Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Sep. 10, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Blockchain Solutions, Inc. | |
Entity Central Index Key | 0001610462 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 333-197749 | |
Is Entity's Reporting Status Current? | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 1,200,043 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2018 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 16,582 | $ 13,582 |
Prepaid assets and other | 1,077 | 718 |
Total current assets | 17,659 | 14,300 |
Land and property, furniture and fixtures and equipment, net of accumulated depreciation of $3,525 (2018) and $3,504 (2017) | 180,213 | 180,234 |
Total assets | 197,872 | 194,534 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 636,681 | 516,997 |
Accounts payable and accrued expenses, stockholders | 16,350 | 16,351 |
Note payable | 170,000 | 170,000 |
Convertible notes payable, related party | 1,425,139 | 1,379,245 |
Derivative liability | 2,428,064 | 2,538,644 |
Liabilities of discontinued operations | 123,194 | 122,947 |
Total current liabilities | 4,799,427 | 4,744,184 |
Total liabilities | 4,799,427 | 4,744,184 |
Stockholders' Deficit: | ||
Common stock, $0.001 par value; 300,000,000 shares authorized; 1,200,043 shares issued and outstanding | 1,200 | 1,200 |
Preferred stock, $0.001 par value; 10,000,000 shares authorized; Series A preferred stock, $0.001 par value; 100 shares issued and outstanding | ||
Additional paid-in capital | 5,141,459 | 5,141,459 |
Accumulated deficit | (9,744,214) | (9,692,309) |
Total stockholders' deficit | (4,601,555) | (4,549,650) |
Total liabilities and stockholders' deficit | $ 197,872 | $ 194,534 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Accumulated depreciation of property, furniture and fixtures and equipment | $ (3,525) | $ (3,504) |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 300,000,000 | 300,000,000 |
Common Stock, shares issued | 1,200,043 | 1,200,043 |
Common Stock, shares outstanding | 1,200,043 | 1,200,043 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 100 | 100 |
Preferred stock, shares outstanding | 100 | 100 |
Series A Preferred Stock | ||
Preferred stock, par value | $ 0.001 | |
Preferred stock, shares issued | 100 | |
Preferred stock, shares outstanding | 100 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating Expenses: | ||
Professional fees | $ 16,938 | $ 24,194 |
General and administrative | 37,554 | 8,762 |
Depreciation and amortization | 21 | 111 |
Loss on fixed asset disposal | 1,242 | |
Loss from operations | (54,513) | (34,309) |
Other income (expenses): | ||
Rental income - related party | 3,000 | 3,000 |
Gain (loss) on changes in fair value of derivative liability | 169,832 | (7,093,755) |
Interest expense | (170,224) | (107,654) |
Total other expense, net | 2,608 | (7,198,409) |
Net loss from continuing operations | (51,905) | (7,232,718) |
Discontinued operations: | ||
Loss from discontinued operations, net of income taxes | ||
Net loss | $ (51,905) | $ (7,232,718) |
Basic and diluted loss per share Continuing operations | $ (0.04) | $ (6.03) |
Basic and diluted loss per share Discontinued operations | ||
Basic and diluted loss per share | $ (0.04) | $ (6.03) |
Weighted average number of common shares outstanding Basic and diluted | 1,200,043 | 1,200,043 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (51,905) | $ (7,232,718) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Loss on disposal of fixed assets | 1,242 | |
Depreciation | 21 | 111 |
Amortization of discounts on convertible notes | 41,722 | 25,132 |
Change in fair value of derivative liabilities | (169,832) | 7,093,755 |
Other non cash interest expense | 21,702 | 2,896 |
Expenses paid by related party | 31,314 | |
Change in operating assets and liabilities: | ||
Decrease (increase) in rent receivable, related party | (2,000) | |
Decrease (increase) in prepaid assets and other | (359) | 4,000 |
Increase in accounts payable and accrued expenses | 130,092 | 107,238 |
Increase in accounts payable and accrued expenses, stockholder | 9,813 | |
Net cash provided by operating activities - continuing operations | 2,755 | 9,467 |
Net cash provided by (used in) operating activities - discontinued operations | 245 | (8,467) |
Net cash provided by operating activities | 3,000 | 1,000 |
Cash flows from investing activities: | ||
Net cash used in investing activities - discontinued operations | ||
Net cash used in investing activities | ||
Cash flows from financing activities: | ||
Net cash used in financing activities - continuing operations | ||
Net cash used in financing activities - discontinued operations | ||
Net cash used in financing activities | ||
Net increase in cash | 3,000 | 1,000 |
Cash, beginning | 13,582 | |
Cash, ending | 16,582 | 2,582 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | ||
Cash paid for income taxes | ||
Schedule of non-cash financing activities | ||
Original issue discount on convertible promissory notes | 21,702 | 2,896 |
Accounts payable paid directly by a related party lender | 10,408 | 28,956 |
Debt discount for derivatives | $ 41,722 | $ 25,132 |
ORGANIZATION
ORGANIZATION | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | NOTE 1 - ORGANIZATION BUSINESS Blockchain Solutions, Inc. (the “Company” or “Blockchain”), was originally formed as Cabinet Grow, Inc. (“CGNV”) and began operations in California in 2008, doing business as Universal Hydro (“Hydro”). Prior to April 2014, CGNV was a sole proprietorship owned by its’ former chief operating officer and stockholder. On April 28, 2014, the Company registered with the Secretary of State of California as Cabinet Grow, Inc. (CGCA), and all of the business, assets and liabilities of Hydro were assigned to CGCA. On May 14, 2014, the Company filed Articles of Incorporation with the Nevada Secretary of State. On May 15, 2014, CGCA merged with CGNV, with CGNV being the surviving entity. On June 13, 2017, the Company formed a wholly owned subsidiary, Data420 and filed Articles of Incorporation with the Nevada Secretary of State. Also, on June 13, 2017, the Company formed a wholly owned subsidiary, 420 Data Sciences L.L.C. (“420 Data”) and filed Articles of Organization Limited-Liability Company, with the Nevada Secretary of State. On June 16, 2017, 420 Data filed an Amendment to the Articles of Organization changing the name of 420 Data to Data420 Sciences, LLC (“Data420 Sciences”). On November 8, 2017, the Company filed Articles of Merger (the “Merger”) by and between the Company and its wholly owned subsidiary, Data420, with the Nevada Secretary of State. Pursuant to the Merger, Cabinet Grow, Inc. was the surviving entity and effectuated a name change in the State of Nevada to Data420. On February 2, 2018, the Company formed and filed Blockchain with the Nevada Secretary of State, as a wholly owned subsidiary of the Co mpany. On February 5, 2018, the Company filed Articles of Merger (the “Merger”) by and between the Company and Blockchain, with the Nevada Secretary of State, and Amended and Restated Articles of Incorporation were filed pursuant to the Merger to reflect the Company was the surviving entity and as part of the Merger, the Company effectuated a name change to Blockchain Solutions, Inc. The name change was effective March 6, 2018. Blockchain is a company focused on developing blockchain technologies to deliver advanced solutions to industry-specific problems. The company has identified opportunities in markets including cannabis, insurance, and healthcare. In the cannabis industry, the Company is developing a blockchain solution to help government entities collect taxes through smart contracts. Across all market opportunities, the Company seeks to deliver security, efficiency, and integration through blockchain technology. On March 18, 2016, the Board of Directors (the “Board”) of the Company, acting pursuant to a Majority Consent of Stockholders, approved an amendment to the Articles of Incorporation (the “Amended and Restated Articles”) to among other matters, clarify that of the 310,000,000 shares of authorized capital stock of the Company, 300,000,000 shares are designated as common stock and 10,000,000 shares are designated as preferred stock, and to clarify that of the 10,000,000 shares of preferred stock, 100 have been designated as Class mber 30, 2016, the Board authorized a consolidation, whereby every 250 shares of the Company’s common stock would be consolidated into 1 share. The consolidation became effective on March 9, 2017. All share amounts for all periods presented have been retroactively adjusted to reflect the Reverse Split. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2018, and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2018, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Current Report on Form 10-K filed on August 13, 2019. EMERGING GROWTH COMPANY We qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates. DISCONTINUED OPERATIONS On December 31, 2015, the Company’s Board of Directors approved the purchase of certain real property as described in Note 1. As a result of the purchase, the Company’s prior business operations have been (re)classified as discontinued operations on a retrospective basis for all periods presented herein. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. LAND, PROPERTY AND EQUIPMENT Property and equipment are stated at cost, and depreciation is provided by use of straight-line methods over the estimated useful lives of the assets. The estimated useful lives of property and equipment are as follows: Manufacturing equipment 10 years Office equipment and furniture 7 years Computer hardware and software 3 years The Company's property and equipment consisted of the following at March 31, 2018 and December 31, 2017: March 31, 2018 December 31, 2017 Manufacturing equipment $ 826 $ 826 Software 2,912 2,912 Land 180,000 180,000 Accumulated depreciation (3,525 ) (3,504 ) Balance $ 180,213 $ 180,234 Depreciation expense for the three months ended March 31, 2018 and 2017, was $21 and $111, respectively. REVENUE RECOGNITION The Company recognizes revenue in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, “Revenue Recognition.” ASC 605 requires that the following four basic criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably assured. The Company recognizes revenue from leased property during the month the tenant is responsible for payment. Revenues from the sale of cabinets are included in net loss from discontinued operations for all periods presented herein. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value measurements are determined under a three-level hierarchy for fair value measurements that prioritizes the inputs to valuation techniques used to measure fair value, distinguishing between market participant assumptions developed based on market data obtained from sources independent of the reporting entity (“observable inputs”) and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (“unobservable inputs”). Fair value is the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company primarily uses prices and other relevant information generated by market transactions involving identical or comparable assets (“market approach”). The Company also considers the impact of a significant decrease in volume and level of activity for an asset or liability when compared with normal activity to identify transactions that are not orderly. The highest priority is given to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Financial instruments are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The three hierarchy levels are defined as follows: Level 1 – Quoted prices in active markets that is unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Credit risk adjustments are applied to reflect the Company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the Company’s own credit risk as observed in the credit default swap market. The Company's financial instruments consist primarily of cash, accounts receivable, accounts payable and accrued expenses, note payable and convertible debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The Company’s derivative liability (conversion option and warrant derivative) is valued using the level 3 inputs. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market exchange or from future earnings or cash flows. The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of March 31, 2018, and December 31, 2017, for each fair value hierarchy level: March 31, 2018 Derivative Total Level I $ — $ — Level II $ — $ — Level III $ 2,428,064 $ 2,428,064 December 31, 2017 Level I $ — $ — Level II $ — $ — Level III $ 2,538,644 $ 2,538,644 INCOME TAXES Prior to May 2014, the Company was organized as a sole proprietorship and was not subject to income taxes. Rather, the Company’s sole stockholder was subject to income taxes on the Company’s taxable activity. In May 2014, the Company became subject to income taxes and will be subject to Federal and State income taxes as a corporation. The Company accounts for income taxes in accordance with ASC 740-10, “Income Taxes.” Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed, nor paid, any interest or penalties. Uncertain tax positions are measured and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. EARNINGS (LOSS) PER SHARE The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. For the periods ending ended March 31, 2018, and 2017, 1,909,554 and 1,808,278 shares of common stock, respectively, underlying convertible debt and warrants have been excluded from the computation diluted earnings per share because they are antidilutive. RECENT ACCOUNTING PRONOUNCEMENTS In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842).” Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard will have on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, “ Business Combinations (Topic 805) Clarifying the Definition of a Business With the exception of the new standard discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2018, that are of significance or potential significance to the Company. |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE | NOTE 3 – CONVERTIBLE NOTES PAYABLE THE DOVE FOUNDATION, RELATED PARTY On June 3, 2014, the Board authorized the Company to enter into a Securities Purchase Agreement (“SPA”) with Chicago Venture Partners, L.P. (“CVP”). Pursuant to the SPA, the Company agreed to issue to CVP a Secured Convertible Promissory Note in the principal amount of $1,657,500 (the “Note”). On April 29, 2016, CVP and Tonaquint sold and transferred all of their ownership and rights under the CVP SPA and Note and the Tonaquint SPA and related Purchase documents to The Dove Foundation (“Dove”). On June 6, 2014, the Company executed the SPA with CVP, for the sale of the Company Note in the principal amount of up to $1,657,500 (which included CVP’s legal expenses in the amount of $7,500 and a $150,000 OID) for $1,500,000, consisting of $500,000 paid in cash on June 11, 2014 (the “Closing Date”), two $250,000 secured promissory notes and two $250,000 promissory notes (the “Investor Notes”), aggregating $1,000,000, bearing interest at the rate of 10% per annum. The Investor Notes were due 30 months from the Closing Date. A summary of the convertible note payable balance as of March 31, 2018, and December 31, 2017 is as follows: March 31, 2018 December 31, 2017 Beginning balance $ 1,379,245 $ 1,229,360 Additional fundings 45,894 149,885 Total $ 1,425,139 $ 1,379,245 The newly issued funded amounts for the three months ended March 31, 2018, were made directly to various vendors from Dove and includes $4,172 of OID. The Company has also not recorded the remaining balance of the Investor Notes issued by Dove to the Company. The OID is amortized immediately to interest expense, due to the Note being in default. The embedded conversion feature was bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of the derivative instruments for the fundings of the Note that occurred during the three months ended March 31, 2018, were recorded as a liability on the consolidated balance sheet with the corresponding amount recorded as a discount to the Note. The discount was amortized immediately to interest expense, due to the Note being in default. The change in the fair value of the liability for derivative contracts are recorded in other income or expenses in the consolidated statements of operations at the end of each quarter, with the offset to the derivative liability on the balance sheet. As security for the Note, the Company’s former CEO and former COO each pledged to CVP their 50 shares of Class A Preferred Stock (see Note 8). On August 5, 2016, Dove acquired all of the Class A Preferred Stock. Pursuant to the terms of the Note, the Company was required to deliver the Installment Amount (as defined in the Note) on or before each Installment Date (as defined in the Note) until the Note was repaid. The Company failed to deliver the Installment Amount in June 2015, July 2015 and August 2015 (each, a “Breach” and collectively, the “Breaches”). Each such Breach would constitute a separate event of default pursuant to the terms of the Note if so declared by the Lender. The Company began trading as a public Company on July 13, 2015, and on that date the Company determined that the conversion feature of the Note represented an embedded derivative since the Note contains provisions that automatically reduce the conversion price. Accordingly, on July 13, 2015, the Note was not considered to be conventional debt under ASC 815 and the embedded conversion feature was bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of the derivative instruments for the fundings of the Note that occurred prior to July 13, 2015, were recorded as a liability on July 13, 2015, on the consolidated balance sheet with the corresponding amount recorded as a discount to the Note. The discount was amortized from the date of issuance to the maturity date of the Note. The change in the fair value of the liability for derivative contracts are recorded in other income or expenses in the consolidated statements of operations at the end of each quarter, with the offset to the derivative liability on the balance sheet. On September 10, 2015, the Company entered into a forbearance and standstill agreement (the “Forbearance and Standstill Agreement”) with CVP and Matt Lee and Sam May, pursuant to which CVP agreed to refrain and forbear temporarily from exercising and enforcing remedies under the Note. On April 29, 2016, CVP and Tonaquint sold and transferred all of their ownership and rights under the CVP SPA and Note and the Tonaquint SPA and related Purchase documents to The Dove Foundation (“Dove”). On May 17, 2016, the Company received notification that Dove waived the 9.99% ownership limitation contained in the CVP Note. On July 27, 2016, the Company received a Notice of Breach of Secured Convertible Promissory Note from Dove regarding the December 2015 and January 2016 installment payments. Pursuant to the terms and conditions of the default, the lender elected to multiply the outstanding balance by 125%, or $270,056 for the December 2015 default and $344,654 for the January 2016 default. The Lender also increased the interest rate to 22% per annum pursuant to the default. Also, on July 27, 2016, Dove sent the Company a conversion notice to issue 1,051,779 shares of common stock in exchange for the cancellation of $920,306 of interest and principal due. Immediately after the conversion Dove owned approximately 87.6% of the common stock of the Company. The Note may be converted at the option of the holder, on the date that is six months from the Trading Date (defined in the Purchase Agreement as the date on which the Common Stock is first trading on an Eligible Market, but in any event the Company shall cause its Common Stock to be trading on an Eligible Market within nine months of the Closing Date of June 11, 2014) or at any time thereafter at a conversion price of $0.1976. The conversion price is equal to $6,500,000 divided by 33,000,000 (the amount of fully diluted shares of Common Stock of the Company on the date the Company filed its’ Registration Statement). In the event the Company elects to prepay all or any portion of the Company Note, the Company is required to pay to CVP an amount in cash equal to 125% multiplied by the sum of all principal, interest and any other amounts owing. WARRANT The Company also issued a five- year warrant to CVP (the “CVP Warrant”) to purchase the number of shares equal to $420,000 divided by 70% of the average of the three lowest closing bid prices in the 20 trading days immediately after becoming public (the “Market Price”). Since the Company was not public and could not determine the Market Price, based on the current discounted cash flow valuation, the Company initially estimated that CVP can purchase 24,000 shares of common stock, with an exercise price of $50 per share. As of March 31, 2018, and December 31, 2017, based on the Market Price, the Company estimated the number of shares that CVP can purchase to be 6,545. Accounting Standard Codification “ASC” 815 – Derivatives and Hedging On March 31, 2018, and December 31, 2017, the Company revalued the warrant at $38,884 and $9,745, respectively, using the Black- Scholes option pricing model and recorded a derivative liability expense for the three months ended March 31, 2018, and increased the derivative liability by $29,139 on the balance sheet as of March 31, 2018. |
DERIVATIVE LIABLITIES
DERIVATIVE LIABLITIES | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
DERIVATIVE LIABLITIES | NOTE 4 –DERIVATIVE LIABILITIES The change in the fair value of the liability for derivative contracts are recorded in other income or expenses in the consolidated statements of operations at the end of each quarter, with the offset to the derivative liability on the balance sheet. A summary of the derivative liability balance as of March 31, 2018, and December 31, 2017, is as follows: March 31, 2018 December 31, 2017 Beginning balance $ 2,538,644 $ 954,884 Newly issued initial derivative liability 59,252 183,921 Fair value change (169,832 ) 1,399,839 Total $ 2,428,064 $ 2,538,644 The fair value on the commitment dates for the Note fundings from January 1, 2018 through March 31, 2018, and the re-measurement date for the Company’s derivative liabilities were based upon the following management assumptions: Commitment Date Re-Measurement Date Expected dividends -0- -0- Expected volatility 314%-371% 314% Expected term .5 years .5 years Risk free interest 1.64%-1.93% 1.93% |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 5 – RELATED PARTY TRANSACTIONS As of March 31, 2018, and December 31, 2017, the Company owed $37,190 to former officers of the Company (included in liabilities of discontinued operations) and $16,350 to the current CEO (included in accounts payable and accrued expenses, stockholders). NOTE PAYABLE, STOCKHOLDER The Company’s former COO loaned the Company various amounts for Company expenses. The Company recorded interest expense of $247 for the three months ended March 31, 2018 and 2017. As of March 31, 2018, and December 31, 2017, the former COO was owed accrued interest of $5,841 and $5,595, respectively, which is included liabilities of discontinued operations on the balance sheets presented herein. As of March 31, 2018, and December 31, 2017, the loan balance was $12,482, which is included in liabilities of discontinued operations. NOTE PAYABLE, RELATED PARTY On December 31, 2015, the Company agreed to purchase a 100% membership interest (the “ Membership Interest Quasar Seller Purchase Purchase Agreement The Company paid for the Purchase by delivering to Seller at the closing a Secured Promissory Note (the “ Note Pledge Agreement Trust Deed Purchase Documents Also, on December 31, 2015, Quasar entered into a one- year lease, with automatic month to month renewals, thereafter, of the property to Miller Fabrication, LLC (“Miller”). Miller is controlled by the same individual as Tonaquint and CVP, and therefore is a related party to the Company. The lease can be terminated by either party by giving the other party, not less than thirty (30) days of its’ intention to terminate the lease. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 6 – COMMITMENTS AND CONTINGENCIES LEASE AGREEMENTS Effective August 1, 2014, the Company moved into a 4,427 square foot facility under a new lease agreement, in an industrial complex in Irvine California. The Company entered into a 26 month lease, pursuant to which, there is no base rent for the first two months, beginning October 1, 2014, the monthly lease is $4,870 plus CAM charges of $354 and rent increases to $5,091 on October 1, 2015 for the final twelve months. The Company was straight lining the 24 months costs over the 26 month term of the lease through December 31, 2015, and in January 2016, the Company realized as an expense the remainder of the lease and recorded a liability. For public reporting purposes and corporate correspondences regarding such, the Company utilizes the office address of a company controlled by our CEO in West Palm Beach, Florida at no charge. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 7 – STOCKHOLDERS’ EQUITY COMMON STOCK On March 18, 2016, the Board of Directors of the Company, acting pursuant to a Majority Consent of Stockholders, approved an amendment to the Articles of Incorporation (the “Amended and Restated Articles”) to among other matters, clarify that of the 310,000,000 shares of authorized capital stock of the Company, 300,000,000 shares are designated as common stock and 10,000,000 shares are designated as preferred stock, and to clarify that of the 10,000,000 shares of preferred stock, 100 have been designated as Class A Preferred Stock. Additionally, the Board has the authority to create and designate the rights and preferences of, additional series of preferred stock, without further stockholder approval. On May 2, 2016, the Company filed the Amended and Restated Articles with the Nevada Secretary of State. The Board also approved a resolution giving the Board the authority to effect between a 1:10 and a 1:250 consolidation of the outstanding common stock at any time before December 31, 2016, and to leave the authorized shares of common stock unchanged at 300,000,000. On December 30, 2016, the Board authorized a consolidation, whereby every 250 shares of the Company’s common stock would be consolidated into 1 share. The consolidation become effective on March 9, 2017. As of March 31, 2018, and December 31, 2017, there are 1,200,043 shares of common stock outstanding. CLASS A PREFERRED STOCK On June 3, 2014, the Company’s Board of Directors adopted and approved the Class A Preferred Stock Certificate of Designation, establishing the terms, conditions and relative rights of the Class A Preferred Stock, including that the holders of the Class A Preferred Stock (the “Class A Holders”) shall have limited voting rights and powers compared to the voting rights and powers of holders of Common Stock and other series of Preferred Stock. The Class A Holders shall be entitled to notice of any shareholders meeting in accordance with the Bylaws of the Corporation, and shall be entitled to vote, but only with respect to the following matters (collectively, the “Class A Voting Matters”): (i) the appointment and/or removal of any member of the Company’s board of directors, (ii) any matter related to or transaction (or series of transactions) pursuant to which the Company would sell or license all or substantially all of its assets or the stockholders of the Company would sell all or substantially all of their shares of the Company’s stock or where the Company would merge with or into any other entity, (iii) causing the Company to register its Common Stock for trading pursuant to the Securities Exchange Act of 1934, as amended, including by filing a Registration Statement on Form S-1 with the Securities Exchange Commission and filing and obtaining FINRA approval of a Form 15c2-11, and (iv) with respect to any matter involving a transaction whereby the Company will become part of or merge into an existing public company. For so long as Class A Preferred Stock is issued and outstanding, the holders of Class A Preferred Stock shall vote together as a single class with the holders of the Corporation’s Common Stock and the holders of any other class or series of shares entitled to vote with the Common Stock, with the holders of Class A Preferred Stock being entitled to fifty-one percent (51%) of the total votes on only Class A Preferred Voting Matters regardless of the actual number of shares of Class A Preferred Stock then outstanding, and the holders of Common Stock and any other shares entitled to vote being entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power for any Class A Preferred Voting Matter. The Board also approved the issuance of 50 shares each of the Class A Preferred Stock to the Company’s Chief Executive Officer and Chief Operating Officer. The issued shares of the Class A Preferred Stock were valued at $428,000 based primarily on management’s estimate of the fair value of the control features embedded in the Class A preferred stock. On July 8, 2016, in two private transactions, Dove purchased in the aggregate, 100 shares of Class A Preferred Stock from two shareholders (50 shares each), representing 100% of the issued and outstanding Class A Preferred Stock. As of March 31, 2018, and December 31, 2017, there are 100 shares of Series A Preferred Stock outstanding. |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 3 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | NOTE 8 – DISCONTINUED OPERATIONS In December 2015, the Company’s board of directors approved the purchase of certain real property and completed the purchase on December 31, 2015. In January 2016, the Company ceased its’ prior business activity of marketing, manufacturing and selling horticulture cabinets. ASC 205-20 “Discontinued Operations” establishes that the disposal or abandonment of a component of an entity or a group of components of an entity should be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. As a result, the Company’s results of operations have been reclassified as discontinued operations on a retrospective basis for all periods presented. Accordingly, the assets and liabilities of this component are separately reported as “assets and liabilities of discontinued operations” as of December 31, 2017 and 2016. The results of operations of this component, for all periods, are separately reported as “discontinued operations”. The Company did not have any activity in discontinued operations for the three months ended March 31, 2018, and 2017. The following table presents the reconciliation of carrying amounts of major classes of assets and liabilities of the Company classified as discontinued operations in the consolidated balance sheets at March 31, 2018, and December 31, 2017: March 31, 2018 December 31, 2017 Carrying amounts of major classes of assets included as part of discontinued operations Current assets: Cash and cash equivalents $ 67,680 $ 67,680 Accounts receivable, net 43,032 42,785 Prepaid expenses and other current assets 12,482 12,482 Total current assets included in the assets of discontinued operations $ 123,194 $ 122,947 Carrying amounts of major classes of liabilities included as part of discontinued operations Current liabilities: Accounts payable and accrued expenses $ 67,680 $ 67,680 Accounts payable and accrued expenses, stockholders 43,032 42,785 Customer deposits — — Note payable, stockholder 12,482 12,482 Total current liabilities included in the liabilities of discontinued operations $ 123,194 $ 122,947 |
GOING CONCERN
GOING CONCERN | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | NOTE 9 – GOING CONCERN The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of March 31, 2018, the Company had an accumulated deficit of $9,744,214 and as of March 31, 2018, a working capital deficit of $4,781,768. These conditions, among others, raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management’s Plans As a result of a working capital deficiency the Company ceased its prior business as a manufacturer and distributor of cabinet-based horticultural systems operations. On December 31, 2015, the Company agreed to purchase a 100% membership interest (the “ Membership Interest Quasar Seller is also focused on developing blockchain technologies to deliver advanced solutions to industry-specific problems. The company has identified opportunities in markets including cannabis, insurance, and healthcare. In the cannabis industry, the Company is developing a blockchain solution to help government entities collect taxes through smart contracts. Across all market opportunities, the Company seeks to deliver security, efficiency, and integration through blockchain technology. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 10 – INCOME TAXES A reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows: March 31, 2018 December 31, 2017 Net loss before income taxes $ (162,485 ) $ (113,831 ) Income tax rate 34 % 34 % Income tax recovery (55,245 ) (38,703 ) Non-deductible — — Valuation allowance change 55,245 38,703 Provision for income taxes $ — $ — The significant component of deferred income tax assets at March 31, 2108, and December 31, 2017, is as follows: March 31, 2018 December 31, 2017 Net operating loss carry-forward $ 5,079,963 $ 4,449,910 Valuation allowance (5,079,963 ) (4,449,910 ) Net deferred income tax asset $ — $ — The amount taken into income as deferred income tax assets must reflect that portion of the income tax loss carry forwards that is more likely-than-not to be realized from future operations. The Company has chosen to provide a full valuation allowance against all available income tax loss carry forwards. The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When circumstances change and which cause a change in management’s judgment about the realizability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income. As of March 31, 2018, and December 31, 2017, the Company has no unrecognized income tax benefits. The Company’s policy for classifying interest and penalties associated with unrecognized income tax benefits is to include such items as tax expense. No interest or penalties have been recorded during the three months ended March 31, 2018, and 2017, and no interest or penalties have been accrued as of March 31, 2018, and December 31, 2017. As of March 31, 2018, and December 31, 2017, the Company did not have any amounts recorded pertaining to uncertain tax positions. The tax years from 2016 and forward remain open to examination by federal and state authorities due to net operating loss and credit carryforwards. The Company is currently not under examination by the Internal Revenue Service or any other taxing authorities. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11 – SUBSEQUENT EVENTS On May 7, 2018, the Company consented to an Assignment and Assumption Agreement, whereby Dove assigned all of its rights and interests in and to the Securities and the Tonaquint Note to CVP. The Securities as defined in the Securities Purchase Agreement by and between Dove and CVP include the June 6, 2014 CVP Note and the CVP Warrant (see Note 3). On August 31, 2018, the maturity of the Secured Promissory Note (see Note 5) was extended from June 30, 2018 to December 31, 2018, and on February 6, 2019, the Secured Promissory Note was extended from December 31, 2018 to December 31, 2019. Since April 1, 2018, expenses of the Company had been funded by CVP. As of June 30, 2019, the approximate balance of the CVP convertible note is $1,510,000. In accordance with ASC 855-10, the Company has analyzed its operations subsequent to March 31, 2018, to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements other than the events described above. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2018, and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2018, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Current Report on Form 10-K filed on August 13, 2019. |
EMERGING GROWTH COMPANY | EMERGING GROWTH COMPANY We qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. |
USE OF ESTIMATES | USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates. |
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONS On December 31, 2015, the Company’s Board of Directors approved the purchase of certain real property as described in Note 1. As a result of the purchase, the Company’s prior business operations have been (re)classified as discontinued operations on a retrospective basis for all periods presented herein. |
CASH AND CASH EQUIVALENTS | CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. |
LAND, PROPERTY AND EQUIPMENT | LAND, PROPERTY AND EQUIPMENT Property and equipment are stated at cost, and depreciation is provided by use of straight-line methods over the estimated useful lives of the assets. The estimated useful lives of property and equipment are as follows: Manufacturing equipment 10 years Office equipment and furniture 7 years Computer hardware and software 3 years The Company's property and equipment consisted of the following at March 31, 2018 and December 31, 2017: March 31, 2018 December 31, 2017 Manufacturing equipment $ 826 $ 826 Software 2,912 2,912 Land 180,000 180,000 Accumulated depreciation (3,525 ) (3,504 ) Balance $ 180,213 $ 180,234 Depreciation expense for the three months ended March 31, 2018 and 2017, was $21 and $111, respectively. |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company recognizes revenue in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, “Revenue Recognition.” ASC 605 requires that the following four basic criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably assured. The Company recognizes revenue from leased property during the month the tenant is responsible for payment. Revenues from the sale of cabinets are included in net loss from discontinued operations for all periods presented herein. |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value measurements are determined under a three-level hierarchy for fair value measurements that prioritizes the inputs to valuation techniques used to measure fair value, distinguishing between market participant assumptions developed based on market data obtained from sources independent of the reporting entity (“observable inputs”) and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (“unobservable inputs”). Fair value is the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company primarily uses prices and other relevant information generated by market transactions involving identical or comparable assets (“market approach”). The Company also considers the impact of a significant decrease in volume and level of activity for an asset or liability when compared with normal activity to identify transactions that are not orderly. The highest priority is given to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Financial instruments are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The three hierarchy levels are defined as follows: Level 1 – Quoted prices in active markets that is unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Credit risk adjustments are applied to reflect the Company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the Company’s own credit risk as observed in the credit default swap market. The Company's financial instruments consist primarily of cash, accounts receivable, accounts payable and accrued expenses, note payable and convertible debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The Company’s derivative liability (conversion option and warrant derivative) is valued using the level 3 inputs. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market exchange or from future earnings or cash flows. The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of March 31, 2018, and December 31, 2017, for each fair value hierarchy level: March 31, 2018 Derivative Total Level I $ — $ — Level II $ — $ — Level III $ 2,428,064 $ 2,428,064 December 31, 2017 Level I $ — $ — Level II $ — $ — Level III $ 2,538,644 $ 2,538,644 |
INCOME TAXES | INCOME TAXES Prior to May 2014, the Company was organized as a sole proprietorship and was not subject to income taxes. Rather, the Company’s sole stockholder was subject to income taxes on the Company’s taxable activity. In May 2014, the Company became subject to income taxes and will be subject to Federal and State income taxes as a corporation. The Company accounts for income taxes in accordance with ASC 740-10, “Income Taxes.” Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed, nor paid, any interest or penalties. Uncertain tax positions are measured and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. |
EARNINGS (LOSS) PER SHARE | EARNINGS (LOSS) PER SHARE The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. For the periods ending ended March 31, 2018, and 2017, 1,909,554 and 1,808,278 shares of common stock, respectively, underlying convertible debt and warrants have been excluded from the computation diluted earnings per share because they are antidilutive. |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842).” Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard will have on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, “ Business Combinations (Topic 805) Clarifying the Definition of a Business With the exception of the new standard discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2018, that are of significance or potential significance to the Company. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Property and equipment and leasehold improvements | March 31, 2018 December 31, 2017 Manufacturing equipment $ 826 $ 826 Software 2,912 2,912 Land 180,000 180,000 Accumulated depreciation (3,525 ) (3,504 ) Balance $ 180,213 $ 180,234 |
Financial instruments measured at fair value on a recurring basis | March 31, 2018 Derivative Total Level I $ — $ — Level II $ — $ — Level III $ 2,428,064 $ 2,428,064 December 31, 2017 Level I $ — $ — Level II $ — $ — Level III $ 2,538,644 $ 2,538,644 |
CONVERTIBLE NOTES PAYABLE (Tabl
CONVERTIBLE NOTES PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Convertible Notes Payable | |
Summary of convertible notes payable balance | March 31, 2018 December 31, 2017 Beginning balance $ 1,379,245 $ 1,229,360 Additional fundings 45,894 149,885 Total $ 1,425,139 $ 1,379,245 |
DERIVATIVE LIABLITIES (Tables)
DERIVATIVE LIABLITIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
Summary of derivative liability balance | March 31, 2018 December 31, 2017 Beginning balance $ 2,538,644 $ 954,884 Newly issued initial derivative liability 59,252 183,921 Fair value change (169,832 ) 1,399,839 Total $ 2,428,064 $ 2,538,644 |
Assumptions used in measurement derivative liabilities | Commitment Date Re-Measurement Date Expected dividends -0- -0- Expected volatility 314%-371% 314% Expected term .5 years .5 years Risk free interest 1.64%-1.93% 1.93% |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Reconciliation of carrying amounts of major classes of assets and liabilities classified as discontinued operations | March 31, 2018 December 31, 2017 Carrying amounts of major classes of assets included as part of discontinued operations Current assets: Cash and cash equivalents $ 67,680 $ 67,680 Accounts receivable, net 43,032 42,785 Prepaid expenses and other current assets 12,482 12,482 Total current assets included in the assets of discontinued operations $ 123,194 $ 122,947 Carrying amounts of major classes of liabilities included as part of discontinued operations Current liabilities: Accounts payable and accrued expenses $ 67,680 $ 67,680 Accounts payable and accrued expenses, stockholders 43,032 42,785 Customer deposits — — Note payable, stockholder 12,482 12,482 Total current liabilities included in the liabilities of discontinued operations $ 123,194 $ 122,947 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of provision for income taxes compared to income tax expense | March 31, 2018 December 31, 2017 Net loss before income taxes $ (162,485 ) $ (113,831 ) Income tax rate 34 % 34 % Income tax recovery (55,245 ) (38,703 ) Non-deductible — — Valuation allowance change 55,245 38,703 Provision for income taxes $ — $ — |
Significant component of deferred income tax assets | March 31, 2018 December 31, 2017 Net operating loss carry-forward $ 5,079,963 $ 4,449,910 Valuation allowance (5,079,963 ) (4,449,910 ) Net deferred income tax asset $ — $ — |
ORGANIZATION (Details Narrative
ORGANIZATION (Details Narrative) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation of outstanding common stock | 1:250 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and equipment (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Summary Of Significant Accounting Policies - Property And Equipment | ||
Manufacturing equipment | $ 826 | $ 826 |
Software | 2,912 | 2,912 |
Land | 180,000 | 180,000 |
Accumulated depreciation | (3,525) | (3,504) |
Balance | $ 180,213 | $ 180,234 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Financial instruments measured at fair value on a recurring basis (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Level 1 | ||
Derivative liability | ||
Total | ||
Level 2 | ||
Derivative liability | ||
Total | ||
Level 3 | ||
Derivative liability | 2,428,064 | 2,538,644 |
Total | $ 2,428,064 | $ 2,538,644 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Depreciation expense | $ (21) | $ (111) |
Antidilutive securities, underlying convertible debt and warrants excluded from computation of diluted earnings per share | 1,909,554 | 1,808,278 |
Manufacturing equipment | ||
Useful life of property and equipment | 10 years | |
Office equipment and furniture | ||
Useful life of property and equipment | 7 years | |
Computer hardware and software | ||
Useful life of property and equipment | 3 years |
CONVERTIBLE NOTES PAYABLE - Sum
CONVERTIBLE NOTES PAYABLE - Summary of convertible notes payable balance (Details) - Convertible note payable balance - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Beginning balance | $ 1,379,245 | $ 1,229,360 |
Additional fundings | 45,894 | 149,885 |
Total | $ 1,425,139 | $ 1,379,245 |
CONVERTIBLE NOTES PAYABLE - Dov
CONVERTIBLE NOTES PAYABLE - Dove Foundation, Related Party and Warrant (Details Narrative) - USD ($) | 3 Months Ended | |||||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Jul. 27, 2016 | Jun. 11, 2014 | Jun. 06, 2014 | |
CVP Convertible Note | ||||||
Investor Notes | ||||||
Company Note principal amount | $ 1,657,500 | |||||
Legal expenses included in principal amount of Company Note | 7,500 | |||||
Original issue discount of Company Note | 150,000 | |||||
Sale price of Company Note | $ 1,500,000 | |||||
Cash paid for note on Closing Date | $ 500,000 | |||||
Aggregate value of two secured promissory notes and two promissory notes issued in sale of Company Note, $250,000 each | $ 1,000,000 | |||||
Interest rate of Company Note | 10.00% | |||||
Outstanding balance increased amount after December default | $ 270,056 | |||||
Outstanding balance increased amount after January default | $ 344,654 | |||||
Increased interest rate per annum pursuant to default | 22.00% | |||||
Cancellation of interest and principal due, shares issued in exchange | 1,051,778 | |||||
Cancellation of interest and principal due, amount | $ (920,306) | |||||
Cancellation of interest and principal due, Company common stock percentage owned by holder of note | 87.60% | |||||
CVP Convertible Note - Conversion Details | ||||||
Investor Notes | ||||||
OID included in newly issued funded amounts of notes | $ 4,172 | |||||
Warrants issued to CVP | ||||||
Warrant | ||||||
Warrant issued to CVP, number of shares purchaseable value | $ 420,000 | |||||
Warrant issued to CVP, estimated number of shares purchaseable | 24,000 | |||||
Warrant issued to CVP, current estimated number of shares purchaseable | 6,545 | 6,545 | ||||
Warrant issued to CVP, exercise price | $ 50 | $ 50 | ||||
Initial derivative liability of warrants | $ 577,100 | |||||
Initial derivative liability expense of warrants | $ 77,100 | |||||
Discount to the Note for warrants | $ 500,000 | |||||
Revaluation of warrant | $ 38,884 | $ 9,745 | ||||
Increase in derivative liability | $ 29,139 |
DERIVATIVE LIABLITIES - Summary
DERIVATIVE LIABLITIES - Summary of derivative liability balance (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Notes to Financial Statements | ||
Beginning balance | $ 2,538,644 | |
Newly issued initial derivative liability | 59,252 | |
Fair value change | (169,832) | $ 1,399,839 |
Total | $ 2,428,064 | $ 2,538,644 |
DERIVATIVE LIABLITIES - Assumpt
DERIVATIVE LIABLITIES - Assumptions used in measurement derivative liabilities (Details) | 3 Months Ended |
Mar. 31, 2018 | |
Commitment Date | |
Expected dividends | 0.00% |
Expected volatility, minimum | 314.00% |
Expected volatility, maximum | 371.00% |
Expected term | 6 months |
Risk free interest, minimum | 1.64% |
Risk free interest, maximum | 1.93% |
Re-Measurement Date | |
Expected dividends | 0.00% |
Expected volatility, maximum | 314.00% |
Expected term | 6 months |
Risk free interest, maximum | 1.93% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2015 | |
Related Party Transactions [Abstract] | ||||
Amounts owed to officers included in liabilities of discontinued operations | $ 37,190 | $ 37,190 | ||
Amounts owed to officers included in accounts payable and accrued liabilities, stockholders | 16,350 | 16,350 | ||
Interest expense for note payable, stockholder | 247 | $ 247 | ||
Accrued interest owed to COO, included in accounts payable and accrued liabilities, stockholders | 5,841 | $ 5,595 | ||
Loan balance of note payable, stockholder included in liabilities of discontinued operations | $ 12,482 | $ 12,482 | ||
Membership interest agreed to be purchased in Quasar, LLC | 100.00% | |||
Purchase price of membership interest acquisition | $ 180,000 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | 3 Months Ended | |||
Mar. 31, 2018 | Dec. 31, 2017 | Jul. 08, 2016 | Jun. 03, 2014 | |
COMMON STOCK | ||||
Consolidation of outstanding common stock | 1:250 | |||
CLASS A PREFERRED STOCK | ||||
Class A Preferred Stock issued to officers | 100 | 100 | 50 | |
Value of Class A Preferred Stock | $ 428,000 | |||
Preferred stock shares purchased by Dove in private transactions | 100 |
DISCONTINUED OPERATIONS - Recon
DISCONTINUED OPERATIONS - Reconciliation of carrying amounts of major classes of assets and liabilities classified as discontinued operations (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 67,680 | $ 67,680 |
Accounts receivable, net | 43,032 | 42,785 |
Prepaid expenses and other current assets | 12,482 | 12,482 |
Total current assets included in the assets of discontinued operations | 123,194 | 122,947 |
Current liabilities: | ||
Accounts payable and accrued expenses | 67,680 | 67,680 |
Accounts payable and accrued expenses, stockholders | 43,032 | 42,785 |
Customer deposits | ||
Note payable, stockholder | 12,482 | 12,482 |
Total current liabilities included in the liabilities of discontinued operations | $ 123,194 | $ 122,947 |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Accumulated deficit | $ (9,744,214) | $ (9,692,309) | |
Working capital deficit | $ (4,781,768) | ||
Membership interest agreed to be purchased in Quasar, LLC | 100.00% | ||
Purchase price of membership interest acquisition | $ 180,000 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of provision for income taxes compared to income tax expense (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Net loss before income taxes | $ (162,485) | $ (113,831) |
Income tax rate | 34.00% | 34.00% |
Income tax recovery | $ (55,245) | $ (38,703) |
Non-deductible | ||
Valuation allowance change | 55,245 | 38,703 |
Provision for income taxes |
INCOME TAXES - Significant comp
INCOME TAXES - Significant component of deferred income tax assets (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry-forward | $ 5,079,963 | $ 4,449,910 |
Valuation allowance | (5,079,963) | (4,449,910) |
Net deferred income tax asset |