UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE FISCAL YEAR ENDED JUNE 30, 20212022

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number: 811-8387

 

WATERSIDE CAPITAL CORPORATIONMETAVESCO, INC.

(Exact name of registrant as specified in its charter)

 

virginianevada 54-1694665

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification Number)

 

140 West 31st Street, 2nd Floor

New York410 Peachtree Pkwy, New YorkSuite 4245, Cumming, GA 1000130041

 

Registrant’s telephone number, including area code: 212(678)-686-1515241-5898

 

Securities registered under Section 12 (b) of the Exchange Act:

 

Title of Each Class: NONEeach classTrading Symbol(s)Name of each exchange on which registered: NONEregistered
N/AN/AN/A

Securities registered pursuant to section 12(g) of the Act:

 

None

Title of Class

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in rule 405 of the Securities Act. YES ☐ NO

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. YES ☒ NO ☐

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the pastpreceding 12 months (or for such shorter period that the Registrantregistrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES ☐ NOYES NO ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 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 ☐ NOYES

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. YES ☐ NO

 

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐Accelerated filer ☐
  
Non-accelerated filerSmaller Reporting Companyreporting company
Emerging growth company

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C., 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES ☐ YESNO NO ☐

 

The aggregate market value of the registrant’s voting stock held by non-affiliates, computed on the basis of the closing price of the registrant’s common stock on the OTC Pink on August 24,December 31, 2021, was approximately $1,520,55410,339,764 (6,082,214 shares at $0.25$1.70 per share).

 

As of August 24, 2021,October 7, 2022, there were 6,082,214 shares of the registrant’s common stock, $1.00$0.0001 par value per share, outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE

None.

 

 

 
 

 

OTHER INFORMATION

 

As used in this Annual Report on Form 10-K, the terms “we”, “us”, “our”, “Metavesco”, “Waterside” and the “Company” refer to Metavesco, Inc., a Nevada corporation (formerly Waterside Capital Corporation, a Virginia corporation,Corporation), unless otherwise stated. “SEC” refers to the Securities and Exchange Commission.

 

 

 

TABLE OF CONTENTS

 

Part I 
  
Item 1. Business1
  
Item 1A. Risk Factors74
  
Item 1B. Unresolved Staff Comments138
  
Item 2. Properties138
  
Item 3. Legal Proceedings138
  
Item 4. Mine Safety Disclosures138
  
Part II 
  
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities149
  
Item 6. Selected Financial Data1610
  
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations1610
  
Item 7A. Quantitative and Qualitative Disclosures About Market Risk2214
  
Item 8. Financial Statements and Supplementary Data2315
  
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure3531
  
Item 9A. Controls and Procedures3531
  
Item 9B. Other Information3632
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections32
  
Part III 
  
Item 10. Directors, Executive Officers, and Corporate Governance3733
  
Item 11. Executive Compensation3934
  
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters4035
  
Item 13. Certain Relationships and Related Transactions, and Director Independence4035
  
Item 14. Principal Accounting Fees and Services4138
  
Part IV 
  
Item 15. Exhibits, Financial Statement Schedules4239
Item 16. Form 10–K Summary39
  
Signatures4340

 

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

Except for historical information, this Annual Report contains forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements are based on management’s current expectations, assumptions, and beliefs concerning future developments and their potential effect on our business, and are subject to risks and uncertainties that could negatively affect our business, operating results, financial condition, and stock price. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” “will,” “would”, “if, “shall”, “might”, “will likely result, “projects”, “goal”, “objective”, or “continues”, or the negative of these terms or other comparable terminology, although the absence of these words does not necessarily mean that a statement is not forward-looking. Additionally, statements concerning future matters such as our business strategy, development of new products, sales levels, expense levels, cash flows, future commercial and financing matters, future partnering opportunities and other statements regarding matters that are not historical are forward-looking statements.

 

Although the forward-looking statements in this Annual Report reflect our good faith judgment, based on currently available information, they involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the section titled “Risk Factors.” It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Annual Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Annual Report to conform these statements to actual results or to changes in our expectations. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date we file this Annual Report. Readers are urged to carefully review and consider the various disclosures made in this Annual Report.

 

CERTAIN REFERENCES AND NAMES OF OTHERS USED HEREIN

 

This Annual Report may contain additional trade names, trademarks, and service marks of others, which are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.

 

 

 

PART I

ITEM 1.BUSINESS

ITEM 1. BUSINESS

 

The Company was incorporated in the Commonwealth of Virginia on July 13, 1993, and was a closed-end investment company licensed by the Small Business Administration (the “SBA”) as a Small Business Investment Company (“SBIC”). The Company previously made equity investments in and provided loans to small businesses to finance their growth, expansion, and development. Under applicable SBA regulations, the Company was restricted to investing only in qualified small businesses as contemplated by the Small Business Investment Act of 1958. As a registered investment company under the Act, the Company’s investment objective was to provide its shareholders with a high level of income, with capital appreciation as a secondary objective. The Company made its first investment in a small business in October 1996.

 

On March 30, 2010, the SBA notified the Company that its account had been transferred to liquidation status and that the outstanding debentures of $16.1 million-plus accrued interest (the “Debentures”) were due and payable within fifteen days of the date of the letter. The Company did not possess adequate liquid assets to make this payment. The Company negotiated terms of a settlement agreement with the SBA effective September 1, 2010. The Debentures were repurchased by the SBA in September 2010, represented by a Note Agreement between the SBA and the Company. The Note Agreement had a maturity of March 31, 2013. In the event of a default, the SBA had the ability to seek receivership.

 

On May 24, 2012, the SBA delivered to the Company a notice of an event of default for failure to meet the principal repayment schedule under the Note Agreement (the “Notice”). Under the terms of the Notice and the Note Agreement, the SBA maintained a continuing right to terminate the Note Agreement and appoint a receiver to manage the Company’s assets.

 

On November 20, 2013, the SBA filed a complaint in the United States District Court for the Eastern District of Virginia (the “District Court”) seeking, among other things, receivership for the Company and judgment in the amount outstanding under the Note Agreement plus continuing interest. The complaint alleged that as of October 31, 2013, there remained an outstanding balance of $11,762,634.58 under the Note Agreement, including interest, which continued to accrue at the rate of $2,021.93 per day. In filing the complaint, the SBA requested that the District Court take exclusive jurisdiction of the Company and all of its assets wherever located and appoint the SBA as permanent receiver of the Company to liquidate all of the Company’s assets and satisfy the claims of its creditors in the order of priority as determined by the District Court.

 

On May 28, 2014, the District Court entered a Consent Order and Judgment Dismissing Counterclaim, Appointing Receiver, Granting Permanent Injunctive Relief and Granting Money Judgment (the “Order”). The Order appointed the SBA as receiver of the Company, and the SBA designated Charles Fulford as its principal agent to act on its behalf as the receiver (the “Receiver”). The Order authorized the Receiver to marshal and liquidate all of the Company’s assets in an orderly manner. The Order also served to enter judgment in favor of the United States of America, on behalf of the SBA, against the Company for $11,770,722. Such amount represented $11,700,000 in principal and $70,722 in accrued interest. The District Court assumed jurisdiction over the Company, and the SBA was appointed Receiver effective May 28, 2014.

 

The Company effectively stopped conducting an active business upon the appointment of the SBA as Receiver and the commencement of the receivership ordered by the District Court (the “Receivership”). Over the course of the Receivership, the activity of the Company was limited to the liquidation of the Company’s assets by the Receiver and the payment of the proceeds therefrom to the SBA and for the expenses of the Receivership.

 

The SBIC license granted to the Company by the SBA was revoked by the SBA effective March 20, 2017, in conjunction with the entry by the District Court of the Order Approving the Procedures for Winding Up and Terminating the Receivership Estate. On June 28, 2017, the Receivership was terminated pursuant to the entry of a Final Order by the District Court, further discharged all claims and obligations of the Company other than the judgment held by SBA (the “Final Order”). Prior to the Final Order, the Receiver provided notice to all shareholders of the Company. The Receiver also initiated separate contact with the largest shareholders of the Company in an attempt to identify a shareholder willing to assume responsibility for the control of the Company on behalf of the Company’s shareholders. Roran Capital, LLC (“Roran”), was the only shareholder willing to assume such control. As such, at the direction of the Receiver, paragraph 4 of the Final Order specifically stated that “Control of Waterside shall be unconditionally transferred and returned to its shareholders c/o Roran Capital, LLC (“Roran”) upon notification of entry of this Order”. At that time Roran owned 51,000 shares of the Company which represented 2.7% of the issued and outstanding common stock at that time (and owns 4,247,666 shares currently which represents 70% of the issued and outstanding shares of the Company at this time). 99% of the equity interests in Roran were at the time, and remain, beneficially owned by Yitzhak Zelmanovitch. At the time of the Final Order, the Company had no assets, and a sole remaining liability owed to the SBA in an amount exceeding $10,000,000.

 

1

Upon termination of the Receivership, Roran took possession of all books and records made available to it by the Receiver. The termination of the Receivership, and the termination of the power and authority of the Receiver, left the Company with no Board of Directors and no officers. It was impossible to convene a shareholders meeting as there were no corporate officers or directors to provide (i) notice, or (ii) the administrative oversight required for such a meeting. Roran, in reliance on and in compliance with the Final Order, sought to appoint a new board of directors (the “New Board”). Without a New Board, the Company would be unable to operate as a viable business, and appointment by Roran was the only manner in which the New Board could be constituted.

 

Roran expended a good faith effort to seek out qualified third parties to serve on the New Board. Because of the liability exposure inherent in serving on the board of a public company, the Company’s lack of financial resources, and the Company’s loss of its SBIC license, Roran was unable to locate any qualified individuals to serve on the New Board and thus appointed Zindel Zelmanovitch, the father of Yitzhak Zelmanovitch, as the sole director and officer of the Company. Zindel is an experienced business person who has previously served as the CEO and director of a public company; thus, although related to the 99% owner of Roran, he has objectively acceptable qualifications to serve in this dual position. Zindel Zelmanovitch has never owned any shares of stock of the Company and has not been compensated for any of his services as a director or officer of the Company to date.

1

 

In his capacity as the sole director and officer of the Company, Zindel Zelmanovitch considered a variety of options for the Company, including bankruptcy and liquidation, neither of which would have yielded any economic benefit for the Company’s shareholders. Thus, Zindel Zelmanovitch negotiated with Roran to provide a loan or loans to fund reasonable expenses of the Company, on arm’s length terms, so long as progress was being made to reorganize the Company and to identify either (i) a new business to enter into; or, (ii) an active business with which to merge or otherwise acquire, which would benefit from operating as a public entity. The New Board (Zindel Zelmanovitch) has continued to work toward achieving that goal. With no assets and no SBIC license from the SBA, no income, and liabilities in excess of $10,000,000 (which has now been forgiven in full, as stated below), the New Board (Zindel Zelmanovitch) concluded that continuing to operate as a registered investment company was impossible; furthermore, the consistent feedback from third parties with which the New Board has sought to consummate a transaction to commence a new business or acquire or merge a new business into the Company has been that until the Company’s Application Pursuant to Section 8(f) of the Investment Company Act of 1940 for an order declaring that the Company has ceased to be an Investment Company is approved, no such transaction was feasible. On April 22, 2020, the SEC issued an order declaring that the Company had ceased to be an investment company.

 

Since the entry of the Final Order (June 28, 2017) and the termination of the Receivership, the Company has been maintained for the benefit of its shareholders and pursuant to, and in compliance with, the Final Order. The Company has no assets, and the Company no longer has the SBIC license from the SBA. The Company is no longer operating as a registered investment company under the Investment Company Act. While it would have been possible for the Company to merely dissolve, the Company has instead decided to endeavor to reconstitute itself as a viable business. The Company has engaged and intends to continue to engage, qualified professionals and personnel to bring the Company current in its SEC filings and audits. The Company filed a Form 10-K for the period ending June 30, 2017 and has subsequently timely filed all periodic reports on Forms 10-Q and Forms 10-K.

 

2

The Company’s outstanding judgment payable owed to the SBA was purchased by Roran from the SBA in July 2017. As such, all amounts due under the outstanding judgment payable were owed to Roran rather than the SBA. Upon purchase, the Company began to accrue interest that was due under the original terms of the judgment payable. The statutory interest rate was 0.094%. The Company accrued $163,991 in interest on the judgment payable as of March 31, 2019. On May 16, 2019, Roran forgave the entire principal amount and interest due thereon of $10,609,635.

 

On September 19, 2017, the Company issued a Convertible Promissory Note in an amount up to $150,000 in favor of Roran which was increased to $200,000 on June 17, 2019 and $250,000 on December 13, 2019 (the “Note”), and as of June 30, 2021, $149,838 has been drawn by the Company under the Note (exclusive of accrued interest). The Note was issued pursuant to a Convertible Loan Agreement with Roran (the “Loan Agreement”). All outstanding principal and accrued interest on the Note is due and payable on the maturity date, which was March 19, 2019 and then extended to September 19, 2019 and then June 19, 2020. Roran has agreed to extend the loan and advance additional funds until further negotiations regarding the loan have concluded. Amounts borrowed under the Note bear interest at 12% per annum. Roran has the right to convert all or any portion of the Note into shares of the Company’s common stock at a conversion price equal to 60% of the 20 day trailing lowest share price. The use of proceeds of this loan has been and continues to be the payment by the Company of its reasonable operational expenses payable to third-party service providers (consisting solely of third party expenses such as legal, accounting, transfer agent and edgarization costs, all at the actual cost for such services). The loan is not a senior or a secured instrument.

 

On June 8, 2020, Roran converted $124,500 principal amount of its promissory note with the Company and $25,500 of accrued and unpaid interest thereon, totaling $150,000, into 4,166,666 shares of Company Common Stock at the stated conversion price per share of $0.036. The remaining balance due on the promissory note, as of the conversion date, was $104,838 in principal and $19,988 in interest.

 

On September 2, 2021, the Company entered into a Stock Purchase Agreement (the “SPA”) by and between (i) the Company (ii) Ryan Schadel (“Buyer”) and (iii) Roran. Roran agreed to sell to the Buyer 4,247,666 shares of common stock of the Company held by Roran for a total purchase price of $385,000. In conjunction with the SPA, Roran agreed to forgive all amounts due to Roran by the Company totaling $207,644, which is comprised of convertible note payable – related party, accrued interest payable – related party, and advances from related party. The Buyer acquired 4,247,666 shares of the Company’s Common Stock, representing 69.7% of the issued and outstanding shares of Common Stock. As such, the SPA resulted in a change of control of the Company.

Effective November 29, 2021, the Company converted from a Virginia corporation to a Nevada corporation.

On December 15, 2021, the Company filed with the Nevada Secretary of State amended and restated articles of incorporation. The amended and restated articles had the effect of (i) increasing the Company’s authorized common stock to 100 million shares, (ii) increasing the Company’s authorized preferred stock to 20 million shares, and (iii) reducing the par value of each of the Company’s common stock and preferred stock to $0.0001 per share. Common stock and additional paid-in capital for all periods presented in these financial statements have been adjusted retroactively to reflect the reduction in par value.

On December 17, 2021, the majority shareholder and board of directors approved an amendment to the amended and restated articles of incorporation that would change the Company’s name from Waterside Capital Corporation to Metavesco, Inc. The name change was approved by Financial Industry Regulatory Authority (“FINRA”) and was effective June 3, 2022.

In March 2022, the Company commenced operations as a web3 enterprise. The Company generates income as a liquidity provider, via decentralized exchanges such as Uniswap. Additionally, the Company farms tokens via Proof of Stake protocols on decentralized exchanges as well as centralized exchanges including Coinbase exchange. The Company also invests in promising NFT projects and virtual land, primarily on EVM protocols.

The Company is currently authorized to issue twenty-five thousand (25,000)twenty million (20,000,000) shares of preferred stock, with a par value of $1.00$0.0001 per share. There are zero (0)twenty two (22) shares of preferred stockSeries A Convertible Preferred Stock issued. The Company is also authorized to issue tenone hundred million (10,000,000)(100,000,000) shares of common stock, with a par value of $1.00$0.0001 per share. As of June 30, 2021,2022, and currently, 6,082,214 shares of common stock of the Company were outstanding. These shares are quoted over the counter with Pink OTC Markets Inc. under the ticker symbol “WSCC”“MVCO” and are held by 23 shareholders of record as of June 9, 2021.October 7, 2022. The Company does not have any other equity securities outstanding.

 

Current Business Strategy and Operations

 

The Company continues to explore options to either (i) enter into a new business, or, (ii) merge with, or otherwise acquire, an active business that would benefit from operating as a public entity. The New Board continues to search to identify the best possible candidate(s) in order to provide value to the shareholders of the Company. On April 22, 2020, the SEC issued an order declaring that the Company had ceased to be an investment company. The Company voluntarily files annual, quarterly, and current reports with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company will continuecontinues to list its common stock on the Pink OTC Markets for the benefit of its shareholders. As a result of these efforts, the Company is and holds itself out as being engaged primarily in the business of seeking either (i) a new business to enter into; or, (ii) merger or acquisition candidates, which would benefit from being public.

 

32

 

Our Business

 

We areOn September 2, 2021, the Company entered into a shell company as that term is defined under federal securities laws. Our business plan isStock Purchase Agreement (the “SPA”) by and between (i) the Company (ii) Ryan Schadel (“Buyer”) and (iii) Roran Capital, LLC (“Roran”). Roran agreed to seek (i) a new businesssell to enter into; or, (ii) acquire assets orthe Buyer 4,247,666 shares of an entity actively engaged incommon stock of the business that generates revenues in exchangeCompany held by Roran for our securities. We will not restrict our searcha total purchase price of $385,000. In conjunction with the SPA, Roran agreed to any specific business, industry, or geographical location,forgive all amounts due to Roran by the Company totaling $207,644 which is comprised of convertible note payable – related party, accrued interest payable – related party and we may participateadvances from related party. The Buyer acquired 4,247,666 shares of the Company’s Common Stock, representing 69.7% of the issued and outstanding shares of Common Stock. As such, the Schadel SPA resulted in a business venturechange of virtually any kind or nature. This discussioncontrol of our new business is purposefully general and is not meant to be restrictive of our virtually unlimited discretion to search for and enter potential business opportunities. Management anticipates that it may be able to participate in only one potential business venture because we have nominal assets and limited financial resources. This lack of diversification should be considered a substantial risk to our shareholders because it will not permit us to offset potential losses from one venture against gains from another.the Company.

 

Plan of Operations

We currently plan to investigateIn March 2022, the Company commenced operations as a web3 enterprise. The Company generates income as a liquidity provider, via decentralized exchanges such as Uniswap. Additionally, the Company farms tokens via Proof-of-Stake (“PoS”) protocols on decentralized exchanges, as well as centralized exchanges, including Coinbase. The Company also invests in non-fungible token (“NFT”) projects and if such investigation warrants, either (i) enter into a new business; or, (ii) acquire assets or shares of an entity actively engaged in business and which is seeking the perceived advantages of being a publicly held corporation. Our principal business objective for the next 12-months and beyond will be to achieve long-term growth potential through either entering into a new business or a combination with an existing business, rather than immediate, short-term earnings. We will not restrict our search for potential candidate target companies to any specific business, industry, or geographical location and, thus, may acquire, or enter into, any type of business.virtual land that it believes are promising, primarily on EVM protocols.

 

The analysisCompany has three areas of new business opportunities will be undertaken by or under the supervision of the New Board. We have not entered into any material definitive agreement with any party. In our efforts to analyze and evaluate a prospective target business, we will consider several factors, including, without limitation, the following:focus:

 

experience and skill of management and availability of additional personnel ofLiquidity Provider - In decentralized finance (DeFi), the target business;ability to trade assets from one to another is facilitated by Liquidity Pools (“LPs”) which generally contain a 50/50 balance between both underlying tokens. The Company expects to invest substantially in LPs to generate ongoing revenue. We expect that this revenue will fuel our other initiatives as we build the Company.
Staking - Like LPs, staking can provide potential passive revenue to the Company. Purchasing large blocks of lucrative PoS assets to grow the passive income portfolio is expected to be a major cornerstone to our success. This is a much greener approach to the traditional Proof of Work model, which is used by Bitcoin and Ethereum. Ethereum 2.0 is expected to be on PoS in the near future and our goal is to eventually become a validator on the network.
costs associated with effecting the business combination;
equity interest retained by our shareholders in the merged entity;
growthNFTs - The Company holds NFTs for capital appreciation and for potential of the target business;
capital requirements of the target business;
capital available to the target business;
stage of development of the target business;
proprietary features and degree of intellectual property or other protection of the target business;
the financial statements of the target business; and
the regulatory environment in which the target business operates.income from IP licensing.

 

4

The foregoing criteria are not intendedOn August 29, 2022, the Company announced its plan to be exhaustive, and any evaluation relating tobegin Bitcoin mining operations. Bitcoin mining has been part of the meritsCompany roadmap since entering the web3 space in March of a particular target business will be based, to2022, although our plans have been accelerated with the extent relevant, on the above factors, as well as other considerations we deem relevant. In connection with our evaluation of a prospective target business, we anticipate that we will conduct a due diligence review which will encompass, among other things, meeting with incumbent management as well as a review of financial, legal and other information.

The time and costs required to select and evaluate a target business (including conducting a due diligence review) and to structure and consummate the business combination (including negotiating and documenting relevant agreements and preparing requisite documents for filing pursuant to applicable corporate and securities laws) cannot be determined at this time. Our sole officer and director intend to devote only a very small portion of his time to our affairs, and, accordingly, the consummation of a business combination may require a longer time than if he devoted his full time to our affairs. However, he will devote such time as he deems reasonably necessary to carry out our business and affairs. The amount of time devoted to our business and affairs may vary significantly depending upon, among other things, whether we have identified a target business or are engagedrecent decrease in the price of Bitcoin. Mining equipment has become much more affordable as overleveraged miners are forced to sell equipment at reduced prices. Metavesco is in active negotiation of a business combination.

talks with suppliers for equipment and hosting space. We anticipate that various prospective target businessesthe Company will be brought to our attention from various sources, including securities broker-dealers, investment bankers, venture capitalists, bankers, and other members of the financial community, including, possibly, Roran.

Various impediments to a business combination or an entry into a new business may arise, such as appraisal rights afforded the shareholders of a target business under the laws of its state of the organization. This may prove to be a deterrent to a particular combination.

The way we participate in an opportunity will depend upon the nature of the opportunity, our respective needs and desires as well as those of the promoters of the opportunity, and the relative negotiating strength of ourselves and such promoters.

It is likely that we will acquire our participation in a business opportunity through the issuance of common stock or other securities. Although the terms of any such transaction cannot be predicted, it should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called “tax-free” reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the “Code”), depends upon the issuance to the shareholders of the acquired company of at least 80% of the common stock of the combined entities immediately following the reorganization. If a transaction were structured to take advantage of these provisions rather than other “tax-free” provisions provided under the Code, all prior shareholders would, in such circumstances, retain 20% or less of the total issued and outstanding shares. Under other circumstances, depending upon the relative negotiating strength of the parties, prior shareholders may retain substantially less than 10% of the total issued and outstanding shares. This could result in substantial additional dilution to the equity of those who were our shareholders prior to such reorganization.

Our present shareholders will likely not have control of a majority of our voting shares following a reorganization transaction. As part of such a transaction, our current director may resign, and new directors may be appointed without any vote by shareholders.

In the case of an acquisition, the transaction may be accomplished upon the sole determination of our management without any vote or approval by shareholders. In the case of a statutory merger or consolidation directly involving our Company, it will likely be necessary to call a shareholders’ meeting and obtain the approval of the holders of a majority of the outstanding shares. The necessity to obtain such stockholder approval may result in delay and additional expense in the consummation of any proposed transaction and will also give rise to certain appraisal rights to dissenting shareholders. Most likely, management will seek to structure any such transaction so as not to require stockholder approval, if possible.

It is anticipated that the investigation of specific business opportunities and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention and substantial cost for accountants, attorneys, and others. If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation would not be recoverable. Furthermore, even if an agreement is reached for the participation in place very soon to start mining operations at a specific business opportunity, the failure to consummate that transaction may resulthosted site in our loss of the related costs incurred.

5

During the year ended June 30, 2021, we did not engageTexas and then eventually a second site in any business activities that provided us with positive cash flows. As such, the costs of investigating and analyzing business combinations for the next 12-months and beyond will be paid with funds raised through other sources, which may not be available on favorable terms, if at all. The Company, at this time, does not intend to obtain funds in one or more private placements to finance the operation of any acquired business opportunity until the Company has successfully consummated such a merger or acquisition or entered into a new business. Instead, the Company intends to borrow money to finance ongoing operations.Georgia.

 

Government Regulations

 

The Company is no longer a registered investment company.

 

The Company’s common stock is a “penny stock,” as defined in Rule 3a51-1 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that the broker-dealer, not otherwise exempt from such rules, must make a special written determination that the penny stock is suitable for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure rules have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. So long as the Company’s common stock is subject to the penny stock rules, it may be more difficult to sell our common stock.

 

Patents, Trademarks, Franchises, Royalty Agreements or Labor Contracts

 

We have no current plans for any registrations such as patents, trademarks, copyrights, franchises, concessions, royalty agreements, or labor contracts. We will assess the need for any copyright, trademark, or patent applications on an ongoing basis.

 

Competition

 

The Company will remain an insignificant participant among the firms which engageOur current and future competition includes other digital assets focused companies, such as Coinshares International Limited and private operators that are in the acquisitionsame business as us.

Many of business opportunities. There are many established venture capitalour current and financial concerns thatpotential competitors have significantly greater financial and personnel resources and technical expertise than the Company. Given the Company’s extremely limited financiallonger histories, and greater brand recognition. They may devote more resources to technology, infrastructure, marketing and limited management availability, the Company will continuemay be able to be atmore rapidly develop their solutions. Other companies also may enter into business combinations or alliances that strengthen their competitive positions. Our small team and relative lack of capital is a significant competitive disadvantage compared to the Company’s competitors.disadvantage.

Employees

 

The Company currently has no employees. It isone employee, the sole officer, who is also the director, will manage the business of the Company. The sole officer and director may joinof the CompanyCompany. We generally work remotely and we anticipate as an employee in the future. The Company does not anticipate a need to engage any full-time employees at this time.we hire additional staff they will also work remotely.

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Available Information

 

The Company expects to continue to file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, proxy statements and other information with the SEC. Any materials filed by the Company with the SEC may be read and copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the SEC’s Public Reference Room is available by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains annual, quarterly and current reports, proxy statements and other information that issuers (including the Company) file electronically with the SEC. The Internet address of the SEC’s website is http://www.sec.gov. At some point in the future, we intend to make our reports, amendments thereto, and other information available, free of charge, on a website for the Company. At this time, the Company does not maintain aOur website and there is no estimate for when the Company will maintain such a website. can be found at www.metavesco.com.

Our corporate offices are located at 140 West 31st Street, Second Floor, New York, New York, 10001.410 Peachtree Pkwy, Suite 4245, Cummings, GA 30041. Our telephone number is 212-686-1515.678-241-5898.

 

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ITEM 1A.RISK FACTORS

ITEM 1A RISK FACTORS

 

You should carefully consider the risks described below, together with the other information set forth in this report, which could materially affect our business, financial condition, and future results. The risks described below are not the only risks facing our Company. Risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and operating results.

Risks Related to Our Business

 

We have no recent operating history or basis for evaluating prospects.

We currently have no operating business or immediate plans to develop one. We are seeking to enter into a merger or business combination with another operating company or to enter into a new business. To date, our efforts have been limited to meeting our regulatory filing requirements and searching for a business target.

We have limited resources and no revenues from operations and will need additional financing in order to execute any business plan.

We have limited resources, no revenues from operations to date, and our cash on hand will not be sufficient to satisfy our cash requirements during the next twelve months. In addition, we will not achieve any revenues until, at the earliest, the consummation of a merger or similar business combination and we cannot ascertain our capital requirements until such time. There can be no assurance that determinations ultimately made by us will permit us to achieve our business objectives.

Our business will have no revenues unless and until we merge with or acquire or start an operating business.

We have no revenues from operations. We may not realize any revenues unless and until we successfully merge with or acquire an operating business or start our own operations.

Since the Company has no assets and no present source of revenues, we are dependent upon the financial support of Roran.

At present, our business activities are limited to seeking potential business opportunities. Due to our limited financial and personnel resources, there is only a limited basis upon which to evaluate our prospects for achieving our intended business objectives. We have no assets and have no operating income, revenues, or cash flow from operations. Roran is providing us with funding, on an as-need basis, under a loan arrangement, with amounts advanced limited to enabling us to continue our corporate existence and our business objective to seek new business opportunities, as well as to fund the costs, including professional accounting and legal fees. The amount to be loaned by Roran in the interim financing arrangement is limited to $250,000.

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We will be able to effect at most one merger or similar business combination or enter into just one new business and thus may not have a diversified business.

Our resources are limited, and we will most likely have the ability to effect only a single merger or similar business combination or enter into a single new business. This probable lack of diversification will subject us to numerous economic, competitive and regulatory developments, any or all of which may have a material adverse impact upon the particular industry in which we may operate after the consummation of a merger. We will become dependent upon the development or market acceptance of a single or a limited number of products, processes, or services.

We depend substantially upon our chief executive officer to make all management decisions.

Our ability to effect a merger or similar business combination or enter into a new business will be dependent upon the efforts of our sole director and officer, Zindel Zelmanovitch. Notwithstanding the importance of Mr. Zelmanovitch, we have not entered into any employment agreement or other understanding with Mr. Zelmanovitch concerning compensation or obtained any “key man” life insurance on any of his life. The loss of the services of Mr. Zelmanovitch will have a material adverse effect on achieving our business objectives and success. We will rely upon the expertise of Mr. Zelmanovitch and do not anticipate that we will hire additional personnel.

There is competition for those private companies suitable for a business combination of the type contemplated by management.

We are in a highly competitive market for a small number of business opportunities, which could reduce the likelihood of consummating a successful business combination. We are and will continue to be an insignificant participant in the business of seeking mergers with joint ventures with and acquisitions of small private and public entities. A large number of established and well-financed entities, including small public companies and venture capital firms, are active in mergers and acquisitions of companies that may be desirable target candidates for us. Nearly all these entities have significantly greater financial resources, technical expertise, and managerial capabilities than we do; consequently, we will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. These competitive factors may reduce the likelihood of our identifying and consummating a successful business combination.

Future success is highly dependent on the ability of management to locate and attract a suitable target business opportunity.

The nature of our operations is highly speculative. The success of our plan of operation will depend to a great extent on the operations, financial condition, and management of the identified business opportunity. While management intends to seek business combination(s) with entities having established operating histories, we cannot assure you that we will be successful in locating candidates meeting that criterion. In the event we complete a business combination, the success of our operations may be dependent upon the management of the successor firm or venture partner firm and numerous other factors beyond our control.

There is no assurance of a business combination or other transaction.

No assurances can be given that we will successfully identify and evaluate suitable business opportunities or that we will conclude a business combination. We cannot guarantee that we will be able to negotiate a business combination on favorable terms, and there is consequently a risk that funds allocated to the purchase of our shares will not be invested in a company with active business operations.

Management will change upon the consummation of a business combination.

After the closing of a merger or business combination, it is likely our current management will not retain any control or managerial responsibilities. Upon such an event, Mr. Zelmanovitch intends to resign from his positions with us.

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Current shareholders will be immediately and substantially diluted upon a merger or business combination.

Our Articles of Incorporation authorized the issuance of (i) twenty-five thousand (25,000) shares of preferred stock, with a par value of $1.00 per share, of which none are issued; and, (ii) ten million (10,000,000) shares of common stock, with a par value of $1.00 per share, of which a total of 6,082,214 shares have been issued. To the extent that additional shares of common stock are authorized and issued in connection with a merger or business combination, our shareholders could experience significant dilution of their respective ownership interests. Furthermore, the issuance of a substantial number of shares of common stock may adversely affect prevailing market prices, if any, for the common stock and could impair our ability to raise additional capital through the sale of equity securities.

There are relatively low barriers to becoming a blank check company or shell company, thereby increasing the competition for a small number of business opportunities.

There are relatively low barriers to becoming a blank check or shell company. A newly incorporated company with a single stockholder and sole officer and director may become a blank check company or shell company by voluntarily subjecting itself to the SEC reporting requirements by filing and seeking effectiveness of Form 10, thereby registering its common stock pursuant to Section 12(g) of the Securities and Exchange Act of 1934 with the SEC. Assuming no comments to the Form 10 have been received from the SEC, that registration statement is automatically deemed effective 60 days after filing the Form 10 with the SEC. The relative ease and low cost with which a company can become a reporting blank check or shell company can increase the number of public companies seeking a business combination, thereby adding further competition to an already highly competitive market for a limited number of businesses that will consummate a successful business combination.

Our management will only be able to devote a limited amount of time to seeking a target company or new business, which may adversely impact our ability to identify a suitable acquisition candidate.

While seeking a business combination or developing our business plan, management anticipates devoting only a limited amount of time to the Company’s affairs in total. Our sole director and officer, Zindel Zelmanovitch, has not entered into a written employment agreement with us and is not expected to do so in the foreseeable future. This limited commitment may adversely impact our ability to identify and consummate a successful business combination. If we pursue a business combination or develop our plan of operations, we will need to have increased management involvement. There is no assurance that we will be able to expand our management resources to implement a business combination or business plan.

The time and cost of preparing a private company to become a public reporting company may preclude us from entering into a merger or acquisition with the most attractive private companies.

Target companies that fail to comply with SEC reporting requirements may delay or preclude acquisition. The time and additional costs that may be incurred by some target entities to prepare these statements may significantly delay or essentially preclude the consummation of an acquisition. Otherwise, suitable acquisition prospects that do not have or are unable to obtain the required audited statements may be inappropriate for acquisition.

Any potential acquisition or a merger with a foreign company may subject us to additional risks.

If we enter into a business combination with a foreign concern, we will be subject to risks inherent in business operations outside of the United States. These risks include, for example, currency fluctuations, regulatory problems, punitive tariffs, unstable local tax policies, trade embargoes, risks related to the shipment of raw materials and finished goods across national borders and cultural and language differences. Foreign economies may differ favorably or unfavorably from the United States economy in growth of the gross national product, rate of inflation, market development, rate of savings, and capital investment, resource self-sufficiency and balance of payments positions, and in other respects.

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Our holdings are controlled by one shareholder which owns approximately 70% of our issued and outstanding stock.

 

70% of our issued and outstanding common stock is controlled by Roran Capital, which is beneficially owned by Yitzhak Zelmanovitch, the son ofMr. Schadel, our sole officer and director, Zindel Zelmanovitch.director. As a result, Yitzhak ZelmanovitchMr. Schadel can direct the affairs of the Company as the majority shareholder and there is no assurance that any decisions made through a shareholder vote will be the same decisions that one or more minority shareholders would make.

 

The Company mayhas a limited operating history.

The Company has a limited history of operations and is in the early stage of development. As such, the Company will be subject to certain tax consequencesmany risks common to such enterprises, including undercapitalization, cash shortages, limitations with respect to personnel, financial and other resources and lack of revenues. There is no assurance that the Company will be successful in our business, which may increase our costachieving a return on shareholders’ investment and the likelihood of doing business.

We may notsuccess must be considered in light of its early stage of operations. There can be no assurance that the Company will be able to structure an acquisition to result in tax-free treatment for the companies or their shareholders, which could deter third parties from entering into certain business combinations with us or result in being taxed on consideration received in a transaction. Currently, a transaction may be structured to result in tax-free treatment to both companies, as prescribed by various federal and state tax provisions. We intend to structuredevelop any business combination to minimize the federal and state tax consequences to both us and the target entity; however, we cannot guarantee that the business combination will meet the statutory requirements of a tax-free reorganizationits projects profitably or that the partiesany of its activities will obtain the intended tax-free treatment upon a transfer of stock or assets. A non-qualifying reorganization could result in the imposition of both federal and state taxes that may have an adverse effect on both parties to the transaction.generate positive cash flow.

 

As a blank check company, any registered offering of our securities will have to comply with Rule 419 under the Securities Act of 1933, which could impact our ability to raise equity funds from investors.

In the event we register an offering of our securities with the SEC while we are a blank check company, we will have to comply with Rule 419 under the Securities Act of 1933. Rule 419 is a cumbersome rule applicable to blank check companies selling penny stocks in a registered offering. Rule 419 requires that the gross proceeds raised in such an offering be deposited into an escrow account with a financial institution insured by the FDIC or in a separate bank account established by a registered broker or dealer in which the broker or dealer acts as trustee for the persons having the beneficial interests in the account. Furthermore, Rule 419 requires the securities issued to investors in the blank check offering be issued in the name of such investors, but certificates representing such securities must be deposited into the escrow account instead of being delivered directly to investors,The Company’s compliance and the records of the escrow agent, maintained in good faith and in the regular course of business, must show the name and interest of each party to the account. The initial registration statement for the blank check offering shall disclose the specific terms of the offering, including, but not limited to, (i) the terms and provisions of the escrow or trust agreement and the effect thereof upon the company’s right to receive funds and the effect of the escrow or trust agreement upon the investor’s funds and securities required to be deposited into the escrow or trust account, including, if applicable, any material risk of non-insurance of investors’ funds resulting from deposits in excess of the insured amounts; and, (ii) the obligation of the company to provide, and the right of the purchaser to receive, information regarding an acquisition, including the requirement that pursuant to Rule 419, investors confirm in writing their investment in the Company’s securities. Rule 419 imposes certain additional disclosure obligations on companies making blank check offerings. Due to the requirements of Rule 419 and the fact that investors investing in blank check offerings have no idea if or when an acquisition or merger transaction will occur, or if the acquisition or merger target is worthy of the investors’ money or risks, it may be difficult for the company to complete a blank check offering successfully and even if the company is successful in raising funds in such an offering, itmanagement programs may not be able to find an attractive acquisition or merger candidate. Therefore, investors in a blank check offering will have their funds at risk for a prolonged period of time, and they may not be happy with the results of an acquisition or merger if one were to occur.

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Risks Related to Ownership of Our Common Stock

Our common stock is a “penny stock” which may restrict the ability of shareholders to sell our common stock in the secondary market.effective.

 

The SEC has adopted regulations which generally define “penny stock”Company’s ability to comply with applicable laws and rules will be an equity security that has a market price, as defined, of less than $5.00 per share, or an exercise price of less than $5.00 per share, subject to certain exceptions, including an exception of equity security that is quoted on a national securities exchange. Our Common Stock is not quoted on a national exchange but is tradedlargely dependent on the OTC Marketplace Pink Sheets (the “Pink Sheets”). Thus, they are subject to rules that impose additional sales practice requirements on broker-dealers who sell these securities. For example, the broker-dealer must make a special suitability determination for the purchaserestablishment and maintenance of such securitiescompliance, review and have received the purchaser’s written consent to the transactions prior to the purchase. Additionally, the rules require the delivery, prior to the transaction, of a disclosure schedule prepared by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered underwriter, and current quotations for the securities, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, among other requirements, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. The “penny stock” rules may restrictreporting systems, as well as the ability to attract and retain qualified compliance and other risk management personnel. The Company cannot provide any assurance that its compliance policies and procedures will always be effective or that the Company will be successful in monitoring or evaluating its risks. In the case of our shareholders to sell our common stock inalleged non-compliance with applicable laws or regulations, the secondary market.

Trading in our securitiesCompany could be subject to extreme price fluctuationsinvestigations and judicial or administrative proceedings that could adversely affect your investment.

Historically speaking, the market prices for securities of small publicly traded companies have been highly volatile. Publicized events and announcements may have a significant impact on the market price of our common stock. In addition, the stock market from time to time experiences extreme price and volume fluctuations that particularly affect the market prices for small publicly traded companies and which are often unrelated to the operating performance of the affected companies.

Because we may seek to complete a business combination through a “reverse merger,” we may not be able to attract the attention of major brokerage firms following such a transaction.

Additional risks may exist since we may assist a privately held business to become public through a “reverse merger”. Securities analysts of major brokerage firms may not provide coverage of our Company since there is no incentive to brokerage firms to recommend the purchase of our common stock. No assurance can be given that brokerage firms will want to conduct any secondary offerings on behalf of our post-merger Company in the future.

We cannot assure you that following a business combination with an operating business or business start-up, our common stock will be listed on any securities exchange higher than the Pink Sheets.

Although our common stock is currently quoted on the Pink Sheet, securities quoted on this trading platform often lack liquidity and analyst coverage, which may result in lower pricessubstantial penalties or civil lawsuits, including by customers, for our common stock than mightdamages, restitution or other remedies, which could be obtained in a larger, more established stock exchangessignificant. Any of these outcomes, individually or together, may among other things, materially and may also result in a larger spread between the bid and asked price for our common stock. Following a business combination or business start-up, we may seek the listing of our common stock on NASDAQ or any other exchange, which represents a higher listing than the Pink Sheets. However, we cannot assure you that we will be able to meet the initial listing standards of any of those, or that we will be able to maintain a listing of our common stock on any stock exchange other than the Pink Sheets. Until our common stock is listed on the NASDAQ or another stock exchange, we expect that our common stock would be eligible to continue to trade on the Pink Sheets, where our shareholders may find it more difficult to dispose of shares or obtain accurate quotations as to the market value of our common stock. If a market for our common stock does not develop or is not sustained, it may be difficult for our shareholders to sell their shares of common stock at an attractive price or at all. In the absence of an active trading market for our common stock, shareholders may not be able to sell their common stock at or above the price at which they acquired the shares or at the time that they would like to sell. We cannot predict the prices at which our common stock will trade. In addition, we cannot assure you that we will be able to meet the initial listing standards of any national securities exchange, or, if we do meet such initial qualitative listing standards, that we will be able to maintain any such listing. In addition, we would be subject to an SEC rule that, if it failed to meet the criteria set forth in such rule, imposes various practice requirements on broker-dealers who sell securities governed by the rule to persons other than established customers and accredited investors. Consequently, such rule may deter broker-dealers from recommending or selling our common stock, which may further affect its liquidity. This would also make it more difficult for us to raise additional capital following a business combination.

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Liquidity is limited, and we may be unable to obtain a listing of our common stock on a more liquid market.

Our common stock is quoted on the Pink Sheets, which provides significantly less liquidity than a securities exchange (such as the American or New York Stock Exchange) or an automated quotation system (such as the Nasdaq Global Market or Capital Market). There is the uncertainty that we will ever be accepted for a listing on an automated quotation system or national securities exchange.

Substantial sales of our common stock may impact the market price of our common stock.

Future sales of substantial amounts of our common stock, including shares that we may issue upon exercise of options and warrants, and the resale of shares by investors who have registration rights, could adversely affect the market price of our common stock. Furthermore, if we raise additional funds through the issuance of common stock or securities convertible into our common stock, the percentage ownership of our shareholders will be reduced,Company’s reputation, financial condition, investment and trading strategies, and asset value and the pricevalue of our common stock may fall.

We do not expect to pay dividends for the foreseeable future, and investors must look solely to the stock appreciation for a return on theirany investment in us.

We have no plans to pay, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain all future earnings to fund the development and growth of our business. Any payment of future dividends will be at the discretion of our board of directors and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that the board of directors deems relevant. Investors may need to rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize a return on their investment. Investors seeking cash dividends should not purchase ourCompany’s common stock.

 

FINRA sales practice requirementsThe Company may also limit a shareholder’s abilityrequire additional funds to buy and sell our stock.finance its operations.

 

In additionAdditional funds, raised through debt or equity offerings, may be needed to finance the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, the broker-dealer must have reasonable grounds for believingCompany’s future activities. There can be no assurance that the investment is suitable for that customer. Prior to recommending low-priced, speculative securities to their non-institutional customers, broker-dealers must make reasonable effortsCompany will be able to obtain information aboutadequate financing in the customer’s financial status, tax status, investment objectives,future or that the terms of such financing will be favorable. Failure to obtain such additional financing could cause the Company to reduce or terminate its operations.

If additional funds are raised through further issuances of equity or securities convertible into equity, existing shareholders could suffer significant dilution, and any new equity securities issued could have rights, preferences and privileges superior to those of holders of the Company’s common stock. Any debt financing secured in the future could involve restrictive covenants relating to capital raising activities and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirementsfinancial and operational matters, which may make it more difficult for broker-dealersthe Company to recommend that their customers buy our common stock, which may limit your abilityobtain additional capital and to buy and sell our stock and have an adverse effect on the market for our shares.pursue business opportunities.

 

Our publicly-filed reports are reviewed from timeMarket adoption of digital assets has been limited to time by the SEC,date and any significant changes or amendments required as a result of any such review may result in material liability to us and may have a material adverse impact on the trading price of our common stock.further adoption is uncertain.

 

Currently, there is relatively small use of digital assets in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect an investment in the Company’s common stock. Digital assets have only recently become accepted as a means of payment for goods and services by certain major retail and commercial outlets and use of digital assets by consumers to pay such retail and commercial outlets remains limited. Conversely, a significant portion of digital asset demand is generated by speculators and investors seeking to profit from the short- or long-term holding of tokens. A lack of expansion by digital assets into the retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in the market price of these assets. Further, if fees increase for recording transactions on these blockchains, demand for digital assets may be reduced and prevent the expansion of the networks to retail merchants and commercial businesses, resulting in a reduction in the price of these assets.

The reportsvalue of digital assets may be subject to momentum pricing risk.

Momentum pricing typically is associated with growth stocks and other securities filingsassets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Market prices of publicly-traded companiesdigital assets are determined primarily using data from various exchanges, over-the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of digital assets, inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value of the Company’s digital asset holdings and the value of the Company’s common stock.

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A decline in the adoption and use of digital assets could materially and adversely affect the performance of the Company.

Because digital assets are a relatively new asset class and a technological innovation, they are subject to review bya high degree of uncertainty. As a related but separate issue from that of the SEC from timeregulatory environment, the adoption, growth and longevity of any digital asset will require growth in its usage and in the blockchain for various applications. A lack of expansion in use of digital assets and blockchain technologies would adversely affect the financial performance of the Company. In addition, there is no assurance that any digital assets will maintain their value over the long term. Even if growth in the use of any digital assets occurs in the near or medium term, there is no assurance that such use will continue to timegrow over the long term. A lack of expansion of digital assets into the retail and commercial markets, may result in increased volatility or a reduction in the market price of these assets. Further, if fees increase for the purpose of assisting companies in complying with applicable disclosure requirements. The SEC is required, pursuant to the Sarbanes-Oxley Act of 2002, to undertake a comprehensive review of a company’s reports at least once every three years, although an SEC reviewrecording transactions on these blockchains, demand for digital assets may be initiated at any time. While we believe that our previously filed SEC reports comply,reduced and we intend that all future reports will comply, in all material respects withprevent the published rules and regulationsexpansion of the SEC, we could be requirednetworks to modify, amend, or reformulate information containedretail merchants and commercial businesses, resulting in our filings as a resultreduction in the price of these assets. A contraction in use of any SEC review. Any modification, amendment, or reformulation of information contained in such reports could be significant anddigital asset may result in material liability to usincreased volatility or a reduction in prices, which could materially and have a material adverse impact onadversely affect the Company’s investment and trading pricestrategies, the value of ourits assets and the value of any investment in the Company’s common stock.

 

We may invest or spend our cash in ways with which you may not agree or in ways which may not yield a significant return.

 

Our managementMr. Schadel, our sole officer and director and a significant stockholder, has considerable discretion in the use of our cash. Our cash may be used for purposes that do not increase our operating results or market value. Until the cash is used, it may be placed in investments that do not produce significant income or that may lose value. The failure of our management to invest or spend our cash effectively could result in unfavorable returns and uncertainty about our prospects, each of which could cause the price of our common stock to decline.

 

Our digital assets may be subject to concentration risk.

Concentration risk is the risk of amplified losses that may occur from having a large portion of our holdings in digital assets. Digital assets returns may be highly corelated and may also be Illiquid. Investments within the same industry, geographic region or security type tend to be highly correlated, meaning that what happens to one investment is likely to happen to the others. Digital assets may also be difficult to sell off quickly. Should we need quick access to cash and are heavily invested in illiquid securities, we may not be able to tap this money in a timely or cost-efficient manner.

Risks Related to our Operations

Cyber-attacks, data breaches or malware may disrupt our operations and trigger significant liability for us, which could harm our operating results and financial condition, and damage our reputation or otherwise materially harm our business.

As a publicly traded company, we may experience cyber-attacks and other attempts to gain unauthorized access to our systems on a regular basis. There is a risk that some or all of our cryptocurrencies could be lost or stolen as a result of one or more of these incursions. As we increase in size, we may become a more appealing target of hackers, malware, cyber-attacks or other security threats, and, despite our implementation of strict security measures and it is impossible to eliminate all such vulnerability. For instance, we may not be able to ensure the adequacy of the security measures employed by third parties, such as our service providers. Efforts to limit the ability of malicious actors to disrupt the operations of the internet or undermine our own security efforts may be costly to implement and may not be successful. Such breaches, whether attributable to a vulnerability in our systems or otherwise, could result in claims of liability against us, damage our reputation and materially harm our business.

We have not to date experienced a material cyber-event; however, the occurrence of any such event in the future could subject us to liability give rise to legal and/or regulatory action, which could damage our reputation or otherwise materially harm our business, operating results, and financial condition.

Incorrect or fraudulent digital assets transactions may be irreversible and we could lose access to our digital assets.

Digital asset transactions are not, from an administrative perspective, reversible without the consent and active participation of the recipient of the digital assets from the transaction. Because of the decentralized nature of the blockchain, once a transaction has been verified and recorded in a block that is added to the blockchain, an incorrect transfer of a digital or a theft thereof generally will not be reversible, and we may not have sufficient recourse to recover our losses from any such transfer or theft. It is possible that, through computer or human error, or through theft or criminal action, our rewards or fees could be transferred in incorrect amounts or to unauthorized third parties, or to uncontrolled accounts. Though recent high profile enforcement actions against individuals laundering stolen digital assets have demonstrated some means of bringing malicious actors to justice for their theft, the stolen digital assets is likely to remain unrecoverable. Furthermore, we must possess both the unique public and private keys to our digital wallets to gain access to our digital assets and the loss of a private key required may be irreversible. Therefore, if we lose, or if a malicious actor successfully denies us access to our private keys, we may be permanently denied access to the digital assets held in the wallet corresponding to the lost, stolen or blocked keys. Though we have taken and continue to take reasonable steps to secure our private keys. if we were to lose access to our private keys or otherwise experience data loss relating to our digital wallets, we could effectively lose access to and the ability to use our digital assets. Moreover, we may be unable to secure insurance policies for our digital assets at rates or on terms acceptable to us, if at all. To the extent that we are unable to recover our losses from such action, error or theft, such events could have a material adverse effect on our business, results of operations and financial condition.

Our business could be harmed by prolonged power and internet outages, shortages, or capacity constraints.

Our operations require access to high-speed internet to be successful. If we lose internet access for a prolonged period, we may be required to reduce our operations or cease them altogether. If this occurs, our business and results of operations may be materially and adversely affected.

Risks Related to Governmental Regulation and Enforcement

Regulatory changes or actions may alter the nature of an investment in us or restrict the use of digital assets in a manner that adversely affects our business, prospects, or operations.

As digital assets have grown in both popularity and market size, governments around the world have reacted differently to digital assets; certain governments have deemed them illegal, and others have allowed their use and trade without restriction, while in some jurisdictions, such as in the U.S., subject the mining, ownership and exchange of digital assets to extensive, and in some cases overlapping, unclear and evolving regulatory requirements. Ongoing and future regulatory actions could have a material adverse effect on our business, prospects or operations.

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Our interactions with a blockchain may expose us to SDN or blocked persons and new legislation or regulation could adversely impact our business or the market for cryptocurrencies.

The Office of Financial Assets Control (“OFAC”) of the U.S. Department of Treasury requires us to comply with its sanction program and not conduct business with persons named on its specially designated nationals (“SDN”) list. However, because of the pseudonymous nature of blockchain transactions we may inadvertently and without our knowledge engage in transactions with persons named on OFAC’s SDN list. Our Company’s policy prohibits any transactions with such SDN individuals, but we may not be adequately capable of determining the ultimate identity of the individual with whom we transact with respect to selling cryptocurrency assets. Moreover, the use of cryptocurrencies, including Bitcoin, as a potential means of avoiding federally-imposed sanctions, such as those imposed in connection with the Russian invasion of Ukraine. For example, on March 2, 2022, a group of United States Senators sent the Secretary of the United States Treasury Department a letter asking Secretary Yellen to investigate its ability to enforce such sanctions vis-à-vis Bitcoin, and on March 8, 2022, President Biden announced an executive order on cryptocurrencies which seeks to establish a unified federal regulatory regime for cryptocurrencies. We are unable to predict the nature or extent of new and proposed legislation and regulation affecting the cryptocurrency industry, or the potential impact of the use of cryptocurrencies by SDN or other blocked or sanctioned persons, which could have material adverse effects on our business and our industry more broadly. Further, we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties as a result of any regulatory enforcement actions, all of which could harm our reputation and affect the value of our common stock.

Digital assets may be made illegal in certain jurisdictions which could adversely affect our business prospects and operations.

Although we do not anticipate any material adverse regulations on digital assets in our jurisdictions of operation, it is possible that state or federal regulators may seek to impose harsh restrictions or total bans on digital assets which may make it impossible for us to do business. Further, although digital assets in general are largely unregulated in most countries (including the United States), regulators in certain jurisdictions may undertake new or intensify existing regulatory actions in the future that could severely restrict the right to mine, acquire, own, hold, sell, or use digital assets or to exchange it for traditional fiat currency such as the United States Dollar. Such restrictions may adversely affect us as the large-scale use of digital assets as a means of exchange is presently confined to certain regions globally. Such circumstances could have a material adverse effect on us, which could have a material adverse effect on our business, prospects or operations and potentially the value of digital assets we acquire and thus harm investors.

The Company will have to adapt to respond to evolving security risks.

As technological change occurs, the security threats to the Company’s digital assets will likely adapt, and previously unknown threats may emerge. The ability of the Company and Coinbase to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of their assets. To the extent that the Company or Coinbase is unable to identify and mitigate or stop new security threats, The Company’s assets may be subject to theft, loss, destruction or other attack.

The majority of the Company’s digital assets are held in Self Custody (Non-Custodial) wallets. The Company holds the majority of its digital assets in Self Custody (Non-Custodial) wallets. These wallets are used to interact with Decentralized Exchanges and other DeFi focused protocols. Mr. Schadel, our sole officer and director and our majority stockholder, is currently the holder of the private keys that provide access to these wallets.

Additionally, the Company from time to time holds assets at Coinbase, a SOC 1/ SOC 2 certified digital asset custodian. If Coinbase were to be subject to a malicious attack or otherwise cease its operations, the Company will be at risk of losing the majority of its digital assets. There is no assurance that Coinbase will not be subject to any such attack and there is no guarantee that Coinbase won’t cease its operations.

Banks may not provide banking services, or may cut off banking services, to businesses that provide digital asset-related services.

A number of companies that provide digital asset-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to digital asset-related companies, or companies that accept digital assets, for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide digital asset-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may decrease the usefulness of digital assets as a payment system and harm public perception of digital assets. Similarly, the usefulness of digital assets as a payment system and the public perception of digital assets could be damaged if banks were to close the accounts of many or of a few key businesses providing digital asset-related services. This could decrease the market prices of digital assets, and adversely affect the value of the Company’s digital asset holdings and the Company’s common stock.

The Company’s business is exposed to the potential misuse of digital assets and malicious actors.

Since the existence of digital assets, there have been attempts to use them for speculation or malicious purposes. Although lawmakers increasingly regulate the use and applications of digital assets, and software is being developed to curtail speculative and malicious activities, there can be no assurances that those measures will sufficiently deter those and other illicit activities in the future. Advances in technology, such as quantum computing, could lead to a malicious actor or botnet (a voluntary or hacked collection of computers controlled by networked software coordinating the actions of the computers) being able to alter the blockchain on which digital asset transactions rely. In such circumstances, the malicious actor or botnet could control, exclude or modify the ordering of transactions, or generate new digital assets or transactions using such control. The malicious actor or botnet could double spend its own digital assets and prevent the confirmation of other users’ transactions for so long as it maintains control. Such changes could adversely affect an investment in the Company’s common stock.

The security procedures and operational infrastructure of the Company and Coinbase may be breached due to the actions of outside parties, error or malfeasance of an employee of the Company or Coinbase, or otherwise, and, as a result, an unauthorized party may obtain access to the Company’s digital asset accounts, private keys, data or tokens. Additionally, outside parties may attempt to fraudulently induce employees of the Company or Coinbase to disclose sensitive information in order to gain access to the infrastructure of the Company or Coinbase. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event, and often are not recognized until launched against a target, The Company may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of the Company’s digital assets account occurs, the market perception of the effectiveness of its security protocols could be harmed and the value of the Company’s common stock could be materially adversely affected.

6

The Company’s use of proprietary and non-proprietary software, data and intellectual property may be subject to substantial risk.

The Company’s token selection strategy may rely heavily on the use of proprietary and non-proprietary software, data and intellectual property of third parties in the digital asset sector. The reliance on this technology and data is subject to a number of important risks. For example, the operation of any element of the digital assets network, or any other electronic platform, may be severely and adversely affected by the malfunction of technology. For example, an unforeseen software or hardware malfunction could occur as a result of a virus or other outside force, or as result of a design flaw in the design and operation of the network or platform. In addition, the underlying technology of the tokens themselves, may be inactive for periods of time, known as “downtime” and could have serious adverse effects on our business.

Risks Related to Ownership of Our Common Stock

Nevada law contains provisions that could discourage, delay or prevent a change in control of our company, prevent attempts to replace or remove current management and reduce the market price of our stock.

Certain provisions of Nevada law described below may make us a less attractive candidate for acquisition, which may adversely impact the value of the shares of our capital stock held by our stockholders. We have not opted out of these provisions in our Bylaws, as permitted under the Nevada Revised Statutes.

Nevada Revised Statutes Sections 78.411 through 78.444 (the “Nevada Combinations Statute”) generally prohibit “combinations” including mergers, consolidations, sales and leases of assets, issuances of securities and similar transactions by a Nevada corporation having a requisite number of stockholders of record (of which we are one) with any person who beneficially owns (or any affiliate or associate of the corporation who within the previous two years owned), directly or indirectly, 10% or more of the voting power of the outstanding voting shares of the corporation (an “interested stockholder”), within two years after such person first became an interested stockholder unless (i) the board of directors of the corporation approved the combination or transaction by which the person first became an interested stockholder before the person first became an interested stockholder or (ii) the board of directors of the corporation has approved the combination in question and, at or after that time, such combination is approved at an annual or special meeting of the stockholders of the target corporation, and not by written consent, by the affirmative vote of holders of stock representing at least 60% of the outstanding voting power of the target corporation not beneficially owned by the interested stockholder or the affiliates or associates of the interested stockholder.

Two years after the date the person first became an interested stockholder, the Nevada Combinations Statute prohibits any combination with that interested stockholder unless (i) the board of directors of the corporation approved the combination or transaction by which the person first became an interested stockholder before the person first became an interested stockholder or (ii) such combination is approved by a majority of the outstanding voting power of the corporation not beneficially owned by the interested stockholder or any affiliate or associate of the interested stockholder. The Nevada Combinations Statute does not apply to combinations with an interested stockholder after the expiration of four years from when the person first became an interested stockholder.

Because there has been limited precedent set for financial accounting of digital assets, the determination that we have made for how to account for digital assets transactions may be subject to change.

Because there has been limited precedent set for the financial accounting of cryptocurrencies and related revenue recognition and no official guidance has yet been provided by the FASB or the SEC, it is unclear how companies may in the future be required to account for cryptocurrency transactions and assets and related revenue recognition. A change in regulatory or financial accounting standards could result in the necessity to change our accounting methods and restate our financial statements. Such a restatement could adversely affect the accounting for our newly mined cryptocurrency rewards and more generally negatively impact our business, prospects, financial condition and results of operations. Such circumstances would have a material adverse effect on our ability to continue as a going concern or to pursue our new strategy at all, which would have a material adverse effect on our business, prospects or operations as well as and potentially the value of any cryptocurrencies we hold or expects to acquire for our own account and harm investors.

We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.

We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”). Section 404 requires that we document and test our internal control over financial reporting and issue management’s assessment of our internal control over financial reporting. Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2022. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework(2013). A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Based on our assessment, as of June 30, 2022, we concluded that our internal control over financial reporting contained material weaknesses. To remediate these material weaknesses, our management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively.

We believe that these actions will remediate the material weakness. However, the remediation cannot be deemed successful until the applicable controls operate for a sufficient period of time and our management has concluded, through testing, that these controls are operating effectively. If we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, the accuracy and timeliness of the filing of our annual and quarterly reports may be materially adversely affected and could cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock. In addition, a material weakness in the effectiveness of our internal control over financial reporting could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements, each of which could have a material adverse effect on our business, results of operations and financial condition.

Substantial sales of our common stock may impact the market price of our common stock.

Future sales of substantial amounts of our common stock, including shares that we may issue upon exercise of options and warrants could adversely affect the market price of our common stock. Furthermore, if we raise additional funds through the issuance of common stock or securities convertible into our common stock, the percentage ownership of our shareholders will be reduced, and the price of our common stock may fall.

7
ITEM 1B.UNRESOLVED STAFF COMMENTS

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

Not applicable.

ITEM 2.PROPERTIES

ITEM 2. PROPERTIES

 

We do not currently own any property. The Company’s corporate documents are stored at a storage facility. We share office space with Roran, for which we are not charged a fee. Our administrative functions are provided through Roran, for which we are not charged a fee. We may need to rent office space in the future.month to month from Regus for $281 per month. We generally work remotely and we anticipate as we hire additional staff they will also work remotely. As of August 25, 2021,October 7, 2022, we believe that our properties are suitable and adequate to meet our anticipated needs.

ITEM 3.LEGAL PROCEEDINGS

 

Although we may, fromITEM 3. LEGAL PROCEEDINGS

From time to time, we may be involved in routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate amount of liability, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect our financial condition, results of operations and liquidity. In addition, the ultimate outcome of any litigation is uncertain. Any outcome (including any for the actions described above), whether favorable or unfavorable, may materially and adversely affect us due to legal costs and expenses, diversion of management attention and other factors. We expense legal costs in the period incurred. We cannot assure you that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against us in the future, and these matters could relate to prior, current or future transactions or events.

We are not currently a party to certain lawsuits in the ordinary course of business, weany other material legal proceedings. We are not currently involvedaware of any pending or threatened litigation against us that in any lawsuits thatour view would have a material adverse effect on our results of operations,business, financial condition, liquidity, or cash flows.operating results. However, legal claims are inherently uncertain, and we cannot assure you that we will not be adversely affected in the future by legal proceedings.

ITEM 4.MINE SAFETY DISCLOSURES

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

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PART II

 

ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY; RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY; RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Information About Our Common Stock

 

Our shares are quoted on the Over-the-Counter Electronic Bulletin Board (OTCBB) in theOTC Pink Sheets under the symbol “WSCC”“MVCO”. The OTCBBOTC Market is a regulated quotation servicenetwork of security dealers who buy and sell stock. The dealers are connected by a computer network that displays real-time quotes, last sale prices,provides information on current “bids” and “asks,” as well as volume information in over-the-counter securities.information. The OTCBB is not an issuer listing service, market, or exchange. Although the OTCBB does not have any listing requirements per se, to be eligible for quotationtrading of securities on the OTCBB issuers must remain current in their filings with the SECOTC Pink is often sporadic and investors may have difficulty buying and selling our shares or applicable regulatory authority. Securities quotedobtaining market quotations for them, which may have a negative effect on the OTCBB that become delinquent in their required filings will be removedmarket price of our common stock.

The following a 30table sets forth, for the periods indicated the high and low bid quotations for our common stock. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown, or 60 day grace period if they docommission and may not make their required filing during that time. We cannot guarantee that we will continue to haverepresent actual transactions.

  High  Low 
Fiscal Year 2022        
April 1 to June 30, 2022 $1.59  $0.70 
January 1, 2022 to March 31, 2022  1.70   0.98 
October 1 to December 31, 2021  1.70   0.37 
July 1 to September 30, 2021  0.90   0.17 
         
Fiscal Year 2021        
April 1 to June 30, 2021 $0.41  $0.06 
January 1, 2021 to March 31, 2021  0.45   0.03 
October 1 to December 31, 2020  0.38   0.05 
July 1 to September 30, 2020  0.25   0.02 

On October 5, 2022, the funds required to remain in compliance withclosing price of our reporting obligations.common stock was $0.69.

 

Penny Stock Rules

 

The Securities and Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).

 

A purchaser is purchasing penny stock, which limits the ability to sell the stock. Our shares constitute penny stock under the Securities and Exchange Act. The shares will remain penny stocks for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his/her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.

 

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document, which:

 

 contains a description of the nature and level of risk in the market for penny stock in both public offerings and secondary trading;

14

 

 contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the Securities Act of 1934, as amended;
   
 contains a brief, clear, narrative description of a dealer market, including “bid” and “ask” price for the penny stock and the significance of the spread between the bid and ask price;
   
 contains a toll-free telephone number for inquiries on disciplinary actions;
   
 defines significant terms in the disclosure document or the conduct of trading penny stocks; and
   
 contains such other information and is in such form (including language, type, size, and format) as the SEC shall require by rule or regulation.

 

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer:

 

 the bid and offer quotations for the penny stock;
   
 the compensation of the broker-dealer and its salesperson in the transaction;
   
 the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and
   
 monthly account statements showing the market value of each penny stock held in the customer’s account.

 

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, shareholders may have difficulty selling their securities.

 

Reports

 

We will furnish annual financial statements to our shareholders, audited by our independent registered public accounting firm, and will furnish un-audited quarterly financial statements in our quarterly reports filed electronically with the SEC. All financial statements and information filed by us can be found at the SEC website, www.sec.gov.

 

Transfer Agent

 

The Company has retained Computershare Investor Services Inc., 1500 Robert-Bourassa Blvd., 7th Floor, Montreal, Quebec, H3A 3S8, as its transfer agent.

 

9

Number of Equity Security Holders

 

As of June 8, 2021,October 7, 2022, we had 23 holders of record of our common stock. This does not include beneficial owners holding common stock in street name. As such, the number of beneficial holders of our shares could be substantially larger than the number of shareholders of record.

 

Dividend Policy

 

We have no current plans to pay dividends. We currently anticipate that we will retain all of our future earnings, if any, for use in the development and expansion of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our Board and will depend upon our results of operations, financial condition, and other factors that the Board, in its discretion, may deem relevant. There are no restrictions, other than applicable law, on the ability of the Board to declare and pay dividends.

 

Recent Sales of Unregistered Securities

 

None.

 

Repurchase of Equity Securities

 

None.

 

Information About Our Equity Compensation Plans

 

The information required under this heading is incorporated herein by reference to the applicable information set forth in Item 12 of this Annual Report on Form 10-K.

15

ITEM 6.SELECTED FINANCIAL DATA

ITEM 6. SELECTED FINANCIAL DATA

 

As a Smaller Reporting Company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.

ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of the results of operations and financial condition for the fiscal years ended June 30, 2021,2022, and 20202021 should be read in conjunction with our financial statements, and the notes to those financial statements that are included elsewhere in this Annual Report.

 

All references to “Metavesco”, “Waterside”, “we”, “our,” “us” and the “Company” in this Item 7 refer to Metavesco, Inc. (formerly Waterside Capital Corporation.Corporation).

 

The discussion in this section contains forward-looking statements. These statements relate to future events or our future financial performance. We have attempted to identify forward-looking statements by terminology such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “would” or “will” or the negative of these terms or other comparable terminology, but their absence does not mean that a statement is not forward-looking. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors, which could cause our actual results to differ from those projected in any forward-looking statements we make. Several risks and uncertainties we face are discussed in more detail under “Risk Factors” in Part I, Item 1A of this Annual Report, or in the discussion and analysis below. You should, however, understand that it is not possible to predict or identify all risks and uncertainties, and you should not consider the risks and uncertainties identified by us to be a complete set of all potential risks or uncertainties that could materially affect us. You should not place undue reliance on the forward-looking statements we make herein because some or all of them may turn out to be wrong. We undertake no obligation to update any of the forward-looking statements contained herein to reflect future events and developments, except as required by law. The following discussion should be read in conjunction with the financial statements, and the notes to those statements included elsewhere in this Annual Report on Form 10-K.

 

10

Overview & Management Plans

On September 2, 2021, the Company entered into a Stock Purchase Agreement (the “SPA”) by and between (i) the Company (ii) Ryan Schadel (“Buyer”) and (iii) Roran Capital, LLC (“Roran”). Roran agreed to sell to the Buyer 4,247,666 shares of common stock of the Company held by Roran for a total purchase price of $385,000. In conjunction with the SPA, Roran agreed to forgive all amounts due to Roran by the Company totaling $207,644 which is comprised of convertible note payable – related party, accrued interest payable – related party and advances from related party. The Buyer acquired 4,247,666 shares of the Company’s Common Stock, representing 69.7% of the issued and outstanding shares of Common Stock. As such, the Schadel SPA resulted in a change of control of the Company.

In March 2022, the Company commenced operations as a web3 enterprise. The Company generates income as a liquidity provider, via decentralized exchanges such as Uniswap. Additionally, the Company farms tokens via Proof-of-Stake (“PoS”) protocols on decentralized exchanges, as well as centralized exchanges, including Coinbase. The Company also invests in non-fungible token (“NFT”) projects and virtual land that it believes are promising, primarily on EVM protocols.

 

The Company was formed in the Commonwealthhas three areas of Virginia on July 13, 1993, and was a closed-end investment company licensed by the SBA as an SBIC. The Company previously made equity investments in and provided loans to small businesses to finance their growth, expansion, and development. Under applicable SBA regulations, the Company was restricted to investing only in qualified small businesses as contemplated by the Small Business Investment Act of 1958. As a registered investment company under the Investment Company Act, the Company’s investment objective was to provide its shareholders with a high level of income, with capital appreciation as a secondary objective. The Company made its first investment in a small business in October 1996.focus:

 

Liquidity Provider - In decentralized finance (DeFi), the ability to trade assets from one to another is facilitated by Liquidity Pools (“LPs”) which generally contain a 50/50 balance between both underlying tokens. The Company expects to invest substantially in LPs to generate ongoing revenue. We expect that this revenue will fuel our other initiatives as we build the Company.
Staking - Like LPs, staking can provide potential passive revenue to the Company. Purchasing large blocks of lucrative PoS assets to grow the passive income portfolio is expected to be a major cornerstone to our success. This is a much greener approach to the traditional Proof of Work model, which is used by Bitcoin and Ethereum. Ethereum 2.0 is expected to be on PoS in the near future and our goal is to eventually become a validator on the network.
NFTs - The Company holds NFTs for capital appreciation and for potential income from IP licensing.

In May 2014,

On August 29, 2022, the Company effectively ceasedannounced its plan to begin Bitcoin mining operations. The Company consented to a court order appointing the SBA as receiver of the Company for the purpose of marshaling and liquidating in an orderly manner allBitcoin mining has been part of the Company’s assets. That order also entered judgmentroadmap since entering the web3 space in favorMarch of 2022. Although our plans have been accelerated with the United Statesrecent decrease in the price of America, on behalf of the SBA, againstBitcoin. Mining equipment has become much more affordable as overleveraged miners are forced to sell equipment at reduced prices. Metavesco is in active talks with suppliers for equipment and hosting space. We anticipate the Company will have an agreement in the amount of $11,770,722. The SBA was appointed receiver effective May 28, 2014.

Over the course of the Receivership, the activity of the Company was limitedplace very soon to the liquidation of the Company’s assets by the receiverstart mining operations at a hosted site in Texas and the payment of the proceeds therefrom to the SBA and for the expenses of the Receivership. The SBIC license granted to the Company by the SBA was revoked by the SBA effective March 20, 2017. On June 28, 2017, the Receivership was terminated. The Final Order specifically stated that “Control of Waterside shall be unconditionally transferred and returned to its shareholders c/o Roran Capital, LLC (“Roran”) upon notification of entry of this Order”.

16

Upon termination of the Receivership, Roran took possession of all books and records made available to it by the SBA. With no assets and no SBIC license from the SBA, no income, and liabilitiesthen eventually a second site in excess of $10,000,000, it became clear to the Company that continuing to operate as a registered investment company was impossible. Roran provided assurances that it would fund reasonable expenses of the Company so long as progress was being made to reorganize the Company and seek a new business to undertake or to merge with an existing business. The New Board has continued to work toward achieving that goal.

The Company filed a Form 10-K for the period ended June 30, 2017 and subsequently has filed all Forms 10-Q and Forms 10-K in a timely fashion. The Company also filed with the SEC an Application pursuant to Section 8(f) of the Investment Company Act of 1940 for an order declaring that the Company has ceased to be a registered investment company. On April 22, 2020, the SEC issued an order declaring that the Company had ceased to be an investment company.

Recent Accounting Pronouncements

From time-to-time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”), or other standard-setting bodies, relating to the treatment and recording of certain accounting transactions. Unless otherwise discussed herein, the management of the Company has determined that these recent accounting pronouncements will not have a material impact on the financial position or results of operations of the Company.Georgia.

 

Critical Accounting Policies

 

Critical Accounting Policies and Significant Judgments and Estimates

 

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements which we have been prepared in accordance with the U.S. generally accepted accounting principles.principles (“GAAP”). In preparing our financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material.

These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

17

 

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under 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.

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

 

Actual results could differ from those estimates.

 

While our significant accounting policies are described in more detail in Note 2 ofto our annual financial statements included in this Annual Report, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our financial statements:

 

Assumption as a Going Concern

 

Management assumesprepares the Company’s financial statements on the basis that the Company will continue as a going concern, which contemplates continuity of operations, the realization of assets, and liquidation of liabilities in the ordinarynormal course of business. However, given our current financial position and lack of liquidity, there is substantial doubt about our ability to continue as a going concern.

 

Convertible Financial Instruments

 

The Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable GAAP.

 

11

When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument.

 

Intangible Assets

Digital assets held by the Company are accounted for as intangible assets with indefinite useful lives, and are initially measured at cost. The Company assigns costs to transactions on a first-in, first-out basis (FIFO).

An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital assets at the time its fair value is being measured.

Tokens are subject to impairment losses if the fair value a tokens decreases below the carrying value at any time during the period. The fair value is measured using the quoted price in the principal market of the tokens. The Company currently obtains the quoted price of tokens from www.cryptocompare.com.

Liquidity pool tokens and non-fungible tokens are subject to impairment losses if the fair value a token decreases below the carrying value at the end of each quarterly accounting period. The fair value of liquidity pool tokens is based on the quoted price on the last day of the quarter at 4PM Eastern Time. The fair value of NFTs is based on the average trading price on the last day of each quarter.

Impairment for liquidity pool tokens and non-fungible tokens is assessed quarterly due to each token being a unique asset and due to the illiquid markets in which these tokens trade. The Company is continuously reviewing available markets and information and its methodology when determining the fair value of digital assets.

The Company currently reviews quoted prices of its liquidity pool tokens, non-fungible tokens and comparable tokens at https://uniswap.org/ and https://opensea.io. Impairment expense is reflected in total expense in the statements of operations. Subsequent reversal of impairment losses is not permitted.

The sales of digital assets held are included within investing activities in the accompanying statements of cash flows and any realized gains or losses from such sales are included in other income (expense) in the statements of operations.

Revenue recognition

There is currently no definitive guidance under GAAP or alternative accounting framework for the accounting for digital assets recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s financial position and results from operations.

Revenue is recognized when the award is claimed and deposited in the Company wallet. The transaction consideration the Company receives is noncash in the form of digital assets. Revenue is measured at the fair value of the digital assets awards received using the quoted price

Airdrop

Airdrop is the distribution of tokens without compensation generally undertaken with a view of increasing awareness of a new token, to encourage adoption of new token and to increase liquidity in the early stages of a token project.

Liquidity Pools

The Company earns fees by providing liquidity on Uniswap V2 and Uniswap V3. The Company earns fees proportionate to the liquidity they have supplied to the exchange. The fee for each trade is set at 0.05% for stable coins, 0.3% for most pairs and 1.0% for exotic pairs. The fees earned by the Company depends on the risk characteristics of each pair of tokens selected and the price range liquidity is provided. Uniswap V2 requires users to provide liquidity over the entire price curve, whereas Uniswap V3 provides users with the provide liquidity over a price range.

Staking Rewards

The Company earns rewards for agreeing to lock up tokens for a fixed period of time to participate in running the blockchain and maintaining security. Rewards are typically calculated in percentage yields.

Beneficial Conversion Feature

 

The issuance of the convertible debt issued by the Company (described in Note 3 to the Financial Statements) generated a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. The Company recognized the BCF by allocating the intrinsic value of the conversion option, which is the number of shares of common stock available upon conversion multiplied by the difference between the effective conversion price per share and the fair value of common stock per share on the commitment date, resulting in a discount on the convertible debt (recorded as a component of additional paid-in capital).

 

1812

 

Fair Value of Financial Instruments

The Company follows paragraph 825-10-50-10 of the FASB ASC for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the ASC (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Transactions involving related parties cannot be presumed to be carried out on an arms-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

Deferred Tax Assets and Income Taxes Provision

 

The Company adopted the provisions of paragraph 740-10-25-13 of the FASB Accounting Standards Codification.ASC. Paragraph 740-10-25-13 which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%)50% likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest, and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.

 

The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.

 

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

 

Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carryforwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, a full valuation allowance offsets the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance.carry-forwards. Management made this assumption based on (a) the Company has incurred recurring losses and presently has no revenue-producing business, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors.

 

ResultsComparison of OperationsYears Ended June 30, 2022 and 2021

 

For the year ended June 30, 2021, as compared to the year ended June 30, 2020:

  For the Fiscal Year Ended: 
  June 30, 2021  June 30, 2020 
Income        
Interest income $-  $- 
Total income  -   - 
Expense        
Administrative expenses  (70,970)  (57,760)
Interest Expense  (45,692)  (70,707)
Total expenses  (116,662)  (128,467)
Net Loss $(116,662) $(128,467)

Revenue

Revenues and Gains

Since there were no operations,In March 2022, the Company did not generate any revenues for the year ended June 30, 2021,commenced operations as a web3 enterprise and 2020. As part of the Receivership, all of the Company’s revenue-generating assets were liquidated. We expect that the Company will not generate any revenue until we can execute on our plan to enter into a new business or merge with or otherwise acquire another business. Even if we are successful in closing such a transaction, there is still no assurance we will generate any revenue.

19

Expenses

The Company did not conduct any active business; therefore, the Company had no direct costs associated with generating revenue.

Total expenses for the year ended June 30, 2020, totaled $128,467. These expenses consisted primarily of legal and accounting and administrative expenses for the Company’s filings with the SEC; and, interest expense.

Total expenses for the year ended June 30, 2021, totaled $116,662. These expenses consisted primarily of legal and accounting and administrative expenses for the Company’s filings with the SEC; and, interest expense.

Personnel

The Company had no employeespurchasing digital assets. Revenue for the years ended June 30, 2022 and 2021 was derived from airdrops, liquidity pool fees and June 30, 2020. Any expenses related to “personnel” were for professional fees, consultants,staking rewards of $100,056 and contractors engaged in maintaining the corporate existence of the Company.$0, respectively.

 

Our business plan includes earning income from liquidity fees and staking. Airdrop revenue represents APE coin awards received as a result of holding the Related Party TransactionsMutant Ape Yacht Club NFT. Airdrop revenue is generally a one-time award and the Company does not have expectations of airdrop further revenue. The Company seeks higher returns from liquidity pool fees by selecting pairs with higher risk and good volumes.

 

The Company has identified the following individuals and entities as related parties basedOur high trade volume is due to adjusting parameters on their affiliation with the Chairman of the Board and Acting Chief Financial Officer:our liquidity pools. Each trade generates a realized gain or loss.

-Yitzhak Zelmanovitch
-Roran Capital, LLC

The Company owed the following amounts to related parties, affiliated with the CEO and Chairman of the Board, at the dates indicated:

  June 30, 2021 
Convertible Note Payable (See Note 3 of the accompanying financial statements) $149,838 
     
Interest on Convertible Note Payable  36,441 
  $186,279 

 

Liquidity and Capital ResourcesAdministrative Expenses

 

On June 30, 2021,Administrative expenses totaled $164,669 and 2020, we had cash and cash equivalents of $44 and $12,625, respectively. On June 30, 2021, and 2020, we had a working capital deficit of $208,324 and $121,662, respectively. For$70,970 for the yearyears ended June 30, 2022 and 2021, and throughrespectively. These expenses are primarily costs related to keeping the date of this Annual Report, we have faced an increasingly challenging liquidity situation that has severely hamstrung our ability to execute our operating plan. We have no operating business, and we generate no revenue. While we are focused on identifying a new business to enter into, or merge with or otherwise acquire an operating business, even those activities require capital. We also maintain our corporate existence and remainCompany current in our voluntaryits SEC filings withand costs incurred for legal expenses related to conversion from a Virginia corporation to a Nevada corporation, amendments to the SEC. We will seek to borrowamended and restated articles of incorporation and the needed capital from Roranissuance of Series A Convertible Preferred Stock.

Interest Expense

Interest expense totaled $12,761 and seek other sources$45,692 for capital. There is no assurance that our Company will be able to secure such funding on acceptable (or any) terms. During the yearyears ended June 30, 2022 and 2021, respectively. The decrease in interest expense is due to the settlement of the convertible note payable.

13

Impairment of Digital Assets Held

Impairment of digital assets held totaled $233,642 and 2020, we reported$0 for the years ended June 30, 2022 and 2021, respectively. Digital assets are accounted for as intangible assets are subject to impairment losses if the fair value of digital assets decreases below the carrying value at any time during the period. Subsequent reversal of impairment losses is not permitted. We will not recognize any increases in the fair value of digital assets held until a net lossgain is recognized on sale. Impairment losses are a non-cash expense.

Realized Gain (Loss) on Sales/ Exchange Digital Assets Held

We generally do not seek to earn income from operationsactively trading digital asset held. We will dispose of $116,662 and $128,467, respectively.assets in circumstances when there is a significant increase in the fair value of an asset or when holding an asset is no longer consistent with our business plan.

Net Loss

 

We hadreported a net loss of $1,115,850 and $116,662 during the years ended June 30, 2022 and 2021, respectively. Any increase in revenue was offset by an increase in administrative, impairment expenses and realized loss on sales/ exchange on digital assets held.

Our losses were primarily due to a broad deterioration of the crypto-currency market.

Liquidity and Capital Resources

We have incurred recurring operating losses and negative operating cash flows from operating activities totaling $57,581 for the period endingthrough June 30, 2021. Combined with2022, and we expect to continue to incur losses and negative operating cash flows at least through the near future. We have obtained $340,000 of funding by issuing a beginningdemand promissory note and convertible promissory notes to Ryan Schadel, the Company’s Chief Executive Officer, sole director and majority stockholder, to meet our most critical cash balancerequirements. On March 16, 2022, the Company entered into Stock Purchases Agreements whereby the Company issued 22 shares to Series A Convertible Preferred Stock and various Warrants for $1,100,000 in cash. At June 30, 2022, $36,143 of $12,625 ascash was in held at a financial institution and $8 was held at Coinbase, Inc. The Company expects over the next twelve months, cash held at a financial institution will be expended on professional fees, transfer agent, Edgar agent and other administrative costs. The cash held at Coinbase Inc. will be deployed to purchase digital assets to generate staking rewards and liquidity pool fees. We hope to start paying some of July 1, 2020,our suppliers and $45,000 proceeds fromcontractors in digital assets in the convertible note,coming months. However, there can be no assurance we had a negative net decreasewill be able to pay any of our suppliers and contractors in cash during 2021 of $(12,581).digital assets.

 

As of June 30, 2021, we had assets of cash of $44 and no other assets. As of June 30, 2021, we had liabilities of $208,368. The Company’s accumulated deficit was $17,930,352.

20

Unless the Company can enter into or acquire a viable business and attract additional investment, the futureresult of the Company operatingaforementioned factors, management has concluded that there is substantial doubt about our ability to continue as a going concern is in substantial doubt.

We voluntarily file annual, quarterly, and current reports with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and the rules subsequently implemented by the SEC and the Public Company Accounting Oversight Board have imposed various requirements on public companies, including requiring changes in corporate governance practices. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities of ours more time- consuming and costly.

Management has determined that additional capital will be required in the form of equity or debt securities. There is no assurance that management will be able to raise capital on terms acceptable to the Company. If we are unable to obtain sufficient amounts of additional capital, we may have to cease filing the required reports and cease operations completely. If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our shareholders will be reduced, shareholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock.

Going Concern

As reflected in the financial statements, the Company had an accumulated deficit at June 30, 2021. The Company also effectively ceased business operations in May 2014 upon the appointment of the SBA as the receiver and the commencement of the Receivership. Over the course of the Receivership, the activity of the Company was limited to the liquidation of the Company assets and the payment of proceeds to the SBA and the costs of the Receivership.

The ability of the Company to re-commence its operations in the future is dependent on the plans of the Company’s management, which will include the raising of capital through debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements and the acquisition of a viable business. The Company may need to incur additional liabilities with certain related parties to sustain the Company’s existence. There can be no assurance that the Company will be able to raise any additional capital or acquire a viable entity to continue its business or enter into a new business.

concern. Our independent registered public accounting firm, in its report for the year ended June 30, 2021, hason our fiscal 2022 financial statements, expressed substantial doubt about our ability to continue as a going concern. Our plan regarding these matters isfinancial statements as of and for the year ended June 30, 2022, do not contain any adjustments for this uncertainty. In response to raiseour Company’s cash needs, we raised funding as described in Note 4 and Note 6 to our financial statements. Any additional debt and/or equity financing to allow us the ability to coveramounts raised will be used for our currentfuture investing and operating cash flow requirements and meet our obligations as they become due. Thereneeds. However, there can be no assurancesassurance that financingwe will be available or, if available, that such financing will be available under favorable terms. In the event that we are unable to generate adequate revenues to cover expenses and cannot obtainsuccessful in raising additional financing in the near future, we may seek protection under bankruptcy laws. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realizationamounts of assets and the satisfaction of liabilities in the ordinary course of business.financing.

 

Off-Balance Sheet Arrangements

 

There are 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 are material to investors.

Management’s Plans

Our plan is to seek, investigate, and consummate a merger or other business combination, purchase of assets or other strategic transaction (i.e. a merger) with a corporation, partnership, limited liability company or other operating business entity, or enter into a new business (collectively, a “Business Target”) desiring the perceived advantages of becoming a publicly reporting and publicly held corporation. We have no operating business, and conduct minimal operations necessary to meet regulatory requirements. Our ability to re-commence any operations is contingent upon obtaining adequate financial resources.

21

We are not currently engaged in any business activities that provide cash flow. The costs of investigating and analyzing business combinations for the next 12 months and beyond such time will be paid with money borrowed from Roran, should negotiations with Roran on an extension of the Roran Note be successful.

During the next twelve months, we anticipate incurring costs related to (i) filing of Exchange Act reports; and, (ii) identifying and consummating a transaction with a Business Target.

We believe we will be able to meet these costs through use of funds borrowed from Roran, or other amounts to be loaned to or invested in us by other investors.

We may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or a merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.

Zindel Zelmanovitch is our president, secretary, and our chief financial officer. Mr. Zelmanovitch is only required to devote a small portion of his time to our affairs on a part-time or as-needed basis. No regular compensation has, in the past, nor is anticipated in the future, to be paid to any officer or director in their capacities as such. We do not anticipate hiring any full-time employees as long as we are seeking and evaluating Business Targets.

As a Smaller Reporting Company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a Smaller Reporting Company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.

 

2214

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

INDEX TO FINANCIAL STATEMENTS AND NOTES

 

CONTENTS: PAGE #
   
ReportReports of Independent Registered Public Accounting FirmFirms (PCAOB ID: 6849 and PCAOB ID: 200) 2416
   
Balance Sheets as of June 30, 20212022 and 20202021 2519
   
Statements of LossOperations for the years ended June 30, 20212022 and 20202021 2620
   
Statements of Stockholders’ DeficitEquity (Deficit) for the years ended June 30, 20212022 and 20202021 2721
   
Statements of Cash Flows for the years ended June 30, 20212022 and 20202021 2822
   
Notes to the Financial Statements 2923

 

2315

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Metavesco, Inc. (formerly Waterside Capital Corporation)

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Metavesco, Inc. (the Company) as of June 30, 2022 and, and the related statements of operations, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2022, and the results of its operations and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Matter

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has a working capital deficit, has generated net losses since its inception and further losses are anticipated. The Company requires additional funds to meet its obligations and the costs of its operations. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of the Accounting for and Disclosure of Digital Currency Held

As disclosed in Note 2 to the consolidated financial statements, the Company’s digital currency held as of June 30, 2022 are accounted for as indefinite-lived intangible assets, and have been included in current assets on the balance sheet. We identified the accounting for and disclosure of the digital currency held as a critical audit matter because, currently, no specific definitive guidance exists for the accounting for and disclosure of digital currencies held in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company’s management has exercised significant judgment in their determination of how existing GAAP should be applied to the accounting for its digital currency held, the associated financial statement presentation and accompanying footnote disclosures.

The primary procedures we performed to address this critical audit matter included the following:

Evaluated management’s rationale for the application of Accounting Standards Codification (“ASC”) 350 to account for its digital currency held and examined management’s processes for determining the amount of impairment expense recognized.
Evaluated management’s rationale for the inclusion of digital currency as a current asset on the balance sheet.
Evaluated management’s rationale for the inclusion of digital currency as a current asset on the balance sheet.
Examined supporting evidence for digital currency transactions including managements processes for calculating any gains or losses on sales of its digital currency.

/s/ Hudgens CPA, PLLC

www.hudgenscpas.com

We have served as the Company’s auditor since 2022.

Houston, Texas

October 7, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders


Waterside Capital Corporation

Opinion on the Financial Statements

We have audited the accompanying balance sheetssheet of Waterside Capital Corporation (the “Company”) as of June 30, 2021, and 2020, and the related statements of loss, stockholders’ deficit, and cash flows for each of the two years in the periodyear ended June 30, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021, and 2020, and the results of its operations and its cash flows for each of the two years in the periodyear ended on June 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has experienced liquidity issues and does not have working capital. The Company’s has no active business to generate cash flows to repay its current and future obligations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Further information and management’s plans in regard to this uncertainty are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our auditsaudit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our auditsaudit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our auditsaudit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provideaudit provides a reasonable basis for our opinion.

 

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the board of directors and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

17

 

Accounting for Complex Debt Transactions—Refer to Note 3 to the Financial Statements

 

Critical Audit Matter Description

 

The Company has an outstanding convertible promissory note with Roran Capital LLC and during the current year, the Company borrowed additional funds under the convertible promissory note. The embedded conversion feature allows the outstanding debt and interest obligations to be converted to common stock at a fixed discount rate to the trading value of the Company’s common stock. Such hybrid instruments require the embedded conversion feature to be analyzed if it meets the criteria for bifurcation to be separately accounted for as a derivative financial instrument. If the embedded conversion feature is not bifurcated, the intrinsic value of the conversion option is calculated to determine the debt discount associated with the conversion feature.

 

The evaluation of whether the embedded conversion feature should be bifurcated from the host debt contract and separately accounted for as a derivative financial instruments is highly complex. The related audit effort in evaluating management’s analysis of the correct application of the accounting literature in U.S. GAAP was extensive and required a high degree of auditor judgment.

 

How the Critical Audit Matter was Addressed in the Audit

 

We obtained management’s analysis of applicable accounting guidance related to the determination if the embedded conversion feature should be bifurcated and accounted for separately. We reviewed the applicable accounting literature for debt and derivatives, noting the conclusions reached by management that the embedded conversion feature should not be separately treated as a derivative financial instrument were consistent with U.S. GAAP.

 

We obtained management’s calculation of the intrinsic value of the embedded conversion feature that was recorded as a debt discount based on the funds provided and recalculated the intrinsic value.
We traced the amounts borrowed into the Company’s bank statements.
We confirmed the overall outstanding debt balance with the creditor.
We agreed the amount recorded into additional paid-in capital to the debt discount recorded.
We tested that the amortization of the debt discount recorded to interest expense was correct.

 

/s/HASKELL & WHITE LLP

/s/ HASKELL & WHITE LLP
We have served as the Company’s auditor since 2017.
Irvine, California
September 1, 2021

24

 

We have served as the Company’s auditor since 2017. In 2022, we became the predecessor auditor.

Irvine, California

September 1, 2021

18

WATERSIDE CAPITAL CORPORATIONMETAVESCO, INC.

(formerly Waterside Capital Corporation)

Balance Sheets

June 30, 2021 and 2020BALANCE SHEETS

 

  June 30, 2021  June 30, 2020 
ASSETS        
Cash $44  $12,625 
TOTAL ASSETS $44  $12,625 
         
LIABILITIES & STOCKHOLDERS’ DEFICIT        
Liabilities        
Current Liabilitites        
Accounts Payable $22,089  $8,700 
Convertible Note Payable - Roran  149,838   104,838 
Accrued Interest Payable  36,441   20,749 
Total Current Liabilities  208,368   134,287 
         
Total Liabilities  208,368   134,287 
         
Stockholders Deficit        
Common Stock, $1.00 par value, 10,000,000 shares authorized, 6,082,214 shares issued and outstanding, as of June 30, 2021 and June 30, 2020  6,082,214   6,082,214 
Additional Paid-In Capital  11,639,814   11,609,814 
Accumulated Deficit  (17,930,352)  (17,813,690)
Total Stockholders Deficit  (208,324)  (121,662)
TOTAL LIABILITIES & STOCKHOLDERS DEFICIT $44  $12,625 
  June 30, 2022  June 30, 2021 
Assets        
Current assets:        
Cash and cash equivalents $35,151  $44 
Prepaid expenses  13,847   - 
Digital assets held, net of impairment  434,642   - 
Total current assets  483,640   44 
         
Total assets $483,640  $44 
         
Liabilities and Stockholders’ Equity (Deficit)        
Current liabilities:        
Accounts payable and accrued liabilities $26,549  $22,089 
Promissory note - related party  100,000   - 
Accrued interest payable - related party  -   36,441 
Convertible note payable - related party  -   149,838 
Convertible promissory note (net of debt discount of $19,441 and $0, respectively)  559     
Convertible promissory notes - related party (net of debt discount of $328,658 and $0, respectively)  12,202   - 
Total current liabilities  139,310   208,368 
         
Stockholders’ Equity (Deficit):        
Preferred stock; $0.0001 par value; 20,000,000 shares authorized  -   - 
Series A Convertible Preferred Stock: 22 and 0 shares issued and outstanding at June 30, 2022 and 2021  -   - 
Preferred stock, value  -   - 
Common stock; $0.0001 par value; 100,000,000 shares authorized; 6,082,214 shares issued and outstanding at June 30, 2022 and 2021  608   608 
Additional paid-in capital  19,389,924   17,721,420 
Accumulated deficit  (19,046,202)  (17,930,352)
Total stockholders’ deficit  344,330   (208,324)
Total liabilities and stockholders’ equity (deficit) $483,640  $44 

 

See reports of Independent Registered Public Accounting Firms.

The accompanying Notesnotes are an integral part of these Financial Statements.financial statements.

19

METAVESCO, INC.

(formerly Waterside Capital Corporation)

STATEMENTS OF OPERATIONS

  2022  2021 
  Year ended June 30, 
  2022  2021 
Revenue:      
Airdrops $17,439  $- 
Liquidity pool fees  81,765   - 
Staking rewards  852   - 
Total Revenue  100,056   - 
Expense        
Administrative expenses  164,669   70,970 
Interest expense  12,761   45,692 
Impairment of digital assets held  233,642   - 
Total Expense  411,072   116,662 
         
Other income (expense)        
Realized gain (loss) on sales/ exchange digital assets held  (804,834)  - 
Total Other income (expense)  (804,834)  - 
         
Net loss $(1,115,850) $(116,662)
         
Net loss per share - basic and diluted $(0.18) $(0.02)
         
Weighted average number of common shares outstanding - basic and diluted  6,082,214   6,082,214 

See reportreports of Independent Registered Public Accounting Firm.Firms.

25

WATERSIDE CAPITAL CORPORATION

Statements of Loss

For the Years Ended June 30, 2021 and 2020

         
  June 30 
  2021  2020 
Expense        
Administrative expenses $70,970  $57,760 
Interest expense  45,692   70,707 
Total Expense  116,662   128,467 
         
Net Loss  (116,662)  (128,467)
         
Net Loss $(116,662) $(128,467)
         
Weighted Average Number of Common Shares Outstanding- Basic and Diluted  6,082,214   2,165,548 
Net Loss Per Share- Basic and Diluted $(.02) $(0.06)

The accompanying Notesnotes are an integral part of these Financial Statements.financial statements.

20

METAVESCO, INC.

(formerly Waterside Capital Corporation)

STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

For the years ended June 30, 2022 and 2021

  Shares  Par Value  Shares  Par Value  capital  deficit  equity 
  Series A Convertible Preferred Stock ($0.0001 par value)  Common Stock ($0.0001 par value)  Additional paid-in  Accumulated  Total stockholders’ 
  Shares  Par Value  Shares  Par Value  capital  deficit  equity 
Balance at June 30, 2021  -  $-   6,082,214  $608  $17,721,420  $(17,930,352) $(208,324)
                             
Issue of Series A Convertible Preferred Stock  22  $-   -   -   1,100,000   -   1,100,000 
Beneficial conversion feature  -   -   -   -   360,860   -   360,860 
Forgiveness of convertible note payable, accrued interest and advances - related party  -   -   -   -   207,644   -   207,644 
Net loss  -   -   -   -   -   (1,115,850)  (1,115,850)
Balance at June 30, 2022  22  $-   6,082,214  $608  $19,389,924  $(19,046,202) $344,330 

  Series A Convertible Preferred Stock ($0.0001 par value)  Common Stock ($0.0001 par value)  Additional paid-in  Accumulated  Total stockholders’ 
  Shares  Par Value  Shares  Par Value  capital  deficit  equity 
Balance at June 30, 2020  -  $-   6,082,214  $608  $17,691,420  $(17,813,690) $(121,662)
                             
Beneficial conversion feature  -   -   -   -   30,000   -   30,000 
Net loss  -   -   -   -   -   (116,662)  (116,662)
Balance at June 30, 2021  -  $-   6,082,214  $608  $17,721,420  $(17,930,352) $(208,324)

See reportreports of Independent Registered Public Accounting Firm.Firms.

26

WATERSIDE CAPITAL CORPORATION

Statements of Stockholders’ Deficit

For the Years Ended June 30, 2021 and 2020

                     
  Common Stock  Additional       
  ($1 Par Value)  Paid-in  Accumulated    
  Shares  Par Value  Capital  Deficit  Total 
Balance at June 30, 2019  1,915,548  $1,915,548  $15,586,480  $(17,685,223) $(183,195)
                     
Beneficial conversion feature  -   -   40,000   -   40,000 
                     
Conversion of note payable and accrued interest  4,166,666   4,166,666   (4,016,666)  -   150,000 
                     
Net loss for the year  -   -   -   (128,467)  (128,467)
                     
Balance at June 30, 2020  6,082,214  $6,082,214  $11,609,814  $(17,813,690) $(121,662)
                     
Beneficial conversion feature  -   -   30,000   -   30,000 
                     
Net loss for the year  -   -   -   (116,662)  (116,662)
                     
Balance at June 30, 2021  6,082,214  $6,082,214  $11,639,814  $(17,930,352) $(208,324)

The accompanying Notesnotes are an integral part of these Financial Statements.financial statements.

21

METAVESCO, INC.

(formerly Waterside Capital Corporation)

STATEMENTS OF CASH FLOW

  2022  2021 
  Year ended June 30, 
  2022  2021 
Cash Flows from Operating Activities:        
Net loss $(1,115,850) $(116,662)
Adjustments to reconcile net loss to net cash used in operating activities        
Amortization of debt discount  12,761   30,000 
Impairment of digital assets held  233,642   - 
Forgiveness of interest - related party  2,997   - 
Realized (gain) loss on sales/ exchange digital assets held  804,834   - 
Digital assets received as revenue  (100,056)  - 
Digital assets paid as expense  17,751   - 
Changes in operating assets and liabilities:        
Increase in prepaid  (13,847)  - 
(Decrease) increase in accounts payable and accrued liabilities  4,460   13,389 
Increase in accrued interest payable - related party  -   15,692 
Net cash used in operating activities  (153,308)  (57,581)
         
Cash Flows from Investing Activities:        
Purchase of digital assets held  (1,289,952)  - 
Net cash provided by investing activities  (1,289,952)  - 
         
Cash Flows from Financing Activities:        
Advances from related party  18,367   - 
Proceeds from issuance of promissory note payable - related party  100,000   - 
Proceeds from issuance of convertible notes payable - related party  240,000   45,000 
Proceeds from issuance of convertible note payable  20,000     
Issuance of Series A Convertible Preferred Stock  1,100,000   - 
Net cash provided by financing activities  1,478,367   45,000 
         
Net change in cash and cash equivalents  35,107   (12,581)
Cash and cash equivalents, beginning of period  44   12,625 
Cash and cash equivalents, end of period $35,151  $44 
         
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION        
Cash paid during period for:        
Interest paid $-  $- 
Income taxes paid $-  $- 
         
Non-cash Investing and Financing Activities        
Purchase of digital assets held with convertible promissory notes - related party $100,860  $- 
Purchase of digital assets held with other digital assets $10,244,898  $- 
Proceeds from sale of digital assets for other digital assets $10,244,898  $- 
Intrinsic value of embedded beneficial conversion feature on convertible note payable - related party and convertible promissory notes - related party $360,860  $30,000 
Forgiveness of convertible note payable, accrued interest and advances - related party $207,644  $- 

See reportreports of Independent Registered Public Accounting Firm.Firms.

27

WATERSIDE CAPITAL CORPORATION

Statements of Cash Flows

For the Years Ended June 30, 2021 and 2020

  2021  2020 
Cash Flow from Operating Activities        
Net loss $(116,662) $(128,467)
Adjustments to reconcile net loss (income) to net cash used in operating activities:        
Amortization of debt discount  30,000   47,500 
Changes in assets and liabilities        
Accounts Payable  13,389   1,392 
Accrued Interest Payable  15,692   23,207 
Net cash used in operating activities  (57,581)  (56,368)
         
Cash flow from Financing Activities        
Proceeds from convertible note payable  45,000   60,000 
Net cash provided by financing activities  45,000   60,000 
         
Net cash (decrease) increase for year  (12,581)  3,632 
Cash at beginning of year  12,625   8,993 
Cash at end of year $44  $12,625 
         
Supplemental disclosure of non-cash financing activity        
         
Intrinsic value of embedded beneficial conversion feature on convertible note payable $30,000  $40,000 
         
Conversion of note payable and accrued interest to common stock $-  $150,000 

The accompanying Notesnotes are an integral part of these Financial Statements.

See report of Independent Registered Public Accounting Firm.financial statements.

 

2822

 

WATERSIDE CAPITAL CORPORATIONMETAVESCO, INC.

(formerly Waterside Capital Corporation)

NOTES TO THE FINANCIAL STATEMENTS

JUNE 30, 20212022

 

NOTE 1 – ORGANIZATION AND OPERATIONS

 

Metavesco, Inc. (formerly Waterside Capital CorporationCorporation) (the “Company”) was incorporated in the Commonwealth of Virginia on July 13, 1993 and was a closed-end investment company licensed by the Small Business Administration (the “SBA”) as a Small Business Investment Company (“SBIC”). The Company previously made equity investments in, and provided loans to, small businesses to finance their growth, expansion, and development. Under applicable SBA regulations, the Company was restricted to investing only in qualified small businesses as contemplated by the Small Business Investment Act of 1958. As a registered investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”), the Company’s investment objective was to provide its shareholders with a high level of income, with capital appreciation as a secondary objective. The Company made its first investment in a small business in October 1996.

 

On May 28, 2014, with the Company’s consent, the courtUnited States District Court for the Eastern District of Virginia, having jurisdiction over thean action filed by the SBA (the “Court”), entered a Consent Order and Judgment Dismissing Counterclaim, Appointing Receiver, Granting Permanent Injunctive Relief and Granting Money Judgment (the “Order”). The Order appointed the SBA receiver of the Company for the purpose of marshaling and liquidating in an orderly manner all of the Company’s assets and entered judgment in favor of the United States of America, on behalf of the SBA, against the Company in the amount of $11,770,722. The Court assumed jurisdiction over the Company and the SBA was appointed receiver effective May 28, 2014.

 

The Company effectively stopped conducting an active business upon the appointment of the SBA as the receiver and the commencement of the court-ordered receivership (the “Receivership”). Over the course of the Receivership, the activity of the Company was limited to the liquidation of the Company’s assets by the receiver and the payment of the proceeds therefrom to the SBA and for the expenses of the Receivership. On June 28, 2017, the Receivership was terminated with the entry of a Final Order by the Court. The Final Order specifically stated that “Control of Waterside shall be unconditionally transferred and returned to its shareholders c/o Roran Capital, LLC (“Roran”) upon notification of entry of this Order”. Upon termination of the Receivership, Roran took possession of all books and records made available to it by the SBA.

 

The Company has no operating assetsfiled with the SEC an application pursuant to Section 8(f) of any value, andthe Investment Company Act of 1940 for an order declaring that the Company no longer has the SBIC license from the SBA.ceased to be a registered investment company. On April 22, 2020, the SEC issued an order under Section 8(f) of the Investment Company Act of 1940, as amended, declaring that the Company hadhas ceased to be an investment company. TheAs a result, the Company willis now seek to either (i) entera reporting company under the Securities Exchange Act of 1934, as amended.

On September 2, 2021, the Company entered into a new business; or,Stock Purchase Agreement (the “SPA”) by and between (i) the Company (ii) merge with, or otherwise acquire, an active business which would benefit from operating as a public entity,Ryan Schadel (“Buyer”) and has undertaken a search(iii) Roran. Roran agreed to identify the best possible candidate(s) in order to provide valuesell to the shareholdersBuyer 4,247,666 shares of common stock of the Company held by Roran for a total purchase price of $385,000. In conjunction with the SPA, Roran agreed to forgive all amounts due to Roran by the Company totaling $207,644, which is comprised of convertible note payable – related party, accrued interest payable – related party, and advances from related party. The Buyer acquired 4,247,666 shares of the Company’s Common Stock, representing 69.7% of the issued and outstanding shares of Common Stock. As such, the SPA resulted in a change of control of the Company.

Effective November 29, 2021, the Company converted from a Virginia corporation to a Nevada corporation.

On December 15, 2021, the Company filed with the Nevada Secretary of State amended and restated articles of incorporation. The amended and restated articles had the effect of (i) increasing the Company’s authorized common stock to 100 million shares, (ii) increasing the Company’s authorized preferred stock to 20 million shares, and (iii) reducing the par value of each of the Company’s common stock and preferred stock to $0.0001 per share. Common stock and additional paid-in capital for all periods presented in these financial statements have been adjusted retroactively to reflect the reduction in par value.

On December 17, 2021, the majority shareholder and board of directors approved an amendment to the amended and restated articles of incorporation that would change the Company’s name from Waterside Capital Corporation to Metavesco, Inc. The name change was approved by Financial Industry Regulatory Authority (“FINRA”) and was effective June 3, 2022.

In March 2022, the Company commenced operations as a web3 enterprise. The Company generates income as a liquidity provider, via decentralized exchanges such as Uniswap. Additionally, the company farms tokens via Proof of Stake protocols on decentralized exchanges as well as centralized exchanges including Coinbase exchange. The Company also invests in promising NFT projects and virtual land, primarily on EVM protocols.

 

Going Concern

 

The accompanyingCompany’s financial statements of our Company have beenare prepared in accordance with generally accepted accounting principles generally accepted in the United States. The Company effectively ceased operations, and it continuesapplicable to have net losses through the date of these financial statements. Our financial statements have been presented on the basis that our business is a going concern, whichconcern. This contemplates the realization of assets and the satisfactionliquidation of liabilities in the normal course of business. We are subject toDuring the risks and uncertainties associated with a business with no operating business or assets and no revenue, as well as limitations on our operating capital resources. We have incurred operating losses and negative operating cash flows since the Receivership, and we expect to continue to incur operating losses and negative operating cash flows at least through the near future. Roran, which is a related party toyear ended June 30, 2022, the Company has previously agreed to loan our Company funds to meet our most criticalincurred a net loss of $1,115,850 and used cash requirements. For further discussionin operating activities of the Roran loan, see Notes 3$153,308, and 4.

29

WATERSIDE CAPITAL CORPORATION

NOTES TO THE FINANCIAL STATEMENTS

JUNEon June 30, 2021

As a result2022, had an accumulated deficit of the aforementioned$19,046,202. These factors, management has concluded that there isamong others, raise substantial doubt about ourthe Company’s ability to continue as a going concern. Our independent registered public accounting firm, in its report on our 2021concern for a period one year from the date that the financial statements raised substantial doubt aboutare issued. The Company will be dependent upon the raising of additional capital through placement of debt and its common stock in order to implement its business plan. There can be no assurance that the Company will be successful in this situation. The Company expects over the next twelve months, cash held at a financial institution will be expended on professional fees, transfer agent, Edgar agent and other administrative costs. The cash held at Coinbase Inc. will be deployed to purchase crypto assets to generate staking rewards and liquidity pool fees. We hope to start paying some of our abilitysuppliers and contractors in crypto assets in the coming months. However, there can be no assurance we will be able to continue as a going concern. Our financial statements aspay any of our suppliers and for the year ended June 30, 2021, do not contain any adjustments for this uncertainty.contractors in digital assets.

23

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

 

Fiscal Year-End

 

The Company elected June 30th as its fiscal year-end date.

 

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of AmericaGAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

 

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under 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.

 

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

 

Actual results could differ from those estimates.

 

Cash and cash equivalents

Cash and cash equivalents include cash and interest-bearing highly liquid investments held at financial institutions, cash on hand that is not restricted as to withdrawal or use with an initial maturity of three months or less, and cash held in accounts at crypto trading venues. At June 30, 2022, $35,143 of cash was at held a financial institution which is a member of the Federal Deposit Insurance Corporation (“FDIC”) and $8 was held at Coinbase, Inc. (“Coinbase”). The contract with Coinbase, Inc. requires USD balances in a client’s fiat wallet be held in an omnibus custodial account for the benefit of Coinbase’s customers. These accounts are either omnibus bank accounts insured by the FDIC (currently up to $250,000 per entity) or trust accounts holding short term U.S. treasuries.

Intangible Assets

Digital assets held by the Company are accounted for as intangible assets with indefinite useful lives, and are initially measured at cost. The Company assigns costs to transactions on a first-in, first-out basis (FIFO).

An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital assets at the time its fair value is being measured.

Tokens are subject to impairment losses if the fair value a tokens decreases below the carrying value at any time during the period. The fair value is measured using the quoted price in the principal market of the tokens. The Company currently obtains the quoted price of tokens from www.cryptocompare.com.

Liquidity pool tokens and non-fungible tokens are subject to impairment losses if the fair value a token decreases below the carrying value at the end of each quarterly accounting period. The fair value of liquidity pool tokens is based on the quoted price on the last day of the quarter at 4PM Eastern Time. The fair value of NFTs is based on the average trading price on the last day of each quarter.

Impairment for liquidity pool tokens and non-fungible tokens is assessed quarterly due to each token being a unique asset and due to the illiquid markets in which these tokens trade. The Company is continuously reviewing available markets and information and its methodology when determining the fair value of digital assets.

The Company currently reviews quoted prices of its liquidity pool tokens, non-fungible tokens and comparable tokens at https://uniswap.org/ and https://opensea.io. Impairment expense is reflected in total expense in the statements of operations. Subsequent reversal of impairment losses is not permitted.

The sales of digital assets held are included within investing activities in the accompanying statements of cash flows and any realized gains or losses from such sales are included in other income (expense) in the statements of operations.

Revenue recognition

There is currently no definitive guidance under GAAP or alternative accounting framework for the accounting for digital assets recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s financial position and results from operations.

Revenue is recognized when the award is claimed and deposited in the Company wallet. The transaction consideration the Company receives is noncash in the form of digital assets. Revenue is measured at the fair value of the digital assets awards received using the quoted price

Airdrop

Airdrop is the distribution of tokens without compensation generally undertaken with a view of increasing awareness of a new token, to encourage adoption of new token and to increase liquidity in the early stages of a token project.

24

Liquidity Pools

The Company earns fees by providing liquidity on Uniswap V2 and Uniswap V3. The Company earns fees proportionate to the liquidity they have supplied to the exchange. The fee for each trade is set at 0.05% for stable coins, 0.3% for most pairs and 1.0% for exotic pairs. The fees earned by the Company depends on the risk characteristics of each pair of tokens selected and the price range liquidity is provided. Uniswap V2 requires users to provide liquidity over the entire price curve, whereas Uniswap V3 provides users with the provide liquidity over a price range.

Staking Rewards

The Company earns rewards for agreeing to lock up tokens for a fixed period of time to participate in running the blockchain and maintaining security. Rewards are typically calculated in percentage yields.

Convertible Financial Instruments

 

The Company bifurcates conversion options from their host instruments and accounts for them as free standingfree-standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable GAAP.

 

When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument.

 

Beneficial conversion feature – The issuance of the convertible debt described in Note 3 generated a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued with ana non-separated embedded conversion option that is not bifurcated and is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. The Company recognized the BCF by allocating the intrinsic value of the conversion option, which is the number of shares of common stock available upon conversion multiplied by the difference between the effective conversion price per share and the fair value of common stock per share on the commitment date, resulting in a discount on the convertible debt (recorded as a component of additional paid inpaid-in capital). The BCF is amortized into interest expense over the life of the related debt.

 

Related Parties

 

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification (“ASC”)ASC for the identification of related parties and disclosure of related party transactions.

30

WATERSIDE CAPITAL CORPORATION

NOTES TO THE FINANCIAL STATEMENTS

JUNE 30, 2021

 

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and, (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

 

Commitments and Contingencies

 

The Company follows ASC 450-20 to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. Management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, management evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

 

Deferred Tax Assets and Income Taxes Provision

 

The Company adoptedfollows the provisions of ASC 740-10-25-13. ASC 740-10-25-13, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. ASC 740-10-25-13 also provides guidance on de-recognition, classification, interest, and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of ASC 740-10-25-13.benefits.

 

The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.

25

 

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

 

31

WATERSIDE CAPITAL CORPORATION

NOTES TO THE FINANCIAL STATEMENTS

JUNE 30, 2021

Tax years that remain subject to examination by major tax jurisdictions are generally the prior three (3) years for federal purposes, and the prior four (4) years for state purposes; however, as a result of the Company’s operating losses, all tax years remain subject to examination by tax authorities.

 

Net Income (Loss) Per Common Share

 

The Company computes net income or loss per share in accordance with ASC 260 Earnings Per Share. BasicUnder the provisions of the Earnings per Share Topic ASC, basic net income (loss)loss per share is computed by dividing the net income (loss)loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net income (loss)loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive.

 

Recently Issued Accounting PronouncementsFair Value of Financial Instruments

 

From timeThe Company follows paragraph 825-10-50-10 of ASC for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of ASC (“Paragraph 820-10-35-37”) to time, newmeasure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Transactions involving related parties cannot be presumed to be carried out on an arms-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2023, which means it will be effective for our fiscal year beginning July 1, 2024. Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the impact of ASU 2020-06 on our financial statements.

Other recent accounting pronouncements are issued by the FASB, or other standard-setting bodies that are adopted byincluding its Emerging Issues Task Force, the Company asAmerican Institute of Certified Public Accountants, and the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards thatSecurities and Exchange Commission did not or are not yet effective will notbelieved by management to have a material impact on ourthe Company’s present or future financial position or results of operations upon adoption.

32

WATERSIDE CAPITAL CORPORATION

NOTES TO THE FINANCIAL STATEMENTS

JUNE 30, 2021statements.

 

NOTE 3 – NOTES PAYABLEDIGITAL ASSETS HELD, NET OF IMPAIRMENT

 

On March 30, 2010, the SBA notified the Company that its account had been transferred to liquidation status and that the then outstanding debenturesDigital assets held, net of $16.1 million-plus accrued interest (the “Debentures”) were due and payable within fifteen days of the date of the letter. The Company did not possess adequate liquid assets to make this payment. The Company negotiated terms of a settlement agreement with the SBA effective September 1, 2010, which allowed the Company’s management to liquidate the portfolio so long as there are no events of default. The Debentures were repurchased by the SBA in September 2010, represented by a Note Agreement between the SBA and the Company. The Note Agreement had a maturity of March 31, 2013. In the event of a default, the SBA had the ability to seek receivership.impairment have consisted of:

SCHEDULE OF DIGITAL ASSETS HELD NET OF IMPAIRMENT

  Tokens  Liquidity Pool Tokens and Non-Fungible Tokens  Total 
  Tokens  Liquidity Pool Tokens and Non-Fungible Tokens  Total 
Balance, July 1, 2021 $-  $-  $- 
             
Beginning balance $-  $-  $- 
Purchase of digital assets  8,000,348   3,615,362   11,615,710 
Proceeds from sale of digital assets  (7,598,130)  (2,626,769)  (10,224,899)
Realized (loss) gain on sales/ exchange digital assets  (361,765)  (443,069)  (804,834)
Acquired digital assets by Airdrop  17,439   -   17,439 
Acquired digital assets by Liquidity Pools  81,765   -   81,765 
Acquired digital assets by Staking Rewards  852       852 
Digital assets used to pay fees  (17,749)  -   (17,749)
Impairment charges  (33,075)  (200,567)  (233,642)
Balance, June 30, 2022 $89,685  $344,957  $434,642 
Ending balance $89,685  $344,957  $434,642 

On May 24, 2012 the SBA delivered to the Company a notice of an event of default for failure to meet the principal repayment schedule under the Note Agreement (the “Notice”). Under the terms of the Notice and the Note Agreement the SBA maintained a continuing right to terminate the Note Agreement and appoint a receiver to manage the Company’s assets.

On November 20, 2013 the SBA filed a complaint in the United States District Court for the Eastern District of Virginia seeking, among other things, receivership for the Company and a judgment in the amount outstanding under the Note Agreement plus continuing interest. The complaint alleged that as of October 31, 2013 there remained an outstanding balance of $11,762,634 under the Note Agreement, including interest, which continued to accrue at the rate of $2,021 per day. The SBA, in filing the complaint, requested that the court take exclusive jurisdiction of the Company and all of its assets wherever located and appoint the SBA as permanent receiver of the Company for the purpose of liquidating all of the Company’s assets and satisfying the claims of its creditors in the order of priority as determined by the court.

The Company initially took steps to contest the legal action initiated by the SBA and to oppose the receivership action. On April 29, 2014 the Board of Directors of the Company, as then constituted (the “Board”), met to reconsider the decision to contest the SBA’s legal action. In light of developments occurring since December of 2013, including projections of its portfolio companies and discussions with the SBA, the Board determined, after consultation with and advice of its counsel, that it was not in the best interests of the Company and its shareholders to continue to contest the legal action. The SBA was informed of this determination. The Board also decided to consent to the receivership process.

On May 28, 2014, with the Company’s consent, the court having jurisdiction over the action filed by the SBA (the “Court”) entered a Consent Order and Judgment Dismissing Counterclaim, Appointing Receiver, Granting Permanent Injunctive Relief and Granting Money Judgment (the “Order”). The Order appointed the SBA receiver of the Company for the purpose of marshaling and liquidating in an orderly manner all of the Company’s assets and entered judgment in favor of the United States of America, on behalf of the SBA, against the Company in the amount of $11,770,722. Such amount represents $11,700,000 in principal and $70,722 in accrued interest. The Court assumed jurisdiction over the Company and the SBA was appointed receiver effective May 28, 2014.

On June 28, 2017, the Receivership was terminated and a final order entered by the Court provided Roran with control of the Company. As of June 30, 2021, the Company’s outstanding judgment payable totaled $0 as the judgment has been satisfied in full.

3326

 

As at June 30, 2022, the Company’s holdings of digital assets held, net of impairment consists of:

SCHEDULE OF ASSETS DIGITAL HOLDING IMPAIRMENTS

  Units held Carrying value, at cost less impairment 
Tokens      
APE 9,304.96 $34,276 
ETH 23.25  23,666 
CAKE 4,570.35  12,061 
MKR 9.83  7,052 
RLP 249.49  6,910 
USDC 5,251.32  5,249 
LINK 94.05  471 
Tokens Total   $89,685 

WATERSIDE CAPITAL CORPORATION

Liquidity Pool Tokens     
 Uniswap V3 4.2 $239,827 
mooEmp 275.77  30,841 
Liquidity Pool Tokens Total   $270,668 

Non-Fungible Tokens     
Mutant Ape Yacht Club 1 $19,573 
Other Deed 8  38,604 
Board Ape Kennel Club 1  6,106 
Meebits 2  10,006 
Non-Fungible Tokens Total   $74,289 
       
Total   $434,642 

NOTE 4 – NOTES TO THE FINANCIAL STATEMENTSPAYABLE – RELATED PARTIES

JUNE 30, 2021

 

The Company’s outstanding judgment payable owed to the SBA was purchased by Roran from the SBA in July 2017. As such, all amounts due to the outstanding judgment payable were owed to Roran rather than the SBA. Upon purchase, the Company began to accrue interest that was due under the original terms of the judgment payable. The statutory interest rate was 0.094Obligations%. The Company satisfied the judgment in full as Roran agreed to forgive the judgment and as of June 30, 2019, recognized a gain on extinguishment of debt of $10,584,254, which is fully offset by NOLs for income tax purposes.

 

On September 19, 2017, the Company issued a Convertible Promissory Note in an amount up to $150,000 in favor of Roran which was increased to $200,000 on June 17, 2019 and $250,000 on December 13, 2019 (the “Note”). The Note was issued pursuant toentered into a Convertible Loan Agreement with Roran (the “Loan Agreement”). Pursuant to the Loan Agreement, Roran agreed to loan the Company an amount not to exceed a total of $150,000 in principal over 18 months”). All outstanding principalOn June 17, 2019, the Company amended the Loan Agreement increasing the loan amount to $200,000 and accrued interest on the Note is due and payable onextending the maturity date which was March 19, 2019 and then extended to September 19, 2019 and then June 19, 2020 and a further extension is being negotiated.Amounts borrowed. Each advance under the Loan Agreement will be documented under a Convertible Promissory Note bearissued by the Company in favor of Roran (the “Note”). The Note bears interest at the rate of 12% per annum. Roran has the right to convert all or any portion of the Note into shares of the Company’s common stock at a conversion price equal to 60% of the share price. The Company recorded a BCF due to the conversion option of $116,800, which has been fully amortized as of September 30, 2019. The debt discount has been amortized as interest expense through September 30, 2019. On December 13, 2019, the Company amended its Loan Agreement Note with Roran as follows: (i) the total amount to be loaned was increased to $250,000, and (ii) the maturity date was extended to June 19, 2020. Although the maturity date has passed, Roran has agreed to extend the loan and advance additional funds until further negotiations have been concluded. On June 8, 2020, Roran converted $124,500 principal amount of its promissory note with the Company and $25,500 of accrued and unpaid interest thereon, totaling $150,000, into 4,166,666 shares of Company Common Stock at the stated conversion price per share of $0.036. The remaining balance due on the promissory note, as of the conversion date, was $104,838 in principal and $19,988 in interest. As a result of the advances made pursuant to the Loan Agreement, the Company has incurred total obligations of $149,838as of June 30, 2021 (exclusive(net of debt discounts and exclusive of accrued interest).

During the year ended June 30, 2022, Roran made non-interest bearing, unsecured, short-term cash advances to the Company totaling $18,367 for the purpose of paying all accounts payable before the closing date of the SPA.

On September 2, 2021, the Company entered into a Stock Purchase Agreement (the “SPA”) by and between (i) the Company (ii) Ryan Schadel (“Buyer”) and (iii) Roran Capital LLC (“Roran”). Roran agreed to sell to the Buyer 4,247,666 shares of common stock of the Company held by Roran for a total advances were $45,000. The Company recorded a BCF due the conversion optionpurchase price of $30,000385,000. In conjunction with the SPA, Roran agreed to forgive all amounts due to Roran by the Company totaling $207,644, and the unamortized balance at June 30, 2021which is $0. The amount is netted against thecomprised of convertible note payable balance– related party, accrued interest payable – related party and advances from related party. In accordance with ASC 470-50-40-2, the resulting forgiveness of convertible note payable, accrued interest and advances – related party of $207,644 is recorded as a debt discount with the corresponding entry toan increase in additional paid-in capital.capital within the statements of shareholders’ equity (deficit), as the debt forgiven is in essence a capital transaction.

SCHEDULE OF AMOUNTS OWNED TO RELATED PARTIES

  

Debts forgiven by Roran on

September 2, 2021

 
Convertible note payable – related party $149,838 
Interest on convertible note payable – related party  39,439 
Advance from related party  18,367 
Forgiveness of convertible note payable, accrued interest and advances – related party $207,644 

27

Demand Promissory Note

On October 18, 2021, the Company issued a Promissory Note in the principal amount of $100,000 (the “Promissory Note”) for cash to Ryan Schadel (the “Holder”), the Company’s Chief Executive Officer, sole director and majority stockholder. The debt discount has been amortized asPromissory Note bears interest expense throughat the maturity date.rate of 0.01% per annum. Any unpaid principal amount and any accrued interest is due on October 18, 2022. The Holder may demand payment of all or any portion of the outstanding principal and interest at any time. The Promissory Note is unsecured and there is no prepayment penalty.

On June 29, 2022, the Company issued a Promissory Note in the principal amount of $40,000 (the “Promissory Note”) for cash to Ryan Schadel (the “Holder”), the Company’s Chief Executive Officer, sole director and majority stockholder. The Promissory Note bears interest at the rate of 0.01% per annum. Any unpaid principal amount and any accrued interest is due on June 29, 2023. The Holder may demand payment of all or any portion of the outstanding principal and interest at any time. The Promissory Note is unsecured and there is no prepayment penalty.

 

Convertible Promissory Notes

On May 10, 2022, the Company issued a Convertible Promissory Note in the principal amount of $20,000 (the “Promissory Convertible Note”), for cash, to Timothy Hackbart (the “Holder”). The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on May 10, 2027. The Promissory Note is unsecured and there is no prepayment penalty. At the option of the Holder, the Promissory Convertible Note is convertible into shares of the Company’s common stock at a conversion price of $0.50 per share. The closing price of the Company’s common stock was $1.40 per share on the date the Promissory Convertible Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $20,000 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2022, $559 of discount amortization is included in interest expense. At June 30, 2022, there was an unamortized discount balance of $19,441 to be amortized through May 2027.

Convertible Promissory Notes – Related Party

On March 4, 2022, the Company issued a Convertible Promissory Note in the principal amount of $40,874 (the “Promissory Convertible Note”), for value received being comprised of 1 (one) bitcoin, to Ryan Schadel (the “Holder”), the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.5% per annum. Any unpaid principal amount and any accrued interest is due on March 4, 2027. The Promissory Note is unsecured and there is no prepayment penalty. At the option of the Holder, the Promissory Convertible Note is convertible into shares of the Company’s common stock at a conversion price of $0.50 per share. The closing price of the Company’s common stock was $1.25 per share on the date the Promissory Convertible Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $40,874 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2022, $2,641 of discount amortization is included in interest expense. At June 30, 2022, there was an unamortized discount balance of $38,233 to be amortized through March 2027.

On March 10, 2022, the Company issued a Convertible Promissory Note in the principal amount of $59,986 (the “Promissory Convertible Note”), for value received being comprised of 22.86012412 Ether, to Ryan Schadel (the “Holder”), the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on March 10, 2027. The Promissory Note is unsecured and there is no prepayment penalty. At the option of the Holder, the Promissory Convertible Note is convertible into shares of the Company’s common stock at a conversion price of $0.50 per share. The closing price of the Company’s common stock was $1.42 per share on the date the Promissory Convertible Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $59,986 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2022, $3,679 of discount amortization is included in interest expense. At June 30, 2022, there was an unamortized discount balance of $56,307 to be amortized through March 2027.

On May 6, 2022, the Company issued a Convertible Promissory Note in the principal amount of $100,000 (the “Promissory Convertible Note”), for cash, to Ryan Schadel (the “Holder”), the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on May 6, 2027. The Promissory Note is unsecured and there is no prepayment penalty. At the option of the Holder, the Promissory Convertible Note is convertible into shares of the Company’s common stock at a conversion price of $0.50 per share. The closing price of the Company’s common stock was $1.45 per share on the date the Promissory Convertible Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $100,000 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2022, $3,012 of discount amortization is included in interest expense. At June 30, 2022, there was an unamortized discount balance of $96,988 to be amortized through May 2027.

On May 9, 2022, the Company issued a Convertible Promissory Note in the principal amount of $100,000 (the “Promissory Convertible Note”), for cash, to Ryan Schadel (the “Holder”), the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on May 9, 2027. The Promissory Note is unsecured and there is no prepayment penalty. At the option of the Holder, the Promissory Convertible Note is convertible into shares of the Company’s common stock at a conversion price of $0.50 per share. The closing price of the Company’s common stock was $1.415 per share on the date the Promissory Convertible Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $100,000 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2022, $2,848 of discount amortization is included in interest expense. At June 30, 2022, there was an unamortized discount balance of $97,152 to be amortized through May 2027.

28

On June 29, 2022, the Company issued a Convertible Promissory Note in the principal amount of $40,000 (the “Promissory Convertible Note”), for cash, to Ryan Schadel (the “Holder”), the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on June 29, 2027. The Promissory Note is unsecured and there is no prepayment penalty. At the option of the Holder, the Promissory Convertible Note is convertible into shares of the Company’s common stock at a conversion price of $0.50 per share. The closing price of the Company’s common stock was $1.00 per share on the date the Promissory Convertible Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $40,000 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2022, $22 of discount amortization is included in interest expense. At June 30, 2022, there was an unamortized discount balance of $39,978 to be amortized through May 2027.

NOTE 45 - RELATED PARTY TRANSACTIONSTRANSACTION - 2021

 

The following individuals and entities have been identified as related parties based on their family affiliation with our former CEO and former Chairman of the Board:

 

Yitzhak Zelmanovitch

Roran Capital LLC

 

The following amounts were owed to related parties affiliated with the former CEO and former Chairman of the Board, at the dates indicated:

SCHEDULE OF AMOUNTS OWED TO RELATED PARTIESCONVERTIBLE DEBTS

 June 30, 2021  June 30, 2021 
Convertible Note Payable $149,838  $149,838 
        
Interest on Convertible Note Payable  36,441   36,441 
Due to related parties $186,279 
Total $186,279 

 

NOTE 6 – SHAREHOLDERS’ EQUITY (DEFICIT)

On June 8, 2020, Roran Capital converted $124,500 principal amount of its promissory noteDecember 15, 2021, the Company filed with the CompanyNevada Secretary of State amended and $25,500restated articles of accruedincorporation. The amended and unpaid interest thereon, totaling $restated articles had the effect of (i) increasing the Company’s authorized common stock to 100 million shares, (ii) increasing the Company’s authorized preferred stock to 150,00020, into 4,166,666 million shares, and (iii) reducing the par value of each of the Company’s common stock and preferred stock to $0.0001 per share. Common stock and additional paid-in capital for all periods presented in these financial statements have been adjusted retroactively to reflect the reduction in par value.

On March 11, 2022, the Company filed with the State of Nevada a certificate of designations for the Company’s Series A Convertible Preferred Stock (“Series A Stock”). The Series A Certificate of Designations provides (i) the number of authorized shares will be 100 (ii) each share will have a stated value of $50,000 (iii) each share is convertible into 100,000 shares of Company common stock, subject to a 9.99% equity blocker (iv) shares are non-voting and (v) shares are not entitled to receive dividends or distributions.

On March 16, 2022, the Company entered into Stock Purchases Agreements whereby the Company issued 22 shares to Series A Stock and various Warrants for $1,100,000 in cash. The Warrants comprise of 2,200,000 Company common stock issuable at the stated conversion price$1.30 per share, 2,200,000 Company common stock issuable at $1.50 per share and 2,200,000 Company common stock issuable at $1.75 per share, Upon issuance on March 16, 2022, the Warrant remain exercisable for a period of $five years0.036. The weighted average remaining legal life of the warrants at June 30, 2022 is 4.71 years.

NOTE 7 – INCOME TAXES

The remaining balanceCompany had no income tax expense due to operating losses incurred for the years ended June 30, 2022 and 2021.

United States

Modifications for net operating losses (NOL): Under Code Section 172(a) the amount of the NOL deduction is equal to the lesser of (a) the aggregate of the NOL carryovers to such year and NOL carrybacks to such year, or (b) 80% of taxable income computed without regard to the deduction allowable in this section. Thus, NOLs are currently subject to a taxable-income limitation and cannot fully offset income. The Act temporarily removes the taxable income limitation to allow an NOL to fully offset income.

Modifications of limitation on business interest: The 2017 Tax Cuts and Jobs Act of 2017 (TCJA) generally limited the amount of business interest allowed as a deduction to 30% of adjusted taxable income. The Act temporarily and retroactively increases the limitation on the promissory note,deductibility of interest expense under Code Section 163(j)(1) from 30% to 50% for tax years beginning in 2019 and 2020. (Code Section 163(j)(10)(A)(i) as amended by Act Section 2306(a)).

The Company has not recorded the necessary provisional adjustments in the financial statements in accordance with its current understanding of the CARES Act and guidance currently available as of this filing. But is reviewing the conversion date, wasCARES Act potential ramifications.

The tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred tax assets and liabilities on June 30, 2022 and 2021 are comprised of the following:

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

  Year Ended
June 30, 2022
  Year Ended
June 30, 2021
 
Deferred tax assets:        
Net-operating loss carryforward $259,803  $77,219 
Total deferred tax assets  259,803   77,219 
Valuation allowance  (259,803)  (77,219)
Deferred tax assets, net of allowance $-  $- 

29

 SCHEDULE OF PROVISION FOR INCOME TAXES

  Year Ended
June 30, 2022
  Year Ended
June 30, 2021
 
Federal        
Current $-  $- 
Deferred  259,803   77,219 
State  -   - 
Current  -   - 
Deferred  -   - 
Change in valuation allowance  (259,803)  (77,219)
Income tax provision $-  $- 

We have a net operating loss (“NOL”) carry forward for U.S. income tax purposes aggregating approximately $104,838 1,237,200 as of June 30, 2022, subject to the Internal Revenue Code Section 382/383, which places a limitation on the amount of taxable income that can be offset by net operating losses after a change in principalownership.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and $19,988 taxing strategies in interest, andmaking this assessment. In case the deferred tax assets will not be realized in future periods, the Company has provided a valuation allowance for the full amount of the deferred tax assets on June 30, 2022. The valuation allowance increased by approximately $182,600 as of June 30, 2022.

The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follows:

SCHEDULE OF EFFECTIVE INCOME TAX RATE

  Year Ended
June 30, 2022
  Year Ended
June 30, 2021
 
Statutory Federal Income Tax Rate  21%  21%
Non-deductible expenses  (5)%  (5)%
Change in valuation allowance  (16)%  (16)%
Income tax provision $-  $- 

The Company has not yet amended its Loan Agreement and Promissory Note with Roran Capital to extend the maturity date, which expired on identified any uncertain tax positions requiring a reserve as of June 19, 2020.30, 2022.

NOTE 5 -8 – SUBSEQUENT EVENTS

 

Forward Stock Split

On July 15, 2022, the Company’s director and shareholders approved an amendment of the Company’s Articles of Incorporation that, if filed, would effect a 10-for-1 forward stock split of the Company’s common stock (the “Forward Split”). The Forward Split is subject to clearance by the Financial Industry Regulatory Authority (“FINRA”), and the Company has evaluatedwill not effect the Forward Split until it is cleared by FINRA. The Board retains authority to abandon the Forward Split for any reason at any time prior to effecting the Forward Split.

Demand Promissory Note – Related Party

On August 12, 2022, the Company issued a Promissory Note in the principal amount of $50,000 (the “Promissory Note”) for cash to Laborsmart Inc. (the “Holder”). The Holder is owned by the Company’s Chief Executive Officer, sole director and majority stockholder. The Promissory Note bears interest at the rate of 5.00% per annum. Any unpaid principal amount and any accrued interest is due on August 12, 2023. The Holder may demand payment of all events that occurredor any portion of the outstanding principal and interest at any time. The Promissory Note is unsecured and there is no prepayment penalty. In event the Note is not paid when due, any outstanding principal and interest will accrue interest of 12% per annum.

Demand Promissory Note and Common Stock Purchase Warrant

On August 12, 2022, the Company issued a Promissory Note in the principal amount of $50,000 (the “Promissory Note”) for cash to Tom Zarro (the “Holder”). The Promissory Note bears interest at the rate of 5.00% per annum. Any unpaid principal amount and any accrued interest is due on August 12, 2023. The Holder may demand payment of all or any portion of the outstanding principal and interest at any time. The Promissory Note is unsecured and there is no prepayment penalty. In event the Note is not paid when due, any outstanding principal and interest will accrue interest of 12% per annum. In conjunction with the issue of the Promissory Note, the Company issued Mr. Zarro a common stock purchase warrant (the “Warrant”). Pursuant to the terms of the Warrant, Mr. Zarro may, at any time on or after August 12, 2022 and until August 12, 2025, exercise the balance sheetWarrant to purchase 20,000 shares of the Company’s common stock for an exercise price per share of $0.75, subject to adjustment as provided in the Warrant.

Amendment to Demand Promissory Note – Related Party

On October 18, 2021, the Company issued a Promissory Note in the principal amount of $100,000 (the “Promissory Note”) for cash to Ryan Schadel (the “Holder”), the Company’s Chief Executive Officer, sole director and majority stockholder. The Promissory Note bears interest at the rate of 0.01% per annum. Any unpaid principal amount and any accrued interest is due on October 18, 2022. On August 29, 2022, the Company entered into an Amendment to Promissory Note, dated August 29, 2022 with the Holder. Pursuant to the terms of the note amendment, the maturity date throughof the Promissory Note was extended to October 23, 2023, and the interest rate of the Note was increased to 5% as of and following August 29, 2022. As consideration for extension of the maturity date, the Company agreed to issue to Mr. Schadel 15,000 shares of the Company’s common stock. These shares were payable as of the date when the financial statements were issued to determine if they must be reported.of this Report.

 

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ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

There were no disagreements with our accountants on accounting or financial disclosure matters during 2021 and 2020, respectively. In the past the Company was not required to engage an independent registered public accounting firm due to its status as a registered investment company. Since the Company is no longer a registered investment company, it engaged the services of Haskell & White LLP in January 2017 to serve as the Company’s independent registered public accounting firm.ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

ITEM 9A.CONTROLS AND PROCEDURES

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Zindel Zelmanovitch,Ryan Schadel, our Chief Executive Officer (who is also ourand Chief Financial Officer), is also our Principal Executive Officer and Principal Financial Officer. Mr. Zelmanovitch evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2021.2022. The term “disclosure controls and procedures,” as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on itsthe evaluation, managementour Chief Executive Officer and Chief Financial Officer concluded as of June 30, 2021 that our disclosure controls and procedures were not effective as of June 30, 2022 because of material weaknesses in our internal control over financial reporting, described below in Management’s Report on Internal Control Over Financial Reporting. Notwithstanding the identified material weaknesses, management believes the financial statements included in this Annual Report on Form 10-K fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

 

Management’s Report on Internal Control Over Financial Reporting

 

Mr. Zelmanovitch,Schadel, as our PrincipalChief Executive Officer and PrincipalChief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) under the Exchange Act. An evaluation was performed of the effectiveness of the Company’s internal control over financial reporting.reporting was performed as of June 30, 2022. The evaluation was based on the framework in 2013 Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 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.

 

Based on our evaluation under the criteria set forth in 2013 Internal Control — Integrated Framework, our managementChief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2021,2022, our internal control over financial reporting was not effective because of the identification of material weaknesses described as follows:

 

 We did not have controls designed to validate the completeness and accuracy of underlying data used in the determination of accounting transactions. As a result, errors were identified in the underlying data used to support accounting transactions. Accordingly, we believe we have a material weakness because there is a reasonable possibility that a material misstatement to the interim or annual financial statements would not be prevented or detected on a timely basis.
   
 We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

 

35

 We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
   
 We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.
   
 We do not have a functioning audit committee or outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.

31

 

Remediation Plan for Material Weaknesses in Internal Control over Financial Reporting

 

Management of the Company is committed to improving its internal controls and subject to sufficient financial resources being available will (i) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities; (ii) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there is sufficient personnel; and, (iii) may consider appointing outside directors and audit committee members in the future.

 

Management has discussed the material weaknesses noted above with our independent registered public accounting firm. Due to the nature of these material weaknesses, it is reasonably possible that misstatements that could be material to the annual or interim financial statements could occur that would not be prevented or detected during our financial close and reporting process.

 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.

 

Changes in Internal Controls Over Financial Reporting

 

There have been no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act or in other factors that materially affected or are reasonably likely to materially affect our internal controls and procedures over financial reporting during the fourth quarter of the fiscal year ended June 30, 2021.2022.

ITEM 9B.OTHER INFORMATION

ITEM 9B.OTHER INFORMATION

 

None.

 

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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PART III

ITEM 10.DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Information Regarding Our Board of Directors

 

Pursuant to our bylaws, the number of directors is fixed and may be increased or decreased from time to time by resolution of our Board of Directors (the “Board”). The Company currently has one individual serving on the Board. The Company will seek to fill vacancies on the Board as it executes on its business plan and is able to fund the cost of errors and omissions insurance coverage for the Board.

 

Information with respect to our current directors is shown below.

 

Name Age  Director Since  Position(s) Held Age Director Since Position(s) Held
Zindel Zelmanovitch  74   2017  Chief Executive Officer, Chairman, Secretary, Chief Financial Officer
Ryan Schadel 45 2021 Chief Executive Officer, Chief Financial Officer

 

Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years.

 

Zindel Zelmanovitch.Ryan Schadel. Mr. ZelmanovitchSchadel has been Chairman of the Board of Directors andserved as our Chief Executive Officer, Secretary, and Chief Financial Officer and a member of the Companyour board of directors since acquiring voting control on September 2017. He has2, 2021. Prior to this, Mr. Schadel served as Chairmana CEO of the Board of Directors and Chief Executive Officer of East Coast Capital Holdings (a diversified private investment fund) since 2002, previously serving as the President and a Director of East Coast Capital Holdings (including its predecessor) since 1986. From 1982 through October 2000 Mr. Zelmanovitch was President and a director and stockholder of Freshstart Venture Capital Corp.Labor Smart, Inc., a publicblue collar staffing company, which was licensed as an SBA SBIC, which was listed on NASDAQ. Mr. Zelmanovitch guided Freshstart through its initial public offering; the company was eventually soldfrom May 2011 to Medallion Financial Corp. Mr. Zelmanovitch received an M.B.A. degree from C.W. Post Center of Long Island University in 1979.February 2021.

 

Family Relationships

 

Zindel Zelmanovitch is the father of Yitzhak Zelmanovitch, who is the manager of Roran.

Information Regarding Our Executive Officers

Zindel Zelmanovitch is our sole executive officer. Since Mr. Zelmanovitch also serves as our sole director, his executive officer’s biography is set forth under “Information Regarding the Board of Directors”, above.None

 

Involvement in Certain Legal Proceedings

 

To the best of our knowledge, none of our directors or executive officers has, during the past ten years:

 

 been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
   
 had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
   
 been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

37

 

 been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
   
 been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
   
 been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the Commission.

 

Section 16(a) Beneficial Ownership Reporting Compliance

33

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. Based solely upon our review of the Forms 3, 4 and 5 filed during fiscal year ended June 30, 2021, we believe that as of June 30, 2021 our executive officers, directors and greater than 10 percent beneficial owners have complied on a timely basis with all Section 16(a) filing requirements.

Corporate Governance

 

Board Committees and Charters

 

Audit Committee

 

We do not currently have a separately constituted audit committee. We will consider forming an Audit Committee in fiscal 20222023 and if appropriate will commence a search for new qualified board members, one of whom will meet the definition of an “audit committee financial expert”. The board of directors will also consider adopting a written audit committee charter.

 

Compensation Committee

 

We do not currently have a separately constituted compensation committee. Our board of directors has not yet determined whether to create a compensation committee.

 

Nominating Committee

 

We do not currently have a separately constituted nominating committee. Our board of directors has not yet determined whether to create a nominating committee.

38

 

Code of Business Conduct

 

We have not yet adopted a Code of Business Conduct, which would apply to our chief executive officer and chief financial officer, or to all directors and employees. Our board of directors plans to adopt a Code of Business Conduct as soon as practicable.

 

Board Diversity

 

While we do not have a formal policy on diversity, our board of directors considers diversity to include the skill set, background, reputation, type and length of business experience of our board of directors members, as well as, a particular nominee’s contributions to that mix. Our board of directors believes that diversity brings a variety of ideas, judgments, and considerations that can benefit our shareholders and us.

 

Stockholder Communications

 

We do not have a formal policy regarding communications with our board of directors, or for the consideration of director candidates recommended by shareholders. To date, no shareholders have made any such recommendations.

ITEM 11.EXECUTIVE COMPENSATION

ITEM 11. EXECUTIVE COMPENSATION

 

There was no executive compensation for the fiscal years ended June 30, 20212022 and 2020,2021, respectively.

 

Outstanding Equity Awards At Fiscal Year-End

 

As of June 30, 20212022 and 2020,2021, respectively, there were no outstanding equity awards. At this time, we have no plans to adopt any equity award program, though that could change in the future.

 

Director Compensation

 

For the years ended June 30, 2021,2022, and 2020,2021, there was no director compensation. At this time we have no plans to compensate our directors, though that could change in the future.

 

Executive Employment Agreements and Change-in-Control Arrangements

 

We have not entered into employment agreements or change-in-control arrangements with any of our executive officers. Each of our executive officers is an at-will employee, and their employment relationship with us may be terminated at any time.

 

Mr. ZelmanovitchSchadel has agreed to work with no remuneration until such time as the Company receives sufficient revenues necessary to provide management salaries. At this time, we cannot accurately estimate when sufficient revenues will occur to implement this compensation, or what the amount of the compensation will be.

 

There are no annuity, pension or retirement benefits proposed to be paid to officers, directors or employees in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the Company or any of its subsidiaries if any.

 

3934

ITEM 12.SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 12. SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table provides information regarding the beneficial ownership of our common stock as of August 31, 2021,October 7, 2022, which is also referred to herein as the “Evaluation Date”, by: (i) each person or group who is known by us to beneficially own more than 5% of our common stock; (ii) each of our current directors; (iii) each of our named executive officers as set forth in Item 11 of this Annual Report; and, (iv) all such directors and executive officers as a group. The table is based upon information supplied by our officers, directors and principal shareholders and a review of Schedules 13D and 13G, if any, filed with the SEC. Unless otherwise indicated in the footnotes to the table and subject to community property laws where applicable, we believe that each of the shareholders named in the table has sole voting and investment power with respect to the shares indicated as beneficially owned.

 

Applicable percentages are based on 6,082,214 shares outstanding as of the Evaluation Date, adjusted as required by rules promulgated by the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include shares of our common stock issuable pursuant to the exercise of stock options or warrants that are either immediately exercisable or exercisable within 60 days of the Evaluation Date. These shares are deemed to be outstanding and beneficially owned by the person holding those options for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

 

Name and Address of Beneficial Owner 

Shares

Beneficially

Owned

  

Percentage of

Total Voting

Power

 
       
Directors and Named Executive Officers:            
None     -0-%
         
All executive officers and directors as a group (persons)        
None      -0-%
5% Shareholders        

Roran Capital LLC

140 West 31st Street

New York, NY 10001

  4,247,666   70%

Michael L. Field

1340 N. Great Neck Road 1272-384
Virginia Beach, VA 23454

  337,610   5.5%
  Common Stock  Series A Convertible Preferred Stock 
Beneficial Owner (1) Number of Shares Beneficially Owned  Percentage of Class (2)  Number of Shares Beneficially Owned (4)  Percentage of Class (3) 
             
Ryan Schadel, Chief Executive Officer, Chief Financial Officer, Sole Director  4,264,266 (4)   70.11%  -   0.00%
                 
All executive officers and directors as a group (1 person)  4,264,266   70.11%  -   0.00%
                 
Timothy Hackbart  -   0.00%  2   9.10%
                 
Tom Zarro  -   0.00%  10   45.45%
                 
Daniel Giancola  -   0.00%  10   45.45%

 

Notes:

(1)Unless otherwise noted, the address of the reporting person is c/o Metavesco, Inc., 410 Peachtree Pkwy, Suite 4245, Cumming, GA 30041

(2)Based on 6,082,214 shares of common stock outstanding as of October 7, 2022 and shares of common stock that the reporting person has the right to acquire within 60 days from the date thereof.

(3)Based on 22 shares of Series A Convertible Preferred Stock outstanding as of October 7, 2022.

(4)Each share of our Series A Convertible Preferred Stock converts into 100,000 shares of our common stock. Series A Convertible Preferred Stock are non-voting. Holders of Series Preferred Stock holdings in shares of common stock of the Company may not exceed 9.99%. This limitation may be waived by the Holder with 61 days’ prior notice.
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Certain Relationships and Related Transactions

 

Our sole executive officer and sole director is the father of Yitzhak Zelmanovitch, who is the manager of Roran.

The Company’s outstanding judgment payable owed to the SBA was purchased by Roran from the SBA in July 2017. As such, all amounts due under the outstanding judgment payable were owed to Roran rather than the SBA. Waterside satisfied the judgment in full on May 16, 2019 as Roran agreed to forgive the judgment.Obligations

 

On September 19, 2017, the Company issued a Convertible Promissory Note in an amount up to $150,000 in favor of Roran which was increased to $200,000 on June 17, 2019 and $250,000 on December 13, 2019 (the “Note”). The Note was issued pursuant toentered into a Convertible Loan Agreement with Roran (the “Loan Agreement”). Pursuant to the Loan Agreement,”). All outstanding Roran agreed to loan the Company an amount not to exceed a total of $150,000 in principal over 18 months. On June 17, 2019, the Company amended the Loan Agreement increasing the loan amount to $200,000 and accrued interest on the Note is due and payable onextending the maturity date which was March 19, 2019 and then extended to September 19, 2019 and then June 19, 2020 and a further extension is being negotiated. Amounts borrowed2019. Each advance under the Loan Agreement will be documented under a Convertible Promissory Note bearissued by the Company in favor of Roran (the “Note”). The Note bears interest at the rate of 12% per annum. Roran has the right to convert all or any portion of the Note into shares of the Company’s common stock at a conversion price equal to 60% of the share price.

The Company recorded a BCF due to the conversion option of $116,800, which has been fully amortized as of September 30, 2019. The debt discount has been amortized as interest expense through September 30, 2019. On December 13, 2019, the Company amended its Loan Agreement Note with Roran as follows: (i) the total amount to be loaned was increased to $250,000, and (ii) the maturity date was extended to June 19, 2020. Although the maturity date has passed, Roran has agreed to extend the loan and advance additional funds until further negotiations have been concluded. On June 8, 2020, Roran Capital converted $124,500 principal amount of its promissory note with Waterside Capital Corporation (the “Company”)the Company and $25,500 of accrued and unpaid interest thereon, totaling $150,000, into 4,166,666 shares of Company Common Stock at the stated conversion price per share of $0.036. The remaining balance due on the promissory note, as of the conversion date, was $104,838 in principal and $19,988 in interest, andinterest. As a result of the advances made pursuant to the Loan Agreement, the Company has not yet amended its Loan Agreementincurred total obligations of $149,838 as of June 30, 2021 (net of debt discounts and exclusive of accrued interest).

35

During the year ended June 30, 2022, Roran made non-interest bearing, unsecured, short-term cash advances to the Company totaling $18,367 for the purpose of paying all accounts payable before the closing date of the SPA.

On September 2, 2021, in conjunction with the SPA, Roran agreed to forgive all obligations due to Roran by the Company totaling $207,644 which is comprised of convertible note payable – related party, accrued interest payable – related party, and advances from related party.

  

Debts forgiven by Roran on September 2, 2021

 
Convertible note payable – related party $149,838 
Interest on convertible note payable – related party  39,439 
Advance from related party  18,367 
Forgiveness of convertible note payable, accrued interest and advances – related party $207,644 

As a result of Roran agreeing to forgive all obligations, as of June 30, 2022, no obligations are due to Roran.

Convertible Promissory Notes – Related Party

On March 4, 2022, the Company issued a Convertible Promissory Note within the principal amount of $40,874 (the “Promissory Convertible Note”), for value received being comprised of 1 (one) bitcoin, to Ryan Schadel (the “Holder”), the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.5% per annum. Any unpaid principal amount and any accrued interest is due on March 4, 2027. The Promissory Note is unsecured and there is no prepayment penalty. At the option of the Holder, the Promissory Convertible Note is convertible into shares of the Company’s common stock at a conversion price of $0.50 per share. The closing price of the Company’s common stock was $1.25 per share on the date the Promissory Convertible Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $40,874 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2022, $2,641 of discount amortization is included in interest expense. At June 30, 2022, there was an unamortized discount balance of $38,233 to be amortized through March 2027.

On March 10, 2022, the Company issued a Convertible Promissory Note in the principal amount of $59,986 (the “Promissory Convertible Note”), for value received being comprised of 22.86012412 Ether, to Ryan Schadel (the “Holder”), the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on March 10, 2027. The Promissory Note is unsecured and there is no prepayment penalty. At the option of the Holder, the Promissory Convertible Note is convertible into shares of the Company’s common stock at a conversion price of $0.50 per share. The closing price of the Company’s common stock was $1.42 per share on the date the Promissory Convertible Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $59,986 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2022, $3,679 of discount amortization is included in interest expense. At June 30, 2022, there was an unamortized discount balance of $56,307 to be amortized through March 2027.

On May 6, 2022, the Company issued a Convertible Promissory Note in the principal amount of $100,000 (the “Promissory Convertible Note”), for cash, to Ryan Schadel (the “Holder”), the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on May 6, 2027. The Promissory Note is unsecured and there is no prepayment penalty. At the option of the Holder, the Promissory Convertible Note is convertible into shares of the Company’s common stock at a conversion price of $0.50 per share. The closing price of the Company’s common stock was $1.45 per share on the date the Promissory Convertible Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $100,000 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2022, $3,012 of discount amortization is included in interest expense. At June 30, 2022, there was an unamortized discount balance of $96,988 to be amortized through May 2027.

On May 9, 2022, the Company issued a Convertible Promissory Note in the principal amount of $100,000 (the “Promissory Convertible Note”), for cash, to Ryan Schadel (the “Holder”), the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on May 9, 2027. The Promissory Note is unsecured and there is no prepayment penalty. At the option of the Holder, the Promissory Convertible Note is convertible into shares of the Company’s common stock at a conversion price of $0.50 per share. The closing price of the Company’s common stock was $1.415 per share on the date the Promissory Convertible Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $100,000 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2022, $2,848 of discount amortization is included in interest expense. At June 30, 2022, there was an unamortized discount balance of $97,152 to be amortized through May 2027.

36

On June 29, 2022, the Company issued a Convertible Promissory Note in the principal amount of $40,000 (the “Promissory Convertible Note”), for cash, to Ryan Schadel (the “Holder”), the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on June 29, 2027. The Promissory Note is unsecured and there is no prepayment penalty. At the option of the Holder, the Promissory Convertible Note is convertible into shares of the Company’s common stock at a conversion price of $0.50 per share. The closing price of the Company’s common stock was $1.00 per share on the date the Promissory Convertible Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $40,000 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2022, $22 of discount amortization is included in interest expense. At June 30, 2022, there was an unamortized discount balance of $39,978 to be amortized through May 2027.

Shareholder Deficit

On September 2, 2021, the Company entered into a Stock Purchase Agreement (the “SPA”) by and between (i) the Company (ii) Ryan Schadel (“Buyer”) and (iii) Roran Capital LLC (“Roran”). Roran agreed to extendsell to the maturity date,Buyer 4,247,666 shares of common stock of the Company held by Roran for a total purchase price of $385,000. In conjunction with the SPA, Roran agreed to forgive all amounts due to Roran by the Company totaling $207,644, which expired on June 19, 2020.is comprised of convertible note payable – related party, accrued interest payable – related party and advances from related party. In accordance with ASC 470-50-40-2, the resulting forgiveness of convertible note payable, accrued interest and advances – related party of $207,644 is recorded as an increase in additional paid-in capital within the statements of shareholders’ deficit, as the debt forgiven is in essence a capital transaction.

Director Independence

 

We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “independent directors”.

 

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ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES

ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES

 

The following table provides information regarding the fees billed to us by Hudgens CPA, PLLC and Haskell & White LLP in the years ended June 30, 2021,2022, and 2020.2021. All fees described below were approved by the Board:

 

 For the years ended June 30  For the years ended June 30 
 2021  2020  2022  2021 
Audit Fees (1) $24,000  $24,000  $28,400  $24,000 
                
Audit Related Fees (2)  -   -   -   - 
                
Tax Fees (3)  -   -   -   - 
                
All Other Fees (4)  -   -   -   - 
                
Total Fees: $24,000  $24,000  $28,400  $24,000 

 

(1)Audit Fees include fees for services rendered for the audit of our financial statements, included in our Annual Report on Form 10-K. On April 13, 2022, Haskell & White LLP resigned as the Company’s independent registered public accounting firm. On April 29, 2022, the Board of Directors of the Company appointed Hudgens CPA, PLLC as the Company’s new independent registered public accounting firm. Audit Fees attributable to Hudgens CPA, PLLC and Haskell & White LLP in 2022 is $4,250 and $24,150, respectively.
  
(2)Audit Related Fess consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the SEC and other accounting consulting.
  
(3)Tax Fees consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.
  
(4)All Other Fees consists of fees for other miscellaneous items.

 

Pre-Approval Policies and Procedures

 

The policy of our Board is to pre-approve all audit and permissible non-audit services provided by our independent auditors. These services may include audit services, audit-related services, tax services, and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services. The independent auditor and management are required to periodically report to the Board regarding the extent of services provided by the independent auditor in accordance with this pre-approval. Any proposed services not included within the list of pre-approved services or any proposed services that will cause the Company to exceed the pre-approved aggregate amount requires specific pre-approval by the Board.

 

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PART IV

ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

 (a)(1)The Company’s financial statements and related notes thereto are listed and included in this Annual Report (Item 8).
    
  (2)Schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
    
  (3)The following exhibits listed in the attached Exhibit Index are filed as part of this Annual Report pursuant to Item 601 of Regulation S-K:S-K.

ITEM 16. FORM 10-K SUMMARY

None.

EXHIBIT INDEX

 

Exhibit Number Description
   
3.1 Amended and Restated Articles of Incorporation of the Registrant, incorporated(incorporated by reference to Exhibit 13.1 to Financial Statements and Exhibitsthe registrant’s Current Report on Form N-5/A as8-K filed with the Securities and Exchange Commission on January 9, 1999.December 21, 2021).
   
3.2Certificate of Designations for the Series A Preferred Stock, filed with the Nevada Secretary of State on March 11, 2022 (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed with the Commission on March 15, 2022).
3.3Certificate of Amendment to the registrant’s Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed with the Commission on May 24, 2022).
3.23.4 Amended and Restated Bylaws of the Registrant, incorporated(incorporated by reference to Exhibit 23.2 to Financial Statements and Exhibitsthe registrant’s Current Report on Form N-5/A as8-K filed with the Securities and Exchange Commission on January 9, 1999.December 21, 2021).
   
10.1 The Registrant’s License From the Small Business Administration, incorporated by reference to Exhibit 8 to Financial Statements and Exhibits on Form N-5/A as filed with the Securities and Exchange Commission on January 9, 1999.
   
10.2 Convertible Loan Agreement dated September 19, 2017 between the Registrant and Roran Capital LLC, incorporated by reference to Exhibit 10.2 to Form 10-Q as filed by the Registrant with the Securities and Exchange Commission on April 26, 2018.
   
10.3 Convertible Promissory Note dated September 19, 2017 issued by the Registrant in favor of Roran Capital LLC in an amount up to $150,000, incorporated by reference to Exhibit 10.3 to Form 10-Q as filed by the Registrant with the Securities and Exchange Commission on April 26, 2018.
   
10.4 Form of First Amendment to Loan Agreement**
   
10.5 Form of First Amendment to Note**
10.6Securities Purchase Agreement, dated as of September 2, 2021, by and between the Company, Ryan Schadel, and Roran Capital LLC (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Commission on September 9, 2021).
10.7Debt Forgiveness Agreement and Cancellation of Note dated September 2, 2021 by and between the Company and Roran Capital LLC (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the Commission on September 9, 2021)
10.8Promissory Note, dated October 18, 2021, issued by the registrant to Ryan Schadel (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Commission on October 21, 2021).
10.9Convertible Promissory Note, dated March 4, 2022, issued by the registrant in favor of Ryan Schadel (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Commission on March 7, 2022).
10.10Convertible Promissory Note, dated March 10, 2022, issued by the registrant in favor of Ryan Schadel (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Commission on March 11, 2022).
10.11Securities Purchase Agreement by and among Waterside Capital Corporation and Buyer #1 dated as of March 16, 2022 (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Commission on March 22, 2022).
10.12Common Stock Purchase Warrant #1 issued to Buyer #1 on March 16, 2022 for 1,000,000 shares of Common Stock of Waterside Capital Corporation, at an exercise price of $1.30 per share (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the Commission on March 22, 2022).
10.13Common Stock Purchase Warrant #2 issued to Buyer #1 on March 16, 2022 for 1,000,000 shares of Common Stock of Waterside Capital Corporation, at an exercise price of $1.50 per share (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the Commission on March 22, 2022)

10.14Common Stock Purchase Warrant #3 issued to Buyer #1 on March 16, 2022 for 1,000,000 shares of Common Stock of Waterside Capital Corporation, at an exercise price of $1.75 per share (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the Commission on March 22, 2022)
10.15Securities Purchase Agreement by and among Waterside Capital Corporation and Buyer #2 dated as of March 16, 2022 (incorporated by reference to Exhibit 10.5 to the registrant’s Current Report on Form 8-K filed with the Commission on March 22, 2022)
10.16Common Stock Purchase Warrant #1 issued to Buyer #2 on March 16, 2022 for 1,000,000 shares of Common Stock of Waterside Capital Corporation, at an exercise price of $1.30 per share (incorporated by reference to Exhibit 10.6 to the registrant’s Current Report on Form 8-K filed with the Commission on March 22, 2022)
10.17Common Stock Purchase Warrant #2 issued to Buyer #2 on March 16, 2022 for 1,000,000 shares of Common Stock of Waterside Capital Corporation, at an exercise price of $1.50 per share (incorporated by reference to Exhibit 10.7 to the registrant’s Current Report on Form 8-K filed with the Commission on March 22, 2022)
10.18

Common Stock Purchase Warrant #3 issued to Buyer #2 on March 16, 2022 for 1,000,000 shares of Common Stock of Waterside Capital Corporation (incorporated by reference to Exhibit 10.8 to the registrant’s Current Report on Form 8-K filed with the Commission on March 22, 2022)

Securities Purchase Agreement by and among Waterside Capital Corporation and Buyer #3 dated as of March 16, 2022 (incorporated by reference to Exhibit 10.9 to the registrant’s Current Report on Form 8-K filed with the Commission on March 22, 2022)
10.19Common Stock Purchase Warrant #1 issued to Buyer #3 on March 16, 2022 for 200,000 shares of Common Stock of Waterside Capital Corporation, at an exercise price of $1.30 per share (incorporated by reference to Exhibit 10.10 to the registrant’s Current Report on Form 8-K filed with the Commission on March 22, 2022)
10.20Common Stock Purchase Warrant #2 issued to Buyer #3 on March 16, 2022 for 200,000 shares of Common Stock of Waterside Capital Corporation, at an exercise price of $1.50 per share (incorporated by reference to Exhibit 10.11 to the registrant’s Current Report on Form 8-K filed with the Commission on March 22, 2022)
10.21Common Stock Purchase Warrant #3 issued to Buyer #3 on March 16, 2022 for 200,000 shares of Common Stock of Waterside Capital Corporation, at an exercise price of $1.75 per share (incorporated by reference to Exhibit 10.12 to the registrant’s Current Report on Form 8-K filed with the Commission on March 22, 2022)
10.22Convertible Promissory Note, dated May 6, 2022, issued by the registrant in favor of Ryan Schadel (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Commission on May 10, 2022).
10.23Convertible Promissory Note, dated May 9, 2022, issued by the registrant in favor of Ryan Schadel (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the Commission on May 10, 2022).
10.24Note Purchase Agreement, dated May 10, 2022, by and between the registrant and Timothy Hackbart (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the Commission on May 10, 2022).

10.25Convertible Promissory Note, dated May 10, 2022, issued by the registrant in favor of Timothy Hackbart (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the Commission on May 10, 2022).
10.26Demand Promissory Note, dated June 29, 2022, issued by the registrant in favor of Ryan Schadel (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Commission on July 1, 2022).
10.27Note Purchase Agreement, dated as of August 12, 2022, by and between Metavesco, Inc. and Laborsmart, Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Commission on August 18, 2022).
10.28Demand Promissory Note issued on August 12, 2022 by Metavesco, Inc. in favor of Laborsmart, Inc. (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the Commission on August 18, 2022).
10.29Securities Purchase Agreement, dated as of August 12, 2022, by and between Metavesco, Inc. and Tom Zarro (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the Commission on August 18, 2022).
10.30Demand Promissory Note issued on August 12, 2022 by Metavesco, Inc. in favor of Tom Zarro (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the Commission on August 18, 2022).
10.31Common Stock Purchase Warrant issued on August 12, 2022 by Metavesco, Inc. to Tom Zarro (incorporated by reference to Exhibit 10.5 to the registrant’s Current Report on Form 8-K filed with the Commission on August 18, 2022).
10.32Amendment to Demand Promissory Note, dated as of August 29, 2022, issued by the registrant to Ryan Schadel (incorporated by reference to Exhibit 10.5 to the registrant’s Current Report on Form 8-K filed with the Commission on September 2, 2022)
   
31.1 Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(*)2002*.
   
31.2 Certification of the Chief Financial Officer and Chief Operating Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(*)2002*.
   
32.1 Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002(*).
32.2Certification of the Chief Financial Officer and Chief Operating Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002(*)2002*.
   
99.1 Final order Approving and Confirming The Receiver’s Final Report, Terminating The Receivership And Discharging The Receiver, as filed in the United States District Court for The Eastern District of Virginia Norfolk Division on 06-28-2017, incorporated by reference to Exhibit 99.1 to the Registrant’s Form 10-K as filed with the Securities and Exchange Commissions on April 12, 2018.
   
101.INS Inline XBRL Instance DocumentDocument*
   
101.SCH Inline XBRL Taxonomy Extension Schema DocumentDocument*
   
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase DocumentDocument*
   
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase DocumentDocument*
   
101.LAB Inline XBRL Taxonomy Extension Label Linkbase DocumentDocument*
   
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase DocumentDocument*
   
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)*

 

(*)* Filed herewith.
   
(**)* Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on June 21, 2019.
+Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto shall not be deemed “filed” or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act, Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections, and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

 

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SIGNATURES

 

In accordance with the requirements of Section 13 or 15(d) 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.

 

Date: September 1, 2021October 7, 2022WATERSIDE CAPITAL CORPORATIONMETAVESCO, INC.
   
 By:/s/ Zindel ZelmanovitchRyan Schadel
 Name:ZINDEL ZELMANOVITCHRYAN SCHADEL
 Title:Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Accounting Officer)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report is signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

NAME TITLE DATE
     
/s/ Zindel ZelmanovitchRyan Schadel Chairman of the Board;Chief Executive Officer, Chief Financial Officer and Sole Director September 1, 2021October 7, 2022
  Chief(Principal Executive Officer;
ChiefOfficer, Principal Financial Officer and Principal Accounting Officer)  

 

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