Edge Data Solutions, Inc. - Quarter Report: 2019 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

For the quarterly period ended June 30, 2019

OR

For the transition period __________ to __________

Commission File Number: 333-198435

BLOCKCHAIN HOLDINGS CAPITAL VENTURES, INC.

(Exact name of registrant as specified in its charter)

3550 Lenox Road NE. 21st Floor Atlanta GA 30326

(Address and telephone number of principal executive offices)

Mr. Delray Wannemacher, CEO, (833) 682-2428

3550 Lenox Road NE. 21st Floor Atlanta GA 30326

(Name, address and telephone number of agent for service)

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 [X] No [  ]

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

As of August 13, 2019, there were outstanding 5,551,217 shares of our common stock, par value $0.0001 per share, 7,000,000 shares of the Company’s Class A Super Voting preferred stock, par value $0.001 per share, and 7,000,000 shares of the Company’s Class C preferred stock, par value $0.001 per share

BLOCKCHAIN HOLDINGS CAPITAL VENTURES, INC.

FORM 10-Q for the Quarter Ended June 30, 2019

INDEX

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

Blockchain Holdings Capital Ventures, Inc. (Formerly Southeastern Holdings, Inc.)

A Delaware Corporation

Financial Statements

As of June 30, 2019 (Unaudited) and for the Three and Six Months Then Ended (Unaudited)

Blockchain Holdings Capital Ventures, Inc. (Formerly Southeastern Holdings, Inc.)

TABLE OF CONTENTS

BLOCKCHAIN HOLDINGS CAPITAL VENTURES, INC. (Formerly Southeastern Holdings, Inc.)

BALANCE SHEETS

See accompanying notes, which are an integral part of these financial statements.

BLOCKCHAIN HOLDINGS CAPITAL VENTURES, INC. (Formerly Southeastern Holdings, Inc.)

STATEMENTS OF OPERATIONS

See accompanying notes, which are an integral part of these financial statements.

BLOCKCHAIN HOLDINGS CAPITAL VENTURES, INC. (Formerly Southeastern Holdings, Inc.)

STATEMENTS OF CASH FLOWS

See accompanying notes, which are an integral part of these financial statements.

BLOCKCHAIN HOLDINGS CAPITAL VENTURES, INC. (Formerly Southeastern Holdings, Inc.)

STATEMENT OF STOCKHOLDERS’ DEFICIENCY

For the Six Months Ended June 30, 2019 (Unaudited)

See accompanying notes, which are an integral part of these financial statements.

BLOCKCHAIN HOLDINGS CAPITAL VENTURES, INC. (Formerly Southeastern Holdings, Inc.)

STATEMENT OF STOCKHOLDERS’ DEFICIENCY

For the Six Months Ended June 30, 2018 (Unaudited)

See accompanying notes, which are an integral part of these financial statements.

BLOCKCHAIN HOLDINGS CAPITAL VENTURES, INC. (Formerly Southeastern Holdings, Inc.)

NOTES TO FINANCIAL STATEMENTS

As of June 30, 2019 (Unaudited) and for the Three and Six Months then Ended (Unaudited)

NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS

BLOCKCHAIN HOLDINGS CAPITAL VENTURES, INC. (the “Company”), formerly Southeastern Holdings, Inc. (formerly Safe Lane Systems, Inc.) was incorporated in the State of Colorado on September 10, 2013. Safe Lane Systems, Inc. redomiciled to become a Delaware holding corporation in September of 2016. On September 22, 2016, Safe Lane Systems, Inc. formed two wholly owned subsidiaries, SLS Industrial, Inc and Southeastern Holdings, Inc. (both Delaware corporations) and on September 30, 2016 completed a merger and reorganization in which Southeastern Holdings, Inc. (now Blockchain Holdings Capital Ventures, Inc.) became the holding company. On December 1, 2016, the Company spun off its wholly owned subsidiary, SLS Industrial, Inc., along with its assets and liabilities, leaving Southeastern Holdings, Inc. as the only surviving entity.

On August 23, 2018, the Company entered into a Bill of Sale and Assignment and Assumption Agreement with Blockchain Holdings, LLC (“Blockchain”) pursuant to which the Company purchased all of the assets of Blockchain which are used in the business of sourcing of blockchain mining equipment from various suppliers for their customers and also providing management of the equipment hosted, mining pools and tech work on such equipment. The Company issued 300,000,000 (equivalent to 3,000,000 after the reverse split) shares of its common stock, par value $.0001 to the members of Blockchain in exchange for the assets of Blockchain.

On August 30, 2018 the Company changed its name to Blockchain Holdings Capital Ventures, Inc.

Business description

Blockchain Holdings Capital Ventures, Inc. is a holding company with a foundation on building out a network of next generation, decentralized data centers in support of the rapid growth driven by advanced computing technologies, including blockchain. Centralized infrastructure facilities servicing multiple geographical areas encounter many issues such as data congestion and weak network connections. To address this, data processing is moving closer to the customer. BHCV offers low-cost, secure colocation and private data hosting to meet this demand for Edge and micro data centers. Technologies that are driving the movement range from cloud or information services, communications, networking, blockchain mining, disaster recovery solutions, AI, IoT, Big data, rendering, 5G, retail, healthcare, financial services, Smart Cities and self-driving cars. BHCV’s data centers will generate revenue immediately after being deployed with a blockchain mining solution. These will be strategically placed to support both Edge customers and blockchain mining simultaneously. The modular design and ability to add additional data centers as needed, preserves up front capital allowing for rapid deployment and scalability as business demand increases.

After further evaluation of the market the Company has made the decision to lease properties for the data center deployment rather than purchase at this time.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the interim reporting rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments (unless otherwise indicated), necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash Equivalents and Concentration of Cash Balance

The Company considers all highly liquid securities with an original maturity of less than three months to be cash equivalents. The Company’s cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits. As of June 30, 2019 and December 31, 2018, the Company’s cash balances did not exceed federally insured limits.

BLOCKCHAIN HOLDINGS CAPITAL VENTURES, INC. (Formerly Southeastern Holdings, Inc.)

NOTES TO FINANCIAL STATEMENTS

As of June 30, 2019 (Unaudited) and for the Three and Six Months then Ended (Unaudited)

Fair Value of Financial Instruments

Financial Accounting Standards Board (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities inactive markets, or quoted prices for identical or similar assets or liabilities in markets that are not active).

Level 3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

The carrying amounts reported in the balance sheets approximate their fair value.

Revenue Recognition

The Company recognizes revenue under ASC 606, using the following five-step model, which requires that the Company: (1) identify a contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to performance obligations and (5) recognize revenue as performance obligations are satisfied. The Company’s revenue streams historically consisted of three components:

While the Company generated early revenue from the aforementioned sources, the Company has shifted its focus to finding, building, vetting and acquiring assets to support computing demands including the blockchain space and is not currently pursuing operations that historically have generated revenue. There can be no assurances that these efforts will generate future revenue.

Stock-Based Compensation

The Company accounts for share-based payments pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards using the Black-Scholes option pricing model.

Stock compensation expense for stock options is recognized over the vesting period of the award or expensed immediately when stock or options are awarded for previous or current service without further recourse.

In February and March 2019, the Company granted advisors and consultants 915,000 shares of common stock in connection with services provided. 875,000 of these shares vested immediately, and 40,000 vested in June 2019. In April and May 2019, the Company issued 250,000 fully-vested shares of common stock to advisors and consultants in connection for services provided. The Company recognized stock-based compensation expense of $25 and $117 during the three and six months ended June 30, 2019.

BLOCKCHAIN HOLDINGS CAPITAL VENTURES, INC. (Formerly Southeastern Holdings, Inc.)

NOTES TO FINANCIAL STATEMENTS

As of June 30, 2019 (Unaudited) and for the Three and Six Months then Ended (Unaudited)

Income Taxes

The Company is subject to taxation in various jurisdictions and may be subject to examination by various authorities.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company recognizes the amount of taxes payable or refundable for the current year and recognizes deferred tax liabilities and assets for the expected future tax consequences of events and transactions that have been recognized in the Company’s financial statements or tax returns.

NOTE 3: GOING CONCERN

As shown in the accompanying financial statements as of June 30, 2019, the Company had $15,295 of cash, as compared to total current liabilities of $297,754, has incurred substantial operating losses, and had an accumulated deficit of $352,831. Furthermore, the Company’s revenue history has been limited and unstable, and there can be no assurances of future revenues.

Given these factors, the Company is dependent on financing from outside parties, and management intends to pursue outside capital through debt and equity vehicles. There is no assurance that these efforts will materialize or be successful or sufficient to fund operations and meet obligations as they come due.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, however, the above conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

NOTE 4: STOCKHOLDERS’ DEFICIENCY

The Company has designated ten million (10,000,000) shares of its preferred stock, par value $0.001 as Class A Preferred Super Majority Voting Stock (“Class A”). The Class A shares have the right to vote upon matters submitted to the holders of common stock, par value $0.0001 of the Company. Class A shares have a vote equal to the number of shares of common stock of the Company which would give the holders of the Class A shares a vote equal to sixty percent (60%) of the common stock. This vote shall be exercised pro-rata by the holders of the Class A. The Company shall have the right to redeem, in its sole and absolute discretion, at any time one (1) year after the date of issuance of such Class A shares, all or any portion of the shares of Class A at a price of one cent ($0.01) per share. On October 4, 2018, the Company issued a total of 7,000,000 Class A shares to its CEO and COO as stock-based compensation for services rendered.

The Company has not currently authorized a Class B designation of Preferred Stock.

BLOCKCHAIN HOLDINGS CAPITAL VENTURES, INC. (Formerly Southeastern Holdings, Inc.)

NOTES TO FINANCIAL STATEMENTS

As of June 30, 2019 (Unaudited) and for the Three and Six Months then Ended (Unaudited)

The Company has designated ten million (10,000,000) shares of its preferred stock, par value $0.001 as Class C Convertible Preferred Non-Voting Stock (“Class C”). Each share of Class C shall be convertible into five (5) shares of common stock. The holders of Class C shall be entitled to receive the same dividend as the holders of the common stock and such dividend shall be paid pro rata per share on a fully converted basis. The holders of Class C shall have piggyback registration rights. The Company shall have the right to redeem, in its sole and absolute discretion, at any time after five (5) years, all or any portion of the shares of Class C at a price of five dollars ($5.00) per share. The Class C shares shall be considered to have a junior liquidation preference to Class A shares and a senior dividend preference to Class A shares. On October 4, 2018, the Company issued a total of 7,000,000 Class C shares to its CEO and COO as stock-based compensation for services rendered. Subsequently, in April 2019, the Company filed an amended and restated certificate of designation, which restricts the CEO and COO from converting the 7,000,000 shares into common stock for 36 months from the issuance date.

As of June 30, 2019, the Company was authorized to issue 150,000,000 shares of common stock. All common stock shares have full dividend and voting rights. However, it is not anticipated that the Company will be declaring dividends in the foreseeable future.

As of June 30, 2019, the Company had 5,551,217 common shares outstanding.

As of June 30, 2019, 7,000,000 shares of Class A Preferred Stock and 7,000,000 shares of Class C Preferred Stock were issued and outstanding.

NOTE 5: RELATED PARTY TRANSACTIONS

As of June 30, 2019 and December 31, 2018, accrued consulting fees due to the CEO and COO totaled $20,000 and $82,500, respectively. During the three months ended June 2019, the Company paid $37,500 and $25,000 to entities owned by the CEO and COO, respectively, as payment for $62,500 of the accrued consulting fees.

The Company does not currently have consulting or employment agreements with these individuals, and as a result, these fees may fluctuate from time to time. While the Company believes these individuals were appropriately classified as contractors and has accordingly neither paid nor accrued payroll taxes, these payments may result in future tax liabilities should the Internal Revenue Service deem these individuals to be employees.

During the six months ended June 30, 2019, the Company’s CEO advanced $7,244, and the COO advanced $1,315 to fund operations. These advances bear no interest, are unsecured, and are due on demand.

During the period from February 5, 2018 (Inception) through June 30, 2018, The Company paid out an estimated $398 in cryptocurrency as commissions to its CEO and COO from the Company’s mining operations and included this in sales and marketing expense. These commissions are included in sales and marketing expense on the statement of operations.

During the period from February 5, 2018 (Inception) through June 30, 2018, the Company’s revenues and costs of goods sold included the following related party transactions:

(1) Paul Dickman, the Company’s former CEO, is the CFO of ChineseInvestors.com, Inc. and is therefore deemed to exercise significant influence.

(2) Paul Dickman is the Company’s former CEO.

(3) Delray Wannemacher is the Company’s current CEO.

BLOCKCHAIN HOLDINGS CAPITAL VENTURES, INC. (Formerly Southeastern Holdings, Inc.)

NOTES TO FINANCIAL STATEMENTS

As of June 30, 2019 (Unaudited) and for the Three and Six Months then Ended (Unaudited)

NOTE 6: CONVERTIBLE NOTES

In May 2019, the Company issued short-term convertible notes for total proceeds of $100,000. These notes mature one year from execution and accrue interest at a rate of 10% per annum. Conversion terms call for conversion of principal and accrued interest at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.

The Company evaluated the convertible notes in light of ASC 470 and determined that a beneficial conversion feature exists. However, given the lack of a market for the Company’s stock, the Company concluded that such a feature would be trivial in value and allocated the full principal amount to the convertible note liability.

During the six months ended June 30, 2019, the Company recorded interest expense of $1,322, resulting in accrued interest of $1,322 as of June 30, 2019.

NOTE 7: CONCENTRATIONS, COMMITMENTS AND CONTINGENCIES

During the period from February 5, 2018 (Inception) through June 30, 2018, the Company identified a 57% concentration in overall revenue from one customer, which concentration it deemed significant. The Company identified no significant concentrations for the three months ended June 30, 2019.

NOTE 8: RECENT ACCOUNTING PRONOUNCEMENTS

In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842). This ASU requires a lessee to recognize a right-of-use asset and a lease liability under most operating leases in its balance sheet. The ASU is effective for annual and interim periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company has adopted this accounting policy on January 1, 2019 and has determined that it currently does not impact the Company’s financial statements.

Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management and information currently available to management. The use of words such as “believes”, “expects”, “anticipates”, “intends”, “plans”, “estimates”, “should”, “likely” or similar expressions, indicates a forward-looking statement. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. 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 necessarily based upon estimates 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, or on our behalf. We disclaim any obligation to update forward-looking statements.

The identification in this report of factors that may affect our future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our unaudited financial statements and notes thereto included herein.

General

BLOCKCHAIN HOLDINGS CAPITAL VENTURES, INC. (the “Company”), formerly Southeastern Holdings, Inc. (formerly Safe Lane Systems, Inc.) was incorporated in the State of Colorado on September 10, 2013. Safe Lane Systems, Inc. redomiciled to become a Delaware holding corporation in September of 2016. On September 22, 2016, Safe Lane Systems, Inc. formed two wholly owned subsidiaries, SLS Industrial, Inc and Southeastern Holdings, Inc. (both Delaware corporations) and on September 30, 2016 completed a merger and reorganization in which Southeastern Holdings, Inc. (now Blockchain Holdings Capital Ventures, Inc.) became the holding company. On December 1, 2016, the Company spun off its wholly owned subsidiary, SLS Industrial, Inc., along with its assets and liabilities, leaving Southeastern Holdings, Inc. as the only surviving entity.

On August 23, 2018, the Company entered into a Bill of Sale and Assignment and Assumption Agreement with Blockchain Holdings, LLC (“Blockchain”) pursuant to which the Company purchased all of the assets of Blockchain which are used in the business of sourcing of blockchain mining equipment from various suppliers for their customers and also providing management of the equipment hosted, mining pools and tech work on such equipment. The Company issued 300,000,000 shares of its common stock, par value $.0001 valued at $300,000 to the members of Blockchain in exchange for the assets of Blockchain.

The Company has accounted for this transaction as a reverse recapitalization under ASC 805, under which the operating entity, Blockchain Holdings, LLC, adopted the assets, liabilities and equity structure of Blockchain Holdings Capital Ventures, Inc. on August 23, 2018, while retaining its historical activity.

On August 30, 2018 the Company changed its name to Blockchain Holdings Capital Ventures, Inc.

Blockchain Holdings Capital Ventures, Inc. is a holding company with a foundation on building out a network of next generation, decentralized data centers in support of the rapid growth driven by advanced computing technologies, including blockchain. Centralized infrastructure facilities servicing multiple geographical areas encounter many issues such as data congestion and weak network connections. To address this, data processing is moving closer to the customer. BHCV offers low-cost, secure colocation and private data hosting to meet this demand for Edge and micro data centers. Technologies that are driving the movement range from cloud or information services, communications, networking, blockchain mining, disaster recovery solutions, AI, IoT, Big data, rendering, 5G, retail, healthcare, financial services, Smart Cities and self-driving cars. BHCV’s data centers will generate revenue immediately after being deployed with a blockchain mining solution. These will be strategically placed to support both Edge customers and blockchain mining simultaneously. The modular design and ability to add additional data centers as needed, preserves up front capital allowing for rapid deployment and scalability as business demand increases.

After further evaluation of the market the Company has made the decision to lease properties for the data center deployment rather than purchase at this time.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. However, the above conditions raise substantial doubt about the Company’s ability to do so. New business opportunities may never emerge, and we may not be able to sufficiently fund the pursuit of new business opportunities should they arise.

As of June 30, 2019, we had approximately $15,295 in cash on hand. Our current monthly cash burn rate is approximately $35,000, and it is expected that burn rate will continue and is expected to continue at $35,000 until significant additional capital is raised and our marketing plan is executed. Our trade creditors may call debts at any time, and our cash reserves would not be sufficient to satisfy all balances. We are currently dependent on minimal expenses to be covered by a loan or other cash infusion from the Company’s CEO and Director Delray Wannamaker, and COO and Director, Daniel Wong. There is no guarantee that this cash infusion will continue to be made.

Operating results for the three months ended June 30, 2019 and 2018:

For the three months ended June 30, 2019, the Company generated revenues of $0 from operations, compared to $118,070 for the three months ended June 30, 2018, a decrease of $118,070 or 100%. The decrease in revenues were a result of isolated non-recurring sales during the period and a subsequent shift in the Company’s business plans.

For the three months ended June 30, 2019, costs of net revenues were $0, compared to $82,500 for the three months ended June 30, 2018, a decrease of $82,500 or 100%. The decrease in costs was directly attributable to a lack of revenues for the three months ended June 30, 2019.

As a result of the changes in revenues and cost of net revenues discussed above, the Company’s gross profit decreased from $35,570 or 30% of revenue, for the three months ended June 30, 2018 to $0, or 0% of revenue for the three months ended June 30, 2019.

For the three months ended June 30, 2019, selling, general and administrative expenses were $71,193, compared to $36,770 during the three months ended June 30, 2018, an increase of $34,423, or 94%. The increase in these expenses are attributable to increased legal, accounting and other professional fees.

During the three months ended June 30, 2019, the Company recognized $4,034 of interest expense, as compared to $0 for the three months ended June 30, 2018. The increase of $4,034 (or 100%) is attributable to the accrual of interest on convertible debt and certain balances due to our vendors.

As a result of the changes in revenues, costs and expenses, the Company incurred a net loss of $75,227 for the three months ended June 30, 2019, compared to a net loss of $1,200 for the three months ended June 30, 2018, a change of $74,027, or 6,169%.

The future trends of all expenses are expected to be primarily driven by the Company’s ability to execute its business plans. Furthermore, the Company’s ability to continue to fund operating expenses will depend on its ability to raise capital. There can be no assurance that the Company will be successful in doing so.

Operating results for the six months ended June 30, 2019 and for the period from February 5, 2018 (Inception) through June 30, 2018:

For the six months ended June 30, 2019, the Company generated revenues of $0 from operations, compared to $287,526 for the period from February 5, 2018 (Inception) through June 30, 2018, a decrease of $287,526 or 100%. The decrease in revenues were a result of isolated non-recurring sales during the period and a subsequent shift in the Company’s business plans.

For the six months ended June 30, 2019, costs of net revenues were $0, compared to $218,571 for the period from February 5, 2018 (Inception) through June 30, 2018, a decrease of $218,571 or 100%. The decrease in costs was directly attributable to a lack of revenues for the six months ended June 30, 2019.

As a result of the changes in revenues and cost of net revenues discussed above, the Company’s gross profit decreased from $68,955, or 24% of revenue, for the period from February 5, 2018 (Inception) through June 30, 2018 to $0, or 0% of revenue for the six months ended June 30, 2019.

For the six months ended June 30, 2019, selling, general and administrative expenses were $90,389, compared to $40,034 during the period from February 5, 2018 (Inception) through June 30, 2018, an increase of $50,355, or 126%. The increase in these expenses are attributable to increased legal, accounting and other professional fees.

During the six months ended June 30, 2019, the Company recognized $0 of impairment expense and $26,550 during the period from February 5, 2018 (Inception) through June 30, 2018, as a result of equipment that was deemed worthless.

During the six months ended June 30, 2019, the Company recognized $4,494 of interest expense, as compared to $0 for the period from February 5, 2018 (Inception) through June 30, 2018. The increase of $4,494 (or 100%) is attributable to the accrual of interest on convertible debt and certain balances due to our vendors.

As a result of the changes in revenues, costs and expenses, the Company incurred a net loss of $94,883 for the six months ended June 30, 2019, compared to net income of $2,371 for the period from February 5, 2018 (Inception) through June 30, 2018, a change of $97,254, or 4,102%.

The future trends of all expenses are expected to be primarily driven by the Company’s ability to execute its business plans. Furthermore, the Company’s ability to continue to fund operating expenses will depend on its ability to raise capital. There can be no assurance that the Company will be successful in doing so.

Liquidity and Capital Resources

The Company’s cash position at June 30, 2019 increased by $9,002 to $15,295, as compared to a balance of $6,293, as of December 31, 2018. The net increase in cash for the six months ended June 30, 2019 was attributable to net cash used in operating activities of $99,557 and net cash provided by financing activities of $108,559.

As of June 30, 2019, the Company had a deficit in working capital of $207,259 compared to a deficit in working capital of $282,459, at December 31, 2018, representing a decrease in working capital of $75,200, attributable to cash used in operations and increased liabilities as a result of additional accrued professional fees.

Net cash used in operating activities of $99,557 during the six months ended June 30, 2019, as compared to net cash provided by operating activities during the period from February 5, 2018 (Inception) through June 30, 2018 of $28,921, was primarily attributable to a significant net loss, which was offset by stock-based compensation and decreases in accounts payable and increased by payment of accrued liabilities.

Net cash used by investing activities was $0 for the six months ended June 30, 2019 decreased by $26,550 from $26,550 of cash used by investing activities for the period from February 5, 2018 (Inception) through June 30, 2018. This is attributable to the Company making no purchases meeting the fixed asset capitalization threshold during the six months ended June 30, 2019.

Net cash provided by financing activities of $108,559 during the six months ended June 30, 2019 increased by $108,559, as compared to $0 during the period from February 5, 2018 (Inception) through June 30, 2018. The difference was a result of the issuance of convertible debt and advances from related parties during the six months ended June 30, 2019.

As reported in the accompanying consolidated financial statements, for the six months ended June 30, 2019 and for the period from February 5, 2018 (Inception) through June 30, 2018, the Company incurred net losses of $94,883 and net income of $2,371, respectively. The Company produced revenues during the 2018 period and did not produce revenues during the 2019 period. The Company’s ability to continue as a going concern is dependent upon its ability to generate additional revenue, reach consistent profitability and raise additional capital. To date, the Company has raised funds from related party advances and the sale of common stock to its former CEO. It intends to finance its future operating activities and its working capital needs largely from proceeds from the sale of equity securities, if any. The sale of equity and entry into other future financing arrangements may result in dilution to stockholders and those securities may have rights senior to those of common shares. If the Company raises additional funds through the issuance of convertible notes or other debt financing, these activities or other debt could contain covenants that would restrict the Company’s operations. Any other third-party funding arrangements could require the Company to relinquish valuable rights. The Company will require additional capital beyond its currently anticipated needs. Additional capital, if available, may not be available on reasonable terms or at all.

While the Company has historically generated revenues, it has not generated any revenues or profits from its current operations. The Company expects to continue to incur operating losses as it incurs professional fees and other expenses related to implementing its business plan. The future trends of all expenses are expected to be primarily driven by the Company’s ability to execute its business plans and continue to generate revenue. Furthermore, the Company’s ability to continue to fund operating expenses will depend on its ability to raise capital. There can be no assurance that the Company will be successful in doing so.

Financial Condition

The Company’s total assets as of June 30, 2019 and December 31, 2018 were $15,295 and $6,293, respectively, representing an increase of $9,002, or 143%. Total liabilities as of June 30, 2019 and December 31, 2018 were $297,754 and $193,986, respectively, for an increase of $103,768, or 53%. The significant change in the Company’s financial condition is attributable to convertible debt issued, cash burn from operations and increases in accounts payable and repayment of accrued expenses. As a result of these transactions, the Company’s cash position increased from $6,293 to $15,295 during the six months ended June 30, 2019.

Off-Balance Sheet Arrangements

We have made no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required for smaller reporting companies.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Operating Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q. Disclosure controls and procedures are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-Q, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of June 30, 2019, our disclosure controls and procedures were not effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2019 that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II

Item 1. Legal Proceedings.

The Company is not a party to any legal proceeding that it believes will have a material adverse effect upon its business or financial position.

Item 1A. Risk Factors.

Not required for smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the period from January 1, 2019 through June 30, 2019, the Company issued the following unregistered securities.

On February 14, 2019, the Company agreed to issue 100,000 shares of common stock to Nancy Madland in exchange for services rendered to the Company.

On February 15, 2019, the Company agreed to issue 125,000 shares of common stock to Fisher Herman Construction, LLC in exchange for execution of a 24-month service contract with the Company. The agreement calls for 375,000 future shares to be issued over the term of the contract, so long as the contract is in full force and effect, consisting of (i) 50,000 shares every 90 days and (ii) 75,000 shares due upon completion of the contract. On May 28, 2019, the Company issued 50,000 additional shares per the terms of this agreement.

On February 15, 2019, the Company agreed to issue 200,000 shares of common stock to Thomas Friend in exchange for services to be rendered to the Company.

On February 28, 2019, the Company agreed to issue 40,000 shares of common stock to Paul Manos in exchange for services rendered.

On March 1, 2019, the Company issued 200,000 shares of common stock to Doug Zook in exchange for services rendered.

On March 1, 2019, the Company issued 200,000 shares of common stock to Patrick Scheetz in exchange for services rendered.

On March 19, 2019, the Company agreed to issue 50,000 shares of common stock to Kyle Sledge in exchange for services to be rendered to the Company.

On April 19, 2019, the Company issued 200,000 shares of common stock to Austin Bosarge in exchange for services to be rendered to the Company.

The Company generated no proceeds from these transactions.

Item 3. Defaults Upon Senior Securities.

There have been no defaults upon senior securities.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits

a. Exhibits

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 hereunto duly authorized.