Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2019 | Feb. 14, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Nukkleus Inc. | |
Entity Central Index Key | 0001592782 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | DE | |
Entity File Number | 000-55922 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 230,485,100 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Sep. 30, 2019 |
CURRENT ASSETS: | ||
Cash | $ 37,423 | $ 23,514 |
Prepaid expense | 12,606 | 6,664 |
Due from affiliate | 143,776 | 3,880 |
Investment - digital currency | 479 | 168,943 |
TOTAL CURRENT ASSETS | 194,284 | 203,001 |
TOTAL ASSETS | 194,284 | 203,001 |
CURRENT LIABILITIES: | ||
Due to affiliates | 1,064,849 | 1,042,987 |
Accrued liabilities | 221,644 | 197,494 |
Accrued liabilities - related party | 10,000 | |
TOTAL CURRENT LIABILITIES | 1,286,493 | 1,250,481 |
OTHER LIABILITIES: | ||
Series A redeemable preferred stock liability at $10 stated value; 200,000 shares authorized; 25,000 and 25,000 shares issued and outstanding ($250,000 and $250,000 less discount of $3,263 and $3,835, respectively) at December 31, 2019 and September 30, 2019, respectively | 246,737 | 246,165 |
TOTAL LIABILITIES | 1,533,230 | 1,496,646 |
STOCKHOLDERS' DEFICIT: | ||
Preferred stock ($0.0001 par value; 14,800,000 shares authorized; 0 share issued and outstanding at December 31, 2019 and September 30, 2019) | ||
Common stock ($0.0001 par value; 900,000,000 shares authorized; 230,485,100 shares issued and outstanding at December 31, 2019 and September 30, 2019) | 23,049 | 23,049 |
Additional paid-in capital | 141,057 | 141,057 |
Accumulated deficit | (1,503,052) | (1,457,751) |
TOTAL STOCKHOLDERS' DEFICIT | (1,338,946) | (1,293,645) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 194,284 | $ 203,001 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2019 | Sep. 30, 2019 |
Statement of Financial Position [Abstract] | ||
Series A redeemable preferred stock, stated value (in dollars per share) | $ 10 | $ 10 |
Series A redeemable preferred stock, authorised | 200,000 | 200,000 |
Series A redeemable preferred stock, issued | 25,000 | 25,000 |
Series A redeemable preferred stock, outstanding | 25,000 | 25,000 |
Series A redeemable preferred stock, gross | $ 250,000 | $ 250,000 |
Series A redeemable preferred stock, discount | $ 3,263 | $ 3,835 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized | 14,800,000 | 14,800,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 900,000,000 | 900,000,000 |
Common stock, issued | 230,485,100 | 230,485,100 |
Common stock, outstanding | 230,485,100 | 230,485,100 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
REVENUE | ||
Revenue - related party | $ 4,800,000 | $ 4,800,000 |
COST OF REVENUE | ||
Cost of revenue - related party | 4,725,000 | 4,725,000 |
GROSS PROFIT | 75,000 | 75,000 |
OPERATING EXPENSES: | ||
Compensation and related benefits | 65,326 | 48,334 |
Other general and administrative | 71,353 | 92,655 |
Other general and administrative - related party | 15,000 | |
Total operating expenses | 136,679 | 155,989 |
LOSS FROM OPERATIONS | (61,679) | (80,989) |
OTHER INCOME (EXPENSE): | ||
Interest expense on redeemable preferred stock | (938) | (938) |
Amortization of debt discount | (572) | (572) |
Gain (loss) on digital currency | 17,888 | (37,403) |
Total other income (expense), net | 16,378 | (38,913) |
LOSS BEFORE INCOME TAXES | (45,301) | (119,902) |
INCOME TAXES | ||
NET LOSS | $ (45,301) | $ (119,902) |
NET LOSS PER COMMON SHARE: | ||
Basic and diluted | $ 0 | $ 0 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||
Basic and diluted | 230,485,100 | 230,485,100 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Statements of Changes in Stockholders' Deficit - USD ($) | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Sep. 30, 2018 | $ 23,049 | $ 141,057 | $ (727,638) | $ (563,532) | |
Balance, shares at Sep. 30, 2018 | 230,485,100 | ||||
Net loss for the year | (119,902) | (119,902) | |||
Balance at Dec. 31, 2018 | $ 23,049 | 141,057 | (847,540) | (683,434) | |
Balance, shares at Dec. 31, 2018 | 230,485,100 | ||||
Balance at Sep. 30, 2019 | $ 23,049 | 141,057 | (1,457,751) | (1,293,645) | |
Balance, shares at Sep. 30, 2019 | 230,485,100 | ||||
Net loss for the year | (45,301) | (45,301) | |||
Balance at Dec. 31, 2019 | $ 23,049 | $ 141,057 | $ (1,503,052) | $ (1,338,946) | |
Balance, shares at Dec. 31, 2019 | 230,485,100 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (45,301) | $ (119,902) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Amortization of debt discount | 572 | 572 |
(Gain) loss on digital currency | (17,888) | 37,403 |
Changes in operating assets and liabilities: | ||
Prepaid expense | (5,942) | 2,000 |
Due from affiliates | (25,000) | |
Due to affiliates | 68,318 | 15,644 |
Accrued liabilities | 24,150 | 51,492 |
Accrued liabilities - related party | (10,000) | |
Net cash provided by (used in) operating activities | 13,909 | (37,791) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of digital currency | (93,655) | |
Net cash used in investing activities | (93,655) | |
NET INCREASE (DECREASE) IN CASH | 13,909 | (131,446) |
Cash - beginning of period | 23,514 | 257,637 |
Cash - end of period | 37,423 | 126,191 |
Cash paid for: | ||
Interest | ||
Income taxes | ||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Investment - digital currency received from affiliate | 17,197 | |
Investment - digital currency transferred to affiliate | $ 203,549 |
The Company History and Nature
The Company History and Nature of the Business | 3 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
THE COMPANY HISTORY AND NATURE OF THE BUSINESS | NOTE 1 – THE COMPANY HISTORY AND NATURE OF THE BUSINESS Nukkleus Inc. (f/k/a Compliance & Risk Management Solutions Inc.) (“Nukkleus” or the “Company”) was formed on July 29, 2013 in the State of Delaware as a for-profit Company and established a fiscal year end of September 30. The Company is a financial technology company which is focused on providing software and technology solutions for the worldwide retail foreign exchange (“FX”) trading industry. The Company primarily provides its software, technology, customer sales and marketing and risk management technology hardware and software solutions package to FXDD Malta Limited (“FXDD Malta”). The FXDD brand (e.g., see FXDD.com) is the brand utilized in the retail forex trading industry by FXDD Malta. Nukkleus Limited, a wholly-owned subsidiary of the Company, provides its software, technology, customer sales and marketing and risk management technology hardware and software solutions package under a General Services Agreement ("GSA") to FXDD Malta Limited (“FXDD Malta”). FXDD Malta is a private limited liability company formed under the laws of Malta. The GSA entered with FXDD Malta provides that FXDD Malta will pay Nukkleus Limited at minimum $1,600,000 per month. Emil Assentato is also the majority member of Max Q Investments LLC (“Max Q”), which is managed by Derivative Marketing Associates Inc. (“DMA”). Mr. Assentato, who is our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and chairman, is the sole owner and manager of DMA. Max Q owns 79% of Currency Mountain Malta LLC, which in turn is the sole shareholder of FXDD Malta. In addition, in order to appropriately service FXDD Malta, Nukkleus Limited entered into a GSA with FXDirectDealer LLC (“FXDIRECT”), which provides that Nukkleus Limited will pay FXDIRECT a minimum of $1,575,000 per month in consideration of providing personnel engaged in operational and technical support, marketing, sales support, accounting, risk monitoring, documentation processing and customer care and support. FXDIRECT may terminate this agreement upon providing 90 days’ written notice. Currency Mountain Holdings LLC is the sole shareholder of FXDIRECT. Max Q is the majority shareholder of Currency Mountain Holdings LLC. In July 2018, the Company incorporated Nukkleus Malta Holding Ltd., which is a wholly-owned subsidiary. In July 2018, Nukkleus Malta Holding Ltd. incorporated Nukkleus Exchange Malta Ltd. For Nukkleus Exchange Malta Ltd., the Company is currently exploring obtaining a license to operate an electronic exchange whereby it facilitates the buying and selling of various digital assets as well as traditional currency pairs used in FX Trading. The Company’s affiliates have created the electronic exchange that may be used by Nukkleus Exchange Malta Ltd., however, as the Company does not believe obtaining a license to operate the exchange will be feasible, the affiliates are searching for alternate uses for the exchange and as such have not sold or transferred the exchange to the Company. On October 29, 2019, the Company entered into a Non-Binding Letter of Intent (“LOI”) with XT Energy Group Inc. (OTCQB: XTEG) (“XT”) and Stanley Hutton Rumbough. The purpose of the LOI was to outline a proposed transaction pursuant to which XT, among other items, would acquire all intellectual properties of EF Hutton, including its trademark “EF Hutton,” held by Mr. Hutton Rumbough and acquire all of the issued and outstanding shares of common stock of the Company in consideration of 11 million shares of XT. The purpose of the transactions was to establish XT in two areas of activity of energy and energy related services and financial services and financial technology. Following the closing of the transactions, the Company would become a wholly-owned subsidiary of XT, and XT would change its name to “EF Hutton Group Inc.” The LOI expired in January 2020 and no agreement was reached. The unaudited condensed financial statements have been prepared using accounting principles generally accepted in the United States of America applicable for a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business. The Company incurred a net loss for the three months ended December 31, 2019 of $45,301, and had an accumulated deficit and a working capital deficit of $1,503,052 and $1,092,209, respectively, at December 31, 2019. The Company’s ability to continue as a going concern is dependent upon the management of expenses and ability to obtain necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due, and upon profitable operations. We cannot be certain that such necessary capital through equity or debt financings will be available to us or whether such capital will be available on terms that are acceptable to us. Any such financing likely would be dilutive to existing stockholders and could result in significant financial operating covenants that would negatively impact our business. In the event that there are any unforeseen delays or obstacles in obtaining funds through the aforementioned sources, Currency Mountain Holdings Bermuda, Limited (“CMH”), which |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | NOTE 2 – BASIS OF PRESENTATION These interim condensed consolidated financial statements of the Company and its subsidiaries are unaudited. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures necessary for a fair presentation of these interim condensed consolidated financial statements have been included. The results reported in the unaudited condensed consolidated financial statements for any interim periods are not necessarily indicative of the results that may be reported for the entire year. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all information and footnotes necessary for a complete presentation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Company's unaudited condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. These accounts were prepared under the accrual basis of accounting. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2019 filed with the Securities and Exchange Commission on January 14, 2020. The consolidated balance sheet as of September 30, 2019 contained herein has been derived from the audited consolidated financial statements as of September 30, 2019, but does not include all disclosures required by U.S. GAAP. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of estimates The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates during the three months ended December 31, 2019 and 2018 include valuation of deferred tax assets and the associated valuation allowances. Fair value of financial instruments and fair value measurements The Company adopted the guidance of Accounting Standards Codification ("ASC") 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value. Fair value is the price that would be received to sell an asset and paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes valuation techniques to maximize the use of observable inputs and minimize the use of unobservable inputs. Assets and liabilities are recorded at fair value are categorized based upon the level of judgment associated with the inputs used to measure their value. Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy are as follows ● Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. ● Level 2-Inputs are unadjusted 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, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. ● Level 3-Inputs are unobservable inputs which reflect the reporting entity's own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The Company holds investments in digital currency, consisting of Bitcoins and Ethereum. The Company initially records its investments at cost, and then revalues such assets at every reporting period and recognizes gain or loss as unrealized gain (loss) on digital currency that are attributable to the change in the fair value of the digital currency. Unrealized gains and losses and realized gains and losses recognized upon the sale or transfer of the investments in digital currency are netted and recognized within gain (loss) on digital currency on the unaudited condensed consolidated statements of operations. The fair value of the investment in digital currency is determined using the equivalency rate of the digital currency to USD and is included in current assets. The equivalency rates obtained represent a generally well recognized quoted price in active markets for Bitcoin and Ethereum. The current guidance in U.S. GAAP does not directly address the accounting for cryptocurrencies. The following tables provide the financial assets measured on a recurring basis and reported at fair value on the balance sheets as of December 31, 2019 and September 30, 2019: Fair value measurement using Level 1 Level 2 Level 3 Total at Investment - digital currency $ 479 $ - $ - $ 479 Fair value measurement using Level 1 Level 2 Level 3 Total at Investment - digital currency $ 168,943 $ - $ - $ 168,943 The investment in digital currency had a cost of $137,223 net of fees, and a fair value of $168,943 at September 30, 2019. The Company recognized a gain of $17,888 and a loss of $37,403 for the three months ended December 31, 2019 and 2018, respectively. During the first quarter of fiscal 2020, the Company transferred substantially all of its investment in digital currency to affiliates related through common ownership. The carrying values of cash, prepaid expense, due from affiliate, due to affiliates, accrued liabilities and accrued liabilities – related party in the Company's condensed consolidated balance sheets approximated their fair values as of December 31, 2019 and September 30, 2019 due to their short-term nature. Concentration of credit risk The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. At December 31, 2019 and September 30, 2019, the Company's cash balances accounts were not in excess of the federally-insured limits. The following table summarizes customer revenue concentrations: Three Months Ended Three Months Ended FXDD Malta - related party 100 % 100 % The following table summarizes vendor expense concentrations: Three Months Ended Three Months Ended FXDIRECT - related party 100 % 100 % Revenue recognition The Company accounts for revenue under the provisions of ASC Topic 606. The nature of the Company's contract with its customer relates to the Company's services performed for a related party under a GSA. The transaction price is determined in accordance with the terms of the GSA and payments are due on a monthly basis. There are multiple services provided under the GSA and these performance obligations are combined into a single unit of accounting. Fees are recognized as revenue over time as the services are rendered under the terms of the GSA. Revenue is recorded at gross as the Company is deemed to be a principal in the transactions. Per share data ASC Topic 260, Earnings per Share, requires presentation of both basic and diluted earnings per share ("EPS") with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic net earnings per share are computed by dividing net earnings available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net earnings per share is computed by dividing net earnings applicable to common stockholders by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. Diluted earnings per share reflects the potential dilution that could occur if securities were exercised or converted into common stock or other contracts to issue common stock resulting in the issuance of common stock that would then share in the Company's earnings subject to anti-dilution limitations. In a period in which the Company has a net loss, all potentially dilutive securities are excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact. For the three months ended December 31, 2019 and 2018, potentially dilutive common shares consist of common stock issuable upon the conversion of Series A preferred stock (using the if-converted method). The following is a reconciliation of the basic and diluted net loss per share computations for the three months ended December 31, 2019 and 2018: Three Month Ended Three Months Ended Net loss available to common stockholders for basic and diluted net loss per share of common stock $ (45,301 ) $ (119,902 ) Weighted average common stock outstanding - basic 230,485,100 230,485,100 Effect of dilutive securities: Series A preferred stock - - Weighted average common stock outstanding - diluted 230,485,100 230,485,100 Net loss per common share - basic and diluted $ (0.00 ) $ (0.00 ) For the three months ended December 31, 2019 and 2018, a total of 1,250,000 shares of common stock from the assumed redemption of the Series A convertible redeemable preferred stock at the contractual floor of $0.20 per share have been excluded from the computation of diluted weighted average number of shares of common stock outstanding as they would have had an anti-dilutive impact. Recently issued accounting pronouncements Effective October 1, 2019, the Company adopted ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU No. 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance also specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based payment awards. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures. |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Dec. 31, 2019 | |
Accrued Liabilities, Current [Abstract] | |
ACCRUED LIABILITIES | NOTE 4 – ACCRUED LIABILITIES At December 31, 2019 and September 30, 2019, accrued liabilities consisted of the following: December 31, September 30, Professional fees $ 84,591 $ 73,478 Directors' compensation 100,537 90,537 Interest payable 32,416 31,479 Other 4,100 2,000 Total $ 221,644 $ 197,494 |
Share Capital
Share Capital | 3 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
SHARE CAPITAL | NOTE 5 – SHARE CAPITAL Preferred stock The Company’s Board of Directors is authorized to issue, at any time, without further stockholder approval, up to 15,000,000 shares of preferred stock. The Board of Directors has the authority to fix and determine the voting rights, rights of redemption and other rights and preferences of preferred stock. Common stock and Series A preferred stock sold for cash On June 7, 2016, the Company sold to CMH 15,450,000 shares of common stock and 100,000 shares of Series A preferred stock for $1,000,000. The common stock was recorded as equity and the Series A preferred stock was recorded as a long-term liability. The Series A preferred stock has the following key terms: 1) A stated value of $10 per share; 2) The holder is entitled to receive cumulative dividends at the annual rate of 1.5% of stated value payable semi-annually on June 30 and December 31; 3) The preferred stock must be redeemed at the stated value plus any unpaid dividends in 5 years. 4) The Series A preferred stock is non-voting. However, without the affirmative vote of the holders of the shares of the Series A preferred stock then outstanding, the Company may not alter or change adversely the powers, preferences or rights given to the Series A preferred stock or alter or amend the Certificate of Designation except to the extent that such vote relates to the amendment of the Certificate of Designation. 5) The holders of the Series A preferred stock are not entitled to receive any preference upon the liquidation, dissolution or winding up of the business of the Company. Each holder of Series A preferred stock shall share ratably with the holders of the common stock of the Company. The $1,000,000 of proceeds received was allocated to the common stock and Series A preferred stock according to their relative fair values determined at the time of issuance, and as a result, the Company recorded a total discount of $45,793 on the Series A preferred stock, which is being amortized to interest expense to the date of redemption. For both the three months ended December 31, 2019 and 2018, amortization of debt discount amounted to $572. The terms of the Series A preferred stock issued represent mandatory redeemable shares, with a fixed redemption date (in 5 years) and the Company has a choice of redeeming the instrument either in cash or a variable number of shares of common stock based on a formula in the certificate of designation. The conversion price has a floor of $0.20 per share. As such, all dividends accrued and/or paid and any accretions are classified as part of interest expense. For both the three months ended December 31, 2019 and 2018, dividends on redeemable preferred stock amounted to $938. At December 31, 2019 and September 30, 2019, Series A redeemable preferred stock consisted of the following: December 31, September 30, Redeemable preferred stock (stated value) $ 250,000 $ 250,000 Less: unamortized debt discount (3,263 ) (3,835 ) Redeemable preferred stock, net $ 246,737 $ 246,165 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 6 – RELATED PARTY TRANSACTIONS Services provided by related parties From time to time, Craig Marshak, a director of the Company, provides consulting services to the Company. Mr. Craig Marshak is a principal of Triple Eight Markets, Inc. All professional services fee payable to Craig Marshak are paid to Triple Eight Markets, Inc. As compensation for professional services provided, the Company recognized consulting expenses of $0 and $15,000 for the three months ended December 31, 2019 and 2018, respectively, which have been included in general and administrative expense – related party on the accompanying unaudited condensed consolidated statements of operations. As of December 31, 2019 and September 30, 2019, the accrued and unpaid services charge related to Craig Marshak amounted to $0 and $10,000, respectively, which have been included in accrued liabilities – related party on the accompanying condensed consolidated balance sheets. The Company uses affiliate employees for various services such as the use of accountants to record the books and accounts of the Company at no charge to those affiliates, which are considered immaterial. Office space from related parties The Company uses office space of affiliate companies, free of rent, which is considered immaterial Revenue from related party and cost of revenue from related party The Company operates under a GSA with FXDD Malta providing personnel and technical support, marketing, accounting, risk monitoring, documentation processing and customer care and support. The minimum monthly amount received is $1,600,000. The Company operates under a GSA with FXDIRECT receiving personnel and technical support, marketing, accounting, risk monitoring, documentation processing and customer care and support. The minimum monthly amount payable is $1,575,000. Both of the above entities are affiliates through common ownership. During the three months ended December 31, 2019 and 2018, services provided to the related party, which was recorded as revenue - related party on the accompanying unaudited condensed consolidated statements of operations were as follows: Three Months Ended Three Months Ended December 31, December 31, Service provided to: FXDD Malta $ 4,800,000 $ 4,800,000 $ 4,800,000 $ 4,800,000 During the three months ended December 31, 2019 and 2018, services received from the related party, which was recorded as cost of revenue - related party on the accompanying unaudited condensed consolidated statements of operations were as follows: Three Months Ended Three Months Ended December 31, December 31, Service received from: FXDIRECT $ 4,725,000 $ 4,725,000 $ 4,725,000 $ 4,725,000 Due from affiliate At December 31, 2019 and September 30, 2019, due from related party consisted of the following: December 31, September 30, NUKK Capital (*) $ 143,776 $ 3,880 (*) An entity controlled by Emil Assentato, the Company’s chief executive officer, chief financial officer and chairman. The balance of due from related party represents investment – digital currency transferred to NUKK Capital. Management believes that the related party receivable is fully collectable. Therefore, no allowance for doubtful account is deemed to be required on its due from related party at December 31, 2019 and September 30, 2019. The Company historically has not experienced uncollectible receivable from the related party. Due to affiliates At December 31, 2019 and September 30, 2019, due to related parties consisted of the following: December 31, September 30, Forexware LLC $ 570,271 $ 570,271 FXDIRECT 130,323 67,056 CMH 42,000 42,000 FXDD Malta 321,784 320,129 FXDD Trading (*) 471 43,185 FXMarkets (*) - 346 Total $ 1,064,849 $ 1,042,987 (*) FXDD Trading and FXMarkets are both controlled by Emil Assentato, the Company’s chief executive officer, chief financial officer and chairman. The balances of due to related parties represent expenses paid by Forexware LLC, FXDIRECT, FXDD Malta, FXDD Trading, and FXMarkets on behalf of the Company and advances from CMH. The balances due to FXDIRECT and FXDD Malta may also include unsettled funds due related to the General Service Agreement. The balances due to FXDD Malta and FXDD Trading also include the value of transferred digital assets. The related parties’ payables are short-term in nature, non-interest bearing, unsecured and repayable on demand. |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 7 – INCOME TAXES The Company recorded no income tax expense for the three months ended December 31, 2019 and 2018 because the estimated annual effective tax rate was zero. As of December 31, 2019, the Company continues to provide a valuation allowance against its net deferred tax assets since the Company believes it is more likely than not that its deferred tax assets will not be realized. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 7 – SUBSEQUENT EVENTS Management has evaluated subsequent events through the date of the filing. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Use of estimates | Use of estimates The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates during the three months ended December 31, 2019 and 2018 include valuation of deferred tax assets and the associated valuation allowances. |
Fair value of financial instruments and fair value measurements | Fair value of financial instruments and fair value measurements The Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value. Fair value is the price that would be received to sell an asset and paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes valuation techniques to maximize the use of observable inputs and minimize the use of unobservable inputs. Assets and liabilities are recorded at fair value are categorized based upon the level of judgment associated with the inputs used to measure their value. Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy are as follows ● Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. ● Level 2-Inputs are unadjusted 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, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. ● Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The Company holds investments in digital currency, consisting of Bitcoins and Ethereum. The Company initially records its investments at cost, and then revalues such assets at every reporting period and recognizes gain or loss as unrealized gain (loss) on digital currency that are attributable to the change in the fair value of the digital currency. Unrealized gains and losses and realized gains and losses recognized upon the sale or transfer of the investments in digital currency are netted and recognized within gain (loss) on digital currency on the unaudited condensed consolidated statements of operations. The fair value of the investment in digital currency is determined using the equivalency rate of the digital currency to USD and is included in current assets. The equivalency rates obtained represent a generally well recognized quoted price in active markets for Bitcoin and Ethereum. The current guidance in U.S. GAAP does not directly address the accounting for cryptocurrencies. The following tables provide the financial assets measured on a recurring basis and reported at fair value on the balance sheets as of December 31, 2019 and September 30, 2019: Fair value measurement using Level 1 Level 2 Level 3 Total at Investment - digital currency $ 479 $ - $ - $ 479 Fair value measurement using Level 1 Level 2 Level 3 Total at Investment - digital currency $ 168,943 $ - $ - $ 168,943 The investment in digital currency had a cost of $137,223 net of fees, and a fair value of $168,943 at September 30, 2019. The Company recognized a gain of $17,888 and a loss of $37,403 for the three months ended December 31, 2019 and 2018, respectively. During the first quarter of fiscal 2020, the Company transferred substantially all of its investment in digital currency to affiliates related through common ownership. The carrying values of cash, prepaid expense, due from affiliate, due to affiliates, accrued liabilities and accrued liabilities – related party in the Company’s condensed consolidated balance sheets approximated their fair values as of December 31, 2019 and September 30, 2019 due to their short-term nature. |
Concentration of credit risk | Concentration of credit risk The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. At December 31, 2019 and September 30, 2019, the Company's cash balances accounts were not in excess of the federally-insured limits. The following table summarizes customer revenue concentrations: Three Months Ended Three Months Ended FXDD Malta - related party 100 % 100 % The following table summarizes vendor expense concentrations: Three Months Ended Three Months Ended FXDIRECT - related party 100 % 100 % |
Revenue recognition | Revenue recognition The Company accounts for revenue under the provisions of ASC Topic 606. The nature of the Company’s contract with its customer relates to the Company’s services performed for a related party under a GSA. The transaction price is determined in accordance with the terms of the GSA and payments are due on a monthly basis. There are multiple services provided under the GSA and these performance obligations are combined into a single unit of accounting. Fees are recognized as revenue over time as the services are rendered under the terms of the GSA. Revenue is recorded at gross as the Company is deemed to be a principal in the transactions. |
Per share data | Per share data ASC Topic 260, Earnings per Share, requires presentation of both basic and diluted earnings per share ("EPS") with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic net earnings per share are computed by dividing net earnings available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net earnings per share is computed by dividing net earnings applicable to common stockholders by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. Diluted earnings per share reflects the potential dilution that could occur if securities were exercised or converted into common stock or other contracts to issue common stock resulting in the issuance of common stock that would then share in the Company's earnings subject to anti-dilution limitations. In a period in which the Company has a net loss, all potentially dilutive securities are excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact. For the three months ended December 31, 2019 and 2018, potentially dilutive common shares consist of common stock issuable upon the conversion of Series A preferred stock (using the if-converted method). The following is a reconciliation of the basic and diluted net loss per share computations for the three months ended December 31, 2019 and 2018: Three Month Ended Three Months Ended Net loss available to common stockholders for basic and diluted net loss per share of common stock $ (45,301 ) $ (119,902 ) Weighted average common stock outstanding - basic 230,485,100 230,485,100 Effect of dilutive securities: Series A preferred stock - - Weighted average common stock outstanding - diluted 230,485,100 230,485,100 Net loss per common share - basic and diluted $ (0.00 ) $ (0.00 ) For the three months ended December 31, 2019 and 2018, a total of 1,250,000 shares of common stock from the assumed redemption of the Series A convertible redeemable preferred stock at the contractual floor of $0.20 per share have been excluded from the computation of diluted weighted average number of shares of common stock outstanding as they would have had an anti-dilutive impact. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements Effective October 1, 2019, the Company adopted ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU No. 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance also specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of financial assets measured on a recurring basis and reported at fair value on the balance sheet | Fair value measurement using Level 1 Level 2 Level 3 Total at Investment - digital currency $ 479 $ - $ - $ 479 Fair value measurement using Level 1 Level 2 Level 3 Total at Investment - digital currency $ 168,943 $ - $ - $ 168,943 |
Schedule of concentration of credit risk | Three Months Ended Three Months Ended FXDD Malta - related party 100 % 100 % The following table summarizes vendor expense concentrations: Three Months Ended Three Months Ended FXDIRECT - related party 100 % 100 % |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Accrued Liabilities, Current [Abstract] | |
Schedule of accrued liabilities | December 31, September 30, Professional fees $ 84,591 $ 73,478 Directors' compensation 100,537 90,537 Interest payable 32,416 31,479 Other 4,100 2,000 Total $ 221,644 $ 197,494 |
Share Capital (Tables)
Share Capital (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Schedule of Common stock and Series A preferred stock sold for cash | December 31, September 30, Redeemable preferred stock (stated value) $ 250,000 $ 250,000 Less: unamortized debt discount (3,263 ) (3,835 ) Redeemable preferred stock, net $ 246,737 $ 246,165 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Schedule of related party transaction | Three Months Ended Three Months Ended December 31, December 31, Service provided to: FXDD Malta $ 4,800,000 $ 4,800,000 $ 4,800,000 $ 4,800,000 Three Months Ended Three Months Ended December 31, December 31, Service received from: FXDIRECT $ 4,725,000 $ 4,725,000 $ 4,725,000 $ 4,725,000 |
Schedule of due from affiliates | December 31, September 30, NUKK Capital (*) $ 143,776 $ 3,880 (*) An entity controlled by Emil Assentato, the Company's chief executive officer, chief financial officer and chairman. |
Schedule of due to affiliates | December 31, September 30, Forexware LLC $ 570,271 $ 570,271 FXDIRECT 130,323 67,056 CMH 42,000 42,000 FXDD Malta 321,784 320,129 FXDD Trading (*) 471 43,185 FXMarkets (*) - 346 Total $ 1,064,849 $ 1,042,987 (*) FXDD Trading and FXMarkets are both controlled by Emil Assentato, the Company's chief executive officer, chief financial officer and chairman. |
The Company History and Natur_2
The Company History and Nature of the Business (Details) - USD ($) | May 24, 2016 | Oct. 29, 2019 | Oct. 17, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 |
The Company History and Nature of the Business (Textual) | ||||||
Net loss | $ 45,301 | |||||
Working capital deficit | 1,092,209 | |||||
Cash used in operating activities | 13,909 | $ (37,791) | ||||
Accumulated deficit | $ (1,503,052) | $ (1,457,751) | ||||
Global Services Agreement [Member] | FXDIRECT [Member] | ||||||
The Company History and Nature of the Business (Textual) | ||||||
Termination of agreement, in days | 90 days | |||||
Related party transaction expense | $ 1,575,000 | |||||
Global Services Agreement Amendment [Member] | FXDD Malta [Member] | ||||||
The Company History and Nature of the Business (Textual) | ||||||
Generated revenue per month | $ 1,600,000 | |||||
Percentage of shares owned | 79.00% | |||||
Debt amount description | The minimum amount payable by FXDD Malta to Nukkleus Limited for services was reduced from $2,000,000 per month to $1,600,000 per month. | |||||
Common Stock [Member] | ||||||
The Company History and Nature of the Business (Textual) | ||||||
Issuance of shares | 11,000,000 | |||||
Outstanding shares of common stock | 11,000,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2019 | Sep. 30, 2019 |
Investment - digital currency | $ 479 | $ 168,943 |
Fair Value Measurements Recurring [Member] | ||
Investment - digital currency | 168,943 | |
Fair Value Inputs Level 1 [Member] | Fair Value Measurements Recurring [Member] | ||
Investment - digital currency | 479 | 168,943 |
Fair Value Inputs Level 2 [Member] | Fair Value Measurements Recurring [Member] | ||
Investment - digital currency | ||
Fair Value Inputs Level 3 [Member] | Fair Value Measurements Recurring [Member] | ||
Investment - digital currency |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Customer revenue concentrations [Member] | FXDD Malta Related Party [Member] | ||
Customer revenue concentrations | 100.00% | 100.00% |
Vendor Expense Concentrations [Member] | FXDIRECT Related Party [Member] | ||
Customer revenue concentrations | 100.00% | 100.00% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - USD ($) | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Net loss available to common stockholders for basic and diluted net loss per share of common stock | $ (45,301) | $ (119,902) |
Weighted average common stock outstanding - basic | 230,485,100 | 230,485,100 |
Effect of dilutive securities: | ||
Series A preferred stock | ||
Weighted average common stock outstanding - diluted | 230,485,100 | 230,485,100 |
Net loss per common share - basic and diluted | $ 0 | $ 0 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 | |
Summary of Significant Accounting Policies (Textual) | |||
Investment - digital currency | $ 479 | $ 168,943 | |
(Gain) loss on digital currency | 17,888 | $ (37,403) | |
Fair value of digital currency | 168,943 | ||
Digital currency cost | $ 137,223 | ||
Unrealized gain on digital currency | $ 17,888 | ||
Series A Convertible Redeemable Preferred Stock [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Preferred stock conversion rate | $ 0.20 | $ 0.20 | |
Number of shares antidilutive excluded from computation (in shares) | 1,250,000 | 1,250,000 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) | Dec. 31, 2019 | Sep. 30, 2019 |
Accrued Liabilities, Current [Abstract] | ||
Professional fees | $ 84,591 | $ 73,478 |
Directors' compensation | 100,537 | 90,537 |
Interest payable | 32,416 | 31,479 |
Other | 4,100 | 2,000 |
Total | $ 221,644 | $ 197,494 |
Share Capital (Details)
Share Capital (Details) - USD ($) | Dec. 31, 2019 | Sep. 30, 2019 |
Equity [Abstract] | ||
Redeemable preferred stock (stated value) | $ 250,000 | $ 250,000 |
Less: unamortized debt discount | (3,263) | (3,835) |
Redeemable preferred stock, net | $ 246,737 | $ 246,165 |
Share Capital (Details Textual)
Share Capital (Details Textual) - USD ($) | Jun. 07, 2016 | Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 |
Share capital (Textual) | ||||
Common stock authorized | 900,000,000 | 900,000,000 | ||
Preferred stock authorized | 14,800,000 | 14,800,000 | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | ||
Common stock, par value | $ 0.0001 | 0.0001 | ||
Amortization of debt discount | $ 572 | $ 572 | ||
Interest expense on preferred stock | $ 938 | 938 | ||
Preferred stock, stated value | $ 10 | $ 10 | ||
proceeds received was allocated to the common stock | 1,000,000 | |||
Board of Directors [Member] | ||||
Share capital (Textual) | ||||
Preferred stock authorized | 15,000,000 | |||
Currency Mountain Holdings Bermuda [Member] | ||||
Share capital (Textual) | ||||
Number of shares issued | 15,450,000 | |||
Series A Preferred Stock [Member] | ||||
Share capital (Textual) | ||||
Dividend payment terms | Payable semi-annually on June 30 and December 31 | |||
Description of preferred stock redemption | The preferred stock must be redeemed at the stated value plus any unpaid dividends in 5 years. | |||
Preferred stock conversion rate | $ 0.20 | |||
Dividend percentage | 1.50% | |||
Preferred stock discount | $ 45,793 | |||
Dividend on redeemable preferred stock | $ 938 | $ 938 | ||
Series A Preferred Stock [Member] | Currency Mountain Holdings Bermuda [Member] | ||||
Share capital (Textual) | ||||
Number of shares issued | 100,000 | |||
Proceed from share isssued | $ 1,000,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 | ||
Related party accounts receivable: | ||||
Total related party receivable: | $ 143,776 | $ 3,880 | ||
Total related party accounts payable: | 1,064,849 | 1,042,987 | ||
Related party service revenue: | ||||
Total related-party services revenue | 4,800,000 | $ 4,800,000 | ||
Related party service costs: | ||||
Total related-party service costs: | 4,725,000 | 4,725,000 | ||
FXDD Malta [Member] | ||||
Related party accounts receivable: | ||||
Total related party accounts payable: | 321,784 | 320,129 | ||
Related party service revenue: | ||||
Total related-party services revenue | 4,800,000 | 4,800,000 | ||
FXDIRECT [Member] | ||||
Related party accounts receivable: | ||||
Total related party accounts payable: | 130,323 | 67,056 | ||
Related party service costs: | ||||
Total related-party service costs: | 4,725,000 | $ 4,725,000 | ||
NUKK Capital [Member] | ||||
Related party accounts receivable: | ||||
Total related party receivable: | 143,776 | 3,880 | ||
Forexware LLC [Member] | ||||
Related party accounts receivable: | ||||
Total related party accounts payable: | 570,271 | 570,271 | ||
CMH [Member] | ||||
Related party accounts receivable: | ||||
Total related party accounts payable: | 42,000 | 42,000 | ||
FXDD Trading [Member] | ||||
Related party accounts receivable: | ||||
Total related party accounts payable: | [1] | 471 | 43,185 | |
FXMarkets [Member] | ||||
Related party accounts receivable: | ||||
Total related party accounts payable: | [1] | $ 346 | ||
[1] | FXDD Trading and FXMarkets are both controlled by Emil Assentato, the Company's chief executive officer, chief financial officer and chairman. |
Related Party Transactions (D_2
Related Party Transactions (Details Textual) - USD ($) | 3 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 | |
Related Party Transactions (Textual) | |||
Consulting fee | $ 0 | $ 15,000 | |
Accrued liabilities - related party | $ 10,000 | ||
Minimum monthly amount payable | 1,064,849 | 1,042,987 | |
Mr. Craig Marshak [Member] | |||
Related Party Transactions (Textual) | |||
Accrued liabilities - related party | 0 | 10,000 | |
FXDD Malta [Member] | |||
Related Party Transactions (Textual) | |||
Minimum monthly amount payable | 321,784 | $ 320,129 | |
GSA [Member] | FXDD Malta [Member] | |||
Related Party Transactions (Textual) | |||
Minimum monthly amount received | 1,600,000 | ||
GSA [Member] | FXDIRECT [Member] | |||
Related Party Transactions (Textual) | |||
Minimum monthly amount payable | $ 1,575,000 |