000 | 7,000,000 |
Preferred stock, liquidation preferences | $ 26,317 | $ 26,317 |
Class C Convertible Preferred Non-Voting Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 7,000,000 | 7,000,000 |
Preferred stock, shares outstanding | 7,000,000 | 7,000,000 |
Preferred stock, liquidation preferences | $ 3,500 | $ 3,500 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues: | ||||
Revenue, net | $ 14,317 | $ 20,624 | ||
Total Revenue | 14,317 | 20,624 | ||
Cost of revenue | ||||
Total Cost of Revenue | ||||
Gross Margin | 14,317 | 20,624 | ||
Operating Expenses: | ||||
Sales and marketing | 974 | 15 | 899 | 13,385 |
General and administrative | 51,369 | 65,051 | 184,432 | 142,072 |
Compensation - related party | 20,000 | 95,000 | ||
Stock-based compensation expense | 218,500 | 381,900 | ||
Depreciation expense | 6,303 | 10,513 | ||
Total Operating Expenses | 297,146 | 65,066 | 672,744 | 155,457 |
Income from operations | (282,829) | (65,066) | (652,120) | (155,457) |
Other Income/(Expense): | ||||
Interest expense | (17,955) | (6,359) | (42,064) | (10,853) |
Loss on termination of prospective acquisition | (23,000) | |||
Gain on debt forgiveness | 12,250 | |||
Gain on disposal of equipment | 4,965 | 4,965 | ||
Cryptocurrency mining income | 716 | 716 | ||
Small business grant income | 1,000 | |||
Total Other Income/(Expense) | (12,274) | (6,359) | (46,133) | (10,853) |
Net Loss | $ (295,103) | $ (71,425) | $ (698,253) | $ (166,310) |
Net Loss per share (basic and diluted) | $ (0.04) | $ (0.01) | $ (0.10) | $ (0.03) |
Weighted average number of common shares outstanding | 8,118,362 | 5,559,642 | 6,923,362 | 5,270,594 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash Flows from Operating Activities | ||
Net Loss | $ (698,253) | $ (166,310) |
Adjustments to reconcile net loss to net cash (used in) operating activities: | ||
Depreciation | 10,513 | |
Gain on disposal of equipment | (4,965) | |
Stock-based compensation | 381,900 | 122 |
Loss on prospective acquisition | 23,000 | |
Changes in operating assets and liabilities: | ||
Change in accounts receivable | (3,193) | |
Change in other current assets | (2,516) | |
Change in prepaid expenses | (8,452) | |
Change in security deposits | (7,753) | |
Change in accounts payable | 8,501 | 84,293 |
Change in accrued compensation - related party | (41,000) | (47,500) |
Change in accrued expenses | 18,261 | 5,165 |
Change in deferred revenue | 1,035 | |
Change in accrued interest related to note conversions | 6,966 | |
Net Cash (Used in) Operating Activities | (315,956) | (124,230) |
Cash Flows from Investing Activities | ||
Purchase of property and equipment | (128,228) | |
Proceeds from disposal of property and equipment | 10,170 | |
Deposits on prospective acquisition | (23,000) | |
Net Cash (Used in) Investing Activities | (141,058) | |
Cash Flows from Financing Activities | ||
Proceeds from issuance of short-term convertible debt | 510,000 | 100,000 |
Related party advances | 168,191 | 18,426 |
Repayment of related party advances | (211,489) | |
Deferred offering costs | (13,500) | |
Change in finance lease assets and liabilities | 2,908 | |
Sale of equity units | 50,000 | |
Net Cash Provided by Financing Activities | 506,110 | 118,426 |
Net Change In Cash | 49,096 | (5,804) |
Cash at Beginning of Period | 14,453 | 6,293 |
Cash at End of Period | 63,549 | 489 |
Supplemental Disclosure of Cash Flow Information: | ||
Convertible debt principal and accrued interest converted to equity units | 106,966 | |
Issuance of common stock for equipment purchases | 6,083 | |
Supplemental Disclosure of Non-Cash Financing Activities: | ||
Forgiveness of related party debt | $ 33,000 |
Statement of Stockholders' Defi
Statement of Stockholders' Deficiency (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Common Stock [Member] | ||||
Balance | $ 565 | $ 438 | ||
Balance, shares | 5,651,217 | 4,386,217 | ||
Common shares issued as compensation | $ 210 | $ 122 | ||
Common shares issued as compensation, shares | 2,010,000 | 1,215,000 | ||
Debt conversions into equity units | $ 43 | |||
Debt conversions into equity units, shares | 427,862 | |||
Subscriptions to equity units | $ 20 | |||
Subscriptions to equity units, shares | 200,000 | |||
Issuance of common stock for equipment | $ 3 | |||
Issuance of common stock for equipment, shares | 32,000 | |||
Net loss | ||||
Balance | $ 832 | $ 560 | $ 832 | $ 560 |
Balance, shares | 8,321,079 | 5,601,217 | 8,321,079 | 5,601,217 |
Additional Paid-in Capital [Member] | ||||
Balance | $ 55,817 | $ 40,000 | ||
Common shares issued as compensation | 381,699 | |||
Reclassification allocating preferred stock value between par value and additional paid-in capital | 15,817 | |||
Debt conversions into equity units | 106,923 | |||
Subscriptions to equity units | 49,980 | |||
Related party debt forgiveness | 33,000 | |||
Issuance of common stock for equipment | 6,080 | |||
Net loss | ||||
Balance | $ 633,499 | $ 55,817 | 633,499 | 55,817 |
Accumulated Deficit [Member] | ||||
Balance | (559,698) | (257,948) | ||
Common shares issued as compensation | ||||
Debt conversions into equity units | ||||
Subscriptions to equity units | ||||
Issuance of common stock for equipment | ||||
Net loss | (698,253) | (166,310) | ||
Balance | (1,257,951) | (424,258) | (1,257,951) | (424,258) |
Class A Preferred Stock [Member] | ||||
Balance | $ 7,000 | $ 26,317 | ||
Balance, shares | 7,000,000 | 7,000,000 | ||
Common shares issued as compensation | ||||
Reclassification allocating preferred stock value between par value and additional paid-in capital | (19,317) | |||
Debt conversions into equity units | ||||
Subscriptions to equity units | ||||
Issuance of common stock for equipment | ||||
Net loss | ||||
Balance | $ 7,000 | $ 7,000 | $ 7,000 | $ 7,000 |
Balance, shares | 7,000,000 | 7,000,000 | 7,000,000 | 7,000,000 |
Class C Convertible Preferred Stock [Member] | ||||
Balance | $ 7,000 | $ 3,500 | ||
Balance, shares | 7,000,000 | 7,000,000 | ||
Common shares issued as compensation | ||||
Reclassification allocating preferred stock value between par value and additional paid-in capital | 3,500 | |||
Debt conversions into equity units | ||||
Subscriptions to equity units | ||||
Issuance of common stock for equipment | ||||
Net loss | ||||
Balance | $ 7,000 | $ 7,000 | $ 7,000 | $ 7,000 |
Balance, shares | 7,000,000 | 7,000,000 | 7,000,000 | 7,000,000 |
Balance | $ (489,316) | $ (187,693) | ||
Common shares issued as compensation | 381,900 | 122 | ||
Reclassification allocating preferred stock value between par value and additional paid-in capital | ||||
Debt conversions into equity units | 106,966 | |||
Subscriptions to equity units | 50,000 | |||
Related party debt forgiveness | 33,000 | |||
Issuance of common stock for equipment | 6,083 | |||
Net loss | $ (295,103) | $ (71,425) | (698,253) | (166,310) |
Balance | $ (609,620) | $ (353,881) | $ (609,620) | $ (353,881) |
Organization and Nature of Oper
Organization and Nature of Operations | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Operations | NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS EDGE DATA SOLUTIONS, INC. (the “Company”), formerly Blockchain Holdings Capital Ventures, Inc. (formerly Southeastern Holdings, Inc., formerly Safe Lane Systems, Inc.) was incorporated in the State of Colorado on September 10, 2013. Safe Lane Systems, Inc. redomiciled to become a Delaware holding corporation in September of 2016. On September 22, 2016, Safe Lane Systems, Inc. formed two wholly owned subsidiaries, SLS Industrial, Inc and Southeastern Holdings, Inc. (both Delaware corporations) and on September 30, 2016 completed a merger and reorganization in which Southeastern Holdings, Inc. (now Edge Data Solutions, Inc.) became the holding company. On December 1, 2016, the Company spun off its wholly owned subsidiary, SLS Industrial, Inc., along with its assets and liabilities, leaving Southeastern Holdings, Inc. as the only surviving entity. On August 23, 2018, the Company entered into a Bill of Sale and Assignment and Assumption Agreement with Blockchain Holdings, LLC (“Blockchain”), pursuant to which the Company purchased all of the assets of Blockchain which are used in the business of sourcing of blockchain mining equipment from various suppliers for their customers and also providing management of the equipment hosted, mining pools and tech work on such equipment. The Company issued 300,000,000 (equivalent to 3,000,000 after the reverse split) shares of its common stock, par value $.0001 to the members of Blockchain in exchange for the assets of Blockchain. On August 30, 2018, the Company changed its name to Blockchain Holdings Capital Ventures, Inc. On January 13, 2020, the Company changed its name to Edge Data Solutions, Inc. Business Description Edge Data Solutions, Inc. (EDSI) is poised to be |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP). The Company maintains the calendar year as its basis of reporting. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash Equivalents and Concentration of Cash Balance The Company considers all highly liquid securities with an original maturity of less than three months to be cash equivalents. The Company’s cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits. As of September 30, 2020, and December 31, 2019, the Company’s cash balances did not exceed federally insured limits. Right of Use Assets and Lease Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Under ASC 842, the Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the Company’s leases do not provide an implicit rate, the Company estimated the incremental borrowing rate in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. The Company’ lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Property and Equipment Property and equipment are stated at cost net of accumulated depreciation and amortization, and accumulated impairment, if any. Depreciation and amortization of property and equipment is provided using the straight-line method over estimated useful lives, which are all currently estimated at three years. As of September 30, 2020, the Company’s property and equipment consisted of $46,122 of datacenter containers not yet placed in service, $68,759 of datacenter equipment and $13,347 of capitalized labor associated with readying the equipment for service, net of $9,635 of accumulated depreciation. Depreciation expense for the three and nine months ended September 30, 2020 was $6,303 and $10,513, respectively. Long-Lived Assets The Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances have indicated that an asset may not be recoverable. Long-lived assets are grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows is less than the carrying value of the assets, the assets are written down to the estimated fair value. As of September 30, 2020, the Company determined that its long-lived assets have not been impaired. Accounts Payable and Accrued Liabilities Accounts payable consisted of $74,434 of liabilities incurred by the issuer prior to the merger as of each September 30, 2020 and 2019. The remaining accounts payable of $64,427 and $88,926 as of September 30, 2020 and December 31, 2019, respectively, consisted of amounts due for professional services and various other general and administrative expenses incurred after the acquisition. As of December 31, 2019, accrued expenses consisted of $1,811 of state and local taxes payable, $1,903 of accrued interest due to a vendor and $7,266 of accrued interest on convertible debt. As of September 30, 2020, accrued expenses consisted of $1,811 of state and local taxes payable and $27,430 of accrued interest on convertible debt. As of December 31, 2019, accrued liabilities included $41,000 of accrued consulting fees payable to entities owned by the CEO and President ($22,000 and $19,000, respectively). During the nine months ended September 30, 2020, the Company paid out the $41,000 of accrued compensation, for $0 of accrued related party compensation as of September 30, 2020. Deferred Offering Costs The Company accumulates costs incurred directly in connection with its unclosed securities offering, as announced on October 13, 2020, as deferred offering costs. In the event the offering is successful, the Company will record all related costs as an offset to additional paid-in capital. In the even the Company terminates the offering or management deems the offering will not likely be successful, the Company will charge these costs to expense in the period in which such a determination is made. During the three months ended September 30, 2020, the Company incurred $13,500 of costs related to this offering, resulting in total deferred offering costs of $13,500 as of September 30, 2020. Fair Value of Financial Instruments Financial Accounting Standards Board (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities inactive markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). Level 3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. The carrying amounts reported in the balance sheets approximate their fair value. Revenue Recognition The Company recognizes revenue under ASC 606, using the following five-step model, which requires that the Company: (1) identify a contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to performance obligations and (5) recognize revenue as performance obligations are satisfied. The Company’s current and anticipated revenue streams consist of: 1. GPU as a Service– The Company owns and operates high performance servers to provide hardware acceleration for rendering farms to process 3D and video rendering and gaming. In addition, these multi-purpose servers produce revenue from mining when the servers are not processing other jobs to ensure zero idle time and have the ability to run AI and HPC processing as well. During the quarter ended September 30, 2020, the Company recognized $14,317 of revenue from its customers’ usage of datacenter credits. The Company further recognized a deferred revenue liability of $1,035 for prepaid usage credits not yet used by its customers as of September 30, 2020. While the Company generated limited revenue in the second and third quarters of 2020, there can be no assurances that service lines will generate satisfactory revenue or continue to generate revenue. Cryptocurrency Transactions In August 2020, the Company began mining Ethereum with its unutilized datacenter capacity. The Company records cryptocurrency generated, net of fees and valuation adjustments, as other income and classifies the cryptocurrency as other current assets in its balance sheets. The Company assesses the carrying value of the cryptocurrency held by the Company at each reporting date and charges valuation adjustments to other income. The carrying value of Ethereum held by the Company was $716 and $0 as of September 30, 2020 and December 31, 2019, respectively. During the three and nine months ended September 30, 2020, the Company recognized $716 of net other income from mining operations. Stock-Based Compensation The Company accounts for share-based payments pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards using the Black-Scholes option pricing model. Stock compensation expense for stock options is recognized over the vesting period of the award or expensed immediately when stock or options are awarded for previous or current service without further recourse. On February 18, 2020, the Company issued 50,000 shares of common stock to an advisor and recorded $9,500 of stock-based compensation expense. On May 6, 2020, the Company agreed to issue 60,000 shares of common stock to a consultant for services rendered, resulting in stock-based compensation expense of $11,400. On June 19, 2020, the Board of Directors approved the issuance of 750,000 fully vested common shares to its board members and officers as compensation for services rendered, consisting of 250,000 shares to Delray Wannemacher, CEO and Director, 250,000 shares to Daniel Wong, President and Director, and 250,000 shares to Austin Bosarge, Director. In connection with this issuance, the Board further approved the issuance of 375,000 common shares on July 1, 2021 and 375,000 common shares on July 1, 2022. Each of these future issuances will result in the issuance of 125,000 common shares to each director and officer. The Company recorded stock-based compensation expense of $142,500 upon approving issuance of the first 750,000 shares. On July 7, 2020, the Company issued a total of 1,000,000 common shares, consisting of 500,000 to Delray Wannemacher, CEO and Director, and 500,000 to Daniel Wong, President and Director, as compensation for services rendered, resulting in stock compensation expense of $190,000. On September 15, 2020, the Company granted 50,000 common shares to a consultant in exchange for services rendered, resulting in $9,500 of stock compensation expense. Under the advisory agreement, the Company will issue an additional 50,000 common shares to the advisor over the next two years. On September 16, 2020, the Company granted 100,000 common shares to an advisor in exchange for services rendered, resulting in $19,000 of stock compensation expense. Under the advisory agreement, the Company will issue an additional 100,000 common shares to the advisor over the next two years. |
Going Concern
Going Concern | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | NOTE 3: GOING CONCERN As shown in the accompanying financial statements as of September 30, 2020, the Company had $63,549 of cash and $77,710 of current assets, as compared to total current liabilities of $839,583, has incurred substantial operating losses, and had an accumulated deficit of $1,257,951. Furthermore, the Company’s revenue history has been limited and unstable, and there can be no assurances of future revenues. Given these factors, the Company is dependent on financing from outside parties, and management intends to pursue outside capital through debt and equity vehicles. There is no assurance that these efforts will materialize or be successful or sufficient to fund operations and meet obligations as they come due. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, however, the above conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. |
Stockholders' Deficiency
Stockholders' Deficiency | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Deficiency | NOTE 4: STOCKHOLDERS’ DEFICIENCY The Company has designated ten million (10,000,000) shares of its preferred stock, par value $0.001 as Class A Preferred Super Majority Voting Stock (“Class A”). The Class A shares have the right to vote upon matters submitted to the holders of common stock, par value $0.0001 of the Company. Class A shares have a vote equal to the number of shares of common stock of the Company which would give the holders of the Class A shares a vote equal to sixty percent (60%) of the common stock. This vote shall be exercised pro-rata by the holders of the Class A. The Company shall have the right to redeem, in its sole and absolute discretion, at any time one (1) year after the date of issuance of such Class A shares, all or any portion of the shares of Class A at a price of one cent ($0.01) per share. On October 4, 2018, the Company issued a total of 7,000,000 Class A shares to its CEO and President (formerly COO) as stock-based compensation for services rendered. The Company has not currently authorized a Class B designation of Preferred Stock. The Company has designated ten million (10,000,000) shares of its preferred stock, par value $0.001 as Class C Convertible Preferred Non-Voting Stock (“Class C”). Each share of Class C shall be convertible into five (5) shares of common stock. The holders of Class C shall be entitled to receive the same dividend as the holders of the common stock and such dividend shall be paid pro rata per share on a fully converted basis. The holders of Class C shall have piggyback registration rights. The Company shall have the right to redeem, in its sole and absolute discretion, at any time after five (5) years, all or any portion of the shares of Class C at a price of five dollars ($5.00) per share. The Class C shares shall be considered to have a junior liquidation preference to Class A shares and a senior dividend preference to Class A shares. On October 4, 2018, the Company issued a total of 7,000,000 Class C shares to its CEO and President (formerly COO) as stock-based compensation for services rendered. Subsequently, in April 2019, the Company filed an amended and restated certificate of designation, which restricts the CEO and President from converting the 7,000,000 shares into common stock for 36 months from the issuance date. On January 20, 2020, the Company purchased datacenter equipment components for 32,000 shares of common stock and capitalized $6,083 based on the estimated value of surrounding equity transactions. In January 2020, the Company issued 627,862 equity units at $0.25 to two individuals in exchange for conversion of $100,000 of convertible notes and $6,966 of accrued interest and an additional $50,000 of cash. Each equity unit consists of one three-year warrant to purchase two shares of the Company’s common stock for $0.50 each, and one share of the Company’s common stock. The Company may call the warrants in the event its common stock trades for $1.00 or more per share for ten out of fifteen consecutive trading days. In connection with these transactions, the Company assigned $119,665 of value to the common stock and $37,301 to the warrants using the Black-Scholes model with the following inputs: Risk-free interest rate 1.44%-1.51 % Expected life of warrants 3 years Annualized volatility 60 % Dividend rate 0 % The following table sets forth the Company’s warrant activity through September 30, 2020: Warrants Shares Term Exercise Remaining Balance, December 31, 2019 - - Warrants issued with equity units 627,862 1,255,724 3 years $ 0.50 Balance, March 31, 2020 627,862 1,255,724 No new issuances Balance, September 30, 2020 627,862 1,255,724 As further discussed in Note 2, the Company issued 1,150,000 common shares and 1,910,000 common shares to management, board members and consultants for services rendered, resulting in stock-based compensation expense of $218,500 and $381,900 for the three and nine months ended September 30, 2020, all respectively. As of September 30, 2020, the Company was authorized to issue 150,000,000 shares of common stock. All common stock shares have full dividend and voting rights. However, it is not anticipated that the Company will be declaring dividends in the foreseeable future. As of September 30, 2020, the Company had 8,321,079 common shares outstanding. As of September 30, 2020, 7,000,000 shares of Class A Preferred Stock and 7,000,000 shares of Class C Preferred Stock were issued and outstanding. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 5: RELATED PARTY TRANSACTIONS During the nine months ended September 30, 2020, the Company paid out previously accrued consulting fees payable to the CEO and President of $22,000 and $19,000, respectively, paid $40,000 and $35,000 of current compensation, and paid $6,600 and $3,909 in health insurance premiums for the CEO and COO, respectively. The Company does not currently have consulting or employment agreements with these individuals, and as a result, these fees may fluctuate from time to time. While the Company believes these individuals were appropriately classified as contractors and has accordingly neither paid nor accrued payroll taxes, these payments may result in future tax liabilities should the Internal Revenue Service deem these individuals to be employees. As of September 30, 2020, the Company owed $0 of outstanding compensation to the CEO and COO. During the nine months ended September 30, 2020, the Company’s CEO and President paid expenses on behalf of the Company totaling $106,387 and $61,804, and the Company repaid $120,652 and $90,838 of related party advances, respectively. As of September 30, 2020, the Company was indebted to the CEO for $44,975 and to the President for $156, respectively, for expenses paid on behalf of the company. In June 2020, Austin Bosarge joined the Company’s Board of Directors. In connection with his appointment to the Board of Directors, he forgave $33,000 of outstanding fees due to his company for previous professional services rendered, resulting in a deemed contribution of $33,000 for the nine months ended September 30, 2020. |
Convertible Notes
Convertible Notes | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Notes | NOTE 6: CONVERTIBLE NOTES As discussed in Note 4, in January, two individuals converted a total of $100,000 of outstanding principal and $6,966 of accrued interest into 427,862 equity units, each consisting of one common share and a three-year warrant to purchase two shares of common stock at $0.50 per share, in connection with additional subscriptions totaling $50,000 to purchase 200,000 of these equity units. In February 2020, the Company issued two short-term convertible notes for total proceeds of $110,000. These notes mature one year from execution and accrue interest at a rate of 10% per annum. Conversion terms call for conversion of principal and accrued interest at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000. In April 2020, the Company issued three short-term convertible notes for total proceeds of $150,000. These notes mature one year from execution and accrue interest at rates ranging from 10-12% per annum. Conversion terms call for conversion of principal and accrued interest at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000. In June 2020, the Company issued another short-term convertible note for total proceeds of $50,000. This note matures one year from execution and accrues interest at 10% per annum. Conversion terms call for conversion of principal and accrued interest at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000. In July 2020, the Company issued a short-term convertible note for total proceeds of $25,000. This note matures one year from execution and accrues interest at 10% per annum. Conversion terms call for conversion of principal and accrued interest at 85% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000. In August 2020, the Company issued a short-term convertible note for total proceeds of $100,000. This note matures one year from execution and accrues interest at 10% per annum. Conversion terms call for conversion of principal and accrued interest at 85% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000. In August 2020, the Company issued two short-term convertible notes totaling $75,000. The notes mature one year from execution and accrue interest at 10% per annum. Conversion terms call for conversion of principal and accrued interest at the lesser of (i) 70% of the stock price or (ii) $0.50 per share, upon closing any offering resulting in aggregate financing of at least $1,000,000. The Company evaluated the convertible notes in light of ASC 470 and determined that a beneficial conversion feature exists. However, given the contingent nature of the holder’s option and the lack of a market for the Company’s stock, the Company concluded that such a feature is not currently ascertainable and allocated the full principal amount to the convertible note liability. During the three and nine months ended September 30, 2020 and 2019, the Company recognized $13,902 and $27,130 and $2,520 and $3,897 of interest expense on convertible debt, all respectively. As of September 30, 2020 and 2019, accrued interest on convertible debt was $27,430 and $3,897, net of converted interest of $6,966 and $0 during the periods then ended, respectively. |
Significant Agreements
Significant Agreements | 9 Months Ended |
Sep. 30, 2020 | |
Significant Agreements | |
Significant Agreements | NOTE 7: SIGNIFICANT AGREEMENTS On March 11, 2019, the Company entered into a Master Services Agreement with SG Building Blocks, Inc. (“SG”), under which SG will provide certain systems, and perform the various design, engineering, fabrication, delivery and installation servics pertaining to those systems. The Company has not yet realized any financial impacts from this agreement. On January 29, 2020, the Company entered into a master service agreement with Charter Trading Corporation (“Charter”), a Texas company, under which Charter will provide Ballistics materials for hardened Edge Datacenters, for use by military contractors. On June 24, 2020, the Company entered into a reseller agreement with Midas Green Technologies, LLC, a Texas-based technology company under which it can purchase and resell datacenter-related equipment. The Company has not yet realized any financial impacts. On August 31, 2020, the Company engaged CIM Securities, LLC (“CIM”) as a financial advisor and its exclusive lead placement agent for the securities offering announced on October 13, 2020. The agreement calls for cash advisory fees of $15,000 and the reimbursement of expenses and up to $5,000 in legal fees. In addition to the engagement fees and expenses, the agreement sets forth contingent fees, based on successful closing of various transaction types: ● Equity, Mezzanine or Structured Debt Transactions ● Senior Debt Transaction – ● Mergers and Acquisition – ● Business Development – On November 2, 2020, the Company entered into a reseller agreement with Lambda Labs, Inc., a provider of GPU-driven computing equipment and cloud services. The Company has not yet realized any financial impacts from this agreement. |
Finance Lease
Finance Lease | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Finance Lease | NOTE 8: FINANCE LEASE On March 27, 2020, the Company entered into a 36-month lease for datacenter equipment. Terms of the lease call for 36 monthly payments of $1,292, with the first payment due at inception, together with a $7,753 security deposit, $3,140 of sales tax and a $500 origination fee, for a total of $12,685 due up front. The Company paid the $12,685 on March 27, 2020. The Company evaluated the lease in light of ASC 842 and determined that it was a long-term finance lease, since (a) the lease term is for the major part of the remaining economic life of the underlying asset and (b) the present value of the sum of lease payments equals or substantially exceeds the fair value of the underlying asset. At lease inception, the Company recognized a right of use asset for $38,895, prepaid tax of $3,140 and a lease liability of $38,895. The Company will ratably amortize the right of use asset and prepaid tax to lease expense over the lease’s life. Based on the present value, term and payment schedule, the Company determined the lease’s implicit rate to be 12.55% and will record interest expense accordingly over the life of the lease. During the nine months ended September 30, 2020, the Company paid a total of $5,842, including $3,575 of principal and $2,267 of interest, to the lessor and recognized $3,241 and $6,483 of lease expense for the three and nine months ended September 30, 2020. As of September 30, 2020, lease-related assets and liabilities consisted of: Assets Prepaid expense $ 2,617 Right of use asset - finance lease 32,412 Security deposit 7,753 Total lease-related assets $ 42,782 Liabilities Lease liability - finance, current portion $ 15,315 Lease liability - finance, non-current portion 20,005 Total lease-related liabilities $ 35,320 Future maturities of the lease liability are as follows: 2020 $ 6,091 2021 12,500 2022 14,186 2023 2,543 Total future maturities $ 35,320 |
Acquisition Deposits
Acquisition Deposits | 9 Months Ended |
Sep. 30, 2020 | |
Acquisition Deposits | |
Acquisition Deposits | NOTE 9: ACQUISITION DEPOSITS During the nine months ended September 30, 2020, the Company issued $25,000 of payments in anticipation of an acquisition of the assets of Blockchain Resources Corp. On June 26, 2020, the parties terminated the agreement. In connection with these payments, a contractor received $2,000 for services directly pertaining to the buildout of the Company’s datacenter equipment. As a result, the Company capitalized the $2,000 and wrote off the remaining $23,000 as unrecoverable losses. |
Concentrations, Commitments and
Concentrations, Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Concentrations, Commitments and Contingencies | NOTE 10: CONCENTRATIONS, COMMITMENTS AND CONTINGENCIES During the three months ended September 30, 2020, one customer comprised 84% of revenue and one customer comprised 15% of revenue, and the loss of these customers would be detrimental to the Company’s recently formed revenue stream. Management has determined that no other significant concentrations, commitments, or contingencies existed as of September 30, 2020. |
Small Business Administration G
Small Business Administration Grant | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Small Business Administration Grant | NOTE 11: SMALL BUSINESS ADMINISTRATION GRANT During the nine months ended September 30, 2020, the Company applied for a United States Small Business Administration loan under the March 27, 2020 Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. In connection with this application, the Company received a one-time grant of $1,000 and recognized it as other income. |
Debt Forgiveness
Debt Forgiveness | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Debt Forgiveness | NOTE 12: DEBT FORGIVENESS On May 5, 2020, a vendor forgave $12,250 of outstanding balances due from the Company pertaining to professional services previously provided, resulting in a $12,250 gain for the nine months ended September 30, 2020. |
Disposal of Equipment
Disposal of Equipment | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Disposal of Equipment | NOTE 13: DISPOSAL OF EQUIPMENT In September 2020, the Company sold datacenter equipment for $10,170 and having an original cost of $6,083, resulting in a gain of $4,965 for the three and nine months ended September 30, 2020. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | NOTE 14: RECENT ACCOUNTING PRONOUNCEMENTS In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842). This ASU requires a lessee to recognize a right-of-use asset and a lease liability under most operating leases in its balance sheet. The ASU is effective for annual and interim periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company has adopted this accounting policy on January 1, 2019 and applied the standard to its current capital lease. Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 15: SUBSEQUENT EVENTS On October 13, 2020, the Company announced a securities offering of Series B Preferred Stock at $1.00 per share, with maximum gross proceeds of $3 million. The class of stock is convertible into common stock and has a 1x liquidation and distribution preference. Proceeds from this offering are also subject to certain placement fees arising from the agreement with the Company’s placement agent, as further discussed in Note 7. On November 2, 2020, the Company entered into a reseller agreement with Lambda Labs, Inc., a provider of GPU-driven computing equipment and cloud services. The Company has not yet realized any financial impacts from this agreement. Management has evaluated significant subsequent events through the date these financial statements were available to be issued and has identified no other significant events requiring disclosure. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP). The Company maintains the calendar year as its basis of reporting. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash Equivalents and Concentration of Cash Balance | Cash Equivalents and Concentration of Cash Balance The Company considers all highly liquid securities with an original maturity of less than three months to be cash equivalents. The Company’s cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits. As of September 30, 2020, and December 31, 2019, the Company’s cash balances did not exceed federally insured limits. |
Right of Use Assets and Lease Liabilities | Right of Use Assets and Lease Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Under ASC 842, the Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the Company’s leases do not provide an implicit rate, the Company estimated the incremental borrowing rate in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. The Company’ lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost net of accumulated depreciation and amortization, and accumulated impairment, if any. Depreciation and amortization of property and equipment is provided using the straight-line method over estimated useful lives, which are all currently estimated at three years. As of September 30, 2020, the Company’s property and equipment consisted of $46,122 of datacenter containers not yet placed in service, $68,759 of datacenter equipment and $13,347 of capitalized labor associated with readying the equipment for service, net of $9,635 of accumulated depreciation. Depreciation expense for the three and nine months ended September 30, 2020 was $6,303 and $10,513, respectively. |
Long-lived Assets | Long-Lived Assets The Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances have indicated that an asset may not be recoverable. Long-lived assets are grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows is less than the carrying value of the assets, the assets are written down to the estimated fair value. As of September 30, 2020, the Company determined that its long-lived assets have not been impaired. |
Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities Accounts payable consisted of $74,434 of liabilities incurred by the issuer prior to the merger as of each September 30, 2020 and 2019. The remaining accounts payable of $64,427 and $88,926 as of September 30, 2020 and December 31, 2019, respectively, consisted of amounts due for professional services and various other general and administrative expenses incurred after the acquisition. As of December 31, 2019, accrued expenses consisted of $1,811 of state and local taxes payable, $1,903 of accrued interest due to a vendor and $7,266 of accrued interest on convertible debt. As of September 30, 2020, accrued expenses consisted of $1,811 of state and local taxes payable and $27,430 of accrued interest on convertible debt. As of December 31, 2019, accrued liabilities included $41,000 of accrued consulting fees payable to entities owned by the CEO and President ($22,000 and $19,000, respectively). During the nine months ended September 30, 2020, the Company paid out the $41,000 of accrued compensation, for $0 of accrued related party compensation as of September 30, 2020. |
Deferred Offering Costs | Deferred Offering Costs The Company accumulates costs incurred directly in connection with its unclosed securities offering, as announced on October 13, 2020, as deferred offering costs. In the event the offering is successful, the Company will record all related costs as an offset to additional paid-in capital. In the even the Company terminates the offering or management deems the offering will not likely be successful, the Company will charge these costs to expense in the period in which such a determination is made. During the three months ended September 30, 2020, the Company incurred $13,500 of costs related to this offering, resulting in total deferred offering costs of $13,500 as of September 30, 2020. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Financial Accounting Standards Board (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities inactive markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). Level 3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. The carrying amounts reported in the balance sheets approximate their fair value. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue under ASC 606, using the following five-step model, which requires that the Company: (1) identify a contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to performance obligations and (5) recognize revenue as performance obligations are satisfied. The Company’s current and anticipated revenue streams consist of: 1. GPU as a Service– The Company owns and operates high performance servers to provide hardware acceleration for rendering farms to process 3D and video rendering and gaming. In addition, these multi-purpose servers produce revenue from mining when the servers are not processing other jobs to ensure zero idle time and have the ability to run AI and HPC processing as well. During the quarter ended September 30, 2020, the Company recognized $14,317 of revenue from its customers’ usage of datacenter credits. The Company further recognized a deferred revenue liability of $1,035 for prepaid usage credits not yet used by its customers as of September 30, 2020. While the Company generated limited revenue in the second and third quarters of 2020, there can be no assurances that service lines will generate satisfactory revenue or continue to generate revenue. |
Cryptocurrency Transactions | Cryptocurrency Transactions In August 2020, the Company began mining Ethereum with its unutilized datacenter capacity. The Company records cryptocurrency generated, net of fees and valuation adjustments, as other income and classifies the cryptocurrency as other current assets in its balance sheets. The Company assesses the carrying value of the cryptocurrency held by the Company at each reporting date and charges valuation adjustments to other income. The carrying value of Ethereum held by the Company was $716 and $0 as of September 30, 2020 and December 31, 2019, respectively. During the three and nine months ended September 30, 2020, the Company recognized $716 of net other income from mining operations. |
Stock-based Compensation | Stock-Based Compensation The Company accounts for share-based payments pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards using the Black-Scholes option pricing model. Stock compensation expense for stock options is recognized over the vesting period of the award or expensed immediately when stock or options are awarded for previous or current service without further recourse. On February 18, 2020, the Company issued 50,000 shares of common stock to an advisor and recorded $9,500 of stock-based compensation expense. On May 6, 2020, the Company agreed to issue 60,000 shares of common stock to a consultant for services rendered, resulting in stock-based compensation expense of $11,400. On June 19, 2020, the Board of Directors approved the issuance of 750,000 fully vested common shares to its board members and officers as compensation for services rendered, consisting of 250,000 shares to Delray Wannemacher, CEO and Director, 250,000 shares to Daniel Wong, President and Director, and 250,000 shares to Austin Bosarge, Director. In connection with this issuance, the Board further approved the issuance of 375,000 common shares on July 1, 2021 and 375,000 common shares on July 1, 2022. Each of these future issuances will result in the issuance of 125,000 common shares to each director and officer. The Company recorded stock-based compensation expense of $142,500 upon approving issuance of the first 750,000 shares. On July 7, 2020, the Company issued a total of 1,000,000 common shares, consisting of 500,000 to Delray Wannemacher, CEO and Director, and 500,000 to Daniel Wong, President and Director, as compensation for services rendered, resulting in stock compensation expense of $190,000. On September 15, 2020, the Company granted 50,000 common shares to a consultant in exchange for services rendered, resulting in $9,500 of stock compensation expense. Under the advisory agreement, the Company will issue an additional 50,000 common shares to the advisor over the next two years. On September 16, 2020, the Company granted 100,000 common shares to an advisor in exchange for services rendered, resulting in $19,000 of stock compensation expense. Under the advisory agreement, the Company will issue an additional 100,000 common shares to the advisor over the next two years. |
Income Taxes | Income Taxes The Company is subject to taxation in various jurisdictions and may be subject to examination by various authorities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company recognizes the amount of taxes payable or refundable for the current year and recognizes deferred tax liabilities and assets for the expected future tax consequences of events and transactions that have been recognized in the Company’s financial statements or tax returns. |
Stockholders' Deficiency (Table
Stockholders' Deficiency (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Schedule of Warrants Using Black - Scholes Assumptions | Risk-free interest rate 1.44%-1.51 % Expected life of warrants 3 years Annualized volatility 60 % Dividend rate 0 % |
Schedule of Warrant Activity | The following table sets forth the Company’s warrant activity through September 30, 2020: Warrants Shares Term Exercise Remaining Balance, December 31, 2019 - - Warrants issued with equity units 627,862 1,255,724 3 years $ 0.50 Balance, March 31, 2020 627,862 1,255,724 No new issuances Balance, September 30, 2020 627,862 1,255,724 |
Finance Lease (Tables)
Finance Lease (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of Lease Related Assets and Liabilities | As of September 30, 2020, lease-related assets and liabilities consisted of: Assets Prepaid expense $ 2,617 Right of use asset - finance lease 32,412 Security deposit 7,753 Total lease-related assets $ 42,782 Liabilities Lease liability - finance, current portion $ 15,315 Lease liability - finance, non-current portion 20,005 Total lease-related liabilities $ 35,320 |
Schedule of Maturities of Lease Liability | Future maturities of the lease liability are as follows: 2020 $ 6,091 2021 12,500 2022 14,186 2023 2,543 Total future maturities $ 35,320 |
Organization and Nature of Op_2
Organization and Nature of Operations (Details Narrative) - $ / shares | Jan. 20, 2020 | Aug. 23, 2018 | Sep. 30, 2020 | Dec. 31, 2019 |
Number of common stock issued | 32,000 | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | ||
Blockchain Holdings, LLC [Member] | ||||
Number of common stock issued | 300,000,000 | |||
Number of shares issued equivalent to reverse split | 3,000,000 | |||
Common stock, par value | $ 0.0001 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Sep. 16, 2020 | Sep. 15, 2020 | Jul. 07, 2020 | Jun. 19, 2020 | May 06, 2020 | Feb. 18, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Property and equipment, net | $ 118,593 | $ 118,593 | |||||||||
Depreciation | 6,303 | 10,513 | |||||||||
Accounts payable other | 74,434 | 74,434 | |||||||||
State and local taxes payable | 1,811 | 1,811 | 1,811 | ||||||||
Accrued consulting fees payable | 41,000 | ||||||||||
Accrued compensation paid | 41,000 | ||||||||||
Accrued related party compensation payable | 41,000 | ||||||||||
Deferred offering cost | 13,500 | 13,500 | |||||||||
Recognized revenue from customer | 14,317 | ||||||||||
Deferred revenue | 1,035 | 1,035 | |||||||||
Cryptocurrency mining income | 716 | 716 | 0 | ||||||||
Stock issued during period stock-based compensation, shares | 1,000,000 | 60,000 | |||||||||
Stock issued during period stock-based compensation, value | $ 190,000 | $ 11,400 | $ 381,900 | $ 122 | |||||||
Issuance of vested common shares | 750,000 | ||||||||||
Issuance of vested common shares, July 1 2021 | 375,000 | ||||||||||
Issuance of vested common shares, July 1 2022 | 375,000 | ||||||||||
Issuance of common shares to director and officer | 125,000 | ||||||||||
Stock based compensation expenses | $ 142,500 | ||||||||||
Chief Executive Officer [Member] | |||||||||||
Accrued consulting fees payable | 22,000 | 22,000 | 22,000 | ||||||||
President [Member] | |||||||||||
Accrued consulting fees payable | 19,000 | 19,000 | 19,000 | ||||||||
Advisor [Member] | |||||||||||
Stock issued during period stock-based compensation, shares | 100,000 | 50,000 | |||||||||
Stock issued during period stock-based compensation, value | $ 19,000 | $ 9,500 | |||||||||
Advisor [Member] | Advisory Agreement [Member] | |||||||||||
Stock issued during period stock-based compensation, shares | 50,000 | ||||||||||
Shares issuing period | Under the advisory agreement, the Company will issue an additional 100,000 common shares to the advisor over the next two years. | Under the advisory agreement, the Company will issue an additional 50,000 common shares to the advisor over the next two years. | |||||||||
Delray Wannemacher CEO and Director [Member] | |||||||||||
Issuance of vested common shares | 250,000 | ||||||||||
Daniel Wang President and Director [Member] | |||||||||||
Issuance of vested common shares | 250,000 | ||||||||||
Austin Bosarge Director [Member] | |||||||||||
Issuance of vested common shares | 250,000 | ||||||||||
Delray Wannemacher [Member] | |||||||||||
Stock issued during period stock-based compensation, shares | 500,000 | ||||||||||
Daniel Wong [Member] | |||||||||||
Stock issued during period stock-based compensation, shares | 500,000 | ||||||||||
Consultant [Member] | |||||||||||
Stock issued during period stock-based compensation, shares | 50,000 | ||||||||||
Stock issued during period stock-based compensation, value | $ 9,500 | ||||||||||
Vendor [Member] | |||||||||||
Accrued interest | 1,903 | ||||||||||
Convertible Debt [Member] | |||||||||||
Accrued interest | 27,430 | 27,430 | 7,266 | ||||||||
Professional Services And Various Other General And Administrative Expenses [Member] | |||||||||||
Accounts payable other | 64,427 | 64,427 | $ 88,926 | ||||||||
Datacenter Equipment [Member] | |||||||||||
Equipment not yet placed in service | 46,122 | 46,122 | |||||||||
Property and equipment, net | 68,759 | 68,759 | |||||||||
Capitalized labour charges | 13,347 | 13,347 | |||||||||
Accumulated depreciation of property and equipment | $ 9,635 | $ 9,635 |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Cash | $ 63,549 | $ 14,453 |
Current assets | 77,710 | 14,453 |
Total current liabilities | 839,583 | 503,769 |
Accumulated deficit | $ (1,257,951) | $ (559,698) |
Stockholders' Deficiency (Detai
Stockholders' Deficiency (Details Narrative) - USD ($) | Jul. 07, 2020 | Jun. 19, 2020 | May 06, 2020 | Jan. 20, 2020 | Oct. 04, 2018 | Jan. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Stock issued during period stock-based compensation, shares | 1,000,000 | 60,000 | ||||||||
Number of shares purchased | 32,000 | |||||||||
Number of shares purchased, value | $ 6,083 | |||||||||
Debt instrument, accrued interest | $ 6,966 | $ 0 | ||||||||
Fair value of common stock | 119,665 | |||||||||
Fair value of warrants | 37,301 | |||||||||
Vested shares | 750,000 | |||||||||
Stock-based compensation expense | $ 381,900 | 122 | ||||||||
Common stock, shares authorized | 150,000,000 | 150,000,000 | 150,000,000 | |||||||
Common stock, shares outstanding | 8,321,079 | 8,321,079 | 5,651,217 | |||||||
Stock issued during period stock-based compensation, value | $ 190,000 | $ 11,400 | $ 381,900 | $ 122 | ||||||
Common Stock [Member] | ||||||||||
Stock issued during period stock-based compensation, shares | 2,010,000 | 1,215,000 | ||||||||
Stock issued during period stock-based compensation, value | $ 210 | $ 122 | ||||||||
Two Individuals [Member] | ||||||||||
Debt equity units | 627,862 | |||||||||
Debt Conversion price | $ 0.25 | |||||||||
Debt instrument principal amount | $ 100,000 | |||||||||
Debt instrument, accrued interest | 6,966 | |||||||||
Debt instrument additional cash | $ 50,000 | |||||||||
Warrants term | 3 years | |||||||||
Warrants to purchase common stock | 2 | |||||||||
Warrants exercise price | $ 0.50 | |||||||||
Number of trading days, description | Ten out of fifteen consecutive trading days. | |||||||||
Two Individuals [Member] | Common Stock [Member] | ||||||||||
Warrants exercise price | $ 1 | |||||||||
Management Board Members and Consultants [Member] | ||||||||||
Stock issued during period stock-based compensation, shares | 1,150,000 | 1,910,000 | ||||||||
Stock issued during period stock-based compensation, value | $ 218,500 | $ 381,900 | ||||||||
Class A Super Majority Voting Preferred Stock [Member] | ||||||||||
Preferred stock shares designated | 10,000,000 | 10,000,000 | 10,000,000 | |||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |||||||
Voting percentage for common stock | Class A shares a vote equal to sixty percent (60%) of the common stock. | |||||||||
Right to redeemable, description | The Company shall have the right to redeem, in its sole and absolute discretion, at any time one (1) year after the date of issuance of such Class A shares, all or any portion of the shares of Class A at a price of one cent ($0.01) per share. | |||||||||
Preferred stock issued | 7,000,000 | 7,000,000 | 7,000,000 | |||||||
Preferred stock outstanding | 7,000,000 | 7,000,000 | 7,000,000 | |||||||
Class A Super Majority Voting Preferred Stock [Member] | Chief Executive Officer and President [Member] | ||||||||||
Stock issued during period stock-based compensation, shares | 7,000,000 | |||||||||
Class C Convertible Preferred Non-Voting Stock [Member] | ||||||||||
Preferred stock shares designated | 10,000,000 | 10,000,000 | 10,000,000 | |||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |||||||
Right to redeemable, description | The Company shall have the right to redeem, in its sole and absolute discretion, at any time after five (5) years, all or any portion of the shares of Class C at a price of five dollars ($5.00) per share. | |||||||||
Conversion of common stock, description | Each share of Class C shall be convertible into five (5) shares of common stock. | |||||||||
Preferred stock, redemption price per share | $ 5 | $ 5 | ||||||||
Preferred stock issued | 7,000,000 | 7,000,000 | 7,000,000 | |||||||
Preferred stock outstanding | 7,000,000 | 7,000,000 | 7,000,000 | |||||||
Class C Convertible Preferred Non-Voting Stock [Member] | Chief Executive Officer and President [Member] | ||||||||||
Stock issued during period stock-based compensation, shares | 7,000,000 | |||||||||
Conversion of stock, description | Subsequently, in April 2019, the Company filed an amended and restated certificate of designation, which restricts the CEO and COO from converting the 7,000,000 shares into common stock for 36 months from the issuance date. |
Stockholders' Deficiency - Sche
Stockholders' Deficiency - Schedule of Warrants Using Black - Scholes Assumptions (Details) - Warrants [Member] | 9 Months Ended |
Sep. 30, 2020 | |
Risk-free interest rate, minimum | 1.44% |
Risk-free interest rate, maximum | 1.51% |
Expected life of warrants | 3 years |
Annualized volatility | 60.00% |
Dividend rate | 0.00% |
Stockholders' Deficiency - Sc_2
Stockholders' Deficiency - Schedule of Warrant Activity (Details) | 9 Months Ended |
Sep. 30, 2020shares | |
Warrant issued with equity units, terms | 3 years |
Warrant issued with equity units, exercise price | 0.50 |
Warrant issued with equity units, remaining life | |
Warrants [Member] | |
Balance, December 31, 2019 | |
Warrant issued with equity units | 627,862 |
Balance, June 30, 2020 | 627,862 |
Shares Under Warrant [Member] | |
Balance, December 31, 2019 | |
Warrant issued with equity units | 1,255,724 |
Balance, June 30, 2020 | 1,255,724 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Accrued consulting fees | $ 41,000 | |||
Payment for related party expenses | $ 211,489 | |||
Deemed contribution | $ 33,000 | 33,000 | ||
Chief Executive Officer [Member] | ||||
Accrued consulting fees | 22,000 | 22,000 | 22,000 | |
Payment of health insurance premium | 6,600 | |||
Outstanding compensation | 40,000 | 40,000 | ||
Related Party expenses | 106,387 | |||
Payment for related party expenses | 120,652 | |||
Indebted for accrued consulting fees | 44,975 | 44,975 | ||
President [Member] | ||||
Accrued consulting fees | 19,000 | 19,000 | $ 19,000 | |
Payment of health insurance premium | 3,909 | |||
Outstanding compensation | 35,000 | 35,000 | ||
Related Party expenses | 61,804 | |||
Payment for related party expenses | 90,838 | |||
Indebted for accrued consulting fees | $ 156 | $ 156 |
Convertible Notes (Details Narr
Convertible Notes (Details Narrative) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Aug. 31, 2020USD ($) | Jul. 31, 2020USD ($) | Jun. 30, 2020USD ($) | Apr. 30, 2020USD ($) | Feb. 29, 2020USD ($) | Jan. 31, 2020USD ($)$ / sharesshares | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)shares | Sep. 30, 2019USD ($) | |
Debt instrument, accrued interest | $ 6,966 | $ 0 | ||||||||
Interest expense, debt | $ 13,902 | $ 2,520 | 27,130 | 3,897 | ||||||
Accrued interest on convertible debt | $ 6,966 | $ 0 | $ 27,430 | $ 3,897 | ||||||
Convertible Debt [Member] | ||||||||||
Proceeds from short-term convertible note | $ 100,000 | $ 25,000 | $ 50,000 | $ 150,000 | $ 110,000 | |||||
Debt instrument, term | 1 year | 1 year | 1 year | 1 year | 1 year | |||||
Debt instrument, interest rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |||||
Debt instrument, convertible, threshold percentage of stock price | 0.85 | 0.85 | 0.70 | 0.70 | 0.70 | |||||
Two Convertible Debt [Member] | ||||||||||
Proceeds from short-term convertible note | $ 75,000 | |||||||||
Debt instrument, term | 1 year | |||||||||
Debt instrument, interest rate | 10.00% | |||||||||
Debt instrument conversion terms | Conversion terms call for conversion of principal and accrued interest at the lesser of (i) 70% of the stock price or (ii) $0.50 per share, upon closing any offering resulting in aggregate financing of at least $1,000,000. | |||||||||
Minimum [Member] | ||||||||||
Aggregate financing | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | |||||
Minimum [Member] | Two Convertible Debt [Member] | ||||||||||
Aggregate financing | $ 1,000,000 | |||||||||
Maximum [Member] | Convertible Debt [Member] | ||||||||||
Debt instrument, interest rate | 12.00% | |||||||||
Two Individuals [Member] | ||||||||||
Debt instrument principal amount | $ 100,000 | |||||||||
Debt instrument, accrued interest | $ 6,966 | |||||||||
Debt equity units | shares | 627,862 | |||||||||
Warrants term | 3 years | |||||||||
Warrants to purchase common stock | shares | 2 | |||||||||
Warrants exercise price | $ / shares | $ 0.50 | |||||||||
Shares issued price per share | $ / shares | $ 0.50 | |||||||||
Two Individuals [Member] | Minimum [Member] | ||||||||||
Debt equity units | shares | 50,000 | |||||||||
Two Individuals [Member] | Maximum [Member] | ||||||||||
Debt equity units | shares | 200,000 |
Significant Agreements (Details
Significant Agreements (Details Narrative) - CIM Securities, LLC [Member] | Aug. 31, 2020USD ($) |
Cash advisory fees | $ 15,000 |
Legal fees | $ 5,000 |
Mergers and Acquisition [Member] | |
Percentage of fee receivable | 5.00% |
Business Development [Member] | |
Percentage of gross value of contracts | 5.00% |
Equity, Mezzanine or Structured Debt Transactions [Member] | |
Percentage of cash placement fee | 7.00% |
Description on equity, mezzanine or structured debt transactions | CIM will receive a cash placement fee of 7.0% of the gross proceeds of securities subscriptions, with an additional fee of 2.0% of the gross proceeds from investors sourced through other FINRA member broker dealers, with total cash fees not to exceed 9.0% of the gross proceeds. In the event the Company sources its own investors, it will pay CIM a total cash placement fee of 2.0% of the gross proceeds. In addition to cash, CIM is entitled to cashless exercise warrants for the purchase of 7.0% (2.0% for investments sourced by Company) of the number of total shares of stock, funding amount, and/or warrants at the same exercise price as paid for the common equity, mezzanine or structured debt stock in equity. The warrants would have a five-year term, be dated for seven years after the transaction closes, non-callable, non-cancelable, assignable and have immediate piggy-back registration rights, cashless exercise provisions and customary anti-dilution provisions. |
Warrants term | 5 years |
Percentage of additional fee on cash placement fee | 2.00% |
Senior Debt Transaction [Member] | |
Percentage of fee receivable | 3.00% |
Finance Lease (Details Narrativ
Finance Lease (Details Narrative) - USD ($) | Mar. 27, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Lease term | 36 months | |||
Initial payment | $ 1,292 | $ 5,842 | $ 3,575 | |
Security deposit | 7,753 | 7,753 | 7,753 | |
Sales tax | 3,140 | |||
Origination fee | 500 | |||
Payments for Rent | 12,685 | |||
Right of use asset | 38,895 | 32,412 | 32,412 | |
Prepaid tax | 3,140 | |||
Finance lease liability | $ 38,895 | 35,320 | 35,320 | |
Lease percentage | 12.55% | |||
Lease expense | $ 3,241 | 6,483 | ||
Finance lease interest expense | $ 2,267 | |||
With 36 Monthly Payments [Member] | ||||
Payments for Rent | $ 12,685 |
Finance Lease - Schedule of Lea
Finance Lease - Schedule of Lease Related Assets and Liabilities (Details) - USD ($) | Sep. 30, 2020 | Mar. 27, 2020 | Dec. 31, 2019 |
Leases [Abstract] | |||
Prepaid expense | $ 2,617 | ||
Right of use asset - finance lease | 32,412 | $ 38,895 | |
Security deposit | 7,753 | 7,753 | |
Total lease-related assets | 42,782 | ||
Lease liability - finance, current portion | 15,315 | ||
Lease liability - finance, non-current portion | 20,005 | ||
Total lease-related liabilities | $ 35,320 | $ 38,895 |
Finance Lease - Schedule of Mat
Finance Lease - Schedule of Maturities of Lease Liability (Details) | Sep. 30, 2020USD ($) |
Leases [Abstract] | |
2020 | $ 6,091 |
2021 | 12,500 |
2022 | 14,186 |
2023 | 2,543 |
Total future maturities | $ 35,320 |
Acquisition Deposits (Details N
Acquisition Deposits (Details Narrative) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Capitalized amount | $ 2,000 |
Contractor received for services | 2,000 |
Wrote off unrecoverable losses | 23,000 |
Blockchain Resourse Corp [Member] | |
Payments on acquisition deposits | $ 25,000 |
Concentrations, Commitments a_2
Concentrations, Commitments and Contingencies - Schedule of Concentration Risk Among Customers (Details) | 1 Months Ended |
Sep. 30, 2020 | |
Customer One [Member] | |
Concentration risk, percentage | 84.00% |
Customer Two [Member] | |
Concentration risk, percentage | 15.00% |
Small Business Administration_2
Small Business Administration Grant (Details Narrative) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Notes to Financial Statements | |
One-time grant received | $ 1,000 |
Debt Forgiveness (Details Narra
Debt Forgiveness (Details Narrative) - USD ($) | May 05, 2020 | Sep. 30, 2020 |
Notes to Financial Statements | ||
Vendor forgave outstanding balance | $ 12,250 | |
Gain on professional services | $ 12,250 |
Disposal of Equipment (Details
Disposal of Equipment (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |
Proceeds from sale of equipment | $ 10,170 | |||
Datacenter Equipment [Member] | ||||
Proceeds from sale of equipment | $ 10,170 | |||
Original cost | $ 6,083 | |||
Gain on sale of equipment | $ 4,965 | $ 4,965 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - Series B Preferred Stock [Member] | Oct. 13, 2020USD ($)$ / shares |
Shares issued price per share | $ / shares | $ 1 |
Gross proceeds from securities offering | $ | $ 3,000,000 |