Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Dec. 31, 2020 | Feb. 12, 2021 | |
Document Information Line Items | ||
Entity Registrant Name | Nukkleus Inc. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --09-30 | |
Entity Common Stock, Shares Outstanding | 230,485,100 | |
Amendment Flag | false | |
Entity Central Index Key | 0001592782 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Dec. 31, 2020 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity File Number | 000-55922 | |
Entity Incorporation, State or Country Code | DE | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 |
CURRENT ASSETS: | ||
Cash | $ 90,342 | $ 82,849 |
Due from affiliates | 3,417,873 | 3,709,772 |
Prepaid expense and other current assets | 4,873 | 7,010 |
TOTAL CURRENT ASSETS | 3,513,088 | 3,799,631 |
TOTAL ASSETS | 3,513,088 | 3,799,631 |
CURRENT LIABILITIES: | ||
Due to affiliates | 4,461,247 | 4,732,977 |
Accrued liabilities | 250,616 | 212,406 |
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 $973 and $1,545, respectively) at December 31, 2020 and September 30, 2020, respectively | 249,027 | 248,455 |
TOTAL CURRENT LIABILITIES | 4,960,890 | 5,193,838 |
TOTAL LIABILITIES | 4,960,890 | 5,193,838 |
CONTINGENCY - (Note 8) | ||
STOCKHOLDERS’ DEFICIT: | ||
Preferred stock ($0.0001 par value; 14,800,000 shares authorized; 0 share issued and outstanding at December 31, 2020 and September 30, 2020) | ||
Common stock ($0.0001 par value; 900,000,000 shares authorized; 230,485,100 shares issued and outstanding at December 31, 2020 and September 30, 2020) | 23,049 | 23,049 |
Additional paid-in capital | 141,057 | 141,057 |
Accumulated deficit | (1,611,908) | (1,558,313) |
TOTAL STOCKHOLDERS’ DEFICIT | (1,447,802) | (1,394,207) |
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ 3,513,088 | $ 3,799,631 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 |
Statement of Financial Position [Abstract] | ||
Series A redeemable preferred stock, stated value (in Dollars per share) | $ 10 | $ 10 |
Series A redeemable preferred stock, authorized | 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 (in Dollars) | $ 250,000 | $ 250,000 |
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, 2020 | Dec. 31, 2019 | |
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: | ||
Professional fees | 86,772 | 41,000 |
Other general and administrative | 40,313 | 95,679 |
Total operating expenses | 127,085 | 136,679 |
LOSS FROM OPERATIONS | (52,085) | (61,679) |
OTHER INCOME (EXPENSE): | ||
Interest expense on redeemable preferred stock | (938) | (938) |
Amortization of debt discount | (572) | (572) |
Gain on digital currency | 17,888 | |
Total other (expense) income, net | (1,510) | 16,378 |
LOSS BEFORE INCOME TAXES | (53,595) | (45,301) |
INCOME TAXES | ||
NET LOSS | $ (53,595) | $ (45,301) |
NET LOSS PER COMMON SHARE: | ||
Basic and diluted (in Dollars per share) | $ 0 | $ 0 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||
Basic and diluted (in Shares) | 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, 2019 | $ 23,049 | $ 141,057 | $ (1,457,751) | $ (1,293,645) | |
Balance (in Shares) at Sep. 30, 2019 | 230,485,100 | ||||
Net loss for the three months ended | (45,301) | (45,301) | |||
Balance at Dec. 31, 2019 | $ 23,049 | 141,057 | (1,503,052) | (1,338,946) | |
Balance (in Shares) at Dec. 31, 2019 | 230,485,100 | ||||
Balance at Sep. 30, 2020 | $ 23,049 | 141,057 | (1,558,313) | (1,394,207) | |
Balance (in Shares) at Sep. 30, 2020 | 230,485,100 | ||||
Net loss for the three months ended | (53,595) | (53,595) | |||
Balance at Dec. 31, 2020 | $ 23,049 | $ 141,057 | $ (1,611,908) | $ (1,447,802) | |
Balance (in Shares) at Dec. 31, 2020 | 230,485,100 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (53,595) | $ (45,301) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Amortization of debt discount | 572 | 572 |
Gain on digital currency | (17,888) | |
Bad debt expense | 12 | |
Changes in operating assets and liabilities: | ||
Prepaid expense and other current assets | 2,125 | (5,942) |
Due from affiliates | 291,899 | |
Due to affiliates | (271,730) | 68,318 |
Accrued liabilities | 38,210 | 24,150 |
Accrued liabilities - related party | (10,000) | |
Net cash provided by operating activities | 7,493 | 13,909 |
NET INCREASE IN CASH | 7,493 | 13,909 |
Cash - beginning of period | 82,849 | 23,514 |
Cash - end of period | 90,342 | 37,423 |
Cash paid for: | ||
Interest | ||
Income taxes | ||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Investment - digital currency received from affiliates | 17,197 | |
Investment - digital currency transferred to affiliates | $ 203,549 |
The Company History and Nature
The Company History and Nature of the Business | 3 Months Ended |
Dec. 31, 2020 | |
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 Triton Capital Markets Ltd. (“TCM”), formerly known as FXDD Malta Limited (“FXDD Malta”). The FXDD brand (e.g., see FXDD.com) is the brand utilized in the retail forex trading industry by TCM. 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 TCM. TCM is a private limited liability company formed under the laws of Malta. The GSA provides that TCM 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 TCM. In addition, in order to appropriately service TCM, 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 Markets Direct Technology Group Ltd (“MDTG”), formerly known as Nukkleus Exchange Malta Ltd. MDTG was exploring potentially obtaining a license to operate an electronic exchange whereby it would facilitate the buying and selling of various digital assets as well as traditional currency pairs used in FX Trading. During the fourth quarter of fiscal 2020, management made the decision to exit the exchange business and to no longer pursue the regulatory licensing necessary to operate an exchange in Malta. On August 27, 2020, the Company renamed Nukkleus Exchange Malta Ltd. to Markets Direct Technology Group Ltd (“MDTG”). MDTG will manage the technology and IP behind the Markets Direct brand (which is operated by TCM). MDTG will hold all the IP addresses and all the software licenses in its name, and it will hold all the IP rights to the brands like Markets Direct and TCM. MDTG will then lease out the rights to use these names/brands licenses to the appropriate entities. Management estimates that MDTG will become operational during the rest of fiscal 2021. The unaudited condensed consolidated 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, 2020 of $53,595, and had an accumulated deficit and a working capital deficit of $1,611,908 and $1,447,802, respectively, at December 31, 2020. 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 is wholly-owned by an entity that is majority-owned by Mr. Assentato, has committed to inject capital into the Company in order to maintain the ongoing operations of the business. The ramifications of the outbreak of the novel strain of COVID-19, reported to have started in December 2019 and spread globally, are filled with uncertainty and changing quickly. Our operations have continued during the COVID-19 pandemic and we have not had significant disruption. The Company is operating in a rapidly changing environment so the extent to which COVID-19 impacts its business, operations and financial results from this point forward will depend on numerous evolving factors that the Company cannot accurately predict. Those factors include the following: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; and the development of widespread testing or a vaccine. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [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, 2020 filed with the Securities and Exchange Commission on December 28, 2020. The consolidated balance sheet as of September 30, 2020 contained herein has been derived from the audited consolidated financial statements as of September 30, 2020, 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, 2020 | |
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, 2020 and 2019 include valuation of deferred tax assets and the associated valuation allowances. Fair value of financial instruments and fair value measurements The investment in digital currency as of September 30, 2020 is recorded with prepaid expense and other current assets on the condensed consolidated balance sheet. The carrying values of cash, prepaid expense, due from affiliates, due to affiliates, and accrued liabilities in the Company’s condensed consolidated balance sheets approximated their fair values as of December 31, 2020 and September 30, 2020 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, 2020 and September 30, 2020, the Company’s cash balances accounts were not in excess of the federally-insured limits. For all periods presented, the Company earned 100% of its revenue from TCM and incurred 100% of its cost of revenue from FXDIRECT. Both TCM and FXDIRECT are related parties. 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, 2020 and 2019, potentially dilutive common shares consist of common stock issuable upon the conversion of Series A preferred stock (using the if-converted method). For the three months ended December 31, 2020 and 2019, 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. Reclassification Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications have no effect on the previously reported financial position, results of operations and cash flows. Recently issued accounting pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (“Topic 326”). In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes 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 unaudited condensed 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 unaudited condensed consolidated financial condition, results of operations, cash flows or disclosures. |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Dec. 31, 2020 | |
Accrued Liabilities [Abstract] | |
ACCRUED LIABILITIES | NOTE 4 – ACCRUED LIABILITIES At December 31, 2020 and September 30, 2020, accrued liabilities consisted of the following: December 31, September 30, Professional fees $ 70,141 $ 46,640 Directors’ compensation 140,538 130,537 Interest payable 36,166 35,229 Other 3,771 — Total $ 250,616 $ 212,406 |
Share Capital
Share Capital | 3 Months Ended |
Dec. 31, 2020 | |
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 liability. On February 13, 2018, 75,000 of the preferred shares were redeemed and cancelled. 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 (on or before June 7, 2021); 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, 2020 and 2019, 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, 2020 and 2019, dividends on redeemable preferred stock amounted to $938. At December 31, 2020 and September 30, 2020, 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 (973 ) (1,545 ) Redeemable preferred stock, net $ 249,027 $ 248,455 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 6 – RELATED PARTY TRANSACTIONS Services provided by related parties 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 TCM 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, 2020 and 2019, 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 Service provided to: TCM $ 4,800,000 $ 4,800,000 $ 4,800,000 $ 4,800,000 During the three months ended December 31, 2020 and 2019, 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 Service received from: FXDIRECT $ 4,725,000 $ 4,725,000 $ 4,725,000 $ 4,725,000 Due from affiliates At December 31, 2020 and September 30, 2020, due from related parties consisted of the following: December 31, September 30, NUKK Capital (*) $ 144,696 $ 144,696 TCM 3,273,177 3,565,076 Total $ 3,417,873 $ 3,709,772 (*) An entity controlled by Emil Assentato, the Company’s chief executive officer, chief financial officer and chairman. The balances of due from NUKK Capital represent investment in digital currency transferred to NUKK Capital. The balance of due from TCM represent unsettled funds due related to the General Services Agreement and monies that the Company paid on behalf of TCM. Management believes that the related parties’ receivables are fully collectable. Therefore, no allowance for doubtful account is deemed to be required on its due from related parties at December 31, 2020 and September 30, 2020. The Company historically has not experienced uncollectible receivable from the related parties. Due to affiliates At December 31, 2020 and September 30, 2020, due to related parties consisted of the following: December 31, September 30, Forexware LLC (*) $ 579,229 $ 579,229 FXDIRECT 3,839,547 4,111,277 CMH 42,000 42,000 FXDD Trading (*) 471 471 Total $ 4,461,247 $ 4,732,977 (*) Forexware LLC and FXDD Trading 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, and FXDD Trading on behalf of the Company and advances from CMH. The balance due to FXDIRECT may also include unsettled funds due related to the General Service Agreement. The balance due to FXDD Trading also includes 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, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 7 – INCOME TAXES The Company recorded no income tax expense for the three months ended December 31, 2020 and 2019 because the estimated annual effective tax rate was zero. As of December 31, 2020, 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. |
Contingency
Contingency | 3 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCY | NOTE 8 – CONTINGENCY On April 16, 2020, the Company was named as a defendant in the Adversary Proceeding filed in the United States Bankruptcy Court for the District of Massachusetts (Case No. 15-10745-FJB; Adversary Proceeding No. 16-01178) titled In re: BT Prime Ltd (“BT Prime”). The Adversary Proceeding is brought by BT Prime against Boston Technologies Powered by Forexware LLC f/k/a Forexware LLC (“Forexware”), Currency Mountain Holdings LLC, Currency Mountain Holdings Limited f/k/a Forexware Malta Holdings Ltd., FXDirectDealer, LLC, FXDD Malta Ltd., Nukkleus Inc., Nukkleus Bermuda Limited and Currency Mountain Holdings Bermuda, Ltd. In the Amended Complaint, BT Prime is seeking, amongst other relief, a determination that the Company and the other defendants are liable for all of the debts of BT Prime stemming from its bankruptcy proceedings, and is seeking to recover certain amounts transferred to Forexware and FXDD Malta prior to the initiation of the bankruptcy case. In the sole claim asserted against the Company, BT Prime alleges that the Company operated as a single business enterprise with no separate existence outside of its collective business relationship with certain of the other Defendants, is a continuation of the business of Forexware and is a successor-in-interest to Forexware. Based on this theory, BT Prime alleges that the Company should be jointly and severally liable for any liability attributable to Forexware or the other Defendants, should the Court eventually find any such liability. The Company maintains that there is no basis for BT Prime’s claim against it and intends to vigorously defend against the claim. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 9 – SUBSEQUENT EVENTS Management has evaluated subsequent events through the date of the filing. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Dec. 31, 2020 | |
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, 2020 and 2019 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 investment in digital currency as of September 30, 2020 is recorded with prepaid expense and other current assets on the condensed consolidated balance sheet. The carrying values of cash, prepaid expense, due from affiliates, due to affiliates, and accrued liabilities in the Company’s condensed consolidated balance sheets approximated their fair values as of December 31, 2020 and September 30, 2020 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, 2020 and September 30, 2020, the Company’s cash balances accounts were not in excess of the federally-insured limits. For all periods presented, the Company earned 100% of its revenue from TCM and incurred 100% of its cost of revenue from FXDIRECT. Both TCM and FXDIRECT are related parties. |
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, 2020 and 2019, potentially dilutive common shares consist of common stock issuable upon the conversion of Series A preferred stock (using the if-converted method). For the three months ended December 31, 2020 and 2019, 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. |
Reclassification | Reclassification Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications have no effect on the previously reported financial position, results of operations and cash flows. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (“Topic 326”). In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes 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 unaudited condensed 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 unaudited condensed consolidated financial condition, results of operations, cash flows or disclosures. |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities | December 31, September 30, Professional fees $ 70,141 $ 46,640 Directors’ compensation 140,538 130,537 Interest payable 36,166 35,229 Other 3,771 — Total $ 250,616 $ 212,406 |
Share Capital (Tables)
Share Capital (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of series A redeemable preferred stock | December 31, September 30, Redeemable preferred stock (stated value) $ 250,000 $ 250,000 Less: unamortized debt discount (973 ) (1,545 ) Redeemable preferred stock, net $ 249,027 $ 248,455 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Schedule of related party transaction | Three Months Ended Three Months Ended Service provided to: TCM $ 4,800,000 $ 4,800,000 $ 4,800,000 $ 4,800,000 Three Months Ended Three Months Ended 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 (*) $ 144,696 $ 144,696 TCM 3,273,177 3,565,076 Total $ 3,417,873 $ 3,709,772 (*) 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 (*) $ 579,229 $ 579,229 FXDIRECT 3,839,547 4,111,277 CMH 42,000 42,000 FXDD Trading (*) 471 471 Total $ 4,461,247 $ 4,732,977 (*) Forexware LLC and FXDD Trading 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 ($) | 3 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | |
The Company History and Nature of the Business (Details) [Line Items] | |||
Net loss | $ (53,595) | $ (45,301) | |
Accumulated deficit | (1,611,908) | $ (1,558,313) | |
Working capital deficit | 1,447,802 | ||
TCM [Member] | Global Services Agreement Amendment [Member] | |||
The Company History and Nature of the Business (Details) [Line Items] | |||
Generated revenue per month | $ 1,600,000 | ||
Percentage of shares owned | 79.00% | ||
Related party transaction expense | $ 1,575,000 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Details) - $ / shares | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Redeemable Convertible Preferred Stock [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Number of shares antidilutive excluded from computation | 1,250,000 | |
Preferred stock conversion rate | $ 0.20 | |
Redeemable Preferred Stock [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Number of shares antidilutive excluded from computation | 1,250,000 | |
TCM [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Equity Method Investment, Ownership Percentage | 100.00% | |
FXDIRECT [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Equity Method Investment, Ownership Percentage | 100.00% |
Accrued Liabilities (Details) -
Accrued Liabilities (Details) - Schedule of accrued liabilities - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 |
Schedule of accrued liabilities [Abstract] | ||
Professional fees | $ 70,141 | $ 46,640 |
Directors’ compensation | 140,538 | 130,537 |
Interest payable | 36,166 | 35,229 |
Other | 3,771 | |
Total | $ 250,616 | $ 212,406 |
Share Capital (Details)
Share Capital (Details) - USD ($) | Feb. 13, 2018 | Jun. 07, 2016 | Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2020 |
Share Capital (Details) [Line Items] | |||||
Preferred stock authorized (in Shares) | 14,800,000 | 14,800,000 | |||
Preferred shares redeemed and cancelled (in Shares) | 75,000 | ||||
Series A redeemable preferred stock, stated value (in Dollars per share) | $ 10 | $ 10 | |||
Amortization of debt discount | $ 572 | $ 572 | |||
CMH [Member] | |||||
Share Capital (Details) [Line Items] | |||||
Number of shares issued (in Shares) | 15,450,000 | ||||
Board of Directors [Member] | |||||
Share Capital (Details) [Line Items] | |||||
Preferred stock authorized (in Shares) | 15,000,000 | ||||
Series A Preferred Stock [Member] | |||||
Share Capital (Details) [Line Items] | |||||
Proceed from share issued | $ 1,000,000 | ||||
Dividend percentage | 1.50% | ||||
Description of preferred stock redemption | The preferred stock must be redeemed at the stated value plus any unpaid dividends in 5 years (on or before June 7, 2021) | ||||
Preferred stock discount | $ 45,793 | ||||
Fixed redemption term | 5 years | ||||
Preferred stock conversion rate (in Dollars per share) | $ 0.20 | ||||
Dividend on redeemable preferred stock | $ 938 | $ 938 | |||
Series A Preferred Stock [Member] | CMH [Member] | |||||
Share Capital (Details) [Line Items] | |||||
Number of shares issued (in Shares) | 100,000 | ||||
Proceed from share issued | $ 1,000,000 |
Share Capital (Details) - Sched
Share Capital (Details) - Schedule of series A redeemable preferred stock - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 |
Schedule of series A redeemable preferred stock [Abstract] | ||
Redeemable preferred stock (stated value) | $ 250,000 | $ 250,000 |
Less: unamortized debt discount | (973) | (1,545) |
Redeemable preferred stock, net | $ 249,027 | $ 248,455 |
Related Party Transactions (Det
Related Party Transactions (Details) - GSA [Member] | Dec. 31, 2020USD ($) |
TCM [Member] | |
Related Party Transactions (Details) [Line Items] | |
Minimum monthly amount received | $ 1,600,000 |
FXDirectDealer [Member] | |
Related Party Transactions (Details) [Line Items] | |
Minimum monthly amount payable | $ 1,575,000 |
Related Party Transactions (D_2
Related Party Transactions (Details) - Schedule of related party transaction - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Service provided to: | ||
Service provided to related parties | $ 4,800,000 | $ 4,800,000 |
Service received from: | ||
Service received from related parties | 4,725,000 | 4,725,000 |
TCM [Member] | ||
Service provided to: | ||
Service provided to related parties | 4,800,000 | 4,800,000 |
FXDIRECT [Member] | ||
Service received from: | ||
Service received from related parties | $ 4,725,000 | $ 4,725,000 |
Related Party Transactions (D_3
Related Party Transactions (Details) - Schedule of due from affiliates - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 | |
Related Party Transactions (Details) - Schedule of due from affiliates [Line Items] | |||
Due from related parties | $ 3,417,873 | $ 3,709,772 | |
NUKK Capital [Member] | |||
Related Party Transactions (Details) - Schedule of due from affiliates [Line Items] | |||
Due from related parties | [1] | 144,696 | 144,696 |
TCM [Member] | |||
Related Party Transactions (Details) - Schedule of due from affiliates [Line Items] | |||
Due from related parties | $ 3,273,177 | $ 3,565,076 | |
[1] | An entity controlled by Emil Assentato, the Company’s chief executive officer, chief financial officer and chairman. |
Related Party Transactions (D_4
Related Party Transactions (Details) - Schedule of due to affiliates - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 | |
Related Party Transactions (Details) - Schedule of due to affiliates [Line Items] | |||
Due to related parties | $ 4,461,247 | $ 4,732,977 | |
Forexware LLC [Member] | |||
Related Party Transactions (Details) - Schedule of due to affiliates [Line Items] | |||
Due to related parties | [1] | 579,229 | 579,229 |
FXDIRECT [Member] | |||
Related Party Transactions (Details) - Schedule of due to affiliates [Line Items] | |||
Due to related parties | 3,839,547 | 4,111,277 | |
CMH [Member] | |||
Related Party Transactions (Details) - Schedule of due to affiliates [Line Items] | |||
Due to related parties | 42,000 | 42,000 | |
FXDD Trading [Member] | |||
Related Party Transactions (Details) - Schedule of due to affiliates [Line Items] | |||
Due to related parties | [1] | $ 471 | $ 471 |
[1] | Forexware LLC and FXDD Trading are both controlled by Emil Assentato, the Company’s chief executive officer, chief financial officer and chairman. |