Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2017 | Feb. 13, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | CleanSpark, Inc. | |
Entity Central Index Key | 827,876 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 34,018,869 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 |
Current assets | ||
Cash | $ 41,912 | $ 57,128 |
Accounts receivable | 26,400 | 41,947 |
Deposits-current | 33,392 | |
Prepaid expense | 27,653 | 29,556 |
Total current assets | 129,357 | 128,631 |
Flexpower system | 12,930,675 | 13,396,574 |
Goodwill | 4,919,858 | 4,919,858 |
Microgrid Assets | ||
Intangible assets | 2,150,947 | 2,216,556 |
Fixed Assets | 114,049 | 125,441 |
Deposits- long term | 5,742 | |
Total assets | 20,244,886 | 20,792,802 |
Current liabilities | ||
Accounts payable and accrued liabilities | 168,674 | 143,225 |
Customer deposits | 18,000 | 16,000 |
Due to related parties | 130,134 | 61,021 |
Loan from related party | 53,333 | 73,333 |
Loans | 117,500 | 7,712 |
Total current liabilities | 487,641 | 301,291 |
Loans | 300,000 | 150,000 |
Total liabilities | 787,641 | 451,291 |
Stockholders' equity (deficit) | ||
Common stock; $0.001 par value; 100,000,000 shares authorized; 33,608,894 and 33,409,471 shares issued and outstanding as of December 31, 2017 and September 30, 2017, respectively | 33,608 | 33,409 |
Preferred stock; $0.001 par value; 10,000,000 shares authorized; 1,000,000 and 1,000,000 shares issued and outstanding as of December 31, 2017 and September 30, 2017, respectively | 1,000 | 1,000 |
Additional paid-in capital | 40,412,518 | 40,240,468 |
Accumulated earnings (deficit) | (20,989,881) | (20,989,881) |
Total stockholders' equity (deficit) | 19,457,245 | 20,341,511 |
Total liabilities and stockholders' equity (deficit) | $ 20,244,886 | $ 20,792,802 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Sep. 30, 2017 |
Statement of Financial Position [Abstract] | ||
Common Stock, par value | $ .001 | $ .001 |
Common Stock, Shares authorized | 100,000,000 | 100,000,000 |
Common Stock, shares issued | 33,608,894 | 33,409,471 |
Preferred Stock, par value | $ .001 | $ .001 |
Preferred Stock, Shares authorized | 10,000,000 | 10,000,000 |
Preferred Stock, shares issued | 1,000,000 | 1,000,000 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Revenues | $ 18,080 | $ 83,884 |
Cost of revenues | 6,468 | 17,974 |
Gross profit | 11,612 | 65,910 |
Operating expenses | ||
Professional fees | 155,001 | 289,344 |
Payroll expenses | 258,198 | |
Research and development | 2,315 | 368 |
General and administrative expenses | 75,942 | 67,265 |
Depreciation and amortization | 560,540 | 488,758 |
Total operating expenses | 1,051,996 | 845,735 |
Loss from operations | (1,040,384) | (779,825) |
Other income (expense) | ||
Interest expense | 16,131 | |
Gain (Loss) on disposal of assets | (12,817) | |
Total other income (expense) | 16,131 | 12,817 |
Net income (loss) | $ (1,056,515) | $ (792,642) |
Basic income (loss) per common share | $ (0.03) | $ (0.03) |
Basic weighted average common shares outstanding | 33,500,391 | 29,725,302 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows from Operating Activities | ||
Net loss | $ (1,056,515) | $ (792,642) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Stock based consulting | 24,749 | 41,518 |
Depreciation and amortization | 560,540 | 488,758 |
Changes in assets and liabilities | ||
(Increase) decrease in prepaid expense | 1,903 | (22,008) |
(Increase) decrease in deposits | (27,650) | (5,742) |
Decrease (increase) in accounts receivable | 15,547 | (18,012) |
Increase in shareholder receivable | 4,020 | |
Increase in customer deposits | 2,000 | 21,650 |
Increase (decrease) in accounts payable | 25,449 | (24,786) |
Increase (decrease) in accounts payable related party | 69,113 | 27,581 |
Net cash from operating activities | (384,864) | (279,663) |
Cash Flows from investing | ||
Purchase of intangible assets | (2,907) | (19,387) |
Purchase of fixed assets | (2,183) | (32,634) |
Investment in Flexpower system | (12,550) | (17,643) |
Loss on disposal of fixed assets | (12,817) | |
Net cash used in investing activities | (17,640) | (17,213) |
Cash Flows from Financing Activities | ||
Payments on short-term loans | 15,212 | 2,261 |
Proceeds from short term notes | 125,000 | |
Proceeds from exercise of warrants | 10,000 | |
Payments on related party debt | (20,000) | |
Proceeds from long term loans | 150,000 | |
Proceeds from issuance of common stock | 137,500 | 68,000 |
Net cash from financing activities | 387,288 | 65,739 |
Net increase (decrease) in Cash | (15,216) | (231,137) |
Beginning cash balance | 57,128 | 436,529 |
Ending cash balance | 41,912 | 205,392 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 11,280 | |
Cash paid for tax | ||
Non-Cash investing and financing transactions | ||
Cashless exercise of options | $ 4,399 | |
Options and warrants for services | 24,749 |
ORGANIZATION AND LINE OF BUSINE
ORGANIZATION AND LINE OF BUSINESS | 3 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Line of Business | Organization CleanSpark, Inc. (the "Company") was incorporated in the state of Nevada on October 15, 1987 as SmartData Corporation. SmartData conducted a 504-public offering in the State of Nevada in December 1987 and began trading publicly in January 1988. Due to a series of unfortunate events, including the untimely death of the founding CEO, SmartData discontinued active business operations in 1992. On March 25, 2014, the Company entered into an Asset and Intellectual Property Purchase Agreement pursuant to which the Company acquired: (i) all Intellectual Property rights, title and interest in Patent # 8,105,401 'Parallel Path, Downdraft Gasifier Apparatus and Method' and Patent # 8,518,133 'Parallel Path, Downdraft Gasifier Apparatus and Method' and (ii) all of the Property rights, title and interest in a 32 inch Downdraft Gasifier ("Gasifier”) and (iii) assumed of $156,900 in liabilities. In December 2014, the Company changed its name to Stratean Inc. through a short-form merger in order to better reflect the new business plan. On July 1, 2016, the Company entered into an Asset Purchase Agreement, as amended (the “Purchase Agreement”), with CleanSpark Holdings LLC, CleanSpark LLC, CleanSpark Technologies LLC and Specialized Energy Solutions, Inc. (together, the “Seller”). Pursuant to the Purchase Agreement, the Company acquired CleanSpark, LLC and all the assets related to Seller and its line of business and assumed $200,000 in liabilities. In October 2016, the Company changed its name to CleanSpark, Inc. through a short-form merger in order to better reflect the brand identity. Line of Business Through the acquisition of CleanSpark, LLC, the Company provides microgrid solutions to military, commercial and residential properties. The services offered consist of turn-key microgrid implementation services, microgrid design and engineering, project development consulting services and solar photovoltaic installation and consulting. The work is performed under fixed price bid contracts, and negotiated price contracts. The Company performed all of its work in California during 2017. The Company also continues to pursue the development of its gasification technologies for commercial deployment. The Company has been granted multiple patents protecting what it believes to be a breakthrough design for the next generation in waste-to-energy technology. The increased efficiency compared to existing solutions results in a significantly lower cost per watt of electricity produced. The Company has completed a commercial prototype and has completed preliminary testing and it is currently working with its manufacturing partners to improve durability and efficiency. Upon completion of product development, the Company intends to deploy its gasification solutions to the Company’s pipeline of commercial microgrid customers in order maximize the conversion of its customer waste streams into electricity. |
BASIS OF PRESENTATION AND GOING
BASIS OF PRESENTATION AND GOING CONCERN | 3 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted. Going concern |
SUMMARY OF SIGNIFICANT POLICIES
SUMMARY OF SIGNIFICANT POLICIES | 3 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT POLICIES | This summary of significant accounting policies of CleanSpark Inc. is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, and have been consistently applied in the preparation of the consolidated financial statements. Principles of Consolidation The accompanying consolidated financial statements include the accounts of CleanSpark, Inc., and its wholly owned operating subsidiaries, CleanSpark, LLC, and CleanSpark, II, LLC. All material intercompany transactions have been eliminated upon consolidation of these entities. Use of estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to review the Company’s goodwill, impairments and estimations of long-lived assets, revenue recognition on percentage of completion type contracts, allowances for uncollectible accounts, inventory valuation, and the valuations of non-cash capital stock issuances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Revenue Recognition Revenues and related costs on construction contracts are recognized using the “percentage of completion method” of accounting in accordance with ASC 605-35, Accounting for Performance of Construction-Type and Certain Production Type Contracts (“ASC 605-35”). Under this method, contract revenues and related expenses are recognized over the performance period of the contract in direct proportion to the costs incurred as a percentage of total estimated costs for the entirety of the contract. Costs include direct material, direct labor, subcontract labor and any allocable indirect costs. All un-allocable indirect costs and corporate general and administrative costs are charged to the periods as incurred. However, in the event a loss on a contract is foreseen, the Company will recognize the loss as it is determined. Revisions in cost and profit estimates during the course of the contract are reflected in the accounting period in which the facts, which require the revision, become known. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined. The Asset, “Costs in excess of billings”, represents revenues recognized in excess of amounts billed on contracts in progress. The Liability, “Billings in excess of costs”, represents billings in excess of revenues recognized on contracts in progress. At December 31, 2017 and September 31, 2017, the costs in excess of billings balance were $0 and $0, and the billings in excess of costs balance were $0 and $0, respectively. Accounts receivables are recorded on contracts for amounts currently due based upon progress billings, as well as retention, which are collectible upon completion of the contracts. Accounts payable to material suppliers and subcontractors are recorded for amounts currently due based upon work completed or materials received, as are retention due subcontractors, which are payable upon completion of the contract. General and administrative expenses are charged to operations as incurred and are not allocated to contract costs. Retention receivable is the amount withheld by a customer until a contract is completed. Retention receivables of $0 and $0 were included in the balance of trade accounts receivable as of December 31, 2017 and September 30, 2017, respectively. Accounts Receivable Cash and cash equivalents Concentration Risk At times throughout the year, the Company may maintain cash balances in certain bank accounts in excess of FDIC limits. As of December 31, 2017, the cash balance in excess of the FDIC limits was $0. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in these accounts. Fair Value of Financial Instruments As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The three levels of the fair value hierarchy are described below: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). Warranty Liability Stock-based compensation Compensation-Stock Compensation, Non-Employee Stock Based Compensation Earnings (loss) per share Earnings Per Share, Long-lived Assets Indefinite Lived Intangibles and Goodwill Assets The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805, “Business Combinations,” where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values. The purchase price is allocated using the information currently available, and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset valuations, liabilities assumed and revisions to preliminary estimates. The purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill. The Company tests for indefinite lived intangibles and goodwill impairment in the fourth quarter of each year and whenever events or circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable. In accordance with its policies, the Company performed a qualitative assessment of indefinite lived intangibles and goodwill at September 30, 2017, and determined there was no impairment of indefinite lived intangibles and goodwill. Business Combinations The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customer lists, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. Income taxes Income Taxes Segment Reporting Recently Issued Accounting Pronouncements |
PREPAID EXPENSES
PREPAID EXPENSES | 3 Months Ended |
Dec. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES | Prepaid expenses consist of the following as of December 31, 2017 and September 30, 2017: December 31, 2017 September 30, 2017 Prepaid compensation $ 4,675 $ 5,241 Prepaid professional fees 2,500 2,500 Prepaid rents — — Prepaid dues and subscriptions 13,002 4,696 Prepaid insurance and bonds 7,476 17,119 Total prepaid expenses $ 27,653 $ 29,556 |
FLEXPOWER SYSTEM ASSETS
FLEXPOWER SYSTEM ASSETS | 3 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Flexpower System | A microgrid is comprised of any number of generation, energy storage, and smart distribution assets that serve single or multiple loads, both connected to the grid and islanded. Our FlexPower system assets are composed of our mPulse integrated microgrid control platform(“mPulse”), Dynamic Network Analysis (“DNA”) and propriety engineering methods which together seamlessly integrates energy generation with energy storage devices and controls facility loads to provide energy optimization and security in real time. Systems utilizing our FlexPower technologies are able to interoperate with the local utility grid and allows users the ability to obtain the most cost-effective power for a facility. Our FlexPower system technologies are ideal for microgrid systems for the commercial, industrial, mining, defense, campus and community users ranging from 4 kw to 100 MW and beyond and Microgrids utilizing the FlexPower system technologies are capable of delivering power at or below the current cost of utility power. Proprietary software mPulse mPulse is a modular platform that enables fine-grained control of a Microgrid based on customer operational goals, equipment and forecasts of load and generation. mPulse performs high-frequency calculations, threshold-based alarming, execution of domain-specific business rules, internal and external health monitoring, historical data persistence, and system-to-operator notifications. The modular design increases system flexibility and extensibility. In addition, the deployment of the mPulse system follows a security-conscious posture by deploying hardware-based firewalls as well as encryption across communication channels. mPulse allows configuration for site-specific equipment and operation and provides a clean, informative user interface to allow customers to monitor and analyze the data streams that describe how their microgrid is operating. mPulse supports CleanSpark’s innovative fractal approach to microgrid design, which enables multiple microgrids on a single site to interact in a number of different ways, including as peers, in a parent-child relationship, and in parallel or completely disconnected. Each grid can have different operational objectives, and those operational objectives can change over time. Any microgrid can be islanded from the rest of the microgrid as well as the larger utility grid. The mPulse software can control the workflow required in both the islanding steps as well as the reconnecting steps of this maneuver and coordinate connected equipment such that connections are only made when it is safe to do so. The mPulse software has proven to be robust and reliable, operating successfully at the Camp Pendleton FractalGrid installation continuously for over 3 years with minimal maintenance and support required. Dynamic Network Analysis The Dynamic Network Analysis (DNA) tool provides a robust microgrid modeling solution. DNA takes utility rate data and load data for a customer site and helps automate the sizing and analysis of potential microgrid solutions as well as providing a financial analysis around each grid configuration. DNA uses historical weather data to generate projected energy generation from PV arrays and models how storage responds to varying operational modes and command logics based upon predicted generation and load curves. DNA analysis multiple equipment combinations and operation situation to determine the optimal grid configuration for a site based on the financials, equipment outlay, utility cost savings, etc., to arrive at payback and IRR values. This ultimately provides us with data to design a microgrid that will meet the customers’ performance benchmarks. Planned improvements On September 27, 2017, the Company launched its development of mPulse 2.0 and DNA 2.0. These improvements are being built into our existing software platforms and add significant improvements, which focus on positioning, integration, focus and quality, as outlined below. Positioning When mPulse originally was developed, a main focus of the platform and the industry was resiliency of microgrid operation, specifically in military contexts. Since that time, the microgrid landscape has continued to evolve, and there is growing opportunity within the commercial and industrial space as the markets in these spaces desire microgrids capable of obtaining the highest economic advantage. Further, this growing focus on economic advantage is in line with the continued market evolution toward an open energy market at regional levels. CleanSpark wants to be well positioned to enter into this market at each step of its availability, from responding to demand response requests all the way through participating in ancillary grid service markets and fully open transactive energy markets as regulation matures. To position ourselves, the mPulse platform operation is being improved to mirror the predicted energy market progression by implementing internal markets at each level of the system. In these internal markets, energy producing assets are modeled as sellers, and energy consuming assets are modeled as buyers, with the market playing matchmaker between the two and virtually “selling” available energy to the highest bidder, thereby satisfying the energy loads at the highest economic advantage for both participants at any given moment. The internal energy market running at our customers’ sites will take daily feeds of production and load forecasts from the platform to set up the daily market parameters, then ingest a stream of current positions of both buyers and sellers as well as their individual pricing information, which is calculated based on the details of the energy rate under which those consumers operate. Consumers bid into the market along the schedule of the specific rate structure under which those loads operate, with bids including the calculated value of energy and power based on that rate and the predicted total use and power profile during the time period of that bid. Based on the predicted generation profile and the other active bids currently being satisfied, the market either fills or cannot fill the newly received bid, and based on the market’s feedback, the consumer’s operation mode and setpoint will change, which will determine the actual control commands sent to related equipment. This market scenario is mirrored at every level, from an individual node potentially consisting of only one producer and one consumer (power source and meter, respectively), to a higher-level node, in which other nodes participate as either net producers or net consumers, to the site level, and even up to regional level, where sites may participate in the market directly. At each level, details of the level below are aggregated and abstracted away, so each level operates in a simple and self-similar way, mirroring the physical construction of the FractalGrid. These markets shine in optimization scenarios, especially around times of just enough supply or even slight scarcity, which are expected to allow CleanSpark to reap the maximum economic value for our customers even in the case of undersized grids. In addition, this flexibility allows for ease of integration for new market participants at each level as regulation matures to support further Demand Response programs, ancillary service markets, and eventually peer-to-peer transactive energy. Integration While DNA has been invaluable in evaluating sites for potential solutions and then creating detailed proposals for those sites, it currently exists as a siloed application. The two tools will be integrated and share fundamental portions of the platform, which will enable increased consistency, performance, feedback and overall system improvements. At its root, DNA is a simulation platform that models the interactions of generation, load, and storage. This simulation uses customer-supplied or CleanSpark-derived load data, generation forecasts, and modeled storage behavior to take a virtual site step by step through a time period with different operation and equipment scenarios. Ultimately, this gives us data to produce a proposal and performance benchmarks that we may be obligated to meet during actual site operation. In order to maximize the probability of meeting those performance obligations, we will use the very same operational logic within the virtual site simulation, which will enable us to embed the economic optimization market functionality within our proposal tool. This not only will help ensure our ability to produce the results we predict, it will also help us understand the maximum value our system can provide to the customer from the start, which may increase the number of opportunities open to us to pursue, unlocking more business. By integrating the architectural patterns and cloud operating platform of DNA and mPulse we will increase performance of both tools, which will enable us to run large numbers of simulation scenarios in parallel, increasing our analysis throughput. The elastic nature of the cloud will facilitate our storing much more data which includes both information used as inputs to DNA simulations as well as the simulation results. This data will quickly grow into a wealth of data that will enable feedback into the model as well as continuous refinement of the parameters that define optimal sites we should pursue, allowing us to target our business development efforts. Focus For mPulse 2.0, we are focusing on furthering the development of the economic optimization logic in the platform, including an increased push toward deep learning algorithms and more effective forecasting both on solar generation and facility load. Quality We employ a quality-first mindset in all aspects of our software design. From a software architecture point of view, this translates in designing for the maintainability, extensibility, scalability, availability, accessibility, and deployability of the system. These planned improvements paired with our design and engineering methods and experience should help keep CleanSpark on the cutting edge of the microgrid industry. The Company plans to make an initial release of both mPulse 2.0 and DNA 2.0 available to customers in the Company’s third fiscal quarter of 2018. The FlexPower system consists of the following as of December 31, 2017 and September 30, 2017: December 31, 2017 September 30, 2017 DNA software $ 4,663,513 $ 4,663,513 MPulse software 5,935,747 5,923,197 Engineering trade secrets 4,020,269 4,020,269 Less: accumulated amortization (1,688,854) (1,210,405) Intangible assets, net $ 12,930,675 $ 13,396,574 Amortization expense for the three months ended December 31, 2017 and 2016 was $478,449 and $335,573, respectively. |
INTANGIBLE AND OTHER ASSETS
INTANGIBLE AND OTHER ASSETS | 3 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
INTANGIBLE AND OTHER ASSETS | Intangible assets consist of the following as of December 31, 2017 and September 30, 2017: December 31, 2017 September 30, 2017 Patents $ 92,380 $ 89,473 Websites 14,532 14,532 Brand and Client lists 2,497,472 2,497,472 Trademarks 5,928 5,928 Software 26,990 26,990 Less: accumulated amortization (486,355) (417,839) Intangible assets, net $ 2,150,947 $ 2,216,566 Amortization expense for the three months ended December 31, 2017 and 2016 was $68,516 and $68,832, respectively. |
FIXED ASSETS
FIXED ASSETS | 3 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
FIXED ASSETS | Fixed assets consist of the following as of December 31, 2017 and September 30, 2017: December 31, 2017 September 30, 2017 Machinery and equipment $ 133,061 $ 133,061 Furniture and fixtures 76,576 74,393 Total 209,637 207,454 Less: accumulated depreciation (95,588) (82,013) Fixed assets, net $ 114,049 $ 125,441 Depreciation expense for the three months ended December 31, 2017 and 2016 was $13,575 and $26,220, respectively. |
LOANS
LOANS | 3 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
LOANS | On September 5, 2017, the Company executed a 9% secured promissory note with a face value of $150,000 with an investor. Under the terms of the promissory note the Company received $150,000 and agreed to make monthly interest payments and repay the note principal 24 months from the date of issuance. The note is secured by 150,000 shares which are held in escrow and would be issued to the note holder only in the case of an uncured default. As of December 31, 2017, The Company owed $150,000 in principal and $1,152 in accrued interested under the terms of the agreement and recorded interest expense of $3,402 for the three months ending December 31, 2017. On October 6, 2017, the Company executed a 58.3 % promissory note with a face value of $45,000 with a financial institution. Under the terms of the promissory note the Company received $45,000 and agreed to repay the note evenly over 12 months. As of December 31, 2017, The Company owed $37,500 in principal and $1,913 in accrued interested under the terms of the agreement and recorded interest expense of $5,738 for the three months ending December 31, 2017. On November 20, 2017, the Company executed a 10% secured promissory note with a face value of $80,000 with an investor. Under the terms of the promissory note the Company received $80,000 and agreed to make monthly interest payments and repay the note principal 12 months from the date of issuance. As of December 31, 2017, The Company owed $80,000 in principal and $680 in accrued interested under the terms of the agreement and recorded interest expense of $899 for the three months ending December 31, 2017. On November 11, 2017, the Company executed a 10% secured promissory note with a face value of $100,000 with an investor. Under the terms of the promissory note the Company received $100,000 and agreed to make monthly interest payments and repay the note principal 24 months from the date of issuance. The note is secured by 100,000 shares which would be issued to the note holder only in the case of an uncured default. As of December 31, 2017, The Company owed $100,000 in principal and $1,452 in accrued interested under the terms of the agreement and recorded interest expense of $1,452 for the three months ending December 31, 2017. On December 5, 2017, the Company executed a 9% secured promissory note with a face value of $50,000 with an investor. Under the terms of the promissory note the Company received $50,000 and agreed to make monthly interest payments and repay the note principal 24 months from the date of issuance. The note is secured by 50,000 shares which would be issued to the note holder only in the case of an uncured default. As of December 31, 2017, The Company owed $50,000 in principal and $321 in accrued interested under the terms of the agreement and recorded interest expense of $321 for the three months ending December 31, 2017. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | The Company has a consulting agreement with Matthew Schultz, our Chief Executive Officer, for management services. In accordance with this agreement, as amended, Mr. Schultz provides services to us in exchange for $15,000 in compensation for services plus a $1,000 medical insurance stipend, each month plus a bonus of 0.5% of gross revenue. The Company has also agreed to reimburse Mr. Schultz for expenses incurred. The term of the agreement is one year and automatically renews until cancelled by either party. During the three months ending December 31, 2017 and 2016, Mr. Schultz earned $48,163 and $45,000, respectively, in accordance with this agreement. During the three months ending December 31, 2017, Mr. Schultz allowed the Company to defer $42,973 as accrued compensation. As of December 31, 2017, the Company owed Mr. Schultz $42,973 in deferred compensation and reimbursable expenses. The Company has a consulting agreement with Zachary Bradford, our Chief Financial Officer, for management services. In accordance with this agreement, as amended, Mr. Bradford provides services to us in exchange for $15,000 in compensation for services plus a $1,000 medical insurance stipend, each month plus a bonus of 0.5% of gross revenue. The Company has also agreed to reimburse Mr. Bradford for expenses incurred. The term of the agreement is one year and automatically renews until cancelled by either party. During the three months ending December 31, 2017 and 2016, Mr. Bradford earned $48,163 and $45,000, respectively, in accordance with this agreement. During the three months ending December 31, 2017, Mr. Bradford allowed the Company to defer $48,163 as accrued compensation. As of December 31, 2017, the Company owed Mr. Bradford $65,016 in deferred compensation and reimbursable expenses. On August 13, 2017, the Company executed a 15% promissory note with a face value of $80,000 with Zachary Bradford, its President and Chief Financial Officer. Under the terms of the promissory note the Company received $80,000 and agreed to repay the note evenly over 12 months. As of December 31, 2017, Company’s owed $53,333 in principal and $600 in accrued interested under the terms of the agreement. The Company has a consulting agreement with Bryan Huber, our Chief Operations Officer, for management services. In accordance with this agreement, as amended, Mr. Huber provides services to us in exchange for $117,000 in compensation for services plus a $500 medical insurance stipend and a bonus of 0.5% of gross revenue. The Company has also agreed to reimburse Mr. Huber for expenses incurred. The term of the agreement is one year and automatically renews until cancelled by either party. During the three months ending December 31, 2017 and 2016, Mr. Huber earned $30,913 and $26,000, respectively, in accordance with this agreement. During the three months ending December 31, 2017, Mr. Huber allowed the Company to defer $2,451 as accrued compensation. As of December 31, 2017, the Company owed Mr. Huber $8,701 in deferred compensation and reimbursable expenses. On March 10, 2017, the Company entered into a consulting agreement with Adam Maher, its Senior Vice President, for management and business development services. In accordance with this agreement, Mr. Maher provides services to the Company in exchange for $120,000 per year, 0.5% bonus on revenues, 2.0% on revenue from direct sales plus reimbursable expenses incurred. During the three months ending December 31, 2017, $30,167 was recorded as a consulting expenses under this this agreement. As of December 31, 2017, Mr. Maher was owed $11,971 in accrued compensation and unreimbursed expenses in accordance with this agreement. The Company’s line of business requires high skilled employees who are appropriately compensated for their specialized skills. Employment agreements range from $90,000 to $172,500 per year, and include a taxable stipend for healthcare, performance bonuses and are subject to standard payroll taxes. |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) | 3 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
STOCKHOLDERS EQUITY (DEFICIT) | Overview The Company’s authorized capital stock consists of 100,000,000 shares of common stock and 10,000,000 shares of preferred stock, par value $0.001 per share. As of December 31, 2017, there were 33,608,894 shares of common stock issued and outstanding and 1,000,000 shares of preferred stock issued and outstanding. Description of Common Stock The Company’s common stock is entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise required by law or provided in any resolution adopted by the Company’s board of directors with respect to any series of preferred stock, the holders of common stock will possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of common stock that are present in person or represented by proxy, subject to any voting rights granted to holders of any preferred stock. Holders of the Company’s common stock representing fifty percent (50%) of the Company’s capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of stockholders. A vote by the holders of a majority of the Company’s outstanding shares is required to effectuate certain fundamental corporate changes such as a liquidation, merger or an amendment to the Company’s articles of incorporation. Subject to any preferential rights of any outstanding series of preferred stock created by the Company’s board of directors from time to time, the holders of shares of common stock will be entitled to such cash dividends as may be declared from time to time by the Company’s board of directors from funds available therefor. Subject to any preferential rights of any outstanding series of preferred stock created from time to time by the Company’s board of directors, upon liquidation, dissolution or winding up, the holders of shares of common stock will be entitled to receive pro rata all assets available for distribution to such holders. In the event of any merger or consolidation of the Company with or into another company in connection with which shares of the Company’s common stock are converted into or exchangeable for shares of stock, other securities or property (including cash), all holders of the Company’s common stock will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash). Holders of the Company’s common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to the Company’s common stock. Description of Preferred Stock The Company’s board of directors is authorized to divide the authorized shares of the Company’s preferred stock into one or more series, each of which must be so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and classes. The Company’s board of directors is authorized, within any limitations prescribed by law and the Company’s articles of incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock, including, but not limited to, the following: • the rate of dividend, the time of payment of dividends, whether dividends are cumulative, and the date from which any dividends accrue; • whether shares may be redeemed, and, if so, the redemption price and the terms and conditions of redemption; • the amount payable upon shares in the event of voluntary or involuntary liquidation; • sinking fund or other provisions, if any, for the redemption or purchase of shares; • the terms and conditions on which shares may be converted, if the shares of any series are issued with the privilege of conversion; • voting powers, if any, provided that if any of the preferred stock or series thereof have voting rights, such preferred stock or series shall vote only on a share for share basis with the common stock on any matter, including, but not limited to, the election of directors, for which such preferred stock or series has such rights; and, • subject to the foregoing, such other terms, qualifications, privileges, limitations, options, restrictions, and special or relative rights and preferences, if any, of shares or such series as the board of directors may, at the time so acting, lawfully fix and determine under the laws of the State of Nevada. On April 15, 2015, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation (the “Certificate of Amendment”) with the Nevada Secretary of State. The Certificate of Amendment authorized ten million (10,000,000) shares of preferred stock. The Company’s Board of Directors and a majority of its shareholders approved the Certificate of Amendment. On April 15, 2015, pursuant to Article IV of our Articles of Incorporation, the Company’s Board of Directors voted to designate a class of preferred stock entitled Series A Preferred Stock, consisting of up to one million (1,000,000) shares, par value $0.001. Under the Certificate of Designation, holders of Series A Preferred Stock will be entitled to quarterly dividends on 2% of our earnings before interest, taxes and amortization. The dividends are payable in cash or common stock. The holders will also have a liquidation preference on the state value of $0.02 per share plus any accumulated but unpaid dividends. The holders are further entitled to have the Company redeem their Series A Preferred Stock for three shares of common stock in the event of a change of control and they are entitled to vote together with the holders of the Company’s common stock on all matters submitted to shareholders at a rate of forty-five (45) votes for each share held. Common Stock issuances During the period commencing October 1, 2017 through December 31, 2017, the Company received $137,500 from 10 investors pursuant to private placement agreements with the investors to purchase 171,875 shares of the Company’s $0.001 par value common stock at a purchase price equal to $0.80 for each share of Common stock. |
STOCK WARRANTS
STOCK WARRANTS | 3 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
STOCK WARRANTS | The following is a summary of stock warrant activity during the three months ended December 31, 2017 and year ended September 30, 2017. Number of Shares Weighted Average Exercise Price Balance, September 30, 2016 13,112,100 $ 0.59 Warrants granted and assumed — $ — Warrants expired — — Warrants canceled — — Warrants exercised 4,500,000 0.083 Balance, September 30, 2017 8,612,100 $ 0.85 Warrants granted and assumed — $ — Warrants expired — — Warrants canceled — — Warrants exercised 27,548 0.363 Balance, December 31, 2017 8,584,552 $ 0.85 As of December 31, 2017, there are warrants exercisable to purchase 8,584,552 shares of common stock in the Company. On December 13, 2017, an investor exercised warrants to purchase 27,548 shares of the Company’s $0.001 par value common stock at a purchase price equal to $0.363 for each share of Common stock. The Company receive $10,000 as a result of this exercise. |
STOCK OPTIONS
STOCK OPTIONS | 3 Months Ended |
Dec. 31, 2017 | |
Other Liabilities Disclosure [Abstract] | |
STOCK OPTIONS | The Company sponsors a stock-based incentive compensation plan known as the 2017 Incentive Plan (the “Plan”), which was established by the Board of Directors of the Company on June 19, 2017. A total of 3,000,000 shares were initially reserved for issuance under the Plan. The following is a summary of stock option activity during the three months ended December 31, 2017 and year ended September 30, 2017. Number of Shares Weighted Average Exercise Price Balance, September 30, 2016 — $ — Options granted and assumed 6,902 $ 3.45 Options expired — — Options canceled — — Options exercised — — Balance, September 30, 2017 6,902 $ 3.45 Options granted and assumed 10,874 $ 3.05 Options expired — — Options canceled — — Options exercised — — Balance, December 31, 2017 17,776 $ 3.21 As of December 31, 2017, there are options exercisable to purchase 17,776 shares of common stock in the Company. The Plan allows the Company to grant incentive stock options, non-qualified stock options, stock appreciation right, or restricted stock. The incentive stock options are exercisable for up to ten years, at an option price per share not less than the fair market value on the date the option is granted. The incentive stock options are limited to persons who are regular full-time employees of the Company at the date of the grant of the option. Non-qualified options may be granted to any person, including, but not limited to, employees, independent agents, consultants and attorneys, who the Company’s Board believes have contributed, or will contribute, to the success of the Company. Non-qualified options may be issued at option prices of less than fair market value on the date of grant and may be exercisable for up to ten years from date of grant. The option vesting schedule for options granted is determined by the Board of Directors at the time of the grant. The Plan provides for accelerated vesting of unvested options if there is a change in control, as defined in the Plan. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | The Company’s corporate offices are located at 70 North Main Street, Suite 105, Bountiful, Utah 84010. The Company occupies the leased space on a month to month basis at a rate of $850 per month. Future minimum lease payments under the operating leases for the facilities as of December 31, 2017, are $0. CleanSpark, LLC has agreed to warranty and maintain the microgrid assets located on the FractalGrid Demonstration Facility to Camp Pendleton Marine Corp Base. In exchange, the Company has been granted the permission to locate its system on the base and the access to conduct guided tours of the FractalGrid Demonstration Facility for the Company’s potential customers. The Company expects to release the assets to USMC Camp Pendleton in 2018 and be relieved from its warranty obligations at the time of release. On December 16, 2016, the Company executed an 18-month lease agreement at 6365 Nancy Ridge Drive, 2 nd The Company was awarded a $900,000 contract from Bethel-Webcor JV. Under the contract terms we will install a turn-key advanced microgrid system at the U.S. Marine Corps Base Camp Pendleton. The contract is in direct support of the United States Department of Navy's communication information system (CIS) operations complex at the U.S. Marine Corps Base Camp Pendleton that was recently awarded to the Joint-Venture. The Company plans to begin on-site work for this project in February of 2018. |
MAJOR CUSTOMERS AND VENDORS
MAJOR CUSTOMERS AND VENDORS | 3 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
MAJOR CUSTOMER | For the three months ended December 31, 2017 and 2016, the Company had the following customers that represented more than 10% of sales. December 31, 2017 December 31, 2016 Bethel-Webcor JV-1 — 38.1% Jacobs/ HDR a joint venture — 46.7% Sungevity — 10.7% Considine Companies 26.0% — Firenze 30.4% — ClearSun Solar Corp. 36.5% — For the three months ended December 31, 2017 and 2016, the Company had no suppliers that represented more than 10% of direct material costs. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | During the period commencing January 1, 2018 through February 13, 2018, the Company received $14,400 from 2 investors pursuant to private placement agreements with the investors to purchase 18,000 shares of the Company’s $0.001 par value common stock at a purchase price equal to $0.80 for each share of Common stock . On January 1, 2018, the Company issued warrants to purchase 100,000 shares o f common stock at an exercise price of $0.80 per share to an advisor for business advisory services. The warrants were valued at $234,095 using the Black Scholes option pricing model based upon the following assumptions: term of 5 years, risk free interest rate of 2.01%, a dividend yield of 0% and volatility rate of 158%. The warrants were fully earned and vested on January 1, 2018. On January 12, 2018, the Company executed a 58.5% promissory note with a face value of $18,400 with a financial institution. Under the terms of the promissory note the Company received $18,400 and agreed to repay the note and interest evenly over 12 months. On January 19, 2018, the Company executed a promissory note with a face value of $24,100 with Larry McNeill, a Director of the Company. The note is due on demand and bears interest at a rate of 15% per annum. On January 19, 2018, an investor exercised warrants to purchase 180,000 shares of the Company’s $0.001 par value common stock at a purchase price equal to $0.083 for each share of Common stock. The Company receive $14,940 as a result of this exercise. On January 19, 2018, an investor exercised warrants to purchase 15,000 shares of the Company’s $0.001 par value common stock at a purchase price equal to $0.363 for each share of Common stock. The Company receive $5,445 as a result of this exercise. On January 29, 2018, an investor exercised warrants to purchase 4,500 shares of the Company’s $0.001 par value common stock at a purchase price equal to $0.363 for each share of Common stock. The Company receive $1,634 as a result of this exercise. On January 29, 2018, the Company executed a promissory note with a face value of $60,000 with Zachary Bradford, its President and Chief Financial Officer. The note is due on demand and bears interest at a rate of 15% per annum. On February 7, 2018, we issued 383,279 shares of common stock an investor for the cashless exercise of 456,000 warrants. |
SUMMARY OF SIGNIFICANT POLICI21
SUMMARY OF SIGNIFICANT POLICIES (Details) | 3 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | The accompanying consolidated financial statements include the accounts of CleanSpark, Inc., and its wholly owned operating subsidiaries, CleanSpark, LLC, and CleanSpark, II, LLC. All material intercompany transactions have been eliminated upon consolidation of these entities. |
Use of Estimates | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to review the Company’s goodwill, impairments and estimations of long-lived assets, revenue recognition on percentage of completion type contracts, allowances for uncollectible accounts, inventory valuation, and the valuations of non-cash capital stock issuances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. |
Cash and cash equivalents | Cash and cash equivalents |
Fair Value of Financial Instruments | Fair Value of Financial Instruments As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The three levels of the fair value hierarchy are described below: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). |
Revenue recognition | Revenue Recognition Revenues and related costs on construction contracts are recognized using the “percentage of completion method” of accounting in accordance with ASC 605-35, Accounting for Performance of Construction-Type and Certain Production Type Contracts (“ASC 605-35”). Under this method, contract revenues and related expenses are recognized over the performance period of the contract in direct proportion to the costs incurred as a percentage of total estimated costs for the entirety of the contract. Costs include direct material, direct labor, subcontract labor and any allocable indirect costs. All un-allocable indirect costs and corporate general and administrative costs are charged to the periods as incurred. However, in the event a loss on a contract is foreseen, the Company will recognize the loss as it is determined. Revisions in cost and profit estimates during the course of the contract are reflected in the accounting period in which the facts, which require the revision, become known. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined. The Asset, “Costs in excess of billings”, represents revenues recognized in excess of amounts billed on contracts in progress. The Liability, “Billings in excess of costs”, represents billings in excess of revenues recognized on contracts in progress. At December 31, 2017 and September 31, 2017, the costs in excess of billings balance were $0 and $0, and the billings in excess of costs balance were $0 and $0, respectively. Accounts receivables are recorded on contracts for amounts currently due based upon progress billings, as well as retention, which are collectible upon completion of the contracts. Accounts payable to material suppliers and subcontractors are recorded for amounts currently due based upon work completed or materials received, as are retention due subcontractors, which are payable upon completion of the contract. General and administrative expenses are charged to operations as incurred and are not allocated to contract costs. Retention receivable is the amount withheld by a customer until a contract is completed. Retention receivables of $0 and $0 were included in the balance of trade accounts receivable as of December 31, 2017 and September 30, 2017, respectively. |
Long-lived Assets | Long-lived Assets |
Stock-based compensation | Stock-based compensation Compensation-Stock Compensation, |
Income taxes | The Company accounts for its income taxes in accordance with FASB Codification Topic ASC 740-10, “ Income Taxes |
Non-Employee Stock Based Compensation | The Company accounts for stock based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASC 505-50. The Company may issue compensatory shares for services including, but not limited to, executive, management, accounting, operations, corporate communication, financial and administrative consulting services. |
Earnings (loss) per share | The Company reports earnings (loss) per share in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 260-10 “ Earnings Per Share, |
Recent Accounting Pronouncements | The Company has evaluated all other recent accounting pronouncements through September 30, 2015, and believes that none of them will have a material effect on the Companys consolidated financial position, results of operations or cash flows. |
Warranty Liability | Warranty Liability |
Business Combinations | The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customer lists, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. |
Segment Reporting | Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method to allocate resources and assess performance. The Company currently has one reportable segment for financial reporting purposes, which represents the Company's core business. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements |
Accounts Receivable | Accounts Receivable |
Concentration Risk | Concentration Risk At times throughout the year, the Company may maintain cash balances in certain bank accounts in excess of FDIC limits. As of December 31, 2017, the cash balance in excess of the FDIC limits was $0. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in these accounts. |
Indefinite Lived Intangibles and Goodwill Assets | The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805, “Business Combinations,” where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values. The purchase price is allocated using the information currently available, and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset valuations, liabilities assumed and revisions to preliminary estimates. The purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill. |
PREPAID EXPENSES (Tables)
PREPAID EXPENSES (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses | December 31, 2017 September 30, 2017 Prepaid compensation $ 4,675 $ 5,241 Prepaid professional fees 2,500 2,500 Prepaid rents — — Prepaid dues and subscriptions 13,002 4,696 Prepaid insurance and bonds 7,476 17,119 Total prepaid expenses $ 27,653 $ 29,556 |
FlEXPOWER SYSTEM (Tables)
FlEXPOWER SYSTEM (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Flexpower System | December 31, 2017 September 30, 2017 DNA software $ 4,663,513 $ 4,663,513 MPulse software 5,935,747 5,923,197 Engineering trade secrets 4,020,269 4,020,269 Less: accumulated amortization (1,688,854) (1,210,405) Intangible assets, net $ 12,930,675 $ 13,396,574 |
INTANGIBLE AND OTHER ASSETS (Ta
INTANGIBLE AND OTHER ASSETS (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | December 31, 2017 September 30, 2017 Patents $ 92,380 $ 89,473 Websites 14,532 14,532 Brand and Client lists 2,497,472 2,497,472 Trademarks 5,928 5,928 Software 26,990 26,990 Less: accumulated amortization (486,355) (417,839) Intangible assets, net $ 2,150,947 $ 2,216,566 |
FIXED ASSETS (Tables)
FIXED ASSETS (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Fixed Assets | December 31, 2017 September 30, 2017 Machinery and equipment $ 133,061 $ 133,061 Furniture and fixtures 76,576 74,393 Total 209,637 207,454 Less: accumulated depreciation (95,588) (82,013) Fixed assets, net $ 114,049 $ 125,441 |
STOCK WARRANTS (Tables)
STOCK WARRANTS (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Warrant Summary | Number of Shares Weighted Average Exercise Price Balance, September 30, 2016 13,112,100 $ 0.59 Warrants granted and assumed — $ — Warrants expired — — Warrants canceled — — Warrants exercised 4,500,000 0.083 Balance, September 30, 2017 8,612,100 $ 0.85 Warrants granted and assumed — $ — Warrants expired — — Warrants canceled — — Warrants exercised 27,548 0.363 Balance, December 31, 2017 8,584,552 $ 0.85 |
STOCK OPTIONS (Tables)
STOCK OPTIONS (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Stock Options | Number of Shares Weighted Average Exercise Price Balance, September 30, 2016 — $ — Options granted and assumed 6,902 $ 3.45 Options expired — — Options canceled — — Options exercised — — Balance, September 30, 2017 6,902 $ 3.45 Options granted and assumed 10,874 $ 3.05 Options expired — — Options canceled — — Options exercised — — Balance, December 31, 2017 17,776 $ 3.21 |
MAJOR CUSTOMERS AND VENDORS (Ta
MAJOR CUSTOMERS AND VENDORS (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Major Customers | December 31, 2017 December 31, 2016 Bethel-Webcor JV-1 — 38.1% Jacobs/ HDR a joint venture — 46.7% Sungevity — 10.7% Considine Companies 26.0% — Firenze 30.4% — ClearSun Solar Corp. 36.5% — |
ORGANIZATION AND LINE OF BUSI29
ORGANIZATION AND LINE OF BUSINESS (Details Narrative) - USD ($) | 3 Months Ended | ||
Dec. 31, 2017 | Jul. 01, 2016 | Mar. 25, 2014 | |
Date of Incorporation | Oct. 15, 1987 | ||
Date began publically trading | Jan. NaN, 1988 | ||
Liabilities Assumed | $ 200,000 | ||
Gisifier Liabilities Assumed | $ 156,900 |
BASIS OF PRESENTATION AND GOI30
BASIS OF PRESENTATION AND GOING CONCERN (Details Narrative) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated earnings (deficit) | $ (20,989,881) | $ (20,989,881) |
SUMMARY OF SIGNIFICANT POLICI31
SUMMARY OF SIGNIFICANT POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Jun. 09, 2017 | Sep. 30, 2016 | |
Accounting Policies [Abstract] | |||||
Cash | $ 41,912 | $ 57,128 | |||
Revenues | 18,080 | $ 83,884 | |||
Concentration Risk | $ 0 | ||||
Options Issued | 17,776 | 6,902 | 6,902 | 6,902 | |
Exercise Price Minimum | $ 2.44 | ||||
Exercise price per share maximum | $ 3.45 | ||||
Impairment Expense | $ 0 | $ 0 | |||
Cost in excess of billings balance | 0 | $ 0 | |||
Billings in excess of Cost | 0 | 0 | |||
Allowance for Doubtful Accounts | 0 | 0 | |||
Warranty Costs and Associated Liabilities | $ 0 | $ 0 |
PREPAID EXPENSES - (Details)
PREPAID EXPENSES - (Details) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 |
Prepaid Expenses - Schedule Of Fixed Assets Details | ||
Prepaid Compensation | $ 4,675 | $ 5,241 |
Prepaid Professional Fees | 2,500 | 2,500 |
Prepaid rents | ||
Prepaid Dues and Subscriptions | 13,002 | 4,696 |
Prepaid Insurance and Bonds | 7,476 | 17,119 |
Total prepaid expenses | $ 27,653 | $ 29,556 |
FLEXPOWER SYSTEM (Details)
FLEXPOWER SYSTEM (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | ||
DNA software | $ 4,663,513 | $ 4,663,513 |
MPulse software | 5,935,747 | 5,923,197 |
Engineering trade secrets | 4,020,269 | 4,020,269 |
Less: Accumulated Amortization | (1,688,854) | (1,210,405) |
Intangible Assets Net | $ 12,930,675 | $ 13,396,574 |
FLEXPOWER SYSTEM (Details Narra
FLEXPOWER SYSTEM (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | ||
Amortization Expense | $ 478,449 | $ 335,573 |
INTANGIBLE AND OTHER ASSETS - S
INTANGIBLE AND OTHER ASSETS - Schedule of Intangible Assets (Details) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Patents | $ 92,380 | $ 89,473 |
Websites | 14,532 | 14,532 |
Brand and Client List | 2,497,472 | 2,497,472 |
Trademarks | 5,928 | 5,928 |
Software | 26,990 | 26,990 |
Less: accumulated depreciation | (486,355) | (417,839) |
Fixed assets, net of accumulated depreciation | $ 2,150,947 | $ 2,216,556 |
INTANGIBLE AND OTHER ASSETS (De
INTANGIBLE AND OTHER ASSETS (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Amortization Expense | $ 68,516 | $ 68,832 |
FIXED ASSETS - Schedule of Prop
FIXED ASSETS - Schedule of Property Pant and Equipment (Details) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 |
Property, Plant and Equipment [Abstract] | ||
Machinery and equipment | $ 133,061 | $ 133,061 |
Furniture and fixtures | 76,576 | 74,393 |
Total | 209,637 | 207,454 |
Less: accumulated depreciation | (95,588) | (82,013) |
Fixed assets, net of accumulated depreciation | $ 114,049 | $ 125,441 |
FIXED ASSETS (Details Narrative
FIXED ASSETS (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Depreciation Expense | $ 13,575 | $ 26,220 |
LOANS (Details Narrative)
LOANS (Details Narrative) - USD ($) | 3 Months Ended | |||||
Dec. 31, 2017 | Dec. 05, 2017 | Nov. 20, 2017 | Nov. 11, 2017 | Oct. 06, 2017 | Sep. 05, 2017 | |
Face Value of note | $ 50,000 | $ 80,000 | $ 100,000 | $ 45,000 | $ 150,000 | |
Cash received | $ 50,000 | $ 80,000 | $ 100,000 | $ 45,000 | $ 150,000 | |
Loans Payable 1 | ||||||
Promissory Note interest rate | 9.00% | |||||
Term of repayment | 24 months | |||||
Owed in principal | $ 150,000 | |||||
Accrued Interest | $ 1,152 | |||||
Shares used to secure note | 150,000 | |||||
Interest Expense | $ 3,402 | |||||
Loans Payable 2 | ||||||
Promissory Note interest rate | 5830.00% | |||||
Term of repayment | 12 months | |||||
Owed in principal | $ 37,500 | |||||
Accrued Interest | 1,913 | |||||
Interest Expense | $ 5,738 | |||||
Loans Payable 3 | ||||||
Promissory Note interest rate | 10.00% | |||||
Term of repayment | 12 months | |||||
Owed in principal | $ 80,000 | |||||
Accrued Interest | 680 | |||||
Interest Expense | $ 899 | |||||
Loans Payable 4 | ||||||
Promissory Note interest rate | 10.00% | |||||
Term of repayment | 24 months | |||||
Owed in principal | $ 100,000 | |||||
Accrued Interest | $ 1,452 | |||||
Shares used to secure note | 100,000 | |||||
Interest Expense | $ 1,452 | |||||
Loans Payable 5 | ||||||
Promissory Note interest rate | 9.00% | |||||
Term of repayment | 24 months | |||||
Owed in principal | $ 50,000 | |||||
Accrued Interest | $ 321 | |||||
Shares used to secure note | 50,000 | |||||
Interest Expense | $ 321 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Professional fees per year minimum | $ 90,000 | |
Professional fees per year maximum | 172,500 | |
Employment Agreement costs minimum per year | 90,000 | |
Employment Agreement costs maximum per year | 172,500 | |
Consulting Agmt | ||
Monthly Fee Max | $ 15,000 | |
Bonus on Revenue | 50.00% | |
Medical Insurance Stripend | $ 1,000 | |
Paid earnings | 48,163 | $ 45,000 |
Defered as Accrued Compensation | 42,973 | |
Deferred Compensation Owed | $ 42,973 | |
Consulting Agmt 2 | ||
Bonus on Revenue | 50.00% | |
Medical Insurance Stripend | $ 1,000 | |
Paid earnings | 48,163 | 45,000 |
Defered as Accrued Compensation | 48,163 | |
Deferred Compensation Owed | $ 65,016 | |
Consulting Agmt 3 | ||
Date of Agreement | Jul. 1, 2016 | |
Term of Agreement | 1 year | |
Professional fees per year minimum | $ 117,000 | |
Professional fees per year maximum | 117,000 | |
Reimbursable Liabilities | $ 4,020 | |
Bonus on Revenue | 50.00% | |
Medical Insurance Stripend | $ 500 | |
Paid earnings | 30,913 | $ 26,000 |
Defered as Accrued Compensation | 2,451 | |
Deferred Compensation Owed | $ 8,701 | |
Consulting Agmt 4 | ||
Date of Agreement | Mar. 10, 2017 | |
Professional fees per year maximum | $ 120,000 | |
Bonus on Revenue | 50.00% | |
Bonus on Revenue from Direct Sales | 200.00% | |
Consulting Expense | $ 30,167 | |
Deferred Compensation Owed | $ 11,971 | |
Promissory Note | ||
Date of Agreement | Aug. 13, 2017 | |
Term of Agreement | 12 months | |
Promissory Note, Value | $ 80,000 | |
Prommisory Note, interest rate | 15.00% | |
Principal Owed | $ 53,333 | |
Interest Owed | $ 600 |
STOCKHOLDERS EQUITY (DEFICIT) (
STOCKHOLDERS EQUITY (DEFICIT) (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2014 | Sep. 30, 2017 | |
Common Stock, Shares authorized | 100,000,000 | 100,000,000 | |
Common Stock, par value | $ .001 | $ .001 | |
Preferred Stock, Shares authorized | 10,000,000 | 10,000,000 | |
Preferred Stock, par value | $ .001 | $ .001 | |
Common Stock, shares issued | 33,608,894 | 33,409,471 | |
Preferred Stock, Shares issued | 1,000,000 | 1,000,000 | |
Series A Preferred Stock, Shares | 1,000,000 | ||
Series A Preferred Stock, Par Value | $ 0.001 | ||
Shares issued for direct investment | 171,875 | ||
Shares issued for direct investment, value | $ 137,500 | $ 200,000 | |
Purchase Price per share issued for Direct Investment | $ 0.80 | ||
Dividend Rate | 2.00% | ||
Liquidation Preference Per Share | $ 0.02 | ||
Date of Certificate of Amendment | Apr. 15, 2015 | ||
Voting rates for shareholders | 45 | ||
Director | |||
Date of Issuance | Dec. 1, 2016 | ||
Officers Options | |||
Date of Issuance | Nov. 1, 2016 |
STOCK WARRANTS - Schedule of Wa
STOCK WARRANTS - Schedule of Warrant Summary (Details) - $ / shares | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accounting Policies [Abstract] | |||
Beginning Balance, number of shares | 8,584,552 | 8,612,100 | 13,122,100 |
Beginning Balance, weighted average exercise price | $ .85 | ||
Warrants Granted and Assumed, number of shares | 5,014,500 | ||
Warrants Granted and Assumed, weighted average exercise price | |||
Warrants exercised, number of shares | .363 | .083 | |
Ending Balance, number of shares | 8,584,552 | 8,584,552 | 8,612,100 |
Ending Balance, weighted average exercise price | $ .85 | $ .85 |
STOCK WARRANTS (Details Narrati
STOCK WARRANTS (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 13, 2017 |
Warrants Exercisable | 8,584,552 | |
Investor exercised warrant to purchase | 27,548 | |
par value of stock | 0.10% | |
Purchase Price per share | $ 0.363 | |
Company received | $ 10,000 |
STOCK OPTIONS - Schedule of Opt
STOCK OPTIONS - Schedule of Option Summary (Details) - $ / shares | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Jun. 09, 2017 | |
Other Liabilities Disclosure [Abstract] | ||||
Beginning Balance, number of shares | 17,776 | 6,902 | 6,902 | 6,902 |
Beginning Balance, weighted average exercise price | $ 3.21 | $ 3.45 | ||
Options Granted and Assumed, number of shares | 10,874 | 6,902 | ||
Options Granted and Assumed, weighted average exercise price | $ 3.05 | |||
Ending Balance, number of shares | 17,776 | 6,902 | 6,902 | 6,902 |
Ending Balance, weighted average exercise price | $ 3.21 | $ 3.45 |
STOCK OPTIONS (Details Narrativ
STOCK OPTIONS (Details Narrative) | 3 Months Ended |
Dec. 31, 2017shares | |
Other Liabilities Disclosure [Abstract] | |
Date of incetive plan | Jun. 19, 2017 |
Shares reserved for issuance | 3,000,000 |
Options exercisable to purchase | 17,776 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2018 | |
Future minimum lease payments | $ 0 | $ 12,230 |
Contract from Bethel-Webcor | 900,000 | |
Lease Agreements 2 | ||
Monthly Rent Expense Minimum | 2,375 | |
Monthly Rent Expense Maximum | $ 2,446 | |
Term of Agreement | 1 year | |
Term of Agreement After Year One | 1 month | |
Date of Agreement | Dec. 16, 2016 | |
Lease Agreements | ||
Monthly Rent Expense | $ 850 | |
Term of Agreement | 1 year | |
Date of Lease Termination | Jan. 22, 2016 |
MAJOR CUSTOMER (Details)
MAJOR CUSTOMER (Details) | Dec. 31, 2017 | Dec. 31, 2016 |
Notes to Financial Statements | ||
Bethel-Webcor | 3810.00% | |
Jacobs/HDR a joint venture | 4670.00% | |
Sungevity | 1070.00% | |
Considine Companies | 2600.00% | |
Firenze | 3040.00% | |
ClearSun Solar Corp | 3650.00% |
MAJOR CUSTOMER (Details Narrati
MAJOR CUSTOMER (Details Narrative) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Notes to Financial Statements | ||
Customer Representation Percentage | 1000.00% | 1000.00% |
Supplier Representaion Percentage | 1000.00% | 1000.00% |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 2 Months Ended | ||||||||||
Feb. 13, 2018 | Feb. 07, 2018 | Jan. 29, 2018 | Jan. 19, 2018 | Jan. 12, 2018 | Jan. 01, 2018 | Dec. 05, 2017 | Nov. 20, 2017 | Nov. 11, 2017 | Oct. 06, 2017 | Sep. 05, 2017 | |
Warrants Issued to purchase shares | 100,000 | ||||||||||
exercise price of warrants | $ .80 | ||||||||||
Value of Warrants | $ 234,095 | ||||||||||
Risk free rate | 201.00% | ||||||||||
Dividend Yield | 0.00% | ||||||||||
Volatility | 15800.00% | ||||||||||
Face Value of Note | $ 50,000 | $ 80,000 | $ 100,000 | $ 45,000 | $ 150,000 | ||||||
Promissory Note 1 | |||||||||||
Face Value of Note | $ 18,400 | ||||||||||
Cash received from Note | $ 18,400 | ||||||||||
Interest Rate | 58.50% | ||||||||||
Promissory Note 2 | |||||||||||
Face Value of Note | $ 24,100 | ||||||||||
Interest Rate | 15.00% | ||||||||||
Promissory Note 3 | |||||||||||
Face Value of Note | $ 180,000 | ||||||||||
Cash received from Note | $ 14,940 | ||||||||||
Interest Rate | 8.30% | ||||||||||
Promissory Note 4 | |||||||||||
Face Value of Note | $ 15,000 | ||||||||||
Cash received from Note | $ 5,445 | ||||||||||
Interest Rate | 36.30% | ||||||||||
Promissory Note 5 | |||||||||||
Face Value of Note | $ 4,500 | ||||||||||
Cash received from Note | $ 1,634 | ||||||||||
Interest Rate | 36.30% | ||||||||||
Promissory Note 6 | |||||||||||
Face Value of Note | $ 60,000 | ||||||||||
Interest Rate | 15.00% | ||||||||||
Promissory Note 7 | |||||||||||
Warrants Issued to purchase shares | 383,279 | ||||||||||
Value of Warrants | $ 456,000 | ||||||||||
Private Placement | |||||||||||
Shares purchased by investors | 18,000 | ||||||||||
Par Value Per Share | $ 0.001 | ||||||||||
Purchase Price Per Share Value | 80.00% | ||||||||||
Cash Received on Investment | $ 14,400 | ||||||||||
Number of investors | 200.00% |