UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2018
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________ to __________
Commission file number: 333-189414
VORTEX BLOCKCHAIN TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
Nevada
80-0899451
(State or other
jurisdiction
(I.R.S. Employer
Identification No.)
of incorporation or
organization)
1401 Ohio Street
Des Moines, Iowa 50314
(Address of principal executive offices and zip code)
(202) 213-1159
(Registrant?s telephone number, including area code)
31C Principal Torre Alta
San Felipe, Puerto Plata
Dominican Republic EH009E3
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. ? Yes ? No
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (?232.405 of this
chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such
files).
? Yes ? No
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, a smaller reporting company or an emerging growth
company. See the definitions of ?large accelerated filer,?
?accelerated filer,? ?smaller reporting company? and ?emerging
growth company? in Rule 12b-2 of the Exchange Act.
?
Large
accelerated
filer
?
Accelerate
d filer
?
Non-
accelerated
filer
?
Smaller
reporting company
?
Emerging
growth company
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act. ?
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
?Yes ?No
Indicate the number of shares outstanding of each of the
issuer?s classes of common stock, as of the latest practicable
date.
Class
Outstanding at March 10, 2020
Common stock, $0.00001 par
value
75,500,000
Vortex Blockchain Technologies Inc.
Form 10-Q
For the Three and Nine Months Ended December 31, 2018
INDEX
Page
PART I ? FINANCIAL INFORMATION
Item 1.
Financial Statements (Unaudited)
3
Item 2.
Management?s Discussion and Analysis of Financial
Condition and Results of Operations
16
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
19
Item 4.
Controls and Procedures
19
PART II ? OTHER INFORMATION
Item 1.
Legal Proceedings
22
Item
1A.
Risk Factors
22
Item 2.
Unregistered Sales of Equity Securities and Use of
Proceeds
22
Item 3.
Defaults Upon Senior Securities
22
Item 4.
Other Information
22
Item 5.
Exhibits
22
Signatures
23
?
FORWARD-LOOKING STATEMENTS
This Report on Form 10-Q contains forward-looking
statements within the meaning of the ?safe harbor? provisions of
the Private Securities Litigation Reform Act of 1995. Reference
is made in particular to the description of our plans and
objectives for future operations, assumptions underlying such
plans and objectives, and other forward-looking statements
included in this report. Such statements may be identified by
the use of forward-looking terminology such as ?may,? ?will,?
?expect,? ?believe,? ?estimate,? ?anticipate,? ?intend,?
?continue,? or similar terms, variations of such terms or the
negative of such terms. Such statements are based on
management?s current expectations and are subject to a number of
factors and uncertainties, which could cause actual results to
differ materially from those described in the forward-looking
statements. Such statements address future events and conditions
concerning, among others, capital expenditures, earnings,
litigation, regulatory matters, liquidity and capital resources,
and accounting matters. Actual results in each case could differ
materially from those anticipated in such statements by reason
of factors such as future economic conditions, changes in
consumer demand, legislative, regulatory and competitive
developments in markets in which we operate, results of
litigation, and other circumstances affecting anticipated
revenues and costs, and the risk factors set forth in our Annual
Report on Form 10-K filed on July 16, 2018.
As used in this Form 10-Q, ?we,? ?us,? and ?our? refer to
Vortex Blockchain Technologies Inc. (formerly UA Granite
Corporation), a Nevada corporation, which is also sometimes
referred to as the ?Company? herein.
YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING
STATEMENTS
The forward-looking statements made in this report on Form
10-Q relate only to events or information as of the date on
which the statements are made in this report on Form 10-Q.
Except as required by law, we undertake no obligation to update
or revise publicly any forward-looking statements, whether as a
result of new information, future events, or otherwise, after
the date on which the statements are made or to reflect the
occurrence of unanticipated events. You should read this report
and the documents that we reference in this report, including
documents incorporated by reference, completely and with the
understanding that our actual future results may be materially
different from what we expect or hope.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
VORTEX BLOCKCHAIN TECHNOLOGIES INC.
FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 31, 2018
?
VORTEX BLOCKCHAIN TECHNOLOGIES INC.
FINANCIAL STATEMENTS
TABLE OF CONTENTS
DECEMBER 31, 2018
Balance Sheet as of December 31, 2018 (unaudited)
F - 2
Statements of Operations for the three month and nine month
periods ended December 31, 2018 and December 31, 2017
(unaudited)
F - 3
Statements of Cash Flows for the nine month period ended
December 31, 2018 and December 31, 2017 (unaudited)
F - 4
Notes to the Financial Statements (unaudited)
F - 5
F-1?
Vortex Blockchain Technologies
Balance Sheet
As of December 31, 2018
December 31,
2018
March 31,
2018*
Cash and Cash Equivalents
$
39
$
308,387
Property, Plant and
Equipment, net
536,822
1,154,487
Other Assets
39,360
39,360
Total Assets
$
576,221
$
1,502,234
Accounts Payable
$
381,031
$
744,397
Current Liabilities
228,752
79,797
Long Term Liabilities
15,739
-
Total Liabilities
625,522
824,194
Common Stock
-
-
Additional Paid-in Capital
893,518
751,017
Accumulated Deficit
(942,819)
(72,977)
Total Equity
(49,301)
678,040
Total Liabilities and Equity
$
576,221
$
1,502,234
*YE March 2018 no longer compares to YE 2018 formerly UA Granite
the shell company as filed July 16, 2018, and now reflects the
merger and acquisition of the assets of Vortex Network. See 8-K
filing October 22, 2018.
F-2
(The Accompanying Notes are an Integral Part of These Financial
Statements)
Vortex Blockchain Technologies Inc.
Statements of Operations
For the Three and Nine Month Period Ended December 31, 2018 and
2017 (Unaudited)
Nine Months Ending
Three Months Ending
December 31,
2018
December 31
2017*
December 31,
2018
December 31
2017*
Revenue
$
81,200
$
-
$
-
$
-
Operating
Expenses
699,691
43,000
146,066
42,000
Interest
Expense
-
2,000
-
1,000
Net loss
$
(618,491)
$
(45,000)
$
(146,066)
$
(43,000)
Shares
outstanding
75,500,000
21,000,000
75,500,000
21,000,000
EPS
$
(0.01)
$
(0.00)
$
(0.00)
$
(0.00)
*Note: 2017 reflects the former UA Granite Shell.
F-3
(The Accompanying Notes are an Integral Part of These Financial
Statements)
?
Vortex Blockchain Technologies Inc.
(Statements of Cash Flows)
For the Nine Month Period Ended December 31, 2018 and 2017
(Unaudited)
Nine Months Ending
December 31, 2018
December 31,
2017*
Net Loss
$
(618,491)
$
-
Adjustments to reconcile net loss
to net cash used
by operating activities:
Disposal of PPE
744,397
-
Transaction Costs
-
Changes in Assets/Liabilities:
Other Assets
-
-
Accounts Payable
(363,366)
-
Other Liabilities
(86,657)
-
Cash Used in Operating Activities
(324,117)
-
Capital Expenditures
(126,732)
-
Cash Used in Investing Activities
(126,732)
-
Proceeds from Director
142,501
-
Notes Payable
-
-
Cash provided by Financing
Activities
142,501
-
Increase (Decrease) in Cash
(308,348)
-
Cash Beginning
308,387
-
Cash Ending
39
-
Change in Cash for Period
$
(308,348)
$
-
*Note: December 31, 2017 financials not presented due to
immateriality of UA Granite former shell position at this time.
F-4
(The Accompanying Notes are an Integral Part of These Financial
Statements)
Vortex Blockchain Technologies Inc.
Notes to the Financial Statements (unaudited)
NOTE 1 ? NATURE OF OPERATIONS
DESCRIPTION OF BUSINESS AND HISTORY
Vortex Blockchain Technologies, Inc (the ?Company?) was
incorporated on February 14, 2013 in the State of Nevada as UA
Granite Corporation, and a reverse merger with Vortex Network,
LLC was completed on October 17, 2018.
The Company mined and sold bitcoins and had modest revenues but
has incurred losses since inception. Currently, the Company is
engaged in software development, and bitcoin mining, has been
issued a going concern opinion, and relies primarily upon the
sale of our securities and loans from its CEO and directors to
fund operations.
GOING CONCERN
These financial statements have been prepared on a going concern
basis, which implies the Company will continue to meet its
obligations and continue its operations for the next fiscal
year. Realization value may be substantially different from
carrying values as shown and these financial statements do not
include any adjustments to the recoverability and classification
of recorded asset amounts and classification of liabilities that
might be necessary should the Company be unable to continue as a
going concern. As of December 31, 2018, the Company has a
working capital deficiency, had generated limited revenue, and
has accumulated losses since inception. The continuation of the
Company as a going concern is dependent upon the continued
financial support from its shareholders, the ability of the
Company to obtain necessary equity financing to continue
operations, and the attainment of profitable operations. These
factors raise some doubt regarding the Company?s ability to
continue as a going concern.
NOTE 2 ? SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements and related notes are presented in
accordance with accounting principles generally accepted in the
United States and are expressed in U.S. dollars. The Company?s
fiscal year-end is March 31.
USE OF ESTIMATES
The preparation of financial statements in accordance with U.S.
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial
statements and the reported amounts of net revenue and expenses
in the reporting period. We regularly evaluate our estimates and
assumptions related to the useful life and recoverability of
long-lived assets, stock-based compensation and deferred income
tax asset valuation allowances. We base our estimates and
assumptions on current facts, historical experience and various
other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities
and the accrual of costs and expenses that are not readily
apparent from other sources. The actual results experienced by
us differ materially and adversely from our estimates. To the
extent there are material differences between our estimates and
the actual results, our future results of operations will be
affected.
RECLASSIFICATION
The 2017 and 2018 financial statements have been reclassified to
conform to the 2019 post-merger presentation.
F-5
Vortex Blockchain Technologies Inc.
(Notes to the Financial Statements (unaudited)
NOTE 2 ? SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ? Continued
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid instruments with
original maturities of three months or less when acquired, to be
cash equivalents. We had no cash equivalents at December 31,
2018.
INCOME TAXES
The Company accounts for income taxes under the provisions
issued by the FASB which requires recognition of deferred tax
liabilities and assets for the expected future tax consequences
of events that have been included in the financial statements or
tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the
financial statement and tax bases of assets and liabilities
using enacted tax rates in effect for the year in which the
differences are expected to reverse. The Company computes tax
asset benefits for net operating losses carried forward. The
potential benefit of net operating losses has not been
recognized in these financial statements because the Company
cannot be assured it is more likely than not it will utilize the
net operating losses carried forward in future years.
LOSS PER COMMON SHARE
The Company reports net loss per share in accordance with
provisions of the FASB. The provisions require dual
presentation of basic and diluted loss per share. Basic net loss
per share excludes the impact of common stock equivalents.
Diluted net loss per share utilizes the average market price per
share when applying the treasury stock method in determining
common stock equivalents. As of December 31, 2018, there were no
common stock equivalents outstanding.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Pursuant to ASC No. 820, ?Fair Value Measurements and
Disclosures?, the Company is required to estimate the fair value
of all financial instruments included on its balance sheets as
of December 31, 2018. The Company?s financial instruments
consist of cash. The Company considers the carrying value of
such amounts in the financial statements to approximate their
fair value due to the short-term nature of these financial
instruments.
F-6
Vortex Blockchain Technologies Inc.
(Notes to the Financial Statements (unaudited)
NOTE 2 ? SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ? Continued
RECENTLY ISSUED ACCOUNTING STANDARDS
a) Recently Adopted Accounting Standards
In June 2014, ASU guidance was issued to resolve the
diversity of practice relating to the accounting for stock
based performance awards that the performance target could
be achieved after the employee completes the required
service period. The update is effective prospectively or
retrospectively for annual reporting periods beginning
after December 15, 2015.
The adoption of the pronouncement did not have a material
effect on the Company?s consolidated financial statements.
In June 2014, the FASB issued ASU No. 2014-10, Development
Stage Entities (Topic 915): Elimination of Certain
Financial Reporting Requirements. The amendments in this
Update remove the definition of a development stage entity
from the Master Glossary of the Accounting Standards
Codification, thereby removing the financial reporting
distinction between development stage entities and other
reporting entities. In addition, the amendments eliminate
the requirements for development stage entities to (1)
present inception-to-date information in the statements of
income, cash flows, and shareholder equity, (2) label the
financial statements as those of a development stage
entity, (3) disclose a description of the development stage
activities in which the entity is engaged, and (4) disclose
in the first year in which the entity is no longer a
development stage entity that in prior years it had been in
the development stage. This ASU was effective for annual
periods beginning after December 15, 2014. Early adoption
is permitted. Accordingly, we have elected to adopt ASU No.
2014-10 on April 1, 2015.
b) Recent Accounting Pronouncements
In May 2014, ASU guidance was issued related to revenue
from contracts with customers. The new standard provides a
five-step approach to be applied to all contracts with
customers and also requires expanded disclosures about
revenue recognition. The ASU is effective for annual
reporting periods beginning after December 15, 2017,
including interim periods and is to be retrospectively
applied. Early application is permitted only as of annual
reporting periods beginning after December 15, 2016,
including interim reporting periods within that reporting
period. The Company is currently evaluating this guidance
and the impact it will have on its consolidated financial
statements.
In January 2015, an ASU was issued to simplify the income
statement presentation requirements in Subtopic 225-20 by
eliminating the concept of extraordinary items.
Extraordinary items are events and transactions that are
distinguished by their unusual nature and by the
infrequency of their occurrence. Eliminating the
extraordinary classification simplifies income statement
presentation by altogether removing the concept of
extraordinary items from consideration. This ASU is
effective for annual periods beginning after December 15,
2015, including interim periods within those annual
periods. An entity may apply this ASU prospectively or
retrospectively to all prior periods presented in the
financial statements. Early adoption is permitted. The
Company does not expect the amendments in this ASU to have
any impact on its financial statements.
F-7
Vortex Blockchain Technologies Inc.
(Notes to the Financial Statements (unaudited)
NOTE 2 ? SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ? Continued
RECENTLY ISSUED ACCOUNTING STANDARDS - continued
In November 2015, an ASU was issued to simplify the
presentation of deferred income taxes. The amendments in
this ASU require that deferred tax liabilities and assets
be classified as non-current in a classified balance sheet
as compared to the current requirements to separate
deferred tax liabilities and assets into current and non-
current amounts. This ASU is effective for annual periods
beginning after December 15, 2016, including interim
periods within those annual periods. Earlier application is
permitted. This ASU may be applied either prospectively to
all deferred tax liabilities and assets or retrospectively
to all periods presented. The Company is currently
evaluating this guidance and the impact it will have on its
financial statements.
In February 2016, Topic 842, Leases was issued to replace
the leases requirements in Topic 840, Leases. The main
difference between previous GAAP and Topic 842 is the
recognition of lease assets and lease liabilities by
lessees for those leases classified as operating leases
under previous GAAP. A lessee should recognize in the
balance sheet a liability to make lease payments (the lease
liability) and a right-of-use asset representing its right
to use the underlying asset for the lease term. For leases
with a term of 12 months or less, a lessee is permitted to
make an accounting policy election by class of underlying
asset not to recognize lease assets and lease liabilities.
If a lessee makes this election, it should recognize lease
expense for such leases generally on a straight-line basis
over the lease term. The accounting applied by a lessor is
largely unchanged from that applied under previous GAAP.
Topic 842 will be effective for annual reporting periods
beginning after December 15, 2018, including interim
periods within those annual periods and is to be
retrospectively applied. Earlier application is permitted.
The Company is currently evaluating this guidance and the
impact it will have on its financial statements.
In March 2016, an ASU was issued to reduce complexity in
the accounting for employee share-based payment
transactions. One of the simplifications relates to
forfeitures of awards. Under current GAAP, an entity
estimates the number of awards for which the requisite
service period is expected to be rendered and base the
accruals of compensation cost on the estimated number of
awards that will vest. This ASU permits an entity to make
an entity-wide accounting policy election either to
estimate the number of forfeitures expected to occur or to
account for forfeitures in compensation cost when they
occur. This ASU is effective for annual periods beginning
after December 15, 2016, including interim periods within
those annual periods. Earlier application is permitted.
The Company is currently evaluating this guidance and the
impact it will have on its financial statements.
F-8
Vortex Blockchain Technologies Inc.
(Notes to the Financial Statements (unaudited)
NOTE 3 ? FAIR VALUE MEASUREMENTS
The Company adopted ASC No. 820-10 (ASC 820-10), Fair Value
Measurements. ASC 820-10 relates to financial assets and
financial liabilities.
ASC 820-10 defines fair value, establishes a framework for
measuring fair value in accounting principles generally accepted
in the United States of America (GAAP), and expands disclosures
about fair value measurements. The provisions of this standard
apply to other accounting pronouncements that require or permit
fair value measurements and are to be applied prospectively with
limited exceptions.
ASC 820-10 defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the
measurement date. This standard is now the single source in GAAP
for the definition of fair value, except for the fair value of
leased property as defined in SFAS 13. ASC 820-10 establishes a
fair value hierarchy that distinguishes between (1) market
participant assumptions developed based on market data obtained
from independent sources (observable inputs) and (2) an entity?s
own assumptions, about market participant assumptions, that are
developed based on the best information available in the
circumstances (unobservable inputs). The fair value hierarchy
consists of three broad levels, which gives the highest priority
to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3). The three levels of the fair
value hierarchy under ASC 820-10 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
Inputs other than quoted prices included within Level
1 that are observable for the asset or liability,
either directly or indirectly, including quoted prices
for similar assets or liabilities in active markets;
quoted prices for identical or similar assets or
liabilities in markets that are not active; inputs
other than quoted prices that are observable for the
asset or liability (e.g., interest rates); and inputs
that are derived principally from or corroborated by
observable market data by correlation or other means.
?
Level
3
Inputs that are both significant to the fair value
measurement and unobservable. These inputs rely on
management's own assumptions about the assumptions
that market participants would use in pricing the
asset or liability. (The unobservable inputs are
developed based on the best information available in
the circumstances and include the Company's own data.)
The following presents the Company's fair value hierarchy for
those assets and liabilities measured at fair value on a non-
recurring basis as of December 31, 2018:
Level 1: None
Level 2: None
Level 3: None
Total Gain (Losses): None
F-9
Vortex Blockchain Technologies Inc.
(Notes to the Financial Statements (unaudited)
NOTE 4 - RELATED PARTY TRANSACTIONS
A director has advanced funds to the Company for our legal,
audit, filing fees, general office administration and operating
cash needs. As of December 31, 2018, the director has advanced a
total of $8,680. Total advanced funds were made by current
director, Craig Bergman, during the current fiscal quarter as of
December 31, 2018. The advances are without specific terms of
repayment.
F-10
Vortex Blockchain Technologies Inc.
(Notes to the Financial Statements (unaudited)
NOTE 5 - COMMON STOCK
As of December 31, 2018, the Company has issued 75,500,000
common shares. No additional shares have been issued since the
merger was completed.
F-11
Vortex Blockchain Technologies Inc.
(Notes to the Financial Statements (unaudited)
NOTE 6 ? MERGER AND SHARE EXCHANGE
In October 2018, the Company completed the merger and share
exchange transaction between the Company and Vortex Network,
LLC, whereby the Company issued 65,000,000 shares of common
stock to the existing members of Vortex in exchange for all the
outstanding membership interests of Vortex.
NOTE 7 ? SUBSEQUENT EVENTS
The Registrant entered into a Share Exchange Agreement with
Vortex and the Selling Members on October 17, 2018 (see Share
Exchange Agreement in Management?s Discussion and Analysis of
Financial Operations). In connection with this Agreement,
control of the Company has been assumed by the Management and
Board of Directors of Vortex.
Pursuant to the Share Exchange Agreement, the new Board of
Directors is:
Name
Position
Craig Bergman
Chief Executive Officer, President,
Chairman of the Board
Francis Keyes
Chief Financial Officer and Director
Devon Shaw
Alexander
Meluskey
Chief Technology Officer and Director
Secretary and Director
Mary Lewis Director
On September 30, 2018, the Company had 21,000,000 shares
outstanding and 750,000 shares receivable. In connection with
the Share Exchange Agreement, Angel Vasquez surrendered
11,250,000 shares of common stock for cancellation. After this
cancellation, the Company had 10,500,000 shares outstanding. At
the closing of the Share Agreement, Vortex issued 65,000,000
shares of its common stock to the Selling Members in exchange
for 100% of the Company. After the closing of the Share Exchange
transaction, the company had 75,500,000 shares of common stock
issued and outstanding.
F-12
Item 2. Management?s Discussion and Analysis of Financial
Condition and Results of Operations.
The following discussion should be read in conjunction with our
consolidated financial statements and notes thereto included
elsewhere in this Quarterly Report on Form 10-Q. Forward-looking
statements are statements not based on historical information
and which relate to future operations, strategies, financial
results or other developments. Forward-looking statements are
based upon estimates, forecasts, and assumptions that are
inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are
beyond our control and many of which, with respect to future
business decisions, are subject to change. These uncertainties
and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any
forward-looking statements made by us, or on our behalf. We
disclaim any obligation to update forward-looking statements.
Overview
We were incorporated in the State of Nevada under the name ?UA
Granite Corporation? on February 14, 2013. Our Articles of
Incorporation initially authorized us to issue up to 75,000,000
shares of common stock, par value $0.00001 per share. On April
30, 2018, upon approval by our Board of Directors and majority
stockholders on April 27, 2018, we filed Amended and Restated
Articles of Incorporation with the Nevada Secretary of State,
with a delayed effective date of May 15, 2018, increasing the
number of authorized shares of common stock from 75,000,000
shares to 200,000,000 shares. In connection with the amendment
and restatement of our Articles of Incorporation, our Board of
Directors and majority stockholders also approved and adopted
the Amended and Restated Bylaws of the Company on April 27,
2018. Effective May 31, 2018, pursuant to our Amended and
Restated Articles of Incorporation and upon completion of
processing by the Financial Industry Regulatory Authority
(?FINRA?), we changed the name of our Company from ?UA Granite
Corporation? to ?Vortex Blockchain Technologies Inc.? in
anticipation of a change of our business plan and direction.
Also effective May 31, 2018, we effected a 15-for-1 forward
stock split of all our issued and outstanding common stock,
which increased the number of issued and outstanding shares of
common stock from 1,400,000 to 21,000,000.
We are a development-stage company with limited revenues and
less than one million dollars in assets, and we have incurred
losses since inception. Our limited start-up operations have
consisted of the formation of our Company, development of our
business plan, efforts to raise capital and maintaining our
public company reporting requirements. In October of 2018 we
completed a reverse merger with Vortex Network LLC and are now
operating as a cryptocurrency holding company engaged in the
business of mining crypto assets. In addition to its mining
operation, Vortex is developing a variety of applications in the
cryptocurrency space, in both the software and hardware spheres,
including cloud mining, blockchain hardware and software
development, and a cryptocurrency wallet and exchange.
Share Exchange Agreement
On October 17, 2018, the Registrant entered into a Share
Exchange Agreement (the ?Exchange Agreement?) with Vortex and
the Selling Members. Pursuant to the terms and conditions of the
Exchange Agreement, the Selling Members agreed to voluntarily
exchange all of the outstanding membership interests of Vortex
for 65,000,000 shares of common stock of the Registrant. The
Exchange Agreement was approved by the boards of directors or
managers of each of the Registrant and Vortex, and by the
Selling Members.
The Exchange Agreement includes customary representations,
warranties and covenants of the Registrant, Vortex and the
Selling Members made to each other as of specific dates. The
assertions embodied in those representations and warranties were
made solely for purposes of the Exchange Agreement and are not
intended to provide factual, business, or financial information
about the Registrant, Vortex and the Selling Members. Moreover,
some of those representations and warranties (i) may not be
accurate or complete as of any specified date, (ii) may be
subject to a contractual standard of materiality different from
those generally applicable to stockholders or different from
what a stockholder might view as material, (iii) may have been
used for purposes of allocating risk among the Registrant,
Vortex and the Selling Members, rather than establishing matters
as facts, or (iv) may have been qualified by certain disclosures
not reflected in the Exchange Agreement that were made to the
other party in connection with the negotiation of the Exchange
Agreement and generally were solely for the benefit of the
parties to that agreement. The Exchange Agreement should not be
read alone, but should instead be read in conjunction with the
other information regarding the Registrant and Vortex that has
been, is or will be contained in, or incorporated by reference
into, the Forms 10-K, Forms 10-Q, Forms 8-K, proxy statements
and other documents that the Registrant files with the
Securities and Exchange Commission (the ?SEC?).
The Exchange Agreement provides for the resignation of Angel
Luis Reynoso Vasquez from all positions as an officer and
director of the Registrant, and the appointment of new officers
and directors, effective as of the closing of the Exchange
Transaction (the ?Closing?).
Results of Operations
During the three-month period ended December 31, 2018, we
focused on carrying out the Share Exchange with Vortex and
satisfying our ongoing obligations as a public reporting
company.
From February 14, 2013 (the date of our inception) to December
31, 2018, we have earned limited revenues. We expect to continue
to incur losses over the next twelve months, or until we are
able to fully develop and carry out our new business opportunity
that enables us to generate sufficient operating revenues.
Comparison of Three Months Ended December 31, 2018 and December
31, 2017
Our operations for the three-month periods ended December 31,
2018 and December 31, 2017 can be summarized as follows:
December 31,
2018
December 31
2017*
Revenue
$
-
$
-
Operating
Expenses
146,066
42,000
Interest
Expense
-
1,000
Net loss
$
(146,066)
$
(43,000)
*Note: 2017 reflects the former UA Granite Shell.
During the three-month period ended December 31, 2018, we
incurred $146,006 in operating expenses, compared to $42,000 in
operating expenses during the three-month period ended December
31, 2017. The increase in operating expenses can be attributed
to an increase in legal and accounting expenses related to
merger and assuming the operations of Vortex Network and their
existing staff.
We incurred a net loss of $146,066 for the three-month period
ended December 31, 2018, compared to a net loss of $43,000 for
the three-month period ended December 31, 2017. The increase in
net loss over the comparable three-month periods ended December
31, 2018 and 2017 can be attributed to an increase in operating
expenses without generating sufficient revenues to offset those
expenses.
Liquidity and Capital Resources
Balance Sheets
As of December 31, 2018, we had $39 in cash and total assets of
$576,221. As of March 31, 2018, we had $308,387 in cash and
total assets of $1,502,234. The assets are primarily
infrastructure and bitcoin mining equipment acquired in the
merger.
As of December 31, 2018, we had total liabilities in the amount
of $625,522 compared to total liabilities in the amount of
$824,194 as of March 31, 2018. The decrease in our total
liabilities and increase in our working capital deficit is due
to an increase in accounts payable and accrued liabilities and
amounts due to our director, as we had limited cash flows to
repay outstanding obligations as they became due.
As of December 31, 2018, our accumulated deficit was $942,819,
compared to an accumulated deficit of $72,977 as of March 31,
2018. The change is attributed to the merger with Vortex
Network, LLC which are now entirely part of the Company Vortex
Blockchain Technologies, Inc.
Cash Flows
Cash Used in Operating Activities
During the three-month period ended December 31, 2018, we used
$324,117 in cash for operating activities. We cannot compare
these to the UA Granite previous shell company?s 2017 YE as they
are now immaterial in nature.
Cash Used in Investing Activities
During the period from February 14, 2013 (inception) to December
31, 2018, the Company has not engaged in any investing
activities. We expect to use cash for investing activities in
future periods, when available.
Cash Flows from Financing Activities
During the three-month period ended December 31, 2018, we
received $142,501 in cash from financing activities. The
proceeds received from financing activities during the nine-
month period ended December 31, 2018 were advances provided by
management to support our day-to-day activities and assets
acquired from Vortex Network in the merger.
Recent Developments and Future Financing Activities
In order to execute on our business strategy, we will require
additional working capital. We anticipate that we will require a
minimum of approximately $2,500,000 in debt and/or equity
financing to proceed with our plan of operations over the next
twelve months. As we had negative cash and working capital in
the amount of $609,744 as of December 31, 2018, we do not have
sufficient working capital to enable us to carry out our
operations for the next twelve months.
We expect to use debt and/or equity financing to fund operations
for the foreseeable future, including, without limitation, the
sale of at least $2,500,000 of our capital stock pursuant to a
private placement for the purpose of financing the contemplated
ongoing operations of the Company and Vortex, as previously
disclosed on our Current Report on Form 8-K filed with the SEC
on October 22, 2018.
Any future sale of additional equity and/or debt securities will
result in dilution to current stockholders. We may also seek
additional loans where the incurrence of indebtedness would
result in increased debt service obligations and could require
us to agree to operating and financial covenants that would
restrict our operations. Financing may not be available in
amounts or on terms acceptable to us, if at all. Any failure by
us to raise additional funds on terms favorable to us, or at
all, could limit our ability to expand business operations and
could harm our overall business prospects.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have,
or are reasonably likely to have, a current or future effect on
our financial condition, changes in our financial condition,
revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to our
stockholders and investors.
Critical Accounting Policies
Our financial statements are affected by the accounting policies
used and the estimates and assumptions made by management during
their preparation. A complete listing of these policies is
included in Note 2 of the notes to our financial statements for
the three-month period ended December 31, 2018. We believe the
accounting policies utilized in preparing our financial
statements conform to the generally accepted accounting
principles in the United States (?US GAAP?).
The preparation of financial statements in conformity with US
GAAP requires management to make estimates and assumptions that
affect the amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the balance
sheet and reported amounts of revenues and expenses during the
reporting period. We base our estimates and assumptions on
current facts, historical experience and various other factors
that we believe to be reasonable under the circumstances, the
results of which form the basis for making judgments about the
carrying values of assets and liabilities and the accrual of
costs and expenses that are not readily apparent from other
sources. By their nature, these estimates are subject to an
inherent degree of uncertainty, and actual results could differ
from such estimates. The actual results experienced by our
Company may differ materially and adversely from our Company?s
estimates. To the extent there are material differences between
the estimates and the actual results, future results of
operations will be affected.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk.
As a ?smaller reporting company?, we are not required to provide
the information required by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that
information required to be disclosed in the reports filed or
submitted under the Securities Exchange Act of 1934, as amended
(the ?Exchange Act?), is recorded, processed, summarized and
reported, within the time period specified in the rules and
forms of the Securities and Exchange Commission (the ?SEC?).
Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information
required to be disclosed in the reports filed under the Exchange
Act is accumulated and communicated to our management, including
our Chief Executive Officer (who is our Principal Executive
Officer) and our Chief Financial Officer (who is our Principal
Financial Officer and Principal Accounting Officer) to allow for
timely decisions regarding required disclosure.
Our management, with the participation and under the supervision
of our Principal Executive Officer and Principal Financial
Officer, carried out an evaluation of the effectiveness of the
design and operation of our disclosure controls and procedures
(as defined by Rule 13a-15(e) or 15d-15(e) of the Exchange Act)
as of December 31, 2018. Based upon that evaluation, our
Principal Executive Officer and Principal Financial Officer
concluded that our disclosure controls and procedures were not
effective as of December 31, 2018 in ensuring that information
required to be disclosed by us in reports that we file or submit
under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in the SEC?s rules
and forms. This conclusion is based on findings that constituted
material weaknesses. A material weakness is a deficiency, or
combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a
material misstatement of our interim financial statements will
not be prevented or detected on a timely basis.
In performing the above-referenced evaluation, our management
identified the following material weaknesses:
* Lack of Appropriate Independent Oversight and Audit
Committee. We do not have a formal audit committee with a
financial expert, and therefore lacks the board oversight
role within the financial reporting process.
* Insufficient Accounting Resources and Lack of Formal
Policies and Procedures Necessary to Adequately Review
Significant Accounting Transactions. Our Company has
insufficient internal accounting resources and personnel
with sufficient knowledge of US GAAP rules and procedures
to oversee our financial reporting and procedures. We
utilize a third party independent contractor for the
preparation of our financial statements. Although the
financial statements and footnotes prepared by such third
party independent contractor are reviewed by our
management, we do not have a formal policy to review
significant accounting transactions and the accounting
treatment of such transactions. The third party independent
contractor is not involved in the day-to-day operations of
our Company, and may not be provided information from
management on a timely basis to allow for adequate
reporting and consideration of certain accounting
transactions.
* Related Party Transactions. Our Company has no formal
process related to the identification and approval of
related party transactions.
Our management team will continue to monitor and evaluate the
effectiveness of our internal controls and procedures and our
internal controls over financial reporting on an ongoing basis,
and is committed to taking further action and implementing
additional enhancements or improvements, as necessary and as
funds permit, such as forming an audit committee made up of non-
managerial directors.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate. All
internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined
to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.
Changes in Internal Control Over Financial Reporting
No changes in our internal control over financial reporting
outside of the management change reflected in the merger, have
occurred during the quarter ending December 31, 2018. These
management changes have not materially affected, or are not
reasonably likely to materially affect, our internal control
over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Other Information.
None.
Item 5. Exhibits.
Referenc
es
Description
No.
31*
Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32*
Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
* Filed herewith.
?
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
VORTEX BLOCKCHAIN TECHNOLOGIES INC.
Dated: March 10, 2020
By:
/s/ Craig Bergman
Name
:
Craig Bergman
Titl
e:
President, Chief Executive
Officer
Exhibit 31
CERTIFICATION PURSUANT TO
EXCHANGE ACT RULES 13a-14(a) and 15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Craig Bergman, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Vortex
Blockchain Technologies Inc. for the period ended December 31,
2018;
2.
Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present
in all material respects the financial condition, results of
operations and cash flows of the Registrant as of, and for,
the periods presented in this report;
4.
I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-
15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the Registrant and have:
(a)
Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material
information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in
which this report is being prepared;
(b)
Designed such internal control over financial reporting,
or caused such internal control over financial reporting
to be designed under our supervision, to provide
reasonable assurance regarding the reliability of
financial reporting and the preparation of financial
statements for external purposes in accordance with
generally accepted accounting principles;
(c)
Evaluated the effectiveness of the Registrant?s
disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the
disclosure controls and procedures as of the end of the
period covered by this report based on such evaluation;
and
(d)
Disclosed in this report any change in the Registrant?s
internal control over financial reporting that occurred
during the Registrant?s most recent fiscal quarter (the
Registrant?s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is
reasonably likely to materially affect, the Registrant?s
internal control over financial reporting; and
5.
I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the Registrant?s
auditors and the audit committee of the Registrant?s board of
directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in
the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the Registrant?s ability to record,
process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves
management or other employees who have a significant
role in the Registrant?s internal control over financial
reporting.
Date: March 10, 2020
By:
/s/ Craig Bergman
Name:
Craig Bergman
Title:
President, Chief Executive
Officer
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Vortex Blockchain
Technologies Inc. (the ?Company?) on Form 10-Q for the quarterly
period ended December 31, 2018, as filed with the Securities and
Exchange Commission on the date hereof (the ?Report?), the
undersigned certifies, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that, to the best of his knowledge:
(1) The Report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in the Report
fairly presents, in all material respects, the financial
condition and results of operation of the Company.
Date: March 10, 2020
By:
/s/ Craig Bergman
Name:
Craig Bergman
Title:
President, Chief
Executive Officer