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CalEthos (BUUZ)

Document and Entity Information

Document and Entity Information - shares9 Months Ended
Sep. 30, 2020May 31, 2021
Cover [Abstract]
Entity Registrant NameCalEthos, Inc.
Entity Central Index Key0001174891
Document Type10-Q
Document Period End DateSep. 30,
2020
Amendment Flagfalse
Current Fiscal Year End Date--12-31
Entity Current Reporting StatusYes
Entity Interactive Data CurrentYes
Entity Filer CategoryNon-accelerated Filer
Entity Small Business Flagtrue
Entity Emerging Growth Companyfalse
Entity Shell Companytrue
Entity Common Stock, Shares Outstanding12,960,621
Document Fiscal Period FocusQ3
Document Fiscal Year Focus2020

Condensed Balance Sheets

Condensed Balance Sheets - USD ($)Sep. 30, 2020Dec. 31, 2019
CURRENT ASSETS:
Cash and cash equivalents $ 123,000
Prepaid expenses2,000 2,000
Total Current Assets2,000 125,000
Total Assets2,000 125,000
CURRENT LIABILITIES:
Accounts payable and accrued liabilities532,000 363,000
Promissory note, net11,000
Convertible promissory notes, net692,000 323,000
Total Current Liabilities1,235,000 686,000
Total Liabilities1,235,000 686,000
STOCKHOLDERS' DEFICIT
Preferred stock, value
Common stock par value $0.001: 100,000,000 shares authorized; 16,634,951 shares issued and outstanding17,000 17,000
Additional paid-in capital8,743,000 8,750,000
Stock subscription receivable(2,000)(2,000)
Accumulated deficit(9,991,000)(9,326,000)
Total Stockholders' Deficit(1,233,000)(561,000)
Total Liabilities and Stockholders' Deficit2,000 125,000
Series A Convertible Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred stock, value

Condensed Balance Sheets (Paren

Condensed Balance Sheets (Parenthetical) - USD ($)Sep. 30, 2020Dec. 31, 2019
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized100,000,000 100,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized100,000,000 100,000,000
Common stock, shares issued16,634,951 16,634,951
Common stock, shares outstanding16,634,951 16,634,951
Series A Convertible Preferred Stock [Member]
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized3,600,000 3,600,000
Preferred stock, shares issued85,975 85,975
Preferred stock, shares outstanding85,975 85,975
Preferred stock, liquidation preference, value $ 119,000 $ 119,000

Condensed Statements of Operati

Condensed Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)3 Months Ended9 Months Ended
Sep. 30, 2020Sep. 30, 2019Sep. 30, 2020Sep. 30, 2019
Income Statement [Abstract]
Revenues
Operating Expenses
Professional fees74,000 130,000 266,000 1,024,000
General and administrative expenses4,000 49,000 16,000
Operating expenses78,000 130,000 315,000 1,040,000
Loss from operations(78,000)(130,000)(315,000)(1,040,000)
Other expenses
Financing cost(15,000)(88,000)(212,000)(176,000)
Loss on extinguishment of series A convertible preferred stock (138,000)
Total other expenses(15,000)(88,000)(350,000)(176,000)
Loss before provision for income taxes(93,000)(218,000)(665,000)(1,216,000)
Provision for income taxes
Net loss(93,000)(218,000)(665,000)(1,216,000)
Other comprehensive income (loss)
Comprehensive loss $ (93,000) $ (218,000) $ (665,000) $ (1,216,000)
Net loss per share $ (0.01) $ (0.01) $ (0.04) $ (0.07)
Weighted average common shares outstanding: Basic and diluted16,634,951 16,634,951 16,634,951 16,634,951

Condensed Statements of Stockho

Condensed Statements of Stockholders' Deficit (Unaudited) - USD ($)Series A Convertible Preferred Stock [Member]Preferred Stock [Member]Common Stock [Member]Additional Paid-In Capital [Member]Stock Subscription Receivable [Member]Accumulated Deficit [Member]Total
Beginning Balance at Dec. 31, 2018 $ 17,000 $ 7,660,000 $ (7,827,000) $ (150,000)
Beginning Balance, shares at Dec. 31, 201835,975 16,634,951
Proceeds for the sale of series A convertible preferred stock 69,000 69,000
Proceeds for the sale of series A convertible preferred stock, shares50,000
Relative fair value of warrants issued with convertible promissory notes 102,000 102,000
Beneficial conversion feature associated with convertible promissory notes 118,000 118,000
Net loss (181,000)(181,000)
Ending Balance at Mar. 31, 2019 $ 17,000 7,949,000 (8,008,000)(42,000)
Ending Balance, shares at Mar. 31, 201985,975 16,634,951
Beginning Balance at Dec. 31, 2018 $ 17,000 7,660,000 (7,827,000)(150,000)
Beginning Balance, shares at Dec. 31, 201835,975 16,634,951
Net loss(1,216,000)
Ending Balance at Sep. 30, 2019 $ 17,000 8,626,000 (2,000)(9,043,000)(402,000)
Ending Balance, shares at Sep. 30, 201985,975 16,634,951
Beginning Balance at Mar. 31, 2019 $ 17,000 7,949,000 (8,008,000)(42,000)
Beginning Balance, shares at Mar. 31, 201985,975 16,634,951
Relative fair value of warrants issued with convertible promissory notes 49,000 49,000
Beneficial conversion feature associated with convertible promissory notes 51,000 51,000
Stock options issued for services 577,000 577,000
Net loss (817,000)(817,000)
Ending Balance at Jun. 30, 2019 $ 17,000 8,626,000 (8,825,000)(182,000)
Ending Balance, shares at Jun. 30, 201985,975 16,634,951
Stock subscription (2,000) (2,000)
Net loss (218,000)(218,000)
Ending Balance at Sep. 30, 2019 $ 17,000 8,626,000 (2,000)(9,043,000)(402,000)
Ending Balance, shares at Sep. 30, 201985,975 16,634,951
Beginning Balance at Dec. 31, 2019 $ 17,000 8,750,000 (2,000)(9,326,000)(561,000)
Beginning Balance, shares at Dec. 31, 201985,975 16,634,951
Conversion of series A convertible preferred Stock to convertible promissory notes (119,000) (119,000)
Conversion of series A convertible preferred Stock to convertible promissory notes, shares(85,975)
Fair value of warrants issued with the conversion of series A convertible preferred stock 52,000 52,000
Debt premium on issuance of convertible promissory notes for conversion of series A convertible preferred stock 58,000 58,000
Net loss (476,000)(476,000)
Ending Balance at Mar. 31, 2020 $ 17,000 8,741,000 (2,000)(9,802,000)(1,046,000)
Ending Balance, shares at Mar. 31, 2020 16,634,951
Beginning Balance at Dec. 31, 2019 $ 17,000 8,750,000 (2,000)(9,326,000)(561,000)
Beginning Balance, shares at Dec. 31, 201985,975 16,634,951
Fair value of warrants issued with the conversion of series A convertible preferred stock52,000
Debt premium on issuance of convertible promissory notes for conversion of series A convertible preferred stock58,000
Net loss(665,000)
Ending Balance at Sep. 30, 2020 $ 17,000 8,743,000 (2,000)(9,991,000)(1,233,000)
Ending Balance, shares at Sep. 30, 2020 16,634,951
Beginning Balance at Mar. 31, 2020 $ 17,000 8,741,000 (2,000)(9,802,000)(1,046,000)
Beginning Balance, shares at Mar. 31, 2020 16,634,951
Relative fair value of warrants issued with convertible promissory notes 1,000 1,000
Net loss (96,000)(96,000)
Ending Balance at Jun. 30, 2020 $ 17,000 8,742,000 (2,000)(9,898,000)(1,141,000)
Ending Balance, shares at Jun. 30, 2020 16,634,951
Relative fair value of warrants issued with convertible promissory notes 1,000 1,000
Net loss (93,000)(93,000)
Ending Balance at Sep. 30, 2020 $ 17,000 $ 8,743,000 $ (2,000) $ (9,991,000) $ (1,233,000)
Ending Balance, shares at Sep. 30, 2020 16,634,951

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows (Unaudited) - USD ($)9 Months Ended
Sep. 30, 2020Sep. 30, 2019
Cash flows from operating activities
Net loss $ (665,000) $ (1,216,000)
Adjustments to reconcile net loss to net cash used in operating activities
Amortization of convertible promissory notes discounts186,000 176,000
Loss on extinguishment of convertible preferred stock86,000
Fair value of warrants issued for extinguishment of preferred stock52,000
Fair value of equity based compensation 577,000
Changes in operating assets and liabilities:
Accounts payable and accrued expenses169,000 159,000
Net cash used in operating activities(172,000)(304,000)
Cash flows from investing activities
Cash held by officer 12,000
Net cash provided by investing activities 12,000
Cash flows from financing activities
Proceeds from the issuance of convertible promissory notes39,000 320,000
Proceeds from the issuance of promissory note10,000
Proceeds from the issuance of series A convertible preferred stock 69,000
Net cash provided by financing activities49,000 389,000
Net increase (decrease) in cash(123,000)97,000
Cash, beginning of period123,000
Cash, end of period 97,000
Supplemental disclosure of cash flow information:
Cash paid for interest
Cash paid for income taxes
Non-Cash investing and financing activities
Conversion of series A preferred stock to convertible promissory notes147,000
Fair value of warrants issued with the conversion of series A convertible preferred stock52,000
Debt premium on issuance of convertible promissory notes for conversion of series A convertible preferred stock58,000
Relative fair value of warrants issued with convertible promissory notes 151,000
Beneficial conversion feature associated with convertible promissory notes 169,000
Stock subscription receivable $ (2,000)

Organization and Accounting Pol

Organization and Accounting Policies9 Months Ended
Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Accounting PoliciesNote 1 –
Organization and Accounting Policies CalEthos, Inc. (the “Company”)
(fka RealSource Residential, Inc.) was incorporated on March 20, 2002 under the laws of the State of Nevada. Since the second quarter
of 2016, the Company has been a “shell” company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended. Change
in Control On May 16, 2018, certain majority
stockholders of the Company, including certain former directors and officers of the Company, entered into a stock purchase agreement dated
May 16, 2018 (the “Control Purchase Agreement”) with RealSource Acquisition Group, LLC, a Utah limited liability company (“RealSource
Acquisition”), whereby RealSource Acquisition agreed to purchase an aggregate of 11,006,356 shares (440,256 shares after giving
effect to the Reverse Stock Split (the “Control Shares”) of the Company’s issued and outstanding shares of common stock
for an aggregate purchase price of $180,000. Immediately prior to the closing under the Control Purchase Agreement on September 12, 2018
(the “Closing Date”), RealSource Acquisition assigned its rights under the Control Purchase Agreement to M1 Advisors, LLC,
a Delaware limited liability company (“M1 Advisors”), pursuant to a purchase agreement and assignment and assumption of contract
rights dated as of August 28, 2018 between RealSource Acquisition and M1 Advisors. M1 Advisors paid RealSource Acquisition $80,000 as
consideration for such assignment. Effective on the Closing Date,
and in accordance with the amended and restated bylaws of the Company and the requirements of the Control Purchase Agreement, (a) each
of Michael S. Anderson, Nathan W. Hanks and V. Kelly Randall resigned as directors of the Company, (b) Michael Campbell, the sole member
of M1 Advisors, and Piers Cooper were elected to the Company’s board of directors, and (c) Mr. Hanks also resigned as president
and chief executive officer of the Company, Mr. Randall also resigned as chief operating office and chief financial officer of the Company,
Mr. Campbell was appointed the chief executive officer of the Company and Piers Cooper was appointed president of the Company. On the Closing Date, the Company
entered into a series A preferred stock purchase agreement dated as of the Closing Date (the “Preferred Purchase Agreement”)
with M1 Advisors, which is an entity controlled by Michael Campbell, the Company’s chief executive officer and a director of the
Company at such time, Piers Cooper, the Company’s president and a director of the Company at such time, the members of RealSource
Acquisition, and the other investors who were signatories thereto (collectively, the Purchasers”). Pursuant to the Preferred Purchase
Agreement, the Company sold to the Purchasers an aggregate of 15,600,544 shares of the Company’s series A preferred stock, which
has since been re-designated as Founder preferred stock (“Founder Preferred Stock”), for an aggregate purchase price of $16,000,
or $0.001 per share. Of the Founder Preferred Stock purchased, 9,320,414 shares were purchased by M1 Advisors, 4,674,330 shares were purchased
by Mr. Cooper and an aggregate of 1,195,000 shares were purchased by the members of RealSource Acquisition or their assigns. Immediately following the above
transactions, an aggregate of 15,600,544 shares of Founder Preferred Stock and 630,207 shares of common stock was issued and outstanding.
At such time, the shares of Founder Preferred Stock and common stock owned by M1 Advisors represented approximately 60.14% of the issued
and outstanding shares of capital stock of the Company on a fully-diluted basis and the shares of Founder Preferred Stock owned by Mr.
Cooper represented approximately 28.80% of the issued and outstanding shares of capital stock of the Company on a fully-diluted basis.
The shares of Founder Preferred Stock acquired by M1 Advisors were purchased with funds that M1 Advisors borrowed from another entity
controlled by Mr. Campbell. On December 20, 2018, all outstanding
shares of Founder Preferred Stock was converted in to shares of the Company’s common stock on a one-for-one basis pursuant to the
terms of the Founder Preferred Stock. Business
Activity Following the change in control,
as described above, the board of directors determined to establish the Company in the rapidly-growing cannabis industry, initially in
the State of California. The primary activity of the Company’s management is to seek and investigate various opportunities in the
California cannabis industry, and if such investigation warrants, acquire assets and create a business around them, acquire part or all
of an operating cannabis business or invest in a joint venture with other more established companies already in the cannabis industry.
The Company will not restrict its search to any specific business, segment of the cannabis industry or geographical location and the Company
may participate in a business venture of virtually any kind or nature that the board of directors believe is beneficial to the Company
and its shareholders. Financial
Statement Presentation The accompanying unaudited condensed
financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”)
for interim financial information and with the instructions to Form 10-Q and Rule 8-01 of Regulation S-X. Pursuant to these rules and
regulations, certain information and note disclosures, normally included in financial statements prepared in accordance with GAAP, have
been condensed or omitted. GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures.
In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have
been included. Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 2020. The balance sheet as of December 31, 2019 has been derived from the
audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial
statements. For further information, refer to the financial statements and notes thereto contained in the Annual Report on Form 10-K for
the year ended December 31, 2019. The notes to the unaudited condensed financial statements are presented on a going concern basis unless
otherwise noted. Basis of
Presentation The accompanying
condensed financial statements have been prepared assuming that the Company will continue as a going concern. The Company has no established
operations. The Company incurred a net loss of approximately $665,000 for the nine months ended September 30, 2020 and had an
accumulated deficit of approximately $9,991,000 as of September 30, 2020. The Company has financed its activities principally
through debt and equity financing and shareholder contributions. Management expects to incur additional losses and cash outflows in the
foreseeable future in connection with its operating activities. The Company’s
condensed financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company
is subject to a number of risks similar to those of other similar stage companies, including dependence on key individuals; successful
development, marketing and branding of products; uncertainty of product development and generation of revenues; dependence on outside
sources of financing; risks associated with research and development; dependence on third-party suppliers and collaborators; protection
of intellectual property; and competition with larger, better-capitalized companies. Ultimately, the attainment of profitable operations
is dependent on future events, including obtaining adequate financing to fund its operations and generating a level of revenues adequate
to support the Company’s cost structure. The Company will need to raise
debt or equity financing in the future in order to continue its operations and achieve its growth targets. However, there can be no assurance
that such financing will be available in sufficient amounts and on acceptable terms, when and if needed, or at all. The precise amount
and timing of the funding needs cannot be determined accurately at this time, and will depend on a number of factors, including market
demand for the Company’s products and services, the success of product development efforts, the timing of receipts for customer
deposits, the management of working capital, and the continuation of normal payment terms and conditions for purchase of goods and services.
The Company believes its cash balances and cash flow from operations will not be sufficient to fund its operations and growth for the
next twelve months from the issuance date of these financial statements. If the Company is unable to substantially increase revenues,
reduce expenditures, or otherwise generate cash flows from operations, then the Company will likely need to raise additional funding from
investors or through other avenues to continue as a going concern. Debt Discounts The Company accounts for debt
discounts originating in connection with conversion features that remain embedded in the related notes in accordance with ASC 470-20, Debt
with Conversion and Other Options Earnings Per Share We use ASC 260, “ Earnings
Per Share There were 1,778,214 common share
equivalents at September 30, 2020 and 1,089,000 common share equivalents at September 30, 2019. For the three months ended September 30,
2020 and 2019, these potential shares were excluded from the shares used to calculate diluted. These securities were not included in the
computation of diluted net earnings per share as their effect would have been antidilutive. Recent Accounting Pronouncements Changes to accounting principles
are established by the Financial Accounting Standards Board’s (“FASB”) in the form of Accounting Standards Update (“ASU”)
to the FASB’s Codification. We consider the applicability and impact of all ASUs on our financial position, results of operations,
cash flows, or presentation thereof. The Company reviewed all recently issued pronouncements in 2021, but not yet effective, and does
not believe the future adoption of any such pronouncements may be expected to cause a material impact on the Company’s financial
condition or the results of its operations.

Accounts Payable and Accrued Li

Accounts Payable and Accrued Liabilities9 Months Ended
Sep. 30, 2020
Payables and Accruals [Abstract]
Accounts Payable and Accrued LiabilitiesNote 2 –
Accounts Payable and Accrued Liabilities The following table summarizes
the Company’s accounts payable and accrued expense balances as of the date indicated:
September 30, 2020 December 31, 2019
Trade payables $ 224,000 $ 187,000
Accrued liabilities 281,000 176,000
Interest payable 27,000 -
Accounts payable and accrued expenses $ 532,000 $ 363,000

Promissory Note

Promissory Note9 Months Ended
Sep. 30, 2020
Debt Disclosure [Abstract]
Promissory NoteNote 3 –
Promissory Note During the
period ended September 30, 2020, the Company issued a promissory note for $11,000 (“Promissory Note”). The total proceeds
were $10,000, due to approximately $1,000 for an original issue discount. The Promissory Note is non-interest bearing with the principal
due and payable in August 2020. Any amount of unpaid principal on the date of maturity will accrue interest at rate of 10% per annum
(default interest). The original issue discount was amortized over the term of the Promissory Note, which was one month. As of September
30, 2020, the Promissory note was in default, so the Company accrued approximately $200 of default interest.

Convertible Promissory Notes

Convertible Promissory Notes9 Months Ended
Sep. 30, 2020
Debt Disclosure [Abstract]
Convertible Promissory NotesNote 4 –
Convertible Promissory Notes During the period ended September
30, 2020, the Company issued convertible promissory notes for the total amount of $33,000 (the “Notes”). The total proceeds
were approximately $30,000, due to approximately $3,000 for an original issue discount. The Notes are non-interest bearing with the principal
due and payable starting in July 2021 and August 2021. Any amount of unpaid principal on the date of maturity will accrue interest at
rate of 10% per annum (default interest). The principal amount and all accrued interest are convertible into shares of the Company’s
common stock, as of the date of issuance, at a rate of $1.00 per share (“Conversion Rate”). The conversion rate is adjustable
if, at any time when any principal amount of the Notes remains unpaid or unconverted, the Company issues or sells any shares of the Company’s
common stock for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting
discounts or allowances in connection therewith), which is less than the Conversion Rate in effect on the date of such issuance (or deemed
issuance) of such shares of common stock (a “Dilutive Issuance”). Immediately upon a Dilutive Issuance, the Conversion Rate
will be reduced to the amount of the consideration per share received by the Company in such Dilutive Issuance. Events of default include
failure to issue conversion shares, the occurrence of a breach or default under any other agreement, instrument or document involving
any indebtedness for borrowed money of more than $100,000 in the aggregate, bankruptcy filing, application for the appointment of a custodian,
trustee or receiver, insolvency, the Company’s common stock delisted, or dissolution, winding up, or termination of the business
of the Company. In connection with the issuance
of the Notes, the Company issued to the purchasers of the Notes stock purchase warrants (the “Warrants”) to purchase an aggregate
of 11,000 shares of the Company’s common stock for a purchase price of $1.50 per share, subject to adjustments. In accordance with ASC 470 - Debt,
the Company has allocated the cash proceeds amounts of the Notes among the Notes, the warrants and the conversion feature. The relative
fair value of the warrants issued totaled approximately $2,000 and of the beneficial conversion totaled approximately $0, which amounts
are being amortized and expensed over the term of the Notes. As of September 30, 2020, the amortization expense was approximately $185,000. The Company determined that the
conversion feature of the Notes would not be an embedded feature to be bifurcated and accounted for as a derivative in accordance with
ASC 818-15, Derivatives and Hedging As of September 30, 2020 and December
31, 2019, the convertible promissory notes consisted of the following:
September 30, 2020 December 31, 2019
Principal amount $ 697,000 $ 506,000
Original issue discount (3,000 ) (19,000 )
Warrant discount (2,000 ) (85,000 )
Conversion feature discount − (79,000 )
Net balance $ 692,000 $ 323,000 Interest expense on default convertible
notes amounting to $27,000 and $0 for the nine months ended September 30, 2020 and 2019.

Subsequent Events

Subsequent Events9 Months Ended
Sep. 30, 2020
Subsequent Events [Abstract]
Subsequent EventsNote 5 –
Subsequent Events The Company
has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine
if they must be reported. The management of the Company determined the following reportable non-adjusting events: Subsequent
to September 30, 2020, the Company issued one (1) additional Note for total cash proceeds of $10,000. On January
5, 2021, Piers Cooper (“Mr. Cooper”), our President and a member of our Board of Directors, resigned as an officer and director
of our company (“Termination Agreement”). As part of the Termination Agreement, Mr. Cooper’s agreed to return 3,674,330
shares of the Company’s common stock (“Cancelled Shares”). The Cancelled shares were to be returned within thirty days
of Mr. Cooper’s execution of the Termination Agreement, which was January 5, 2021. The Cancelled Shares were returned and cancelled
on April 19, 2021. In January
2021, the Company issued a promissory note for cash amounting to $15,000 with 8% annual interest per year and a maturity date of March
31, 2022. Interest will be computed starting January 11, 2021 and payable at maturity date together with the principal amount. In the
event of default, the interest rate of the note shall increase to 10% per annum and computed on the basis of the actual number of days
elapsed and a 365-day year. In February
2021, the Company issued a promissory note for cash amounting to $25,000 with 10% annual interest per year and a maturity date of February
19, 2022. The principal and accrued interest is payable in a single installment on or before the maturity date. In the event of default,
the interest rate of the note shall increase to 15% per annum and computed on the basis of the actual number of days elapsed and a 365-day
or 366-day year. In March 2021,
the Company issued a convertible promissory note in the amount of $55,000 (the “Note”). The total proceeds were approximately
$50,000, due to approximately $5,000 for an original issue discount. The Note is non-interest bearing with the principal due and payable
starting in March 2022. Any amount of unpaid principal on the date of maturity will accrue interest at rate of 10% per annum
(default interest). The principal amount and all accrued interest are convertible into shares of the Company’s common stock, as
of the date of issuance, at a rate of $1.00 per share (“Conversion Rate”). The conversion rate is adjustable if, at any time
when any principal amount of the Notes remains unpaid or unconverted, the Company issues or sells any shares of the Company’s common
stock for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts
or allowances in connection therewith), which is less than the Conversion Rate in effect on the date of such issuance (or deemed issuance)
of such shares of common stock (a “Dilutive Issuance”). Immediately upon a Dilutive Issuance, the Conversion Rate will be
reduced to the amount of the consideration per share received by the Company in such Dilutive Issuance. Events of default include failure
to issue conversion shares, the occurrence of a breach or default under any other agreement, any money judgment, writ or similar process
entered or filed against the Company or any of its property or other assets for more than $100,000, bankruptcy filing, application for
the appointment of a custodian, trustee or receiver, insolvency, the Company’s common stock delisted, or dissolution, winding up,
or termination of the business of the Company. In connection with the issuance of the Notes, the Company issued to the purchasers of the
Notes stock purchase warrants (the “Warrants”) to purchase an aggregate of 27,500 shares of the Company’s common stock
for a purchase price of $1.50 per share, subject to adjustments. In February
2021, the Company signed a new consulting agreement that granted one of its shareholders an option to purchase 750,000 shares
of the Company’s common stock at $0.001 per share for the consultancy work provided from August 2020 to February 2021. The options
were fully vested on the date of issuance. In March 2021,
the CEO agreed to forgive approximately $68,000 due to him. In March 2021,
the CFO agree to reduce amount due to him from approximately $127,000 to $30,000. For the reduction of $97,000, the Company will issue
75,000 shares of common stock. The remaining liability of $30,000 will be paid in cash. In April 2021,
the Company issued a promissory note for cash amounting to $8,550 with 0% annual interest per year if paid at a maturity date of July
5, 2021. In the event of default, the interest rate of the note shall increase to 8% per annum and computed on the basis of the actual
number of days elapsed and a 365-day or 366-day year. In April 2021,
an option holder exercised two options for 385,000 and 750,000 shares of the Company's common stock at an exercise price of $0.001
for both options. The shares for the options have yet to be issued. In April 2021,
the Company issued a promissory note for cash amounting to $50,000 with 10% annual interest per year and a maturity date of April 22,
2022. The principal and accrued interest is payable in a single installment on or before the maturity date. In the event of default,
the interest rate of the note shall increase to 15% per annum and computed on the basis of the actual number of days elapsed and a 365-day
or 366-day year.

Organization and Accounting P_2

Organization and Accounting Policies (Policies)9 Months Ended
Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Change in ControlChange
in Control On May 16, 2018, certain majority
stockholders of the Company, including certain former directors and officers of the Company, entered into a stock purchase agreement dated
May 16, 2018 (the “Control Purchase Agreement”) with RealSource Acquisition Group, LLC, a Utah limited liability company (“RealSource
Acquisition”), whereby RealSource Acquisition agreed to purchase an aggregate of 11,006,356 shares (440,256 shares after giving
effect to the Reverse Stock Split (the “Control Shares”) of the Company’s issued and outstanding shares of common stock
for an aggregate purchase price of $180,000. Immediately prior to the closing under the Control Purchase Agreement on September 12, 2018
(the “Closing Date”), RealSource Acquisition assigned its rights under the Control Purchase Agreement to M1 Advisors, LLC,
a Delaware limited liability company (“M1 Advisors”), pursuant to a purchase agreement and assignment and assumption of contract
rights dated as of August 28, 2018 between RealSource Acquisition and M1 Advisors. M1 Advisors paid RealSource Acquisition $80,000 as
consideration for such assignment. Effective on the Closing Date,
and in accordance with the amended and restated bylaws of the Company and the requirements of the Control Purchase Agreement, (a) each
of Michael S. Anderson, Nathan W. Hanks and V. Kelly Randall resigned as directors of the Company, (b) Michael Campbell, the sole member
of M1 Advisors, and Piers Cooper were elected to the Company’s board of directors, and (c) Mr. Hanks also resigned as president
and chief executive officer of the Company, Mr. Randall also resigned as chief operating office and chief financial officer of the Company,
Mr. Campbell was appointed the chief executive officer of the Company and Piers Cooper was appointed president of the Company. On the Closing Date, the Company
entered into a series A preferred stock purchase agreement dated as of the Closing Date (the “Preferred Purchase Agreement”)
with M1 Advisors, which is an entity controlled by Michael Campbell, the Company’s chief executive officer and a director of the
Company at such time, Piers Cooper, the Company’s president and a director of the Company at such time, the members of RealSource
Acquisition, and the other investors who were signatories thereto (collectively, the Purchasers”). Pursuant to the Preferred Purchase
Agreement, the Company sold to the Purchasers an aggregate of 15,600,544 shares of the Company’s series A preferred stock, which
has since been re-designated as Founder preferred stock (“Founder Preferred Stock”), for an aggregate purchase price of $16,000,
or $0.001 per share. Of the Founder Preferred Stock purchased, 9,320,414 shares were purchased by M1 Advisors, 4,674,330 shares were purchased
by Mr. Cooper and an aggregate of 1,195,000 shares were purchased by the members of RealSource Acquisition or their assigns. Immediately following the above
transactions, an aggregate of 15,600,544 shares of Founder Preferred Stock and 630,207 shares of common stock was issued and outstanding.
At such time, the shares of Founder Preferred Stock and common stock owned by M1 Advisors represented approximately 60.14% of the issued
and outstanding shares of capital stock of the Company on a fully-diluted basis and the shares of Founder Preferred Stock owned by Mr.
Cooper represented approximately 28.80% of the issued and outstanding shares of capital stock of the Company on a fully-diluted basis.
The shares of Founder Preferred Stock acquired by M1 Advisors were purchased with funds that M1 Advisors borrowed from another entity
controlled by Mr. Campbell. On December 20, 2018, all outstanding
shares of Founder Preferred Stock was converted in to shares of the Company’s common stock on a one-for-one basis pursuant to the
terms of the Founder Preferred Stock.
Business ActivityBusiness
Activity Following the change in control,
as described above, the board of directors determined to establish the Company in the rapidly-growing cannabis industry, initially in
the State of California. The primary activity of the Company’s management is to seek and investigate various opportunities in the
California cannabis industry, and if such investigation warrants, acquire assets and create a business around them, acquire part or all
of an operating cannabis business or invest in a joint venture with other more established companies already in the cannabis industry.
The Company will not restrict its search to any specific business, segment of the cannabis industry or geographical location and the Company
may participate in a business venture of virtually any kind or nature that the board of directors believe is beneficial to the Company
and its shareholders.
Financial Statement PresentationFinancial
Statement Presentation The accompanying unaudited condensed
financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”)
for interim financial information and with the instructions to Form 10-Q and Rule 8-01 of Regulation S-X. Pursuant to these rules and
regulations, certain information and note disclosures, normally included in financial statements prepared in accordance with GAAP, have
been condensed or omitted. GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures.
In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have
been included. Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 2020. The balance sheet as of December 31, 2019 has been derived from the
audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial
statements. For further information, refer to the financial statements and notes thereto contained in the Annual Report on Form 10-K for
the year ended December 31, 2019. The notes to the unaudited condensed financial statements are presented on a going concern basis unless
otherwise noted.
Basis of PresentationBasis of
Presentation The accompanying
condensed financial statements have been prepared assuming that the Company will continue as a going concern. The Company has no established
operations. The Company incurred a net loss of approximately $665,000 for the nine months ended September 30, 2020 and had an accumulated
deficit of approximately $9,991,000 as of September 30, 2020. The Company has financed its activities principally through debt and equity
financing and shareholder contributions. Management expects to incur additional losses and cash outflows in the foreseeable future in
connection with its operating activities. The Company’s
condensed financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company
is subject to a number of risks similar to those of other similar stage companies, including dependence on key individuals; successful
development, marketing and branding of products; uncertainty of product development and generation of revenues; dependence on outside
sources of financing; risks associated with research and development; dependence on third-party suppliers and collaborators; protection
of intellectual property; and competition with larger, better-capitalized companies. Ultimately, the attainment of profitable operations
is dependent on future events, including obtaining adequate financing to fund its operations and generating a level of revenues adequate
to support the Company’s cost structure. The Company will need to raise
debt or equity financing in the future in order to continue its operations and achieve its growth targets. However, there can be no assurance
that such financing will be available in sufficient amounts and on acceptable terms, when and if needed, or at all. The precise amount
and timing of the funding needs cannot be determined accurately at this time, and will depend on a number of factors, including market
demand for the Company’s products and services, the success of product development efforts, the timing of receipts for customer
deposits, the management of working capital, and the continuation of normal payment terms and conditions for purchase of goods and services.
The Company believes its cash balances and cash flow from operations will not be sufficient to fund its operations and growth for the
next twelve months from the issuance date of these financial statements. If the Company is unable to substantially increase revenues,
reduce expenditures, or otherwise generate cash flows from operations, then the Company will likely need to raise additional funding from
investors or through other avenues to continue as a going concern.
Debt DiscountsDebt Discounts The Company accounts for debt
discounts originating in connection with conversion features that remain embedded in the related notes in accordance with ASC 470-20,
Debt with Conversion and Other Options
Earnings Per ShareEarnings Per Share We use ASC 260, “ Earnings
Per Share There were 1,778,214 common share
equivalents at September 30, 2020 and 1,089,000 common share equivalents at September 30, 2019. For the three months ended September
30, 2020 and 2019, these potential shares were excluded from the shares used to calculate diluted. These securities were not included
in the computation of diluted net earnings per share as their effect would have been antidilutive.
Recent Accounting PronouncementsRecent Accounting Pronouncements Changes to accounting principles
are established by the Financial Accounting Standards Board’s (“FASB”) in the form of Accounting Standards Update (“ASU”)
to the FASB’s Codification. We consider the applicability and impact of all ASUs on our financial position, results of operations,
cash flows, or presentation thereof. The Company reviewed all recently issued pronouncement in 2021, but not yet effective, and does not
believe the future adoption of any such pronouncements may be expected to cause a material impact on the Company’s financial condition
or the results of its operations.

Accounts Payable and Accrued _2

Accounts Payable and Accrued Liabilities (Tables)9 Months Ended
Sep. 30, 2020
Payables and Accruals [Abstract]
Schedule of Accounts Payable and Accrued LiabilitiesThe following table summarizes
the Company’s accounts payable and accrued expense balances as of the date indicated:
September 30, 2020 December 31, 2019
Trade payables $ 224,000 $ 187,000
Accrued liabilities 281,000 176,000
Interest payable 27,000 -
Accounts payable and accrued expenses $ 532,000 $ 363,000

Convertible Promissory Notes (T

Convertible Promissory Notes (Tables)9 Months Ended
Sep. 30, 2020
Debt Disclosure [Abstract]
Schedule of Convertible Promissory NotesAs of September 30, 2020 and December
31, 2019, the convertible promissory notes consisted of the following:
September 30, 2020 December 31, 2019
Principal amount $ 697,000 $ 506,000
Original issue discount (3,000 ) (19,000 )
Warrant discount (2,000 ) (85,000 )
Conversion feature discount − (79,000 )
Net balance $ 692,000 $ 323,000

Organization and Accounting P_3

Organization and Accounting Policies (Details Narrative) - USD ($)May 16, 2018Sep. 30, 2020Jun. 30, 2020Mar. 31, 2020Sep. 30, 2019Jun. 30, 2019Mar. 31, 2019Sep. 30, 2020Sep. 30, 2019Dec. 31, 2019
Aggregate purchasers shares11,006,356
Number of shares after reserve stock split440,256
Purchase price of shares $ 180,000
Payment made as consideration $ 80,000
Preferred stock, shares outstanding
Preferred stock, shares issued
Common stock, shares outstanding16,634,951 16,634,951 16,634,951
Common stock, shares issued16,634,951 16,634,951 16,634,951
Net loss $ (93,000) $ (96,000) $ (476,000) $ (218,000) $ (817,000) $ (181,000) $ (665,000) $ (1,216,000)
Accumulated deficit $ (9,991,000) $ (9,991,000) $ (9,326,000)
Common share equivalents1,778,214 1,089,000
Preferred Purchase Agreement [Member]
Aggregate purchasers shares15,600,544
Purchase price of shares $ 16,000
Purchase price per share $ 0.001 $ 0.001
Common stock, shares outstanding630,207 630,207
Common stock, shares issued630,207 630,207
Preferred Purchase Agreement [Member] | Founder Preferred Stock [Member]
Preferred stock, shares outstanding15,600,544 15,600,544
Preferred stock, shares issued15,600,544 15,600,544
Preferred Purchase Agreement [Member] | M1 Advisors [Member]
Aggregate purchasers shares9,320,414
Percentage of shares issued and outstanding60.14%60.14%
Preferred Purchase Agreement [Member] | Mr. Cooper [Member]
Aggregate purchasers shares4,674,330
Percentage of shares issued and outstanding28.80%28.80%
Preferred Purchase Agreement [Member] | Members of RealSource Acquisition [Member]
Aggregate purchasers shares1,195,000

Accounts Payable and Accrued _3

Accounts Payable and Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($)Sep. 30, 2020Dec. 31, 2019
Payables and Accruals [Abstract]
Trade payables $ 224,000 $ 187,000
Accrued liabilities281,000 176,000
Interest payable27,000
Accounts payable and accrued expenses $ 532,000 $ 363,000

Promissory Note (Details Narrat

Promissory Note (Details Narrative) - USD ($)9 Months Ended
Sep. 30, 2020Sep. 30, 2019Dec. 31, 2019
Promissory note, net $ 11,000
Proceeds from the issuance of promissory note10,000
Promissory Note [Member]
Promissory note, net11,000
Proceeds from the issuance of promissory note10,000
Original issue discount $ 1,000
Debt instruments, interest rate10.00%
Interest payable $ 200

Convertible Promissory Notes (D

Convertible Promissory Notes (Details Narrative) - USD ($)9 Months Ended
Sep. 30, 2020Sep. 30, 2019
Convertible promissory note $ 33,000
Proceeds from issuance of convertible debt $ 39,000 $ 320,000
Issuance of warrants to purchase of common stock11,000
Issuance of warrant price per share $ 1.50
Fair value of warrant amount $ 2,000
Convertible Promissory Notes [Member]
Proceeds from issuance of convertible debt30,000
Debt instrument, discount $ 3,000
Debt instruments, interest rate10.00%
Debt instruments, conversion price $ 1
Debt instrument, convertible amount $ 100,000
Beneficial conversion feature0
Amortization expenses185,000
Interest expense on debt instrument $ 27,000 $ 0

Convertible Promissory Notes -

Convertible Promissory Notes - Schedule of Convertible Promissory Notes (Details) - USD ($)Sep. 30, 2020Dec. 31, 2019
Net balance $ 692,000 $ 323,000
Convertible Promissory Notes [Member]
Principal Amount697,000 506,000
Original issue discount(3,000)(19,000)
Warrant discount(2,000)(85,000)
Conversion feature discount (79,000)
Net balance $ 692,000 $ 323,000

Subsequent Events (Details Narr

Subsequent Events (Details Narrative) - USD ($)Jan. 05, 2021May 21, 2021Apr. 30, 2021Mar. 31, 2021Feb. 28, 2021Jan. 31, 2021Sep. 30, 2020Sep. 30, 2019
Convertible promissory note issued during period $ 33,000
Proceeds from issuance of convertible debt $ 39,000 $ 320,000
Issuance of warrants to purchase of common stock11,000
Issuance of warrant price per share $ 1.50
Promissory Note [Member]
Debt instrument, interest rate10.00%
Subsequent Event [Member] | New Consulting Agreement [Member]
Stock issued during the period, shares750,000
Shares issued price per share $ 0.001
Subsequent Event [Member] | Piers Cooper [Member]
Stock issued during the period, cancelled3,674,330
Subsequent Event [Member] | Chief Executive Officer [Member]
Debt forgiven by officer, amount $ 68,000
Subsequent Event [Member] | Chief Financial Officer [Member]
Debt forgiven by officer, amount97,000
Due to officers $ 30,000 $ 127,000
Subsequent Event [Member] | Chief Financial Officer [Member] | Common Stock [Member]
Stock issued during the period, shares75,000
Subsequent Event [Member] | Holder One [Member] | Equity Option [Member]
Stock option exercised385,000
Option exercise price $ 0.001
Subsequent Event [Member] | Holder Two [Member] | Equity Option [Member]
Stock option exercised750,000
Option exercise price $ 0.001
Subsequent Event [Member] | One Additional Notes [Member]
Proceeds from notes $ 10,000
Subsequent Event [Member] | Promissory Notes [Member]
Debt instrument, face amount $ 8,550 $ 25,000 $ 15,000
Debt instrument, interest rate0.00%10.00%8.00%
Debt instrument, maturity dateJul. 5,
2021
Feb. 19,
2022
Mar. 31,
2022
Debt instrument, descriptionCompany issued a promissory note for cash amounting to $8,550 with 0% annual interest per year if paid at a maturity date of July 5, 2021. In the event of default, the interest rate of the note shall increase to 8% per annum and computed on the basis of the actual number of days elapsed and a 365-day or 366-day year.The principal and accrued interest is payable in a single installment on or before the maturity date. In the event of default, the interest rate of the note shall increase to 15% per annum and computed on the basis of the actual number of days elapsed and a 365-day or 366-day year.Interest will be computed starting January 11, 2021 and payable at maturity date together with the principal amount. In the event of default, the interest rate of the note shall increase to 10% per annum and computed on the basis of the actual number of days elapsed and a 365-day year.
Subsequent Event [Member] | Convertible Promissory Note [Member]
Debt instrument, interest rate10.00%
Convertible promissory note issued during period $ 55,000
Proceeds from issuance of convertible debt50,000
Original issue discount $ 5,000
Debt instrument maturity date, descriptionThe Notes are non-interest bearing with the principal due and payable starting in March 2022.
Debt instruments conversion price per share $ 1
Indebtedness for borrowed money maximum limit $ 100,000
Subsequent Event [Member] | Convertible Promissory Note [Member] | Warrant [Member]
Issuance of warrants to purchase of common stock27,500
Issuance of warrant price per share $ 1.50
Subsequent Event [Member] | Promissory Note [Member]
Debt instrument, face amount $ 50,000
Debt instrument, interest rate10.00%
Debt instrument, maturity dateApr. 22,
2022
Debt instrument, descriptionThe principal and accrued interest is payable in a single installment on or before the maturity date. In the event of default, the interest rate of the note shall increase to 15% per annum and computed on the basis of the actual number of days elapsed and a 365-day or 366-day year.