NOTES
TO UNAUDITED FINANCIAL STATEMENTS
December
31, 2022
NOTE
1 – ORGANIZATION AND OPERATIONS
Metavesco,
Inc. (formerly Waterside Capital Corporation) (the “Company”) was incorporated in the Commonwealth of Virginia on July 13,
1993 and was a closed-end investment company licensed by the Small Business Administration (the “SBA”) as a Small Business
Investment Company (“SBIC”). The Company previously made equity investments in, and provided loans to, small businesses to
finance their growth, expansion, and development. Under applicable SBA regulations, the Company was restricted to investing only in qualified
small businesses as contemplated by the Small Business Investment Act of 1958. As a registered investment company under the Investment
Company Act of 1940, as amended (the “Investment Company Act”), the Company’s investment objective was to provide its
shareholders with a high level of income, with capital appreciation as a secondary objective. The Company made its first investment in
a small business in October 1996.
On
May 28, 2014, with the Company’s consent, the United States District Court for the Eastern District of Virginia, having jurisdiction
over an action filed by the SBA (the “Court”), entered a Consent Order and Judgment Dismissing Counterclaim, Appointing Receiver,
Granting Permanent Injunctive Relief and Granting Money Judgment (the “Order”). The Order appointed the SBA receiver of the
Company for the purpose of marshaling and liquidating in an orderly manner all of the Company’s assets and entered judgment in
favor of the United States of America, on behalf of the SBA, against the Company in the amount of $11,770,722.
The Court assumed jurisdiction over the Company and the SBA was appointed receiver effective May 28, 2014.
The
Company effectively stopped conducting an active business upon the appointment of the SBA as the receiver and the commencement of the
court-ordered receivership (the “Receivership”). Over the course of the Receivership, the activity of the Company was limited
to the liquidation of the Company’s assets by the receiver and the payment of the proceeds therefrom to the SBA and for the expenses
of the Receivership. On June 28, 2017, the Receivership was terminated with the entry of a Final Order by the Court. The Final Order
specifically stated that “Control of Waterside shall be unconditionally transferred and returned to its shareholders c/o Roran
Capital, LLC (“Roran”) upon notification of entry of this Order”. Upon termination of the Receivership, Roran took
possession of all books and records made available to it by the SBA.
The
Company filed with the Securities and Exchange Commission (the “SEC”) an application pursuant to Section 8(f) of the Investment Company Act for an order declaring that
the Company had ceased to be a registered investment company. On April 22, 2020, the SEC issued an order under Section 8(f) of the Investment
Company Act declaring that the Company had ceased to be an investment company. As a result, the Company is now a
reporting company under the Securities Exchange Act of 1934, as amended.
On
September 2, 2021, the Company entered into a Stock Purchase Agreement (the “SPA”) by and between (i) the Company (ii) Ryan
Schadel (“Buyer”) and (iii) Roran. Roran agreed to sell to the Buyer 4,247,666 shares of common stock of the Company held
by Roran for a total purchase price of $385,000. In conjunction with the SPA, Roran agreed to forgive all amounts due to Roran by the
Company totaling $207,644, which is comprised of convertible note payable – related party, accrued interest payable – related
party, and advances from related party. The Buyer acquired 4,247,666 shares of the Company’s
Common Stock, representing 69.7% of the issued and outstanding shares of Common Stock. As such, the SPA resulted in a change of control
of the Company.
Effective
November 29, 2021, the Company converted from a Virginia corporation to a Nevada corporation.
On
December 15, 2021, the Company filed with the Nevada Secretary of State amended and restated articles of incorporation. The amended
and restated articles of incorporation had the effect of (i) increasing the
Company’s authorized common stock to 100
million shares, (ii) increasing the Company’s authorized preferred stock to 20
million shares, and (iii) reducing the par value of each of the Company’s common stock and preferred stock to $0.0001
per share. Common stock and additional paid-in
capital for all periods presented in these unaudited financial statements have been adjusted retroactively to reflect the reduction
in par value.
On
December 17, 2021, the majority shareholder and board of directors approved an amendment to the amended and restated articles of incorporation
that would change the Company’s name from Waterside Capital Corporation to Metavesco, Inc. The name change was effective June 3, 2022, following clearance by the Financial
Industry Regulatory Authority (“FINRA”).
In
March 2022, the Company commenced operations as a web3 enterprise. The Company generates income as a liquidity provider, via decentralized
exchanges such as Uniswap. Additionally, the Company farms tokens via Proof of Stake protocols on decentralized exchanges, as well as
centralized exchanges including the Coinbase, Inc. (“Coinbase”) exchange. The Company also invests in what it considers promising non-fungible token (“NFT”) projects and virtual land, primarily on
Ethereum virtual machine (“EVM”) protocols.
The
interim unaudited financial statements herein have been prepared by the Company pursuant to the rules and regulations of the SEC. The accompanying interim unaudited financial statements have been prepared under
the presumption that users of the interim financial information have either read or have access to the audited financial statements for
the latest fiscal year ended June 30, 2022. Accordingly, note disclosures which would substantially duplicate the disclosures contained
on June 30, 2022, audited financial statements have been omitted from these interim unaudited financial statements. The Company evaluated
all subsequent events and transactions through the date of filing this report.
Certain
information and note disclosures normally included in financial statements prepared in accordance with the United States generally accepted
accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management,
all adjustments considered necessary for a fair presentation have been included. Operating results for the three and six months ended
December 31, 2022, are not necessarily indicative of the results that may be expected for the year ending June 30, 2023. For further
information, refer to the audited financial statements and notes for the year ended June 30, 2022, included in the Company’s Annual
Report on Form 10-K filed with the SEC on October 7, 2022.
Going
Concern
The
Company’s unaudited financial statements are prepared in accordance with GAAP applicable to a going concern. This contemplates
the realization of assets and the liquidation of liabilities in the normal course of business. During the six months ended December
31, 2022, the Company incurred a net loss of $165,326
and used cash in operating activities of $123,715,
and on December 31, 2022, had an accumulated deficit of $19,211,528.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a period
one year from the date that the unaudited financial statements are issued. The Company will be dependent upon the raising of
additional capital through placement of debt and its common stock in order to implement its business plan. There can be no assurance
that the Company will be successful in this situation. The Company expects over the next twelve months, cash held at a financial
institution will be expended on professional fees, transfer agent, Edgar agent and other administrative costs. The cash held at
Coinbase will be deployed to purchase crypto assets to generate staking rewards and liquidity pool fees. We hope to start
paying some of our suppliers and contractors in crypto assets in the coming months. However, there can be no assurance we will be
able to pay any of our suppliers and contractors in digital assets.
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES
Significant
Accounting Policies
There
have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s
audited financial statements included in its Annual Report on Form 10-K for the fiscal year ended June 30, 2022, as filed with the SEC.
Fiscal
Year-End
The
Company elected June 30 as its fiscal year-end date.
Use
of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
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 disclosure of contingent assets and liabilities at the dates of the financial statements and the
reported amounts of revenues and expenses during the reporting periods.
These
significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these
estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management
bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial
statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources.
Management
regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes
in facts and circumstances, historical experience, and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates
are adjusted accordingly.
Actual
results could differ from those estimates.
Cash
and cash equivalents
Cash
and cash equivalents include cash and interest-bearing highly liquid investments held at financial institutions, cash on hand that is
not restricted as to withdrawal or use with an initial maturity of three months or less, and cash held in accounts at crypto trading
venues. At December 31, 2022, $972 of cash was at held a financial institution which is a member of the Federal Deposit Insurance Corporation
(“FDIC”) and $0 was held at Coinbase. The contract with Coinbase requires USD balances
in a client’s fiat wallet be held in an omnibus custodial account for the benefit of Coinbase’s customers. These accounts
are either omnibus bank accounts insured by the FDIC (currently up to $250,000 per entity) or trust accounts holding short term U.S.
treasuries.
Intangible
Assets
Digital
assets held by the Company are accounted for as intangible assets with indefinite useful lives, and are initially measured at cost. The
Company assigns costs to transactions on a first-in, first-out basis (FIFO).
An
intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events
or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment
exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital assets at the time its
fair value is being measured.
Tokens
are subject to impairment losses if the fair value a tokens decreases below the carrying value at any time during the period. The fair
value is measured using the quoted price in the principal market of the tokens. The Company currently obtains the quoted price of tokens
from www.cryptocompare.com.
Liquidity
pool tokens and non-fungible tokens are subject to impairment losses if the fair value a token decreases below the carrying value at
the end of each quarterly accounting period. The fair value of liquidity pool tokens is based on the quoted price on the last day of
the quarter at 4PM Eastern Time. The fair value of NFTs is based on the average trading price on the last day of each quarter.
Impairment
for liquidity pool tokens and NFTs is assessed quarterly due to each token being a unique asset and due to the illiquid
markets in which these tokens trade. The Company is continuously reviewing available markets and information and its methodology when
determining the fair value of digital assets.
The
Company currently reviews quoted prices of its liquidity pool tokens, NFTs and comparable tokens at https://uniswap.org/
and https://opensea.io. Impairment expense is reflected in total expense in the statements of operations. Subsequent reversal
of impairment losses is not permitted.
The
sales of digital assets held are included within investing activities in the accompanying statements of cash flows and any realized gains
or losses from such sales are included in other income (expense) in the statements of operations.
Revenue
recognition
The
Company recognizes revenue under the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards
Codification (“ASC”) 606, Revenue from Contracts with Customers. The core principle of the revenue standard is
that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are
applied to achieve that core principle:
| |
● |
Step
1: Identify the contract with the customer |
| |
● |
Step
2: Identify the performance obligations in the contract |
| |
● |
Step
3: Determine the transaction price |
| |
● |
Step
4: Allocate the transaction price to the performance obligations in the contract |
| |
● |
Step
5: Recognize revenue when the Company satisfies a performance obligation |
Revenue
is recognized when control of the promised goods or services is transferred to customer, in an amount that reflects the consideration
the Company expects to be entitled to in exchange for those goods or services. The Company generates revenue through liquidity pools
and staking rewards.
Liquidity
Pools
Liquidity
pools are a collection of digital assets locked in a smart contract that provide liquidity to decentralized exchanges. Liquidity allows
digital assets to be converted to cash quickly and efficiently without drastic price swings. An important component of a liquidity pool
are automated market makers (“AMMs”). An AMM is a protocol that uses liquidity pools to allow digital assets to be traded by a mathematical
formula rather than though a traditional market of buyers and sellers.
The
Company earns fees by providing liquidity on Uniswap V2 and Uniswap V3. The Company earns fees proportionate to the liquidity they have
supplied to the exchange. The fee for each trade is set at 0.05% for stable coins, 0.3% for most pairs and 1.0% for exotic pairs. The
fees earned by the Company depend on the risk characteristics of each pair of tokens selected and the price range liquidity is provided.
Uniswap V2 requires users to provide liquidity over the entire price curve, whereas Uniswap V3 provides users with liquidity over a price
range.
Revenue
is recognized from liquidity pools when the award is claimed and deposited in the Company wallet. The transaction consideration the Company
receives is noncash in the form of digital assets. Revenue is measured at the fair value of the digital asset awards received.
Staking
Rewards
Staking
rewards are granted to holders of a crypto asset when the holders lock up that crypto asset as collateral to secure fairness when validating
transactions or other network actions.
The
Company participates in networks with proof-of-stake consensus algorithms, through creating or validating blocks on the network. In exchange
for participating in the consensus mechanism of these networks, the Company earns rewards in the form of the native token of the network.
Each block creation or validation is a performance obligation. Revenue is recognized at the point when the block creation or validation
is complete and the rewards are transferred into a digital wallet that the Company controls. Revenue is measured based on the number
of tokens received and the fair value of the token at contract inception.
Airdrops
Airdrops
are the distribution of tokens without compensation generally undertaken with a view of increasing awareness of a new token, to encourage
adoption of a new token and to increase liquidity in the early stages of a token project.
The
Company recognizes crypto assets received through an airdrop if the crypto asset is expected to generate a probable future benefit and
if the Company is able to support the trading, custody, or withdrawal of these assets.
Airdrops
are accounted for in accordance with ASC 610-20, Sales and Transfer of Nonfinancial Assets, Receipt of a airdrops are classified
as gains on the statement of operations.
Convertible
Financial Instruments
The
Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments
if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative
instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument
that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable
generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument
with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when
the host instrument is deemed to be conventional, as that term is described under applicable GAAP.
When
the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded
for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying
common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument.
Beneficial
conversion feature – The issuance of the convertible debt generated a beneficial conversion feature (“BCF”), which
arises when a debt or equity security is issued with a non-separated embedded conversion option that is beneficial to the investor or
in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying
stock at the commitment date. The Company recognized the BCF by allocating the intrinsic value of the conversion option, which is the
number of shares of common stock available upon conversion multiplied by the difference between the effective conversion price per share
and the fair value of common stock per share on the commitment date, resulting in a discount on the convertible debt (recorded as a component
of additional paid-in capital). The BCF is amortized into interest expense over the life of the related debt.
Related
Parties
The
Company follows subtopic 850-10 of the ASC for the identification of related parties and disclosure of related party transactions.
The
financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense
allowances, and other similar items in the ordinary course of business. The disclosures shall include: (a) the nature of the relationship(s)
involved; (b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each
of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects
of the transactions on the financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements
are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and, (d)
amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner
of settlement.
Commitments
and Contingencies
The
Company follows ASC 450-20 to report accounting for contingencies. Certain conditions may exist as of the date the financial statements
are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to
occur. Management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing
loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings,
management evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount
of relief sought or expected to be sought therein.
If
the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability
can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates
that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then
the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss
contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
Deferred
Tax Assets and Income Taxes Provision
The
Company follows the provisions of ASC 740-10-25-13, which addresses the determination of whether tax benefits claimed or expected to
be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10-25-13, the Company may recognize the tax
benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such
a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon
ultimate settlement. ASC 740-10-25-13 also provides guidance on de-recognition, classification, interest, and penalties on income taxes,
accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized
income tax benefits.
The
estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying
balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred
tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
Management
makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates
of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions.
In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction
varies from estimates, additional allowances or reversals of reserves may be necessary.
Tax
years that remain subject to examination by major tax jurisdictions are generally the prior three years for federal purposes, and
the prior four years for state purposes; however, as a result of the Company’s operating losses, all tax years remain subject
to examination by tax authorities.
Net
Loss Per Common Share
The
Company computes net income or loss per share in accordance with ASC 260 Earnings Per Share. Under the provisions of ASC 260, basic net
loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number
of shares of common stock outstanding during the period. The calculation of diluted net loss per share gives effect to common stock
equivalents; however, potential common shares are excluded if their effect is anti-dilutive.
Fair
Value of Financial Instruments
The
Company follows paragraph 825-10-50-10 of ASC for disclosures about fair value of its financial instruments and has adopted
paragraph 820-10-35-37 of ASC (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments.
Paragraph 820-10-35-37 establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. To increase consistency and
comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which
prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair
value hierarchy defined by Paragraph 820-10-35-37 are described below:
| |
Level
1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
| |
Level
2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable
as of the reporting date. |
| |
Level
3: Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
Financial
assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar
techniques and at least one significant model assumption or input is unobservable.
The
fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and
the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than
one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of
the instrument.
Transactions
involving related parties cannot be presumed to be carried out on an arms-length basis, as the requisite conditions of competitive, free-market
dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions
were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
Recently
Issued Accounting Pronouncements
In
August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments
and the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related earnings per share guidance for
both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15,
2023, which means it will be effective for our fiscal year beginning July 1, 2024. Early adoption is permitted but no earlier than fiscal
years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the impact
of ASU 2020-06 on our financial statements.
Other
recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public
Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s
present or future financial statements.
NOTE
3 – DIGITAL ASSETS HELD, NET OF IMPAIRMENT
Digital
assets held, net of impairment have consisted of:
SCHEDULE OF DIGITAL ASSETS HELD NET OF IMPAIRMENT
| | |
Digital
Assets | |
| Balance, June 30, 2022 | |
$ | 434,642 | |
| Beginning balance | |
$ | 434,642 | |
| | |
| | |
| Purchase of digital assets | |
| 4,533,507 | |
| Proceeds from sale of digital assets | |
| (4,573,913 | ) |
| Realized gain on sale/ exchange of digital
assets held | |
| 252,982 | |
| Acquired digital assets by liquidity pools
and other rewards | |
| 89,052 | |
| Digital assets used to pay prepaid, deposit
and expenses | |
| (104,241 | ) |
| Impairment charges | |
| (281,317 | ) |
| Balance, December 31, 2022 | |
$ | 350,712 | |
| Ending balance | |
$ | 350,712 | |
As
at December 31, 2022, the Company’s holdings of digital assets held, net of impairment consists of:
SCHEDULE OF ASSETS DIGITAL HOLDING IMPAIRMENTS
| | |
Units
held | | |
Carrying
value, at cost less impairment | |
| Cryptocurrency | |
| | |
| |
| ETH | |
| 66.84 | | |
$ | 74,646 | |
| MATIC | |
| 7,640.09 | | |
| 5,711 | |
| DYDX | |
| 4,257.72 | | |
| 4,432 | |
| USDC | |
| 3,152.85 | | |
| 3,141 | |
| CRV | |
| 5,604.03 | | |
| 2,924 | |
| LDO | |
| 2,289.96 | | |
| 2,090 | |
| Other | |
| | | |
| 976 | |
| Cryptocurrency Total | |
| | | |
$ | 93,920 | |
| Liquidity Pool Tokens | |
| | | |
| | |
| Uniswap V3 | |
| 3.2 | | |
$ | 154,949 | |
| CAKE | |
| 4,570.35 | | |
| 11,472 | |
| Liquidity Pool Tokens
Total | |
| | | |
$ | 166,421 | |
| | |
| | | |
| | |
| Non-Fungible Tokens | |
| | | |
| | |
| Other Deed | |
| 14 | | |
$ | 50,904 | |
| Mutant Ape Yacht Club | |
| 1 | | |
| 19,573 | |
| Meebits | |
| 2 | | |
| 10,006 | |
| Art Gobblers | |
| 3 | | |
| 9,886 | |
| Other NFT | |
| | | |
| 2 | |
| Non-Fungible Tokens Total | |
| | | |
$ | 90,371 | |
| | |
| | | |
| | |
| Total
digital assets, net of impairment | |
| | | |
$ | 350,712 | |
NOTE
4 – DEPOSIT ON EQUIPMENT
On
August 22, 2022, the Company made a deposit of $72,095 with USD Coin (“USDC”) to purchase 18 Antminer S19j Pro 100TH Bitcoin mining machines.
These machines were deployed, became operational and started to generate
revenue on February 7, 2023.
NOTE
5 – NOTES PAYABLE – RELATED PARTIES
Demand
Promissory Note – Related Parties
On
October 18, 2021, the Company issued a Promissory Note in the principal amount of $100,000
(the “Promissory Note”) for cash to Ryan Schadel, the Company’s Chief Executive Officer, sole director and
majority stockholder. The Promissory Note bears interest at the rate of 0.01%
per annum. Any unpaid principal amount and any accrued interest was due on October 18, 2022. On
August 29, 2022, the Company entered into an Amendment to Promissory Note, dated August
29, 2022, with the Holder. Pursuant to the terms of the note amendment, the
maturity date of the Promissory Note was extended to October 23, 2023, and the interest rate of the Promissory
Note was increased to 5%
as of and following August 29, 2022. As consideration for extension of the maturity date, the Company agreed to issue to Mr. Schadel 15,000
shares of the Company’s common stock with a fair value of $9,000.
These shares were payable and reported as shares to be issued as of the date of this Report. The note amendment resulted in a change
in the cash flows of less than 10%. Therefore, the Promissory Note is not considered
to be substantially different in accordance with ASC 470-50-10-10 and applied the modification accounting model in accordance with
ASC-50-40-17 (b). During the three and six months ended December 31, 2022, $1,995
and $2,689,
respectively, of discount amortization is included in interest expense. At December 31, 2022 and June 30, 2022, there was an
unamortized discount balance of $6,311
and $0,
respectively, to be amortized through October 2023 and accrued interest payable of $835
and $0,
respectively.
On
June 29, 2022, the Company issued a Promissory Note in the principal amount of $40,000 (the “Promissory Note”) for cash to
Mr. Schadel, the Company’s Chief Executive Officer, sole director and majority stockholder. The Promissory
Note bears interest at the rate of 0.01% per annum. Any unpaid principal amount and any accrued interest is due on June 29, 2023. Mr. Schadel may demand payment of all or any portion of the outstanding principal and interest at any time. The Promissory Note is unsecured
and there is no prepayment penalty. At December 31, 2022 and June 30, 2022, there was accrued interest payable of $1 and $0, respectively.
On
August 12, 2022, the Company issued a Promissory Note in the principal amount of $50,000
(the “Promissory Note”) for cash to Laborsmart Inc. (“Laborsmart”). Laborsmart is owned by Mr. Schadel, the
Company’s Chief Executive Officer, sole director and majority stockholder. The Promissory Note bears interest at the rate of 5.00%
per annum. Any unpaid principal amount and any accrued interest is due on August
12, 2023. Laborsmart may demand payment of all or any portion of the outstanding principal and interest at any time. The
Promissory Note is unsecured and there is no prepayment penalty. In event the Promissory Note is not paid when due, any outstanding
principal and interest will accrue interest of 12%
per annum. At December 31, 2022 and June 30, 2022, there was accrued interest payable of $966
and $0,
respectively.
Demand
Promissory Note and Common Stock Purchase Warrant
On
August 12, 2022, the Company issued a Promissory Note in the principal amount of $25,000
(the “Promissory Note”) for cash to Tom Zarro. The Promissory Note bears interest at the rate of 5.00%
per annum. Any unpaid principal amount and any accrued interest is due on August
12, 2023. Mr. Zarro may demand payment of all or any portion of the outstanding principal and interest at any time. The
Promissory Note is unsecured and there is no prepayment penalty. In event the Promissory Note is not paid when due, any outstanding
principal and interest will accrue interest of 12%
per annum. In conjunction with the issue of the Promissory Note, the Company issued Mr. Zarro a common stock purchase warrant (the
“Warrant”). The terms of the Warrant state that, Mr. Zarro may, at any time on or
after August 12, 2022 and until August 12, 2025, exercise the Warrant to purchase 20,000
shares of the Company’s common stock for an exercise price per share of $0.75,
subject to adjustment as provided in the Warrant. The fair value of Warrant was calculated using volatility of 157%,
interest-free rate of 3.18%, nil
expected dividend yield and expected life of 3
years. The fair value of the debt and warrant is allocated based on their relative fair values. During the three and six months
ended December 31, 2022, $1,995
and $3,058,
respectively, of discount amortization is included in interest expense. At December 31, 2022 and June 30, 2022, there was an
unamortized discount balance of $4,858
and $0,
respectively, to be amortized through May 2027 and accrued interest payable of $483
and $0,
respectively.
.
Convertible
Promissory Notes
On
May 10, 2022, the Company issued a Convertible Promissory Note in the principal amount of $20,000
(the “Convertible Promissory Note”), for cash, to Timothy Hackbart. The Convertible Promissory Note bears interest at
the rate of 3.25%
per annum. Any unpaid principal amount and any accrued interest is due on May 10, 2027. The Convertible Promissory Note is unsecured
and there is no prepayment penalty. At the option of the Holder, the Convertible Promissory Note is convertible into shares of the
Company’s common stock at a conversion price of $0.50
per share. The closing price of the Company’s common stock was $1.40
per share on the date the Convertible Promissory Note was issued. As a result of the conversion price being lower than
the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature
of $20,000
upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note)
to be amortized over the life of the related note. During the three and six months ended December 31, 2022, $1,008
and $2,016,
respectively, of discount amortization is included in interest expense. At December 31, 2022 and June 30, 2022, there was an
unamortized discount balance of $17,426
and $19,441,
respectively, to be amortized through May 2027 and accrued interest payable of $418
and $0,
respectively.
Convertible
Promissory Notes – Related Party
On
March 4, 2022, the Company issued a Convertible Promissory Note in the principal amount of $40,874
(the “Convertible Promissory Note”), for value received being comprised of one bitcoin, to Mr. Schadel, the
Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at
the rate of 3.5%
per annum. Any unpaid principal amount and any accrued interest is due on March 4, 2027. The Convertible Promissory Note is
unsecured and there is no prepayment penalty. At the option of Mr. Schadel, the Convertible Promissory Note is convertible into
shares of the Company’s common stock at a conversion price of $0.50
per share. The closing price of the Company’s common stock was $1.25
per share on the date the Convertible Promissory Note was issued. As a result of the conversion price being lower than
the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature
of $40,874
upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note)
to be amortized over the life of the related note. During the three and six months ended December 31, 2022, $2,059
and $4,118
of discount amortization is included in interest expense. At December 31, 2022 and June 30, 2022, there was an unamortized discount
balance of $34,114
and $38,233,
respectively, to be amortized through March 2027 and accrued interest payable of $222
and $0,
respectively.
On
March 10, 2022, the Company issued a Convertible Promissory Note in the principal amount of $59,986
(the “Convertible Promissory Note”), for value received being comprised of 22.86012412 Ether, to Mr. Schadel, the
Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at
the rate of 3.25%
per annum. Any unpaid principal amount and any accrued interest is due on March 10, 2027. The Convertible Promissory Note is
unsecured and there is no prepayment penalty. At the option of Mr. Schadel, the Convertible Promissory Note is convertible into
shares of the Company’s common stock at a conversion price of $0.50
per share. The closing price of the Company’s common stock was $1.42
per share on the date the Convertible Promissory Note was issued. As a result of the conversion price being lower than the market
price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $59,986
upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note)
to be amortized over the life of the related note. During the three and six months ended December 31, 2022, $3,022
and $6,044,
respectively, of discount amortization is included in interest expense. At December 31, 2022 and June 30, 2022, there was an
unamortized discount balance of $50,262
and $56,307,
respectively, to be amortized through March 2027 and accrued interest payable of $326
and $0,
respectively.
On
May 6, 2022, the Company issued a Convertible Promissory Note in the principal amount of $100,000
(the “Convertible Promissory Note”), for cash, to Mr. Schadel, the Company’s Chief Executive Officer, sole
director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.25%
per annum. Any unpaid principal amount and any accrued interest is due on May 6, 2027. The Convertible Promissory Note is unsecured
and there is no prepayment penalty. At the option of Mr. Schadel, the Convertible Promissory Note is convertible into shares of the
Company’s common stock at a conversion price of $0.50
per share. The closing price of the Company’s common stock was $1.45
per share on the date the Convertible Promissory Note was issued. As a result of the conversion price being lower than
the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature
of $100,000
upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note)
to be amortized over the life of the related note. During the three and six months ended December 31, 2022, $5,038
and $10,076, respectively,
of discount amortization is included in interest expense. At December 31, 2022 and June 30, 2022, there was an unamortized discount
balance of $86,911
and $96,988,
respectively, to be amortized through May 2027 and accrued interest payable of $543
and $0,
respectively.
On
May 9, 2022, the Company issued a Convertible Promissory Note in the principal amount of $100,000
(the “Convertible Promissory Note”), for cash, to Mr. Schadel, the Company’s Chief Executive Officer, sole
director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.25%
per annum. Any unpaid principal amount and any accrued interest is due on May 9, 2027. The Convertible Promissory Note is unsecured
and there is no prepayment penalty. At the option of Mr. Schadel, the Convertible Promissory Note is convertible into shares of the
Company’s common stock at a conversion price of $0.50
per share. The closing price of the Company’s common stock was $1.415
per share on the date the Convertible Promissory Note was issued. As a result of the conversion price being lower than
the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature
of $100,0000
upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note)
to be amortized over the life of the related note. During the three and six months ended December 31, 2022, $5,038
and $10,076, respectively,
of discount amortization is included in interest expense. At December 31, 2022 and June 30, 2022, there was an unamortized discount
balance of $87,076
and $97,152,
respectively, to be amortized through May 2027 and accrued interest payable of $543
and $0,
respectively.
NOTE
6 – SHAREHOLDER DEFICIT
On
December 15, 2021, the Company filed with the Nevada Secretary of State amended and restated articles of incorporation. The amended and
restated articles had the effect of (i) increasing the Company’s authorized common stock to 100 million shares, (ii) increasing
the Company’s authorized preferred stock to 20 million shares, and (iii) reducing the par value of each of the Company’s
common stock and preferred stock to $0.0001 per share. Common
stock and additional paid-in capital for all periods presented in these financial statements have been adjusted retroactively to reflect
the reduction in par value.
On
March 11, 2022, the Company filed with the State of Nevada a certificate of designations for the Company’s Series A Convertible
Preferred Stock (“Series A Stock”). The Series A Certificate of Designations provides (i) the number of authorized shares
will be 100,
(ii) each share will have a stated value of $50,000,
(iii) each share is convertible into 100,000
shares of Company common stock, subject to a
9.99%
equity blocker, (iv) shares are non-voting, and (v) shares are not entitled to receive dividends or distributions.
Warrants
On
March 16, 2022, the Company entered into Stock Purchases Agreements whereby the Company issued 22 shares to Series A Stock and various
Warrants for $1,100,000 in cash. The Warrants comprise of 2,200,000 Company common stock issuable at $1.30 per share, 2,200,000 Company
common stock issuable at $1.50 per share and 2,200,000 Company common stock issuable at $1.75 per share. Upon issuance on March 16, 2022,
the Warrant remains exercisable for a period of five years.
On
August 12, 2022, the Company issued a common stock purchase warrant in conjunction with a Promissory Note. The Warrant comprise of 20,000
Company common stock issuable at $0.75 per share. Upon issuance on August 12, 2022, the Warrant remains exercisable for a period of three
years.
The
weighted average remaining legal life of the warrants outstanding at December 31, 2022 is 4.20 years.
Forward
Stock Split
On
July 15, 2022, the Company’s director and shareholders approved an amendment of the Company’s Articles of Incorporation that,
if filed, would effect a 10-for-1 forward stock split of the Company’s common stock (the “Forward Split”). The Forward
Split is subject to clearance by the Financial Industry Regulatory Authority (“FINRA”), and the Company will not effect the
Forward Split until it is cleared by FINRA. The Board retains authority to abandon the Forward Split for any reason at any time prior
to effecting the Forward Split.