UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORMForm 10-Q

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

(Mark One) 

For the quarterly period ended: June 30, 2018þ

or

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

For the transitionquarterly period from __________ to __________ended March 31, 2019

or

Commission File Number☐ :033-25126DTRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Hash Labs Inc.For the transition period from __________________ to __________________________

(Exact name of registrant as specified in its charter)

Commission file number: 033-25126-D

78 SW 7^th Street

Miami, FL 33130

(Address of principal executive offices)

888-879-8896(888) 879-8896

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by sectionSection 13 or 15(d) of the Securities Exchange Act of 1934 during the pastpreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒þ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. files).

Yes ☒þ No ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒þ

As

Securities registered under Section 12(b) of August 13, 2018, there were 21,981,580the Exchange Act: (None.)

Indicated the number of shares outstanding of each of the registrant’s Common Stock.issuer’s classes of common stock, as of the latest practicable date, 23,098,246 shares of common stock are issued and outstanding as of May 16, 2019.

TABLE OF CONTENTS

PART I1. - FINANCIAL INFORMATION

ITEMItem 1. FINANCIAL STATEMENTSFinancial Statements.

Hash Labs IncInc.

Condensed Consolidated Balance Sheets

(unaudited)

The accompanying notes are an integral part of these unauditedcondensed consolidated financial statements.

Hash Labs Inc.

Condensed Consolidated Statements of Operations

(unaudited)(Unaudited)

The accompanying notes are an integral part of these unauditedcondensed consolidated financial statements.

Hash Labs Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)(Unaudited)

The accompanying notes are an integral part of these unauditedcondensed consolidated financial statements.

Hash Labs Inc.

HASH LABS INC.Condensed Consolidated Statements of Changes in Stockholders’ Deficit

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30,For the Three Months Ended March 31, 2019 and 2018

NOTE 1 – BASIS OF PRESENTATION & GOING CONCERN

The accompanying notes are an integral part of these condensed consolidated financial statements.

Hash Labs Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements

For The Three Months Ended March 31, 2019

NOTE 1 — BUSINESS, GOING CONCERN AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Hash Labs Inc., a Nevada corporation (the “Company”), have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete condensed consolidated financial statements. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company’s Form 10-K for the fiscal year ended December 31, 2017.2018 filed with the SEC on April 11, 2019. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and which are necessary to present fairly the financial position of the Company as of June 30, 2018,March 31, 2019, and the results of operations and cash flows for the sixthree months ended June 30, 2018March 31, 2019 and 2017.2018. The results of operations for the sixthree months ended June 30, 2018March 31, 2019 are not necessarily indicative of the results that may be expected for the entire fiscal year.

Principle of Consolidation

The accompanying financial statements present on a consolidated basis the accounts of the Company and its wholly owned subsidiary, Coro Corp., which was organized in the State of Nevada on September 14, 2018.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Nature of Business Operations

Our CompanyHash Labs Inc. is a Nevada corporation that was originally formed on November 1, 2005 when Bio-Solutions International, Inc. (“Bio-Solutions”) entered into an Agreement and Plan of Merger with OmniMed Acquisition Corp., a Nevada corporation and a wholly-owned subsidiary of Bio-Solutions, OmniMed International, Inc. (“OmniMed”) and the shareholders of OmniMed. Pursuant to the agreement, Bio-Solutions acquired all of the outstanding equity stock from the OmniMed shareholders. As a result, the OmniMed shareholders assumed control of Bio-Solutions and changed the name of the Company to OmniMed International, Inc., effective November 21, 2006. On January 17, 2006, OmniMed changed its name to MedeFile International, Inc. The Company’s business following the closing of this agreement was the sale of an Internet-enabled Personal Health Record (iPHR) system for gathering, digitizing, maintaining, accessing and sharing an individual’s medical records, and in connection therewith, providing a professional service specializing in HIPAA compliant retrieval, reproduction and release of information. Under this service, Company personnel go onsite to physicians’ offices weekly to reproduce the records requested by third parties.

In October 2017, the name of the Company was changed to Tech Town Holdings, Inc. to reflect a new business strategy centered on identifying and fostering new or early stage business opportunities being aggressively fueled by digital reinvention and innovation. To that end, our business-building platform was segmented into sixis focused categories, for which we planned to advance numerous technology development projects:

Following close scrutiny of emerging business opportunities, coupled with evaluation of market trends, the Company determined that a more prudent strategy was to narrow its focus. The Company has now concentrated its focus on dynamic global growth opportunities in the financial technology, (“Fintech”) industry, with an emphasis on emerging Blockchain or distributed ledger technology (“DLT”).Fintech industry. The Company is now developing financialproducts and technology solutions to operate onfor global payments and the world’s most advanced DLT, known as Hashgraph. As a result of this concentrated FinTech / DLT focus, the Company was renamed Hash Labs Inc. on January 9, 2018, financial industry.

Going Concern

The accompanying unaudited consolidated financial statements have been prepared contemplating a continuation of the Company as a going concern. However, theThe Company incurredhas reported a net loss of $2,157,270$2,336,961 for the sixthree months ended June 30, 2018March 31, 2019 and has negative working capital of $143,237$2,772,777 as of June 30, 2018.March 31, 2019.

The accompanying unaudited consolidated financial statements have been prepared assuming the Company will continue as a going concern. The operating losses and working capital deficit raise substantial doubt about the Company’s ability to continue as a going concern.

We will need to raise additional capital in order to continue operations. The Company’s ability to obtain additional financing depends onmay be affected by the success of its growth strategy and its future performance, each of which is subject to general economic, financial, competitive, legislative, regulatory and other factors beyond the Company’s control. The unaudited consolidated financial statements doAdditional capital may not include any adjustments relating to the recoverability and classification of recorded assets,be available on acceptable terms, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

We will need to raise additional capital in order to continue operations.at all. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. Additional financing may not be available on terms acceptable to the Company, or at all.

Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail or cease our operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These financial statements do not include any adjustments that might arise from this uncertainty.

Cash and Cash Equivalents

Financial Accounting PronouncementsFor purposes of these financial statements, cash and cash equivalents includes highly liquid debt instruments with maturity of less than three months.

In May 2014,Concentrations of Credit Risk

Financial instruments and related items, which potentially subject the FASB issued ASU No. 2014-09, “Revenue from ContractsCompany to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with Customers.” ASU 2014-09high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit. Currently our operating account is a comprehensive revenuenot above the FDIC limit.

Advertising

The Company follows the policy of charging the costs of advertising to expense as incurred. The Company incurred no advertising costs for the three months ended March 31, 2019 and 2018.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition standardof deferred tax assets and liabilities for the expected future tax consequences of events that has superseded nearly all existing revenue recognition guidance under current U.S. GAAPhave been included in the financial statements. Under this method, deferred tax assets and replaced it with a principle based approach for determining revenue recognition. ASU 2014-09 requires that companies recognize revenueliabilities are determined based on the valuedifferences between the financial statements and tax basis of transferred goods or services as they occurassets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the contract. The ASU also requires additional disclosure aboutperiod that includes the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017.enactment date.

The Company’s primary sourceCompany records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of revenueexisting taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from providing a professional service that specializes in HIPAA compliant retrieval, reproduction and release of information. Orders are fulfilled as requested, then invoiced. Once payment is received, revenue isan uncertain tax position may be recognized when recordsit is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. 

Property and Equipment

Property and equipment are delivered.stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives being 3 years up to 10 years.

DuringComputer and equipment costs consisted of the fourth quarter of 2017,following:

Depreciation expense was $499 and $0 for the Company finalized its assessment related to the new standardthree months ended March 31, 2019 and determined that the timing of revenue recognition related to the Company’s revenues will remain consistent between the new standard and the previous standard.2018, respectively.

Revenue Recognition

The Company accounts for revenue in accordance with Topic 606 which was adopted ASU 2014-09 effective January 1,at the beginning of fiscal year 2018 using the modified retrospective method,method. The comparative information has not been restated and there was no cumulativecontinues to be reported under the accounting standards in effect for those periods. The Company did not recognize any cumulative-effect adjustment to retained earnings.earnings upon adoption as the effect was immaterial. 

Fair Value of Financial Instruments

Cash and Equivalents, Deposits In-Transit, Receivables, Prepaid and Other Current Assets, Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities

The carrying amounts of these items approximated fair value.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, Financial Accounting Standards Board (“FASB”) ASC Topic 820-10-35 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements).

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

Impairment of Long Lived Assets

In accordance with Accounting Standards Codification (“ASC”) 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. ASC 360-10 relates to assets that can be amortized and the life can be determinable. The Company reviews property and equipment and other long-lived assets for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the asset’s carrying amount to future undiscounted net cash flows the assets are expected to generate. Cash flow forecasts are based on trends of historical performance and management’s estimate of future performance, giving consideration to existing and anticipated competitive and economic conditions. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future cash flows arising from the assets or their fair values, whichever is more determinable.

Leases

In February 2016, the FASB issued ASU 2016-02,Leases, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The option of this ASU did not have a material impact on our results of operations, cash flows or financial condition.

Net Loss per Share

Basic and diluted loss per share amounts are computed based on net loss divided by the weighted average number of common shares outstanding. Convertible shares, if converted, totaling 0 and 5,741 common shares, respectively were not included in the computation of diluted loss per share because the assumed conversion and exercise would be anti-dilutive for the three months ended March 31, 2019 and 2018.

Management Estimates

The applicationpresentation of financial statements in conformity with generally accepted accounting principles 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 date of the three levelsfinancial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

Stock Based Compensation

The Company accounts for employee compensation related to stock, options or warrants using a fair value-based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company accounts for nonemployee compensation related to stock, options or warrants using a fair value-based method whereby compensation cost is measured at the earlier of a commitment date or completion of services based on the value of the award and is recognized over the service period. The Company uses the Black-Scholes pricing model to calculate the fair value hierarchy under Topic 820-10-35of options and warrants issued to our assetsboth employees and liabilities asnon-employees. Stock issued for compensation is valued using the market price of June 30, 2018 and December 31, 2017 are described below:  

Derivative liability as of June 30, 2018 was $0, compared to $19,406 as of December 31, 2017.the stock on the measurement date.

2. NOTES PAYABLE – RELATED PARTYReclassifications

On March 21,Certain 2018 the Company, entered into an unsecured 7% Promissory Note with a significant shareholderbalances have been reclassified in the amount2019 financial statement presentation. The reclassification of $15,000. On April 13, 2018accrued interest did not have any effect on the significant shareholder entered into another promissory loan in amount of $10,000 with the similar terms. On May 4, 2018 the significant shareholder entered into another promissory loan in amount of $25,000 with the similar terms. On June 6, 2018 the significant shareholder entered into another promissory loan in amount of $32,000 with the similar terms. The notes have a term of 6 months and are unsecured. The note includes interest calculated for the 6 month ended June 30, 2018, from another note owned by the same shareholder.financial statements.

On July 15, 2016, the Company entered into an unsecured 7% Promissory Notes with a significant shareholder in the amount of $100,000. The note has a one-year term and was in default as of June 30, 2018.Recent Accounting Pronouncements

The changes in these notes payable to related party consisted of the following during the six months ended June 30, 2018:

During the year ended December 31, 2017, the Company entered into five unsecured 7% Promissory Notes with a terms ranging from four to six months.All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable.

During the year ended December 31, 2017, the Company borrowed a total of $4,275 from the former CEO of the Company, repaid $4,330 to the CEO, and the amount due to the CEO was $3,145 as of December 31, 2017. The CEO loaned an additional $25 during the six months ended June 30, 2018. The total amount due on June 30, 2018 is $3,170. The advance carries 0% interest rate, is unsecured, and is due on demand.

Other Related Party Transaction

Michael Delin, a former director of the Company, provided accounting services to the Company through an entity he owns. During the six month ended June 30, 2018, the Company paid Mr. Delin $3,500 for such services.

3. DEFFERED2. DEFERRED STOCK-BASED COMPENSATION - RELATED PARTY

On May 18, 2018, the Company appointed J. Mark Goode as the new President and Chief Executive Officer of the Company, effective May 18. 2018. He was also appointed a member and Chairman of the Board of Directors of the Company (the “Board”).Company.

The Company has entered into an employment agreement on May 18, 2018 (the “Employment Agreement”) with Mr. Goode, which provides for an annual salary and certain other benefits. Pursuant to the Employment Agreement,employment agreement, Mr. Goode’s annual base salary is $96,000, which may increase to up to $216,000 upon Mr. Goode meeting certain milestones set forth in the Employment Agreementemployment agreement related to the Company’s performance and is subject to increases as set from time to time by the Board. Upon the execution of the Employment Agreement,employment agreement, Mr. Goode shall receivereceived 500,000 shares of common stock of the Company valued at $1,250,000 ($2.50 per share). After one year of employment by the Company as the Chief Executive Officer, the Company shallwill issue to Mr. Goode additional shares of common stock of the Company equal to 1% of the outstanding shares of the Company at the time of such issuance; after two years of employment by the Company as the Chief Executive Officer, the Company shallwill issue to Mr. Goode additional shares of common stock of the Company equal to 1% of the outstanding shares of the Company at the time of such issuance; and after three years of employment by the Company as the Chief Executive Officer, the Company shallwill issue to Mr. Goode additional shares of common stock of the Company equal to 1% of the outstanding shares of the Company at the time of such issuance. As of June 30,March 31, 2019 and December 31, 2018 the Company accrued $157,820$1,861,178 and $300,995, respectively in accordance with ASC 718-10-55-65 for the portion earned as the terms of such an award do not establish an ownership relationship because the extent to which (or whether) the employee benefits from the award depends on something other than changes in the entity’s share price. Therefore, the awards should be accounted for as a liability award. ASC 718 requires that public companies measure share-based awards classified as liabilities at fair value at each reporting date. In accordance with 718-30-35-3, a public entity shall measure a liability award under a share-based payment arrangement based on the award’s fair value re-measured at each reporting date until the date of settlement. Compensation cost for each period until settlement shall be based on the change (or a portion of the change, depending on the percentage of the requisite service that has been rendered at the reporting date) in the fair value of the instrument for each reporting period. During the three months March 31, 2019 the Company recorded and expensed $1,560,183 for these awards.

3. NOTES PAYABLE – RELATED PARTY

4. CONVERTIBLE DEBENTURE – RELATED PARTY

During the year ended December 31,On July 15, 2016, the Company entered into eightan unsecured 7% Promissory Notespromissory note with a significant shareholder. Duringshareholder in the year endedamount of $100,000. The note had a one-year term. On April 9, 2019, the maturity date of the note was extended to June 30. 2019.  

The changes in this note payable to related party are reflected in the following at March 31, 2019 and December 31, 2017,2018:

On January 14, 2019, the Company entered into additional unsecured 7% Promissory Notes totaling $215,500. Duringan exchange agreement with Lyle Hauser. Pursuant to the first quarter 2018,exchange agreement, Mr. Hauser exchanged an outstanding convertible promissory note of the Company entered into five additional notes totaling $41,000 within the aggregate amount of $70,384 (including accrued interest) held by Mr. Hauser for a new non-convertible promissory note of the Company in the principal amount of $70,384. The new note had an original maturity date of March 31, 2019, which was extended to June 30, 2019, and bears interest at the rate of 7%. The notes mature four per year, due upon maturity. Mr. Hauser is the Company’s largest stockholder. Accrued interest at March 31, 2019 amounted to 12 months from issuance. $1,040.

On April 3, 2018,January 14, 2019 the Company entered into an exchange agreement with The Vantage Group Ltd. (“Vantage”). Pursuant to the exchange agreement, Vantage exchanged outstandingthe remaining amount due on a convertible promissory notesnote of the Company, in the aggregate principal amount of $518,225equal to $17,780 (including accrued interest) held by Vantage for a new convertiblenon-convertible promissory note of the Company in the principal amount of $518,225.$17,780. The convertiblenew note had an original maturity date of March 31, 2019, which was extended to June 30, 2019, and bears interest at the rate of 7% per year, anddue upon maturity. Vantage is convertible into shares of common stock ofowned by Lyle Hauser. Accrued interest at March 31, 2019 amounted to $263.

On February 28, 2019, the Company atexecuted a conversion price of $0.027.  The Company recorded a debt$110,000 related party promissory note with Lyle Hauser with an original issue discount of $518,225 for the fair value$10,000. The note has a 0% interest rate until maturity and had an original maturity date of the beneficial conversion feature. As ofMarch 31, 2019, which has been extended to June 30, 20182019. Following the Company amortized $492,745 ofmaturity date, the debt discount.note bears a 9% annual interest rate until paid in full.

The Company evaluated the modification under ASC 470-50 and concluded the additiondeletion of the conversion qualifies for debt modification which triggered debt extinguishment; however, there was no impact to the income statement as there was no unamortized discounts or other fees paid on the under the prior debt terms.

The Company analyzed the conversion option in the notes for derivative accounting treatment under ASC Topic 815,“Derivatives and Hedging” and determined that the instrument does not qualify for derivative accounting.

The Company therefore performed an analysis to determine if the conversion option was subject to a beneficial conversion feature and determined that the instrument does have a beneficial conversion feature equivalent. The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the common shares at the commitment date to be received upon conversion.

On April 3, 2018, the Company issued an aggregate of 9,300,000 shares of common stock to Vantage upon the conversion of (i) $241,650 of Vantage’s convertible note and (ii) 7,000 shares of Series C Preferred Stock. In connection with the conversion, Vantage waived any dividends owed to Vantage as the holder of the Series C Preferred Stock.

On April 6, 2018, the Company issued an aggregate of 9,000,000 shares of common stock upon the conversion of a convertible note in the principal amount (including accrued interest) of $243,000.

The balance of notes payable to related party as of June 30, 20184. INTELLECTUAL PROPERTY

During the year ended December 31,In September 2017, the Company entered into five unsecured 7% Promissory Notes with a significant shareholder totaling $65,500. On April 3, 2018, the Company entered intoand closed an exchangeasset purchase agreement with Lyle Hauser.Vantage. Pursuant to the exchangeasset purchase agreement, Mr. Hauser exchanged outstanding promissory notesthe Company purchased from Vantage a software application referred to as Dino Might and related intellectual property. As consideration for the purchase, the Company issued to Vantage 7,000 shares of newly created Series C Preferred Stock, valued at $820,451, and granted to Vantage a revenue sharing interest in the Dino Might asset pursuant to which the Company agreed to pay to Vantage, for the Company’s 2017 fiscal year and the following nine years, 30% of the Company inrevenue generated by the aggregate principal amount of $68,969 (including accrued interest) held by Mr. Hauser for a new convertible promissory note ofDino Might asset. In 2017 the Company inrecognized an impairment loss of $818,472, on the principal amount of $68,969. The convertible note bears interest attransaction based on the rate of 7% per year and is convertible into shares of common stock offuture discounted cash flows over the Company at a conversion price of $0.0005. Lyle Hauser (directly and through Vantage, which he owns) is the Company’s largest stockholder. The Company recorded a debt discount of $68,696 for the fair value of the beneficial conversion feature.next three years. As of June 30, 2018March 31, 2019, the Company amortized $16,562 of the debt discount.Dino Might asset balance was $1,979.

The Company evaluatedIntellectual property is stated at cost. When retired or otherwise disposed, the modification under ASC 470-50related carrying value and concluded the addition of the conversion qualifies for debt modification which triggered debt extinguishment; however, there was no impact to the income statement as there was no unamortized discounts or other fees paid on the under the prior debt terms.

The Company analyzed the conversion option in the notes for derivative accounting treatment under ASC Topic 815,“Derivatives and Hedging” and determined that the instrument does not qualify for derivative accounting.

The Company therefore performed an analysis to determine if the conversion option was subject to a beneficial conversion feature and determined that the instrument does have a beneficial conversion feature equivalent. The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separatelyaccumulated amortization are removed from the convertible note payablerespective accounts and may not be settledthe net difference less any amount realized from disposition, is reflected in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount isearnings. Minor additions and renewals are expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the common shares at the commitment date toyear incurred. The properties will be received upon conversion.depreciated over their estimated useful lives being 3 years.

The changes in these notes payable to related party consisted of the following during the six months ended June 30, 2018:

The Company entered into two 10% Secured Convertible Debentures with a significant shareholder in the amount of $50,000 on November 4, 2013 and $60,000 on December 17, 2013. The debentures carry a one-year term and are convertible into common stock at conversion price equal to the lower of $400 or 80% of the previous day’s closing price. On June 29, 2018 the significant shareholder forgave the amounts owed, which was effective as of April 3, 2018. The Company recorded a capital contribution of $19,999 during the six months ended June 30, 2018.

The changes in these outstanding convertible notes payable to related party consisted of the following during the three months ended June 30, 2018:

5. DERIVATIVE LIABILITIES

As noted above, the Company entered into two 10% Secured Convertible Debentures with a significant shareholder, one in the amount of $50,000 on November 4, 2013 and the other in the amount of $60,000 on December 17, 2013. The debentures carry a one-year term and are convertible into common stock at a conversion price equal to the lower of $400 or 80% of the previous day’s closing price. On June 29, 2018 the significant shareholder forgave the accrued interest, which was effective as of April 3, 2018. The Company recorded a capital contribution of $25,494 during the six months ended June 30, 2018.

The Company assesses the fair value of the convertible debenture using the Black Scholes pricing model and records a derivative liability for the value. The Company then assesses the fair value quarterly based on the Black Scholes Model and increases or decreases the liability to the new value and records a corresponding gain or loss (see below for variables used in assessing the fair value).

Due to the variable conversion rates, the Company treats the convertible debenture as a derivative liability in accordance with the provisions of ASC 815 “Derivatives and Hedging” (ASC 815). ASC 815 applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative and to any freestanding financial instruments that potentially settle in an entity’s own common stock. The fair value of the conversion options was determined using the Black-Scholes Option Pricing Model and the following significant assumptions during the six months ended June 30, 2018.

The change in fair value of the conversion option derivative liability consisted of the following during the year ended December 31, 2017:

Change in fair market value of conversion option liability resulted in a loss of $6,088 for the six months ended June 30, 2018 and $6,839 for the year ended December 31, 2017.

6. EQUITY

On September 29, 2017, the Company filed a Certificate of Designation of Series C Preferred Stock with the Secretary of State of Nevada.Nevada (the “Series C Certificate of Designation”). The Company authorized 7,000 shares of preferred stock as Series C Preferred Stock. The Company has issued 7,000 shares of Series C Preferred Stock. Each holder ofStock on September 29, 2017. All outstanding shares of Series C Preferred Stock shall be entitledwere converted to cast the number of votes equal to the number of whole shares of common stock into which thein April 2018. No shares of Series C Preferred Stock held by such holder are convertibleoutstanding as of March 31, 2019 and December 31, 2018, and no such shares may be re-issued.

During the record date for determining stockholders entitled to vote on such matter. The Series C Preferred Stock is convertible into common stock at a conversion ratio determined by dividing the Series C Original Issue Price of $100 per share by the conversion price of $2.00 (such that each share of Series C Preferred Stock is convertible into 50 shares of common stock). The Series C Preferred Stock will vote on an as-converted basis with the common stock, and in the event any dividends are paid on the common stock, the Series C Preferred Stock will be entitled to dividends on an as-converted basis. If a Distribution Event (as defined in the Series C Certificate of Designation) occurs,three months ended March 31, 2019 the Company will pay to the holderssold a total of Series C Preferred Stock $30,000 for every $120,000 received from such Distribution Event, and the number of outstanding shares of Series C Preferred Stock will be reduced by an amount determined by dividing the amount of such payment by the Series C Original Issue Price. A Distribution Event is defined as the receipt by the Company of $120,000 in proceeds from a financing not involving any holder of Series C Preferred Stock, or any fiscal period in which the Company generated gross profits of $120,000 or more. In the event the Corporation shall at any time after the Series C Original Issue Date issue Additional Shares of Common Stock, without consideration or for a consideration per share less than the Series C Conversion Price in effect immediately prior to such issue, then the Series C Conversion Price shall be reduced, concurrently with such issue.

On September 29, 2017, the Company issued 7,000 shares of Series C Preferred Shares in connection with an Asset Purchase Agreement. The value of the shares issued amount to $820,451. The valuation of the Preferred Shares was determined by an independent financial analyst.

On October 25, 2017, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada, pursuant to which a one-for-200 reverse split of its common stock was effected and the Company changed its name to Tech Town Holdings Inc, effective November 2, 2017. All share and per share amounts herein retroactively reflect the split.

On May 18, 2018, the Company appointed Mark Goode as the new President and Chief Executive Officer of the Company, effective May 18. 2018. He was also appointed a member and Chairman of the Board of Directors of the Company (the “Board”). The Company has entered into an employment agreement on May 18, 2018 (the “Employment Agreement”) with Mr. Goode, which provides for an annual salary and certain other benefits. Pursuant to the Employment Agreement, Mr. Goode’s annual base salary is $96,000, which may increase to up to $216,000 upon Mr. Goode meeting certain milestones set forth in the Employment Agreement related to the Company’s performance and is subject to increases as set from time to time by the Board. Upon the execution of the Employment Agreement, Mr. Goode shall receive 500,00010,000 shares of common stock of the Company valued at $1,250,000for $50,000 ($2.505.00 per share).

6. COMMITMENTS AND CONTINGENCIES

From June 29, 2018 to September 11, 2018, the Company entered into a series of statement of work agreements with Best Innovation Group, Inc. (“BIG”) to provide consulting services to the Company. The statement of work agreements were entered into in connection with a professional services agreement the Company entered into with BIG dated May 1, 2018, under which all services performed by BIG are to be documented in a statement of work agreement. The Company agreed to reimburse BIG at a rate of $200 per hour. Under a statement of work agreement executed on July 26, 2018, the total estimated cost to the Company for services to be performed by BIG is $716,272 of which $238,757 was due on the date of the agreement and $238,757 was due on November 15, 2018 and the remaining amount will be due upon completion which was initially estimated to be March 1, 2019. On September 11, 2018, the Company entered into a statement of work agreement with BIG, under which BIG was engaged to provide SOC 2 gap remediation and audit services. Under this statement of work agreement, $70,000 was due upon execution of the agreement, and $90,000 was expected to be due from December 1, 2018 through March 1, 2019.

On AprilAugust 3, 2018 the Company entered into an exchangea master services agreement with The Vantage Group Ltd. (“Vantage”). PursuantREQ a Washington, DC-based creative and digital marketing agency, pursuant to which the Company engaged REQ to develop a branding and digital marketing strategy for the Company’s intended digital gold project. During the third quarter of 2018, the Company collaborated with REQ to create Coro as the new brand for its intended digital gold technology platform and mobile application. REQ is supporting the Company with the creative design, website development, video production, marketing, public relations and advertising strategy related to the exchange agreement, Vantage exchanged outstanding promissory noteslaunch of its intended Coro digital gold transaction platform.  REQ receives monthly payments which will total $230,500 for services performed for 12 months of services, leading up to the launch of the Company inintended Coro mobile application.

In December 2018, we entered into a software license agreement with Swirlds to license Hashgraph for the aggregate principal amount of $518,225 (including accrued interest) held by Vantage for a new convertible promissory noteCoro platform. The term on of the Company in the principal amount of $518,225. The convertible note bears interest at the rate of 7% peragreement is one year and is convertible into shares of common stock of the Company is obligated to a first year licensing fee of $225,000 for 15 nodes payable on February 28, 2019 and additional nodes at $3,000 per node. In addition the Company is required to pay a conversion price of $0.027.10% transaction fee for account holders on the Swirlds Customer Network. The Company recorded a debt discount of $518,225agreement automatically renews for an additional one year and the fair value of the beneficial conversion feature.fees may not increase more than 1%.

7. RELATED PARTY

On April 3, 2018,January 14, 2019, the Company entered into an exchange agreement with Lyle Hauser. Pursuant to the exchange agreement, Mr. Hauser exchanged an outstanding convertible promissory notesnote of the Company in the aggregate principal amount of $68,969$70,384 (including accrued interest) held by Mr. Hauser for a new convertiblenon-convertible promissory note of the Company in the principal amount of $68,969.$70,384. The convertiblenew note had an original maturity date of March 31, 2019, which was extended to June 30, 2019, and bears interest at the rate of 7% per year, due upon maturity. Mr. Hauser is the Company’s largest stockholder. Accrued interest at March 31, 2019 amounted to $1,040.

On January 14, 2019 the Company entered into an exchange agreement with Vantage. Pursuant to the exchange agreement, Vantage exchanged the remaining amount due on a convertible promissory note of the Company, equal to $17,780 (including accrued interest) held by Vantage for a new non-convertible promissory note of the Company in the principal amount of $17,780. The new note had an original maturity date of March 31, 2019, which was extended to June 30, 2019, and bears interest at the rate of 7% per year, due upon maturity. Vantage is convertibleowned by Lyle Hauser. Accrued interest at March 31, 2019 amounted to $263.

On February 28, 2019, the Company executed a $110,000 related party promissory note with Lyle Hauser with an original issue discount of $10,000. The note has a 0% interest rate and had an original maturity date of March 31, 2019, which has been extended to June 30, 2019. Following the maturity date, the note bears a 9% annual interest rate until paid in full.

8. SUBSEQUENT EVENTS

On April 9, 2019, the maturity date of a promissory note held by Lyle Hauser (the Company’s largest stockholder) originally due on February 29, 2019 was extended to June 30, 2019.

On April 9, 2019, the maturity date of a $17,780 promissory note held by Vantage (owned by Lyle Hauser) that was in default, was extended to June 30, 2019.

On April 9, 2019, the maturity date of a $100,000 promissory note held by Vantage that was in default was extended to June 30, 2019.

On April 12, 2019, the Company entered into and closed a subscription agreement with Vantage pursuant to which the Company sold to Vantage 10,000 shares of common stock for a purchase price of $50,000.

On April 12, 2019, the Company entered into an exchange agreement with Vantage pursuant to which Vantage exchanged a portion of an outstanding promissory note of the Company held by Vantage, in the amount of $50,000, for 10,000 newly issued shares of common stock of the Company at a conversion price of $0.0005. Lyle Hauser (directly and through Vantage, which he owns) is the Company’s largest stockholder. The Company recorded a debt discount of $68,696 for the fair value of the beneficial conversion feature.

On April 3, 2018, the Company issued an aggregate of 9,300,000 shares of common stock to Vantage upon the conversion of (i) $241,650 of Vantage’s convertible note and (ii) 7,000 shares of Series C Preferred Stock. In connection with the conversion, Vantage waived any dividends owed to Vantage as the holder of the Series C Preferred Stock.

On April 6, 2018, the Company issued an aggregate of 9,000,000 shares of common stock upon the conversion of a convertible note in the principal amount (including accrued interest) of $243,000.

On June 25, 2018,24, 2019, the Company entered into a subscription agreement with an accredited investorAdvantage Life and Annuity Company, for the benefit of ALIP 1704-1138 SP (“Advantage Life”), pursuant to which Advantage Life purchased from the Company agreed to sell, and the Investor agreed to purchase, an aggregate of 1,010,101200,000 shares of the Company’s common stock for an aggregate purchase price equal to $333,333.of $1,000,000. The closing of thisthe sale of the shares under the subscription agreement has occurred.

occurred on April 30, 2019. Advantage Life is an existing shareholder of the Company. Brian Dorr and David Dorr, who are principal shareholders of the Company, are the owners and managing directors of Dorr Asset Management SEZC, which is the investment advisor to Advantage Life.

On June 29, 2018May 3, 2019, the significant shareholder forgave the amounts owed.Company issued 20,000 shares of common stock valued at $100,000 ($5.00 per share) fair market value, pursuant to an investor relations agreement, and agreed to pay $2,500 per months for a variety of services, including investor and public relations assessment, marketing surveys, investor support, and strategic business planning. The Company recorded a capital contribution of $19,999. See Note 4. The Company recorded a capital contribution of $35,294 during theagreement is for six months ended June 30, 2018and may renew for an additional 6 months on the extinguishment ofsame terms unless either party notifies the derivative. See Note 5.

On June 29, 2018, two related parties forgave a total of $239,000 of accrued compensation. The amounts have been recorded as a capital contribution.

7. SUBSEQUENT EVENT

Subsequent to June 30, 2018, the Company entered into a subscription agreement with an accredited investor pursuant to which the Company soldother prior to the investor an aggregate of 2,020,202 shares of the Company’s common stock, for an aggregate purchase price equal to $666,667.

Subsequent to June 30, 2018, the Company’s attorney forgave legal fees in the amount of $52,020.

renewal date.

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

This report may contain forward-looking statements. Investors are cautioned that such forward-looking state to all comments are based on our management's beliefs and assumptions and on information currently available to our management and involve risks and uncertainties. Forward-looking statements include statements regarding our plans, strategies, objectives, expectations and intentions, which are subject to change at any time at our discretion. Forward-looking statements include our assessment, from time to time of our competitive position, the industry environment, potential growth opportunities and the effects of regulation. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss many of these risks in greater detail in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017. Also, forward-looking statements represent our management's beliefs and assumptions only as of the date of this report. Our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. 

Corporate OverviewOperations.

Our CompanyOverview

Hash Labs Inc. is a Nevada corporation that was originally formed on November 1, 2005 when Bio-Solutions International, Inc. (“Bio-Solutions”) entered into an Agreement and Plan of Merger with OmniMed Acquisition Corp., a Nevada corporation and a wholly-owned subsidiary of Bio-Solutions, OmniMed International, Inc. (“OmniMed”) and the shareholders of OmniMed. Pursuant to the Agreement, Bio-Solutions acquired all of the outstanding equity stock from the OmniMed shareholders. As a result, the OmniMed shareholders assumed control of Bio-Solutions and changed the name of the Company to OmniMed International, Inc., effective November 21, 2006. On January 17, 2006, OmniMed changed its name to MedeFile International, Inc. The Company’s business following the closing of this agreement was the sale of an Internet-enabled Personal Health Record (iPHR) system for gathering, digitizing, maintaining, accessing and sharing an individual’s medical records, and in connection therewith, providing a professional service specializing in HIPAA compliant retrieval, reproduction and release of information. Under this service, Company personnel went onsite to physicians’ offices weekly to reproduce the records requested by third parties.

In October 2017, the name of the Company was changed to Tech Town Holdings, Inc. to reflect a new business strategy centered on identifying and fostering new or early stage business opportunities being fueled by digital reinvention and innovation.

Following close scrutiny of emerging business opportunities, coupled with evaluation of market trends, the Company determined that a more prudent strategy was to narrow its focus. The Company has now concentratednarrowed its focus on dynamic global growth opportunities in theto financial technology, (“Fintech”) industry,or Fintech, with an emphasis on emerging Blockchain or distributed ledger technology, or (“DLT”). Effective March 2, 2018, the Company changed its name to Hash Labs Inc.

The Company is now developing financialproducts and technology solutions to operatefor global payments and the financial industry. Our first product provides cloud-based hosting on our private permissioned distributed network and is the world’s most advanced DLT, known as Hashgraph. As a resultfirst of this concentrated FinTech / DLT focus, the Company was renamedits kind. The Hash Labs Inc. on January 9, 2018,

New Business Focus

Hash Labs Inc.distributed ledger network, or DLT, provides an ultra fast and highly secure DLT network solution for commercial users. In this regard, developers of distributed applications (“HLAB”DApps”) is a financial technology (“FinTech”) company.  The business of HLAB is exclusively focused on the development of next generation financial solutions based on a revolutionary DLT, known as Hashgraph.  Our initial financial solution, branded CXAU, will be a technology platform based on a mobile application that will digitize gold on the Hashgraph distributed ledger.

HLAB is dedicated to the highest standard of regulatory compliance. The cryptocurrency market has been volatile with a high incidence of fraud and market manipulation. We will never conduct a Coin Offering or Token Sale related to CXAU digital/crypto gold. The HLAB strategy is completely different.  Instead, the CXAU community of users will operate on a permission-based private network.  This will provide the highest level of crypto/IT security, with the ability to transact globally at speeds of hundreds of thousands per second.   No one, will be able to join the CXAU community (User base) without completing an identity verificationrun their transactions and stringent AML/KYC check. In this regard, bad actors will be prevented from joining the CXAU community. We believe CXAU will succeed because HLAB will have a fully compliant and secure crypto currency solution, operatingback-end code on the world’s most advanced distributed ledger.

Equally important, CXAU will solve two important problems.  First, we believe there is a need for a decentralized cryptocurrency solution that offers true stability.private Hash Labs DLT node network. The leading cryptocurrencies are wildly volatile with speculation driving unpredictable swings in valuation.  CXAU will offer a completely stable, asset-backed digital currency.  The valuenumber of one CXAU unit will always correspond to the daily London spot price for 1 Troy Ounce of gold.   Each CXAU unit will be 100% backed by physical gold, held by an independent custodian within an insured vault.  CXAU gold reserves will be independently audited on a quarterly basis and the audit will be published for review by community members.  

CXAU will provide another important financial technology solution.  The CXAU technology will allow for tens of millions of global gold investors holding trillions of value in gold bars and coins to safely digitize their physical gold holdings.   In this regard, global gold investors (both private and institutional) will have the opportunity to efficiently hold and transact with a 100% gold-backed cryptocurrency.  Owners of physical gold will be able to conveniently convert their physical gold into CXAU crypto gold.   If the User ever wishes to liquidate their CXAU units, they can simply withdraw via conversion to physical gold or fiat currency.

HLAB will provide its CXAU community members the benefits of speed, security and peace of mind, while unlocking the opportunity to transact their digitized crypto gold at lightning fast speeds on the Hashgraph distributed ledger. The CXAU mobile application is alreadynew DApp products under development around the world is growing exponentially. Following 10 months of development and we plan to launch it March 1, 2019. The CXAU revenue engine will include multiple income streams associated withextensive testing, the capitalization of the digital gold vault, transaction fees and annual storage fees.

While Bitcoin, Etherum and other popular Blockchain trading platforms continue to grab headlines, the Company believes that a next generation distributed ledger technology known as Hashgraph will disrupt and transform how commerce and the Internet work together. The Hashgraph distributed consensus algorithm was developed by Dr. Leemon Baird andHash Labs DLT node network is owned by Swirlds, Inc., for which Dr. Baird serves as Co-Founder and Chief Technology Officer. This DLT platform offers unparalleled speed, having capacity up toperforming at speeds approaching 500,000 transactions per second. By comparison, prevailing Blockchain ledger technology, made popular by Bitcoin, is slow by design. Its proof of work and digital mining protocol slow transaction volume to just four transactions per second.

In addition,We are currently offering this product to and are in discussions with prospective customers with respect to this product, but have not completed any contract or license agreement for sales of this product to date.

The Company has already completed its independent information security audit and has received its SOC 2 certification. The SOC 2 certification provides our DLT network customers the Hashgraphadded level of security that many require as regulated financial institutions or as regulated entities in other industries.

Our second planned product is usheringbranded Coro. Coro will be a product to more securely transmit money electronically and as such Coro Corp., a wholly owned subsidiary of Hash Labs Inc, and the operator of the Coro product, will operate pursuant to both Federal and State money transmission regulations. Coro Corp. has already obtained its money service business registration from FinCEN and is in an erathe process of “smart contracts,” allowing for fasterobtaining its money transmission license throughout the US. Coro Corp. intends to pursue licensure in all U.S. States, the District of Colombia and safer commerce worldwide on a fair, securethe territory of Puerto Rico. Following nationwide licensure in the US, the Company plans to pursue money transmission licenses in foreign countries such as Mexico and reliable basis. Other benefits include lower transaction costs, less documentation and bureaucracy, greater mitigation of fraud and errors in transaction processing, improved tracking and an increasedCanada. We anticipate that unique to Coro will be its ability to understandsend and utilize data (including “Big Data”)receive U.S. dollars (USD) and analytics. The Company aimsgold (XAU) between users. Coro will also provide the ability to be an industry trusted developer of highly advanced, secure and user friendly DLT -based solutionsfreely convert between the two currencies similar to the way that one might exchange U.S. dollars (USD) for the FinTech market.Euros (EUR).

Powered by its proprietary “gossip about gossip” protocol, HashgraphMany think of gold as an investment but it is not a Blockchain, but a simple, elegant algorithm. Hashgraph is mathematically proven to achieve consensusfirst and implemented in software. It isforemost an international currency. Until 1971, US dollars could be freely exchanged for gold. The United States Federal Reserve, the only bank-grade consensus technology available inBank of Japan, the market today. It is also widely viewed asSwiss National Bank, the industry’s most secure, due to its decentralized (“leaderless”) distributed ledger which allows for “asynchronous byzantine” fault tolerance – the true gold standard for security in distributed systems. More specifically, this means that even if some members are malicious, then a definite consensus can still be reached so a transaction can be processed. In the Blockchain world, consensus is only a probability that increases over time. It is not guaranteed. Sometimes, no consensus is ever reached, resulting in conflicts. Hashgraph has overcome this issue. In addition, blockchain is a costly solution due to its massive need for computation powerIMF, and voracious consumption of energy. Hashgraph eliminates this need for voluminous computing power, thus it costs substantially less to operate.

Argument for Gold-Backed Cryptocurrency

For nearly three millennia, gold has been the world’s primary and most stable exchange of value. Throughout history, this precious yellow metal has consistently been the championBIS, among methods of store and payment of wealth across civilizations. Wars have been fought, new worlds have been discovered and empires have been conquered withothers, all recognize gold as a pillar, and it has never tarnishedcurrency. Gold is also recognized by the International Organization for Standardization as a currency under ISO 4217 with the passingdesignated currency code XAU where 1 XAU is equal to 1 troy ounce of gold. In 2011 Utah passed the Utah Legal Tender Act recognizing gold as legal tender. Wyoming and Oklahoma have also reaffirmed gold as money and there are proposed bills in the legislature of many other states to do the same. There are many companies marketing products and services involving gold as an investment. Through Coro Corp., we will operate as a money transmitter and intend to transmit gold as money and will not market or sell investments in gold. We anticipate completing development and testing of the years. Conversely, Pesetas, MarksCoro digital payment platform in July 2019. The Coro platform includes a highly advanced and Cruzeiros have ceased to exist while Pesoscustomized compliance solution supporting (AML/KYC) customer onboarding and Rubles have been devalued. Only gold has survived and appreciated throughout history.ongoing transaction monitoring.

New Keynesian economists have developedWe are currently evaluating, in consultation with legal counsel, the current global financial system leveraging central banks’ abilityapplicability of federal securities laws to shape monetary policy and print money atour planned Coro platform. Our launch of Coro will be subject to curb economic shocks and fend off recessions. Its supporters have praised this model asour determination, in consultation with legal counsel, that such launch will be in compliance with federal securities law. Subject to such determination, the antidote to the Great Recession of 2008. Others, witnessing the current prolonged bull runCompany anticipates a commercial launch of the financial marketsCoro digital payment platform and a new periodcompliance solution during Q3 of irrational exuberance, are weary of the dangers posed by economic growth fueled by low interest rates and an inflated supply of money. Central banks have acted as the ultimate central authority on money matters for nation states. We believe top bankers have supported the backbone of an economic system that is inefficient at best. The Great Recession dropped the veil of faith in paper money and markets fled to gold as a safeguard against irresponsible bankers.

2019.

The advent of Blockchain technology has rattled the status quo and brought the debate back to the table, propelling thinkers to question the economic fundamentals that keep the global system intact. Digital currencies, such as Bitcoin and Litecoin, have been successful at leveraging Blockchain technology for the transfer of value across borders. However, the inherent volatility and low transaction speed of these emergent methods of crypto value transfer have made them a poor choice for real business to be executed through their networks. As with all nascent technologies, time is of the essence for meaningful applications to occur and right now the time may be ripe for real change to happen. After nearly ten years of development, many hurdles still exist that impede Blockchain from becoming a reliable method for exchange of value. Global commerce is still powered by fiat currency and primarily the US Dollar.

Moreover, taking a cue from history, Hash Labs believes the current economic and banking system is dysfunctional and that CXAU can provide a decentralized digital currency backed by gold. Very recent and dramatic technology advances in digital currencies are driving powerful change. The CXAU crypto gold solution will harness the awesome power of Hashgraph to process more than 500K transactions per second at bank grade security levels.

Our Revenue ModelHash Labs is currently in the early development stage of our Company’s evolution and is developing a defined business model that we believe will serve to profitably generate revenues upon CXAU’s digital vault “pre-sale” in the third quarter of 2018, followed by the launch of our CXAU Crypto Gold ledger in the second quarter of 2019. We plan to seek annual revenue growth through growth of our community members/digital vault holders and by increasing our CXAU gold reserves.

Expanded Leadership Team

Hash Labs has engaged several highly qualified and experienced business and technology executives, having the necessary skills and experience to guide and direct the execution of our new FinTech/DLT-focused growth strategy. With years of experience building and managing regulated financial businesses and designing complex financial structures our new leadership team is uniquely positioned for success and leadership in this rapidly emerging sector. On May 18, 2018, the Company reported that J. Mark Goode was appointed as the Company’s new Chief Executive Officer and a member and Chairman of the Company’s Board of Directors. Mr. Goode replaces our former Chairwoman, President and CEO, Niquana “Nikki” Noel who will remain as a Director on the Board and serve as our Chief Operating Officer. The Company will continue to recruit and expand its leadership team with the best available talent having expertise in the FinTech and DLT sector, and intends to announce additional appointments to our senior leadership team and Board of Directors as we advance through 2018.

Results of Operations for the Three Months Ended June 30,three months ended March 31, 2019 and 2018 and 2017

Revenues

Revenues for the three months ended June 30, 2018March 31, 2019 totaled $6,068$0 compared to revenues of $12,440$6,899 during the three months ended June 30, 2017.March 31, 2018. The decrease of $6,372$6,899 is related to fewer requests for service.the Company’s shift in business. We generatepreviously generated revenues from professional service specializing in HIPAA compliant retrieval, reproduction and release of information. Under this service, Company personnel go onsite to physicians’ office weekly to reproduce the records requested by third parties.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended June 30, 2018March 31, 2019 totaled $1,551,810,$1,818,887, an increase of $1,442,614$1,728,700 or approximately 1321%1917% compared to selling, general and administrative expenses of $109,196$90,187 for the three months ended June 30, 2017. The increase was due mainly to increasedMarch 31, 2018. During the three months ended March 31, 2019 legal expense, consulting fees and compensation to our Chief Executive Officer.Officer increased significantly.

Development Expense

Development expenses for the three months ended March 31, 2019 totaled $506,669 compared to $0 for the three months ended March 31, 2018. During the year ended December 31, 2018, the Company began the development of the Coro gold-back digital asset platform.

Interest Expense

Interest expense on convertible debentures for the three months ended June 30,March 31, 2019 and 2018, was $11,405 and 2017, was $512,044 and $8,239$10,108, respectively. The increase was mainly due to the expense incurred with the beneficial conversion feature added to existing notes payable during the quarter.

Other Expense

Loss on change in fair value of derivatederivative liabilities for the three months ended June 30,March 31, 2019 and 2018 was $0 and 2017 was $1,439 and $140$7,527 respectively.

Net Loss

For the reasons stated above, our net loss for the three months ended June 30, 2018March 31, 2019 was $2,056,347($2,336,961) or $0.11($0.10) per share, an increase of $1,948,852,$2,236,038 or 2,216%, compared to net loss of $107,495,($100,923), or $0.75($0.67) per share, during the three months ended June 30, 2017.March 31, 2018.

Results of Operations for the Six Months Ended June 30, 2018 and 2017

Revenues

Revenues for the six months ended June 30, 2018 totaled $12,967 compared to revenues of $22,149 during six months ended June 30, 2017. The decrease of $9,182 is related to fewer requests for service. We generate revenues from professional service specializing in HIPAA compliant retrieval, reproduction and release of information. Under this service, Company personnel go onsite to physicians’ office weekly to reproduce the records requested by third parties.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the six months ended June 30, 2018 totaled $1,641,997, an increase of $1,426,207 or approximately 661% compared to selling, general and administrative expenses of $215,790 for the six months ended June 30, 2017. The increase was due mainly to increased legal expense, consulting fees and compensation to our Chief Executive Officer.

Interest Expense

Interest expense on convertible debentures for the six months ended June 30, 2018 and 2017, was $522,152 and $15,192 respectively. The increase was mainly due to the expense incurred with the beneficial conversion feature added to existing notes payable during the six months.

Other Expense

Loss on change in fair value of derivate liabilities for the six months ended June 30, 2018 and 2017 was $6,088 and $3,622 respectively.

Net Loss

For the reasons stated above, our net loss for the six months ended June 30, 2018 was $2,157,270 or $0.24 per share, an increase of $1,942,175, compared to net loss of $215,095, or $1.50 per share, during the six months ended June 30, 2017.

Liquidity and Capital Resources

As of June 30, 2018,March 31, 2019, we had cash of $292,078,$5,611, which compared to cash of $730$223,576 as of December 31, 2017.2018. Net cash used in operating activities for the sixthree months ended June 30, 2018March 31, 2019 was $165,010.$375,958. Our current liabilities as of June 30, 2018March 31, 2019 of $440,252$2,778,388 consisted of: $55,718$611,054 for accounts payable and accrued liabilities, net convertible debenture – related partydeferred compensation of $24,930, overdraft of 597,$1,861,178, note payable – related party of $201,187, and derivative liability of $0.$298,163. During the sixthree months ended June 30, 2018 two related parties forgave accrued salary of $239,000. We have negative working capital of $143,237 as of June 30, 2018. DuringMarch 31, 2019 the six months ended June 30, 2018 investor agreedCompany entered into and closed subscription agreements with accredited investors pursuant to purchase,which the Company sold to the investors an aggregate of 1,010,10110,000 shares of the Company’s common stock, $0.0001 par value Common Stock, for an aggregatea purchase price equal to $333,333 in addition aof $5.00 per share, and aggregate gross proceeds of $50,000. A related party converted $484,651advanced the Company $3,000 and the Company executed a $110,000 related party promissory note with Lyle Hauser with an original issue discount of convertible notes, accrued$10,000. The note has a 0% interest rate and preferred stock into common stock.had an original maturity date of March 31, 2019, which has been extended to June 30, 2019. Following the maturity date, the note bears a 9% annual interest rate until paid in full.

We anticipate that we will need to raise additional capital to execute our business plan, which may not be available on acceptable terms, or at all. If we raise funds through the sale of common stock or securities convertible into common stock, it may result in substantial dilution to our then-existing stockholders.

Off Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

Revenue Recognition

The Company had historically generated revenue from licensing the right to utilize its proprietary software for the storage and distribution of healthcare information to individuals and affinity groups. For revenue from product sales, the Company recognized revenue on four basic criteria which must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

Stock-Based Compensation

The Company accounts for all compensation related to stock, options or warrants using a fair value-based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.

Impairment of long-lived assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10-15, “Impairment or Disposal of Long-Lived Assets.” ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals.

Recently Issued Accounting Pronouncements

There were various updated recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 is a comprehensive revenue recognition standard that has superseded nearly all existing revenue recognition guidance under current U.S. GAAP and replaced it with a principle based approach for determining revenue recognition. ASU 2014-09 requires that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017.

The Company’s primary source of revenue ishas been from providing a professional service that specializes in HIPAA compliant retrieval, reproduction and release of information. Orders are fulfilled as requested, then invoiced. Once payment is received, revenue is recognized when records are delivered. (The Company no longer performs this service and has not yet begun generating revenue under its new business focus.)

During the fourth quarter of 2017, the Company finalized its assessment related to the new standard and determined that the timing of revenue recognition related to the Company’s revenues will remain consistent between the new standard and the previous standard. The Company adopted ASU 2014-09 effective January 1, 2018 using the modified retrospective method, and there was no cumulative adjustment to retained earnings.

Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

Item 3.Quantitative and Qualitative Disclosures aboutAbout Market RiskRisk.

Not required for a smaller reporting company.

Item 4.Controls and ProceduresProcedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this Quarterly Report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer (Principal Executivechief executive officer (principal executive and Financial Officer)financial officer) of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Chief Executive Officer (Principal Executivechief executive officer (principal executive and Financial Officer)financial officer) concluded that the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and also are not effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer (Principal Executivechief executive officer (principal executive and Financial Officer)financial officer), to allow timely decisions regarding required disclosure.

Management concluded that the design and operation of our disclosure controls and procedures are not effective because the following material weaknesses exist:

To the extent reasonably possible given our limited resources, we intend to take measures to cure the aforementioned weaknesses, including, but not limited to, increasing the capacity of our qualified financial personnel to ensure that accounting policies and procedures are consistent across the organization and that we have adequate control over financial statement disclosures.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2018,March 31, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal ProceedingsProceedings.

WeThere are notno legal proceedings the Company is party to or any material legal proceedings.of its property is subject to.

Item 1A. Risk FactorsFactors.

Not required for a smaller reporting company.

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

None.On January 21, 2019 the Company entered into a subscription agreement with an investor pursuant to which the Company sold 5,000 shares of the Company’s common stock, for an aggregate purchase price equal to $25,000.

On March 6, 2019 the Company entered into a subscription agreement with an investor pursuant to which the Company sold 5,000 shares of the Company common stock for an aggregate purchase price equal to $25,000.

In connection with the foregoing, we relied upon the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, for transactions not involving a public offering.

Item 3. Defaults uponUpon Senior SecuritiesSecurities.

None.

Item 4. Mine Safety DisclosuresDisclosures.

Not applicable.

Item 5. Other InformationInformation.

None.

Item 6. ExhibitsExhibits.

* Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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