UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2020

 

¨ TRANSITION REPORT UNDER SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission file number: 333-174759

 

INTEGRATED VENTURES, INC.

(Exact Name of Registrant as Specified in Its charter)

 

Nevada

 

82-1725385

(State or Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

73 Buck Road, Suite 2, Huntingdon Valley, PA 19006

(Address of principal executive offices) (Zip Code)

 

 (215) 613-1111

(Registrant’s Telephone Number, Including Area Code)

 

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit such files. Yes x No o.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

 

The number of shares outstanding of the issuer’s common stock, $0.001 par value per share, was 87,954,180 as of May 11, 2020. 

 

 

 

 

INTEGRATED VENTURES, INC.

FORM 10-Q

MARCH 31, 2020

 

TABLE OF CONTENTS

 

 

 

Page No.

 

PART I: FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements

 

3

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

26

 

Item 3.

Quantitative and Qualitative Disclosure About Market Risk

 

35

 

Item 4.

Controls and Procedures

 

35

 

PART II: OTHER INFORMATION

 

Item 1.

Legal Proceedings

 

37

 

Item 1A.

Risk Factors

 

37

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

38

 

Item 3.

Defaults Upon Senior Securities

 

38

 

Item 4.

Mine Safety Disclosures

 

38

 

Item 5.

Other Information

 

38

 

Item 6.

Exhibits

 

39

 

SIGNATURES

40

 

 
2

Table of Contents

 

PART I – FINANCIAL INFORMATION

 

INDEX TO FINANCIAL STATEMENTS

 

 

 

Page

 

 

 

 

Condensed Balance Sheets as of March 31, 2020 (unaudited) and June 30, 2019

 

4

 

 

 

 

Condensed Statements of Operations for the Three Months and Nine Months Ended March 31, 2020 and 2019 (unaudited)

 

5

 

 

 

 

Condensed Statement of Stockholders’ Deficit for the Nine Months Ended March 31, 2020 (unaudited)

 

6

 

 

 

 

Condensed Statement of Stockholders’ Equity (Deficit) for the Nine Months Ended March 31, 2019 (unaudited)

 

7

 

 

 

 

Condensed Statements of Cash Flows for the Nine Months Ended March 31, 2020 and 2019 (unaudited)

 

8

 

 

 

 

Notes to Condensed Financial Statements (unaudited)

 

10

 

 

 
3

Table of Contents

 

Integrated Ventures, Inc.

Condensed Balance Sheets

 

 

 

March 31,
2020

 

 

June 30,
2019

 

 

(Unaudited)

 

 

 

 

ASSETS

Current assets:

 

 

 

 

 

 

Cash

 

$ 101,337

 

 

$ 48,310

 

Prepaid expenses and other current assets

 

 

6,500

 

 

 

3,250

 

Equipment deposits

 

 

-

 

 

 

27,971

 

Total current assets

 

 

107,837

 

 

 

79,531

 

 

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

752,837

 

 

 

1,039,683

 

Digital currencies

 

 

2,361

 

 

 

2

 

Deposits

 

 

700

 

 

 

700

 

Total assets

 

$ 863,735

 

 

$ 1,119,916

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$ 37,007

 

 

$ 39,028

 

Accrued expenses

 

 

25,584

 

 

 

24,456

 

Due to related party

 

 

109,389

 

 

 

69,854

 

Derivative liabilities

 

 

254,528

 

 

 

1,617,774

 

Convertible notes payable, net of discounts

 

 

440,443

 

 

 

457,147

 

Total current liabilities

 

 

866,951

 

 

 

2,208,259

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

866,951

 

 

 

2,208,259

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

 

 

 

 

Series A preferred stock, $0.001 par value, (1,000,000 shares authorized, 500,000 shares issued and outstanding as of March 31, 2020 and June 30, 2019)

 

 

500

 

 

 

500

 

Series B preferred stock, $0.001 par value, (500,000 shares authorized, 430,000 and 300,000 shares issued and outstanding as of March 31, 2020 and June 30, 2019, respectively)

 

 

430

 

 

 

300

 

Common stock, $0.001 par value, (250,000,000 shares authorized, 87,954,180 and 29,824,187 shares issued and outstanding as of March 31, 2020 and June 30, 2019, respectively)

 

 

87,955

 

 

 

29,825

 

Additional paid-in capital

 

 

21,464,686

 

 

 

19,864,239

 

Accumulated deficit

 

 

(21,556,787 )

 

 

(20,983,207 )

Total stockholders’ deficit

 

 

(3,216 )

 

 

(1,088,343 )

Total liabilities and stockholders’ deficit

 

$ 863,735

 

 

$ 1,119,916

 

 

See notes to condensed financial statements

 

 
4

Table of Contents

 

Integrated Ventures, Inc.

Condensed Statements of Operations

(Unaudited)

 

 

 

Three Months Ended
March 31,

 

 

Nine Months Ended
March 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Cryptocurrency mining

 

$ 130,062

 

 

$ 45,496

 

 

$ 363,541

 

 

$ 223,874

 

Sales of cryptocurrency mining equipment

 

 

848

 

 

 

1,108

 

 

 

10,511

 

 

 

25,445

 

Total revenues

 

 

130,910

 

 

 

46,604

 

 

 

374,052

 

 

 

249,319

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

261,484

 

 

 

193,563

 

 

 

753,703

 

 

 

627,719

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross loss

 

 

(130,574 )

 

 

(146,959 )

 

 

(379,651 )

 

 

(378,400 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

205,465

 

 

 

339,987

 

 

 

399,990

 

 

 

1,070,421

 

Impairment of assets

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,097,930

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

205,465

 

 

 

339,987

 

 

 

399,990

 

 

 

3,168,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(336,039 )

 

 

(486,946 )

 

 

(779,641 )

 

 

(3,546,751 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(90,824 )

 

 

(60,889 )

 

 

(573,561 )

 

 

(105,541 )

Realized loss on investments

 

 

(562 )

 

 

(1,060 )

 

 

(6,158 )

 

 

(33,564 )

Gain (loss) on conversion of debt

 

 

10,168

 

 

 

-

 

 

 

(4,592 )

 

 

-

 

Digital currency theft loss

 

 

-

 

 

 

-

 

 

 

(33,037 )

 

 

-

 

Change in fair value of derivative liabilities

 

 

(27,414 )

 

 

2,744

 

 

 

823,409

 

 

 

1,968,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other income (expense)

 

 

(108,632 )

 

 

(59,205 )

 

 

206,061

 

 

 

1,829,154

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(444,671 )

 

 

(546,151 )

 

 

(573,580 )

 

 

(1,717,597 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$ (444,671 )

 

$ (546,151 )

 

$ (573,580 )

 

$ (1,717,597 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$ (0.01 )

 

$ (0.05 )

 

$ (0.01 )

 

$ (0.17 )

Diluted

 

$ (0.01 )

 

$ (0.05 )

 

$ (0.01 )

 

$ (0.17 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

80,513,126

 

 

 

11,571,318

 

 

 

56,552,143

 

 

 

10,221,220

 

Diluted

 

 

80,513,126

 

 

 

11,571,318

 

 

 

56,552,143

 

 

 

10,221,220

 

 

See notes to condensed financial statements

 

 
5

Table of Contents

 

Integrated Ventures, Inc.

Condensed Statement of Stockholders’ Deficit

Nine Months Ended March 31, 2020 (Unaudited)

 

 

 

Series A
Preferred Stock

 

 

Series B
Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Stock
Subscriptions

 

 


Accumulated

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Payable

 

 

Deficit

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2019

 

 

500,000

 

 

$ 500

 

 

 

300,000

 

 

$ 300

 

 

 

29,824,187

 

 

$ 29,825

 

 

$ 19,864,239

 

 

$ -

 

 

$ (20,983,207 )

 

$ (1,088,343 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares in Series B preferred stock Exchange Agreement

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

8,000,000

 

 

 

8,000

 

 

 

471,800

 

 

 

-

 

 

 

-

 

 

 

479,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares in conversion of convertible notes payable

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

53,129,993

 

 

 

53,130

 

 

 

675,386

 

 

 

-

 

 

 

-

 

 

 

728,516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return and cancellation of common shares and reissuance of Series B preferred stock

 

 

-

 

 

 

-

 

 

 

30,000

 

 

 

30

 

 

 

(3,000,000 )

 

 

(3,000 )

 

 

2,970

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series B preferred stock to officer for compensation

 

 

-

 

 

 

-

 

 

 

100,000

 

 

 

100

 

 

 

-

 

 

 

-

 

 

 

119,900

 

 

 

-

 

 

 

-

 

 

 

120,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Settlement of derivative liabilities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

330,391

 

 

 

-

 

 

 

-

 

 

 

330,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(573,580 )

 

 

(573,580 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2020

 

 

500,000

 

 

$ 500

 

 

 

430,000

 

 

$ 430

 

 

 

87,954,180

 

 

$ 87,955

 

 

$ 21,464,686

 

 

$ -

 

 

$ (21,556,787 )

 

$ (3,216 )

 

See notes to condensed financial statements

 

 
6

Table of Contents

 

Integrated Ventures, Inc.

Condensed Statement of Stockholders’ Equity (Deficit)

Nine Months Ended March 31, 2019 (Unaudited)

 

 

 

Series A
Preferred Stock

 

 

Series B
Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Stock
Subscriptions

 

 


Accumulated

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Payable

 

 

Deficit

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2018

 

 

500,000

 

 

$ 500

 

 

 

309,166

 

 

$ 309

 

 

 

8,964,103

 

 

$ 8,965

 

 

$ 9,290,344

 

 

$ 35,000

 

 

$ (11,469,936 )

 

$ (2,134,818 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series B preferred stock to officer for compensation

 

 

-

 

 

 

-

 

 

 

20,000

 

 

 

20

 

 

 

-

 

 

 

-

 

 

 

668,980

 

 

 

-

 

 

 

-

 

 

 

669,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series B preferred stock for
property and equipment

 

 

-

 

 

 

-

 

 

 

38,018

 

 

 

38

 

 

 

-

 

 

 

-

 

 

 

3,003,384

 

 

 

-

 

 

 

-

 

 

 

3,003,422

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series B preferred stock for
stock subscriptions payable

 

 

-

 

 

 

-

 

 

 

3,500

 

 

 

4

 

 

 

-

 

 

 

-

 

 

 

34,996

 

 

 

(35,000 )

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return and cancellation of Series B
preferred stock

 

 

-

 

 

 

-

 

 

 

(3,000 )

 

 

(3 )

 

 

-

 

 

 

-

 

 

 

3

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of Series B preferred stock
to common stock

 

 

-

 

 

 

-

 

 

 

(35,018 )

 

 

(35 )

 

 

3,501,800

 

 

 

3,502

 

 

 

(3,467 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issued for consulting fees

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

200,000

 

 

 

200

 

 

 

79,960

 

 

 

-

 

 

 

-

 

 

 

80,160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issued in cashless exercise of warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,200,000

 

 

 

1,200

 

 

 

691

 

 

 

-

 

 

 

-

 

 

 

1,891

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issued for debt discount

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

150,000

 

 

 

150

 

 

 

53,100

 

 

 

-

 

 

 

-

 

 

 

53,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issued in conversion of
convertible notes payable

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

919,336

 

 

 

919

 

 

 

124,515

 

 

 

-

 

 

 

-

 

 

 

125,434

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash received for common stock
subscription

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

25,000

 

 

 

-

 

 

 

25,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,717,597 )

 

 

(1,717,597 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2019

 

 

500,000

 

 

$ 500

 

 

 

332,666

 

 

$ 333

 

 

 

14,935,239

 

 

$ 14,936

 

 

$ 13,252,506

 

 

$ 25,000

 

 

$ (13,187,533 )

 

$ 105,742

 

 

See notes to condensed financial statements

 

 
7

Table of Contents

  

Integrated Ventures, Inc.

Condensed Statements of Cash Flows

(Unaudited)

 

 

Nine Months Ended
March 31,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$ (573,580 )

 

$ (1,717,597 )

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

438,166

 

 

 

383,912

 

Amortization of debt discount

 

 

513,950

 

 

 

93,725

 

Loan fees added to debt principal

 

 

20,000

 

 

 

-

 

Change in fair value of derivative liabilities

 

 

(823,409 )

 

 

(1,968,259 )

Loss on conversion of debt

 

 

4,592

 

 

 

-

 

Realized loss on sale of investments

 

 

5,911

 

 

 

33,564

 

Digital currency theft loss

 

 

33,037

 

 

 

-

 

Stock-based compensation – related party

 

 

120,000

 

 

 

669,000

 

Stock-based compensation

 

 

-

 

 

 

80,160

 

Impairment of assets

 

 

-

 

 

 

2,097,930

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Digital currencies

 

 

(453,070 )

 

 

(224,933 )

Prepaid expenses and other current assets

 

 

(3,250 )

 

 

2,500

 

Accounts payable

 

 

(2,021 )

 

 

10,876

 

Accrued expenses

 

 

41,060

 

 

 

1,998

 

Due to related party

 

 

39,535

 

 

 

53,288

 

Net cash used in operating activities

 

 

(639,079 )

 

 

(483,836 )

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Net proceeds from the sale of digital currencies

 

 

411,763

 

 

 

203,563

 

Purchase of property and equipment

 

 

(123,349 )

 

 

(42,447 )

Net cash provided by investing activities

 

 

288,414

 

 

 

161,116

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from convertible notes payable

 

 

534,000

 

 

 

338,945

 

Repayment of convertible notes payable

 

 

(130,308 )

 

 

-

 

Proceeds from stock subscriptions payable

 

 

-

 

 

 

25,000

 

Net cash provided by financing activities

 

 

403,692

 

 

 

363,945

 

 

 

 

 

 

 

 

 

 

Net increase in cash

 

 

53,027

 

 

 

41,225

 

Cash, beginning of period

 

 

48,310

 

 

 

41,070

 

 

 

 

 

 

 

 

 

 

Cash, end of period

 

$ 101,337

 

 

$ 82,295

 

 

(Continued) 

 

See notes to condensed financial statements 

 

 
8

Table of Contents

  

Integrated Ventures, Inc.

Condensed Statements of Cash Flows (Continued)

(Unaudited)

 

 

Nine Months Ended
March 31,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$ 1,160

 

 

$ 29,257

 

Cash paid for income taxes

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Equipment deposits for property and equipment

 

$ 27,971

 

 

$ 3,896

 

Debt discount for derivative liabilities

 

 

270,354

 

 

 

128,167

 

Common shares issued for convertible notes payable

 

 

723,924

 

 

 

90,000

 

Settlement of derivative liabilities

 

 

330,391

 

 

 

35,434

 

Common shares issued in Series B preferred stock Exchange Agreement

 

 

479,800

 

 

 

-

 

Return and cancellation of common shares and reissuance of Series B preferred stock

 

 

3,000

 

 

 

-

 

Series B preferred shares for property and equipment

 

 

-

 

 

 

-

 

Series B preferred shares issued for stock subscription payable

 

 

-

 

 

 

35,000

 

Common shares issued for cashless exercise of warrants

 

 

-

 

 

 

1,891

 

Common shares issued for debt discount

 

 

-

 

 

 

53,250

 

Common shares issued for conversion of Series B preferred stock

 

 

-

 

 

 

3,502

 

Series B preferred shares for property and equipment

 

 

-

 

 

 

3,003,422

 

Series B preferred shares returned and cancelled

 

 

-

 

 

 

3

 

 

See notes to condensed financial statements

 

 
9

Table of Contents

 

Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

 

1. ORGANIZATION AND BASIS OF PRESENTATION

 

Organization

 

Integrated Ventures, Inc. (the "Company," "we," "our," or "EMS Find") was incorporated in the State of Nevada on March 22, 2011, under the name of Lightcollar, Inc. On March 20, 2015, the Company amended its articles of incorporation and changed its name from Lightcollar, Inc. to EMS Find, Inc. On May 30, 2017, Integrated Ventures, Inc. (“Integrated Ventures”), a Nevada corporation, was formed as a wholly owned subsidiary of the Company. Pursuant to an Agreement and Plan of Merger dated May 30, 2017, Integrated Ventures was merged into the Company, with the Company being the surviving corporation and changing its name to Integrated Ventures, Inc.

 

The Company has discontinued its prior operations and changed its business focus from its prior technologies relating to the EMS Find platform to acquiring, launching and operating companies in the cryptocurrency sector, mainly in digital currency mining, equipment manufacturing, and sales of branded mining rigs, as well as blockchain software development.

 

The Company is developing and acquiring a diverse portfolio of digital currency assets and block chain technologies and mining revenues commenced in November 2017. Cryptocurrencies are a medium of exchange that uses decentralized control (a block chain) as opposed to a central bank to track and validate transactions. The Company, through its wholly owned subsidiary, BitcoLab, Inc., is currently mining Bitcoin, Litecoin and Ethereum, whereby the Company earns revenue by solving “blocks” to be added to the block chain. 

 

In May 2019, the Company consolidated all of its mining operations and signed a three-year lease and power purchase agreement with PetaWatt Properties, LLC, located in upstate New York.

 

Basis of Presentation

 

The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("US GAAP") for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. The results of operations for the interim periods ended March 31, 2020 shown in this report are not necessarily indicative of results to be expected for the full fiscal year ending June 30, 2020. In the opinion of the Company's management, the information contained herein reflects all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company's results of operations, financial position and cash flows. The unaudited interim financial statements should be read in conjunction with the audited financial statements in the Company's Annual Report on Form 10-K for the year ended June 30, 2019 filed on September 30, 2019 and Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The significant accounting policies of the Company are disclosed in Notes to Financial Statements included in the Company’s Annual Report on Form 10-K. The following summary of significant accounting policies of the Company is presented to assist in understanding the Company’s interim financial statements. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Because of the use of estimates inherent in the financial reporting process, actual results could differ significantly from those estimates.

 

 
10

Table of Contents

 

Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

  

Digital Currencies

 

Digital currencies consist of Bitcoin, Litecoin and Ethereum, generally received for the Company’s own account as compensation for cryptocurrency mining services. Given that there is limited precedent regarding the classification and measurement of cryptocurrencies under current Generally Accepted Accounting Principles (“GAAP”), the Company has determined to account for these digital currencies as indefinite-lived intangible assets in accordance with Accounting Standards Update ("ASU") No. 350, Intangibles – Goodwill and Other, for the period covered by this report and in future reports unless and until further guidance is issued by the Financial Accounting Standards Board (“FASB”). 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. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not than an impairment exists. If it is determined that it is more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. Realized gains or losses on the sale of digital currencies are included in other income (expense) in the statements of operations.

 

Property and Equipment

 

Property and equipment, consisting primarily of computer and other cryptocurrency mining equipment (transaction verification servers) and leasehold improvements, is stated at the lower of cost or estimated realizable value and is depreciated when placed into service using the straight-line method over estimated useful lives. The Company operates in an emerging industry for which limited data is available to make estimates of the useful economic lives of specialized equipment. Management has assessed the basis of depreciation of these assets and believes they should be depreciated over a three-year period due to technological obsolescence reflecting rapid development of hardware that has faster processing capacity and other factors. During the nine months ended March 31, 2019, the Company wrote down cryptocurrency mining equipment by $2,097,930 to estimated net realizable value. Maintenance and repairs are expensed as incurred and improvements are capitalized. Gains or losses on the disposition of property and equipment are recorded upon disposal.

 

Management has determined that the three-year diminishing value best reflects the current expected useful life of transaction verification servers. This assessment takes into consideration the availability of historical data and management’s expectations regarding the direction of the industry including potential changes in technology. Management will review this estimate annually and will revise such estimates as and when data becomes available.

 

To the extent that any of the assumptions underlying management’s estimate of useful life of its transaction verification servers are subject to revision in a future reporting period, either as a result of changes in circumstances or through the availability of greater quantities of data, then the estimated useful life could change and have a prospective impact on depreciation expense and the carrying amounts of these assets.

 

Payments to equipment suppliers prior to shipment of the equipment are recorded as equipment deposits.

 

Derivatives

 

The Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The result of this accounting treatment is that under certain circumstances the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under this accounting standard are reclassified to liability at the fair value of the instrument on the reclassification date.

 

 
11

Table of Contents

 

Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

 

Where the number of warrants or common shares to be issued under these agreements is indeterminate, the Company has concluded that the equity environment is tainted, and all additional warrants and convertible debt are included in the value of the derivatives.

 

We estimate the fair value of the derivatives associated with our convertible notes payable, common stock issuable pursuant to a Series B preferred stock Exchange Agreement and a stock subscription payable using, as applicable, either the Black-Scholes pricing model or multinomial lattice models that value the derivative liability based on a probability weighted discounted cash flow model using future projections of the various potential outcomes. We estimate the fair value of the derivative liabilities at the inception of the financial instruments, and, in the case of our convertible notes payable, at the date of conversions to equity and at each reporting date, recording a derivative liability, debt discount, additional paid-in capital and a gain or loss on change in derivative liabilities as applicable. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. These inputs are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.

 

Impairment of Long-Lived Assets

 

All assets, including intangible assets subject to amortization, are reviewed for impairment when changes in circumstances indicate that the carrying amount of the asset may not be recoverable in accordance with ASC 350 and ASC 360. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value or net realizable value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations. Total impairment expense, consisting of write downs for cryptocurrency mining equipment totaled $2,097,930 for the nine months ended March 31, 2019. We reported no impairment expense for the three months and nine months ended March 31, 2020.

 

Fair Value of Financial Instruments

 

Disclosures about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of March 31, 2020 and June 30, 2019, the amounts reported for cash, prepaid expenses and other current assets, equipment deposits, accounts payable, accrued expenses and due to related party approximate fair value because of their short maturities.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

 

 

·

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

 

 

 

 

·

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

 

 

 

 

·

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

 

 
12

Table of Contents

 

Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

 

Our derivative liabilities are measured at fair value on a recurring basis and estimated as follows:

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

March 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

$ 254,528

 

 

$ -

 

 

$ -

 

 

$ 254,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities measured at fair value

 

$ 254,528

 

 

$ -

 

 

$ -

 

 

$ 254,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

$ 1,617,774

 

 

$ -

 

 

$ -

 

 

$ 1,617,774

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities measured at fair value

 

$ 1,617,774

 

 

$ -

 

 

$ -

 

 

$ 1,617,774

 

 

Stock-Based Compensation

 

The Company accounts for all equity-based payments in accordance with ASC Topic 718, Compensation – Stock Compensation. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock awards, stock options, warrants and other equity-based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The fair value of a stock award is recorded at the fair market value of a share of the Company’s stock on the grant date. The Company estimates the fair value of stock options and warrants at the grant date by using an appropriate fair value model such as the Black-Scholes option pricing model or multinomial lattice models.

 

The Company accounts for non-employee share-based awards based upon ASC 505-50, Equity-Based Payments to Non-Employees. ASC 505-50 requires the costs of goods and services received in exchange for an award of equity instruments to be recognized using the fair value of the goods and services or the fair value of the equity award, whichever is more reliably measurable. The fair value of the equity award is determined on the measurement date, which is the earlier of the date that a performance commitment is reached or the date that performance is complete. Generally, our awards do not entail performance commitments. When an award vests over time such that performance occurs over multiple reporting periods, we estimate the fair value of the award as of the end of each reporting period and recognize an appropriate portion of the cost based on the fair value on that date. When the award vests, we adjust the cost previously recognized so that the cost ultimately recognized is equivalent to the fair value on the date the performance is complete.

 

Revenue Recognition

 

Effective July 1, 2018, we adopted ASC 606, Revenue from Contracts with Customers, as amended, using the modified retrospective method, which requires the cumulative effect of adoption to be recognized as an adjustment to opening retained earnings in the period of adoption. There was no cumulative effect of adopting the new standard and no impact on our financial statements. The new standard provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific guidance. The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, ASC 606 includes provisions within a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation.

 

 
13

Table of Contents

 

Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

 

Our revenues currently consist of cryptocurrency mining revenues and revenues from the sale of cryptocurrency mining equipment recognized in accordance with ASC 606 as discussed above. Amounts collected from customers prior to shipment of products are recorded as deferred revenue. 

 

The Company earns its cryptocurrency mining revenues by providing transaction verification services within the digital currency networks of cryptocurrencies, such as Bitcoin, Litecoin and Ethereum. The Company satisfies its performance obligation at the point in time that the Company is awarded a unit of digital currency through its participation in the applicable network and network participants benefit from the Company’s verification service. In consideration for these services, the Company receives digital currencies, which are recorded as revenue using the closing U.S. dollar price of the related cryptocurrency on the date of receipt. Expenses associated with running the cryptocurrency mining operations, such as equipment depreciation, rent, operating supplies, rent, utilities and monitoring services are recorded as cost of revenues.

 

There is currently no specific definitive guidance in GAAP or alternative accounting frameworks for the accounting for the production and mining of digital currencies and management has exercised significant judgment in determining appropriate accounting treatment for the recognition of revenue for mining of digital currencies. Management has examined various factors surrounding the substance of the Company’s operations and the guidance in ASC 606, including identifying the transaction price, when performance obligations are satisfied, and collectability is reasonably assured being the completion and addition of a block to a blockchain and the award of a unit of digital currency to the Company. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies which could result in a change in the Company’s financial statements.

 

Income Taxes

 

The Company adopted the provisions of ASC 740-10, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of January 31, 2020, tax years 2019, 2018, 2017, 2016 and 2015 remain open for IRS audit. The Company has received no notice of audit from the IRS for any of the open tax years.

 

The Company adopted ASC 740-10, Definition of Settlement in FASB Interpretation No. 48, (“ASC 740-10”), which was issued on May 2, 2007. ASC 740-10 amends FIN 48 to provide guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. The term “effectively settled” replaces the term “ultimately settled” when used to describe recognition, and the terms “settlement” or “settled” replace the terms “ultimate settlement” or “ultimately settled” when used to describe measurement of a tax position under ASC 740-10. ASC 740-10 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The adoption of ASC 740-10 did not have an impact on the accompanying financial statements.

 

 
14

Table of Contents

 

Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

 

Income (Loss) Per Share

 

Basic net income or loss per share is calculated by dividing net income or loss by the weighted average number of common shares outstanding for the period. Diluted income or loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as “in-the-money” stock options and warrants, convertible debt and convertible preferred stock, were exercised or converted into common stock. Equivalent shares are not utilized when the effect is anti-dilutive. For the three months and nine months ended March 31, 2020 and 2019, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share, therefore, basic net loss per share is the same as diluted net loss per share.

 

Recently Issued Accounting Pronouncements

 

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” (Income Taxes Topic 740). The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general provision of Topic 740. The amendments also improve consistent application of and simplify General Accepted Accounting Principles for other areas of Topic 740 by clarifying and amending existing practice. For public entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption of the amendments is permitted. The Company is currently unable to determine the impact on its consolidated financial statements of the implementation of this ASU.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. This new pronouncement, as amended, was effective January 1, 2019 for calendar-year-end public companies, and was adopted by the Company on July 1, 2019.

 

Adoption of the new lease pronouncement did not have a material impact on the Company’s financial statements. The Company concluded that the new lease pronouncement is not applicable to its New York lease and power purchase agreement, for which the Company’s sole obligation is to pay the lessor a contractual dollar amount per kilowatt hour of electricity consumed in the Company’s cryptocurrency mining operations.

 

Although there are other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.

 

Reclassifications

 

Certain amounts in the condensed financial statements for the prior-year periods have been reclassified to conform to the presentation for the current-year periods.

 

3. GOING CONCERN

 

The Company has reported recurring operating losses since its inception and used net cash in operating activities of $639,079 in the nine months ended March 31, 2020. As of March 31, 2020, the Company had an accumulated deficit of $21,556,787. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

 

The accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The ability of the Company to reach a successful level of operations is dependent on the execution of management's plans, which include the raising of capital through the debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. If the Company were not to continue as a going concern, it would likely not be able to realize its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the financial statements.

 

 
15

Table of Contents

 

Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

  

There can be no assurances that the Company will be successful in attaining a profitable level of operations or in generating additional cash from the equity/debt markets or other sources fund its operations. The financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary. Should the Company not be successful in its business plan or in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all operational activities and/or contemplate the sale of its assets, if necessary.

 

4. PROPERTY AND EQUIPMENT

 

Property and equipment consisted of the following at:

 

 

 

March 31,
2020

 

 

June 30,
2019

 

 

 

 

 

 

 

 

Cryptocurrency mining equipment

 

$ 1,730,900

 

 

$ 1,579,580

 

Furniture and equipment

 

 

16,366

 

 

 

16,366

 

 

 

 

 

 

 

 

 

 

Total

 

 

1,747,266

 

 

 

1,595,946

 

Less accumulated depreciation and amortization

 

 

(994,429 )

 

 

(556,263 )

 

 

 

 

 

 

 

 

 

Net

 

$ 752,837

 

 

$ 1,039,683

 

 

Depreciation and amortization expense, included in cost of revenues, was $143,924 and $136,916 for the three months ended March 31, 2020 and 2019, respectively, and $438,166 and $383,912 for the nine months ended March 31, 2020 and 2019, respectively.

 

5. ASSET PURCHASE AGREEMENT

 

On August 2, 2018, the Company entered into an Asset Purchase Agreement with Secure Hosting LLC, a Florida limited liability, for the purchase of 182 Ethereum mining machines.

 

As consideration for the purchase of the machines, the Company issued 38,018 restricted shares of its Series B convertible preferred stock, valued on an “as converted to common” basis at an aggregate of $3,003,422, based on the market value of the Company’s common stock on the date of the transaction.

 

Of the 182 machines purchased, 152 were placed into operations, and 30 units deemed to be under-performing will be utilized by the Company as repair parts or sold as repair parts. The Company performed a lower of cost or market impairment analysis on the machines purchased, including writing off the purchase price allocated to the defective machines, and recorded an impairment expense of $2,097,930, which amount is included in operating expenses for the nine months ended March 31, 2019.

 

The Agreement contains customary representations and warranties and covenants as of the Closing Date, including, without limitation, that the Equipment is (i) in good condition, (ii) free of all liens, (iii) not subject to any intellectual property rights other than software used in the Equipment and (iv) covered by certain manufacturer warranties. Because a portion of the machines were defective, certain shares of the Series B preferred stock issued in the transaction were subsequently returned to the Company and cancelled.

 

 
16

Table of Contents

 

Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

 

6. DIGIMINE ACQUISITION AND PREFERRED STOCK EXCHANGE AGREEMENT

 

In April 2018, the Company acquired the digital currency mining operations of digiMine LLC (“digiMine”) through two Asset Purchase Agreements (the “digiMine Acquisition”) in a transaction recorded as a business combination.

 

On April 16, 2018, the Company entered into an Asset Purchase Agreement with digiMine for the purchase of digiMine’s digital currency mining assets located in Marlboro, New Jersey, the principal assets consisting of: 150 cryptocurrency mining machines; all right, title and interest in, the lease and leasehold improvements for the premises on which digiMine’s business operates; all books and records pertaining to ownership of digiMine’s business as applicable; and restricted cash of $175,000. The Company issued 16,666 shares of its Series B preferred stock to digiMine.

 

The Company also entered into a separate Security and Pledge Agreement, dated as of April 13, 2018, securing its obligations to digiMine under the Asset Purchase Agreement.

 

digiMine has the right (the “Put-Back Right”), at any time commencing April 1, 2019, to require that the Company redeem for cash any of Seller’s then-outstanding Shares at a redemption price equal to 72% of the Shares. The Conversion Amount on execution is equal to $1,200,000 (the “Put-Back Price”) of such Shares; provided, that the Put Back Right expires with respect to any of the Shares at such time as the Shares are registered for resale. Each of the Shares for purposes of the Put-Back Price is equal to a fixed price of $100 per share.

 

On April 30, 2018, the Company entered into a second Asset Purchase Agreement with digiMine for the purchase of digiMine’s digital currency mining assets located in Marlboro, New Jersey, the principal assets consisting of: 97 cryptocurrency mining machines and computer workstation; digital currency portfolio with an estimated value of $15,487; all right, title and interest in, the lease and leasehold improvements for the premises on which digiMine’s business operates; all books and records pertaining to ownership of digiMine’s business as applicable; and restricted cash of $200,000. The Company issued 20,000 shares of its Series B preferred stock to digiMine.

 

The Company also entered into a separate Security and Pledge Agreement, dated as of April 30, 2018, securing its obligations to digiMine under the Agreement.

 

digiMine has the right (the “Put-Back Right”), at any time commencing May 1, 2019, to require that the Company redeem for cash any of Seller’s then-outstanding Shares at a redemption price equal to 72% of the Shares. The Conversion Amount on execution is equal to $1,440,000 (the “Put-Back Price”) of such Shares; provided, that the Put Back Right expires with respect to any of the Shares at such time as the Shares are registered for resale. Each of the Shares for purposes of the Put-Back Price is equal to a fixed price of $100 per share.

 

The Company has identified the Put-Back Rights associated with the two Asset Purchase Agreements as derivatives.

 

The Company engaged an independent valuation firm to estimate the fair value of the Series B preferred stock issued in the two Asset Purchase Agreements, to estimate the value of the derivative liabilities associated with the Put-Back Rights, and allocate the total consideration paid to the assets acquired. The valuation firm developed multinomial lattice models that valued the derivative liability based on a probability weighted discounted cash flow model using future projections of the various potential outcomes.

 

The total consideration paid in the Acquisition is summarized as follows:

 

Value of 36,667 total Series B preferred shares

 

$ 1,163,806

 

Derivative liabilities associated with Put-Back Rights

 

 

3,729,109

 

 

 

 

 

 

Total consideration paid

 

$ 4,892,915

 

 
17

Table of Contents

 

Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

 

The total consideration paid was allocated to the fair value of the assets acquired as follows:

 

Restricted cash

 

$ 375,000

 

Property and equipment

 

 

350,349

 

Digital currencies

 

 

14,056

 

Goodwill

 

 

4,153,510

 

 

 

 

 

 

Total consideration allocated

 

$ 4,892,915

 

 

No liabilities of digiMine were assumed by the Company in the Acquisition. The excess of consideration paid over fair value of assets acquired was recorded as goodwill.

 

The Company performed an impairment analysis on the goodwill at June 30, 2018 and recorded an impairment expense of $4,153,510, which amount is included in operating expenses for the year ended June 30, 2018. The total cash acquired of $375,000 was restricted to fund digital mining operations. As of June 30, 2019, the restricted cash had been fully utilized in digital mining operations.

 

On May 21, 2019, the Company and digiMine entered into an Exchange Agreement (the “Preferred Stock Exchange Agreement”) pursuant to which DigiMine agreed to surrender the remaining 20,000 shares of the Company’s Series B preferred stock held by it and terminate its rights under the Security and Pledge Agreement, dated April 30, 2018, in exchange for 10,000,000 shares (“Exchange Shares”) of the Company’s common stock, which are to be issued in ten tranches of 1,000,000 shares each beginning ten trading days after the date of the Exchange Agreement and each ten trading days thereafter. The Company identified a derivative liability associated with the obligation to issue the common shares recorded initially at $1,650,000 and recorded a loss on the Series B preferred stock exchange of $1,650,000.

 

With the sale of the 16,666 shares of Series B preferred stock by digiMine in April and May of 2019 and with the completion of the Exchange Agreement, the Put-Back Rights in connection with the April 16 and April 30, 2018 Asset Purchase Agreements have been eliminated and the associated derivative liability settled. During the nine months ended March 31, 2020, the Company issued digiMine a total of 8,000,000 common shares valued at $479,800 pursuant to the Preferred Stock Exchange Agreement, extinguishing the obligation in full.

 

7. RELATED PARTY TRANSACTIONS

 

We have one executive officer, Steve Rubakh, who is currently our only full-time employee and sole member of our Board of Directors. Mr. Rubakh is paid an annual salary established by the Board of Directors and is issued shares of Series B preferred stock for additional compensation. The number of shares issued, generally on a quarterly basis, is at the discretion of the Board of Directors.

 

On February 25, 2020, the Company issued to Mr. Rubakh 100,000 total shares of Series B convertible preferred stock valued on an “as converted to common” basis at $120,000. On July 1, 2018, the Company issued to Mr. Rubakh 5,000 shares of Series B convertible preferred stock valued on an “as converted to common” basis at $417,000. The stock-based compensation – related party is included in general and administrative expenses in the accompanying statements of operations.

 

On February 27, 2020, Mr. Rubakh returned 3,000,000 shares of the Company’s common stock and was issued 30,000 shares of the Company’s Series B preferred stock. The common shares returned were previously issued to Mr. Rubakh in conversion of 30,000 shares of Series B preferred stock. The common shares were canceled and the transaction was recorded at the par value of the common and Series B preferred stock.

 

 
18

Table of Contents

 

Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

 

8. CONVERTIBLE NOTES PAYABLE

 

Convertible notes payable, all classified as current, consist of the following:

 

 

 

March 31, 2020

 

 

June 30, 2019

 

 

 

 

 

 

Debt

 

 

 

 

 

 

 

 

Debt

 

 

 

 

 

 

Principal

 

 

Discount

 

 

Net

 

 

Principal

 

 

Discount

 

 

Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geneva Roth Remark Holdings, Inc. #2

 

$ -

 

 

$ -

 

 

$ -

 

 

$ 43,000

 

 

$ 11,582

 

 

$ 31,418

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geneva Roth Remark Holdings, Inc. #3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

78,000

 

 

 

24,253

 

 

 

53,747

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geneva Roth Remark Holdings, Inc. #4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

63,000

 

 

 

21,605

 

 

 

41,395

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BHP Capital NY, Inc. #2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

38,500

 

 

 

16,748

 

 

 

21,752

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Armada Investment Fund, LLC #2

 

 

38,500

 

 

 

-

 

 

 

38,500

 

 

 

38,500

 

 

 

16,747

 

 

 

21,753

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jefferson Street Capital LLC

 

 

-

 

 

 

-

 

 

 

-

 

 

 

38,500

 

 

 

16,747

 

 

 

21,753

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

St. George Investments LLC

 

 

-

 

 

 

-

 

 

-

 

 

 

500,000

 

 

 

234,671

 

 

 

265,329

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Armada Investment Fund, LLC #3

 

 

99,200

 

 

 

12,166

 

 

 

87,034

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BHP Capital NY, Inc. #3

 

 

122,500

 

 

 

15,741

 

 

 

106,759

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BHP Capital NY, Inc. #4

 

 

66,000

 

 

 

20,939

 

 

 

45,061

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Armada Investment Fund, LLC #5

 

 

20,000

 

 

 

4,748

 

 

 

15,252

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Armada Investment Fund, LLC #6

 

 

22,000

 

 

 

6,800

 

 

 

15,200

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BHP Capital NY, Inc. #5

 

 

83,333

 

 

 

34,594

 

 

 

48,739

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BHP Capital NY, Inc. #6

 

 

60,500

 

 

 

26,257

 

 

 

34,243

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Armada Investment Fund, LLC #7

 

 

88,000

 

 

 

38,345

 

 

 

49,655

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$ 600,033

 

 

$ 159,590

 

 

$ 440,443

 

 

$ 799,500

 

 

$ 342,353

 

 

$ 457,147

 

 

On February 6, 2019, the Company entered into a second convertible promissory note with Geneva Roth Remark Holdings, Inc. (“Geneva” in the principal amount of $43,000. The note matures on February 6, 2020 and bears interest at 10%. A debt discount of $19,128 was recorded, including a derivative liability of $16,128. Geneva has the right beginning on the date that is 170 days following the date of the note to convert principal and accrued interest into shares of the Company’s common stock.  The conversion price is 70% of the average of the three lowest trading prices (closing bid prices) of the Company’s common stock during the ten trading days ending on the latest complete trading day prior to the date of conversion.  In August 2019, Geneva converted the entire principal of $43,000 and accrued interest payable of $2,150 into common shares of the Company, extinguishing the debt in full.  As of March 31, 2020, the debt discount had been amortized in full to interest expense.

 

 
19

Table of Contents

 

Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

 

On March 21, 2019, the Company entered into a third convertible promissory note with Geneva in the principal amount of $78,000. The note matures on March 21, 2020 and bears interest at 10%. A debt discount of $33,496 was recorded, including a derivative liability of $30,496. Geneva has the right beginning on the date that is 170 days following the date of the note to convert principal and accrued interest into shares of the Company’s common stock.  The conversion price is 70% of the average of the three lowest trading prices (closing bid prices) of the Company’s common stock during the ten trading days ending on the latest complete trading day prior to the date of conversion.  In September and October 2019, Geneva converted principal of $78,000 and accrued interest of $3,900 into common shares of the Company, extinguishing the debt in full.  As of March 31, 2020, the debt discount had been amortized in full to interest expense.

 

On April 18, 2019, the Company entered into a fourth convertible promissory note with Geneva in the principal amount of $63,000. The note matures on April 18, 2020 and bears interest at 10%. A debt discount of $26,988 was recorded, including a derivative liability of $23,988. Geneva has the right beginning on the date that is 170 days following the date of the note to convert principal and accrued interest into shares of the Company’s common stock.  The conversion price is 70% of the average of the three lowest trading prices (closing bid prices) of the Company’s common stock during the ten trading days ending on the latest complete trading day prior to the date of conversion.  Pursuant to an Assignment Agreement dated October 11, 2019, Geneva assigned $63,000 principal and $3,003 accrued interest to Armada Investment Fund, LLC (“Armada”).  As of March 31, 2020, the debt discount had been amortized in full to interest expense.

 

On May 15, 2019, the Company entered into a second convertible promissory note with Armada in the principal amount of $38,500, with an original issue discount of $2,500. The note bears interest at 8%.  The maturity date of the note has been extended to August 15, 2020.  A debt discount of $20,098 was recorded, including a derivative liability of $15,598. Armada has the right beginning on the date that is 31 days following the date of the note to convert principal and accrued interest into shares of the Company’s common stock.  The conversion price is 70% of the average of the three lowest trading prices (lowest bid prices) of the Company’s common stock during the ten trading days ending on the latest complete trading day prior to the date of conversion.  As of March 31, 2020, the debt discount had been amortized in full to interest expense and there was accrued interest $2,709.  The Company recorded a derivative liability of $18,099 as of March 31, 2020.

 

On May 15, 2019, the Company entered into a second convertible promissory note with BHP Capital NY, Inc. (“BHP”) in the principal amount of $38,500, with an original issue discount of $2,500. The note matures on February 15, 2020 and bears interest at 8%.  A debt discount of $20,097 was recorded, including a derivative liability of $15,597. BHP has the right beginning on the date that is 31 days following the date of the note to convert principal and accrued interest into shares of the Company’s common stock.  The conversion price is 70% of the average of the three lowest trading prices (lowest bid prices) of the Company’s common stock during the ten trading days ending on the latest complete trading day prior to the date of conversion.  In November and December 2019 and January 2020, BHP converted the entire principal of $38,500, accrued interest of $1,933 and conversion fees of $1,000 into common shares of the Company, extinguishing the debt in full.  As of March 31, 2020, the debt discount had been amortized in full to interest expense.

 

On May 15, 2019, the Company entered into a convertible promissory note with Jefferson Street Capital LLC (“Jefferson”) in the principal amount of $38,500, with an original issue discount of $2,500. The note matures on February 15, 2020 and bears interest at 8%.  A debt discount of $20,097 was recorded, including a derivative liability of $15,597. Jefferson has the right beginning on the date that is 31 days following the date of the note to convert principal and accrued interest into shares of the Company’s common stock.  The conversion price is 70% of the average of the three lowest trading prices (lowest bid prices) of the Company’s common stock during the ten trading days ending on the latest complete trading day prior to the date of conversion.  In November and December 2019 and January 2020, Jefferson converted the entire principal of $38,500, accrued interest of $1,540 and conversion fees of $2,000 into common shares of the Company, extinguishing the debt in full.  As of March 31, 2020, the debt discount had been amortized in full to interest expense.

 

On June 26, 2019, the Company entered into an Exchange Agreement with St. George Investments LLC (“St. George”) pursuant to which a convertible promissory note payable to St. George in the principal amount of $500,000 was issued in consideration for the surrender by St. George of all outstanding warrants, which amount was recorded as a loss on settlement of warrants. The warrants were issued by the Company on January 19, 2018. The maturity date of the note was extended to June 26, 2020. The note bears interest at 5%. A debt discount and derivative liability of $239,773 was recorded at the inception of the note. St. George has the right beginning on the date of the note to convert principal and accrued interest into shares of the Company’s common stock. The conversion price is 80% of the average of the three lowest closing prices of the Company’s common stock during the twenty trading days preceding the date of conversion. During the nine months ended March 31, 2020, St. George converted principal of $369,692 and accrued interest of $7,838 into common shares of the Company. The remaining principal balance of $130,308 and accrued interest of $1,160 were repaid in cash in March 2020. As of March 31, 2020, the debt discount had been amortized in full to interest expense.

 

 
20

Table of Contents

 

Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

  

On July 3, 2019, the Company entered into a third convertible promissory note with Armada in the principal amount of $137,500, with an original issue discount of $12,500. The note matures on July 3, 2020 and bears interest at 8%.  A debt discount of $73,573 was recorded, including a derivative liability of $59,573. Armada has the right beginning on the date that is 31 days following the date of the note to convert principal and accrued interest into shares of the Company’s common stock.  The conversion price is 70% of the average of the five lowest trading prices (lowest bid prices) of the Company’s common stock during the fifteen trading days ending on the latest complete trading day prior to the date of conversion.  During the February and March 2020, Armada converted principal of $38,300, accrued interest of $7,500 and fees of $1,000 into common shares of the Company, resulting in a principal balance of $99,200 at March 31, 2020.  As of March 31, 2020, debt discount of $61,407 had been amortized and there was accrued interest payable of $455. The Company recorded a derivative liability of $44,533 as of March 31, 2020.

 

On July 3, 2019, the Company entered into a third convertible promissory note with BHP in the principal amount of $137,500, with an original issue discount of $12,500. The note matures on July 3, 2020 and bears interest at 8%.  A debt discount of $73,584 was recorded, including a derivative liability of $59,584. BHP has the right beginning on the date that is 31 days following the date of the note to convert principal and accrued interest into shares of the Company’s common stock.  The conversion price is 70% of the average of the five lowest trading prices (lowest bid prices) of the Company’s common stock during the fifteen trading days ending on the latest complete trading day prior to the date of conversion.  In February 2020, BHP converted principal of $15,000, accrued interest of $6,540 and fees of $500 into common shares of the Company, resulting in a principal balance of $122,500 at March 31, 2020.  As of March 31, 2020, debt discount of $57,843 had been amortized and there was accrued interest payable of $1,493. The Company recorded a derivative liability of $52,245 as of March 31, 2020.

 

On October 11, 2019, Geneva assigned a convertible promissory note with a principal balance of $63,000 and accrued interest payable of $3,003 to Armada.  Armada assumed the right beginning on the date that is 170 days following April 18, 2019, the date of the original note, to convert principal and accrued interest into shares of the Company’s common stock.  The conversion price of the fourth Armada convertible note is 70% of the average of the three lowest trading prices (lowest bid prices) of the Company’s common stock during the ten trading days ending on the latest complete trading day prior to the date of conversion.  The Company and Armada also entered into an agreement on November 1, 2019 whereby Armada agreed to limit its conversions of this note to no more than $20,000 note principal every thirty days.  During November 2019 through January 2020, Armada converted the entire principal of $63,000 and accrued interest of $4,031 into common shares of the Company, extinguishing the debt in full.  As of March 31, 2020, the debt discount had been amortized in full to interest expense.

 

In consideration for the November 1, 2019 agreement to limit conversions of the fourth Armada note, the Company issued to Armada a fifth convertible promissory note in the principal amount of $20,000.  The note matures on November 1, 2020 and bears interest at 8%.  A debt discount of $8,082 was recorded, consisting of a derivative liability.  Armada has the right beginning on the date that is 31 days following the date of the note to convert principal and accrued interest into shares of the Company’s common stock.  The conversion price is 70% of the average of the five lowest trading prices (lowest bid prices) of the Company’s common stock during the fifteen trading days ending on the latest complete trading day prior to the date of conversion.  As of March 31, 2020, $3,334 of the debt discount had been amortized and there was accrued interest payable of $662. The Company recorded a derivative liability of $9,091 as of March 31, 2020.

 

On November 21, 2019, the Company entered into a sixth convertible promissory note with Armada in the principal amount of $22,000, with an original issue discount of $2,000. The note matures on November 21, 2020 and bears interest at 8%.  A debt discount of $10,590 was recorded, including a derivative liability of $8,090. Armada has the right beginning on the date that is 31 days following the date of the note to convert principal and accrued interest into shares of the Company’s common stock.  The conversion price is 70% of the average of the five lowest trading prices (lowest bid prices) of the Company’s common stock during the fifteen trading days ending on the latest complete trading day prior to the date of conversion.  As of March 31, 2020, $3,790 of the debt discount had been amortized and there was accrued interest payable of $632. The Company recorded a derivative liability of $8,899 as of March 31, 2020.

 

 
21

Table of Contents

 

Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

 

On December 2, 2019, the Company entered into a fourth convertible promissory note with BHP in the principal amount of $66,000, with an original issue discount of $6,000. The note matures on December 2, 2020 and bears interest at 8%.  A debt discount of $73,584 was recorded, including a derivative liability of $59,584. BHP has the right beginning on the date that is 31 days following the date of the note to convert principal and accrued interest into shares of the Company’s common stock.  The conversion price is 70% of the average of the three lowest trading prices (lowest bid prices) of the Company’s common stock during the fifteen trading days ending on the latest complete trading day prior to the date of conversion.  As of March 31, 2020, $10,214 of the debt discount had been amortized and there was accrued interest payable of $1,736. The Company recorded a derivative liability of $26,570 as of March 31, 2020.

 

On February 20, 2020, the Company entered into a fifth convertible promissory note with BHP in the principal amount of $83,333, with an original issue discount of $8,333. The note matures on November 20, 2020, and bears interest at 8%.  A debt discount of $40,507 was recorded, including a derivative liability of $30,674. BHP has the right beginning on the date that is 31 days following the date of the note to convert principal and accrued interest into shares of the Company’s common stock.  The conversion price is 70% of the average of the three lowest trading prices (lowest bid prices) of the Company’s common stock during the fifteen trading days ending on the latest complete trading day prior to the date of conversion.  As of March 31, 2020, $5,913 of the debt discount had been amortized and there was accrued interest payable of $731. The Company recorded a derivative liability of $33,177 as of March 31, 2020.

 

On March 4, 2020, the Company entered into a sixth convertible promissory note with BHP in the principal amount of $60,500, with an original issue discount of $6,500. The note matures on March 4, 2021, and bears interest at 8%.  A debt discount of $28,354 was recorded, including a derivative liability of $22,854. BHP has the right beginning on the date that is 31 days following the date of the note to convert principal and accrued interest into shares of the Company’s common stock.  The conversion price is 70% of the average of the five lowest trading prices (lowest bid prices) of the Company’s common stock during the fifteen trading days ending on the latest complete trading day prior to the date of conversion.  As of March 31, 2020, $2,097 of the debt discount had been amortized and there was accrued interest payable of $358. The Company recorded a derivative liability of $24,096 as of March 31, 2020.

 

On March 4, 2020, the Company entered into a seventh convertible promissory note with Armada in the principal amount of $88,000, with an original issue discount of $8,000. The note matures on March 4, 2021, and bears interest at 8%.  A debt discount of $41,408 was recorded, including a derivative liability of $33,408. Armada has the right beginning on the date that is 31 days following the date of the note to convert principal and accrued interest into shares of the Company’s common stock.  The conversion price is 70% of the average of the five lowest trading prices (lowest bid prices) of the Company’s common stock during the fifteen trading days ending on the latest complete trading day prior to the date of conversion.  As of March 31, 2020, $3,063 of the debt discount had been amortized and there was accrued interest payable of $521. The Company recorded a derivative liability of $35,207 as of March 31, 2020.

 

9. STOCKHOLDERS’ DEFICIT

 

Preferred Stock

 

Series A Preferred Stock

 

On January 25, 2019, the Board of Directors of the Company approved a resolution to increase the number of authorized preferred shares to 20,000,000 shares.

 

In March 2015, the Company filed with the State of Nevada a Certificate of Designation establishing the designations, preferences, limitations and relative rights of 1,000,000 shares of the Company's Series A preferred stock. Holders of the Series A preferred stock have the right to vote in aggregate, on all shareholder matters equal to 1,000 votes per share of Series A preferred stock. The shares of Series A preferred stock are not convertible into shares of common stock.

 

 
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Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

 

The Company has 1,000,000 shares of Series A preferred stock authorized, with 500,000 shares issued and outstanding as of March 31, 2020 and June 30, 2019, which were issued in March 2015 to members of the Company’s Board of Directors in consideration for services.

 

Series B Preferred Stock

 

On December 21, 2015, the Company filed a Certificate of Designation for a new Series B convertible preferred stock with the State of Nevada following approval by the board of directors of the Company. Five Hundred Thousand (500,000) shares of the Company's authorized preferred stock are designated as the Series B convertible preferred stock, par value of $0.001 per share and with a stated value of $0.001 per share (the "Stated Value"). Holders of Series B preferred stock shall be entitled to receive dividends, when and as declared by the Board of Directors out of funds legally available therefor. At any time and from time to time after the issuance of shares of the Series B preferred stock, each issued share of Series B preferred stock is convertible into 100 shares of the Company’s common stock. The holders of the Series B preferred stock shall have the right to vote together with holders of common stock, on an as "converted basis", on any matter that the Company's shareholders may be entitled to vote on, either by written consent or by proxy. Upon any liquidation, dissolution or winding-up of the Company, the holders of the Series B preferred stock shall be entitled to receive out of the assets of the Company, whether such assets are capital or surplus, for each share of Series B preferred stock an amount equal to the Stated Value, and all other amounts in respect thereof then due and payable prior to any distribution or payment shall be made to the holders of any junior securities.

 

The Company has 500,000 shares of Series B preferred stock authorized, with 430,000 and 300,000 shares issued and outstanding as of March 31, 2020 and June 30, 2019.

 

Steve Rubakh, President of the Company, is issued shares of Series B preferred stock as part of his compensation arrangement. The number of shares issued, generally on a quarterly basis, is at the discretion of the Board of Directors. On February 25, 2020, the Company issued to Mr. Rubkh 100,000 total shares of Series B convertible preferred stock valued on an “as converted to common” basis at $120,000. On July 1, 2018, the Company issued to Mr. Rubakh 5,000 shares of Series B convertible preferred stock valued on an “as converted to common” basis at $417,000. The stock-based compensation – related party is included in general and administrative expenses in the accompanying statements of operations.

 

On February 27, 2020, Mr. Rubakh returned 3,000,000 shares of the Company’s common stock and was issued 30,000 shares of the Company’s Series B preferred stock. The common shares returned were previously issued to Mr. Rubakh in conversion of 30,000 shares of Series B preferred stock. The common shares were canceled and the transaction was recorded at the par value of the common and Series B preferred stock.

 

As discussed in Note 5, on August 2, 2018, the Company entered into an Asset Purchase Agreement for the purchase of 182 cryptocurrency mining machines. As consideration for the purchase of the machines, the Company issued 38,018 shares of its Series B convertible preferred stock, valued on an “as converted to common” basis at an aggregate of $3,801,800. Because a portion of the machines were defective, 1,800 shares of the Series B preferred stock issued in the transaction were returned to the Company and cancelled in December 2018.

 

Common Stock

 

On January 25, 2019, the Board of Directors of the Company approved a resolution to increase the number of authorized common shares to 250,000,000. The Company had 87,954,180 and 29,824,187 shares issued and outstanding as of March 31, 2020 and June 30, 2019, respectively.

 

During the nine months ended March 31, 2020, the Company issued a total of 58,129,993 shares of its common stock: 8,000,000 shares valued at $479,800 were issued pursuant to a Preferred Stock Asset Agreement entered into on May 21, 2019 (see Note 6) and a total of 53,129,993 shares valued at $728,516 were issued in conversion of $683,992 note principal, $35,432 accrued interest payable, $4,500 in fees and loss on conversion of debt of $4,592, resulting in the extinguishment of derivative liabilities totaling $330,391. In addition as discussed above, Mr. Rubakh returned 3,000,000 shares of the Company’s common stock and was issued 30,000 shares of the Company’s Series B preferred stock. The common shares returned were previously issued to Mr. Rubakh in conversion of 30,000 shares of Series B preferred stock. The common shares were canceled and the transaction was recorded at the par value of the common and Series B preferred stock.

 

 
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Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

 

During the nine months ended March 31, 2019, the Company issued a total of 5,971,136 shares of its common stock: a total of 200,000 shares of common stock, valued at $80,160, based on the closing market price of stock on the date of grant, were issued to a consultant in August and October 2018; on September 26, 2018, a total of 150,000 shares of common stock valued at $53,250, based on the closing market price of stock on the date of grant, were issued to two lenders as loan fees See Note 8 and a total of 1,200,000 shares of common stock, valued at $1,891, were issued to a lender in the cashless exercise of warrants in August 2018 and January 2019. In addition, in March 2019, a total of 3,501,800 shares of common stock, valued at $125,434, were issued in the conversion of 35,018 shares of Series B preferred stock. No gain or loss was recorded as the conversions were completed within the terms of the Series B preferred stock. In March 2019, a total of 919,336 shares of common stock were issued in the conversion of notes payable principal of $90,000, resulting in the extinguishment of derivative liabilities totaling $35,434. No gain or loss was recorded as the conversions were completed within the terms of the debt agreements.

 

In August 2018, the Company received proceeds of $25,000 from a common stock subscription.

 

10. COMMITMENTS AND CONTINGENCIES

 

Legal Matters

 

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of the date of filing of this report, there were no pending or threatened lawsuits.

 

Operating Leases

 

The Company has consolidated it cryptocurrency operations in one facility in Carthage, New York. The Carthage lease and power purchase agreement was entered into on May 10, 2019 for an initial term of 90 days, with an option to continue the lease for a subsequent 36 months. The Company’s sole obligation under the lease is to pay the lessor a contractual rate per kilowatt hour of electricity consumed in the Company’s cryptocurrency mining operations.

 

As of March 31, 2020, the Company had no obligation for future lease payments under non-cancelable operating leases.

 

NOTE 11. DERIVATIVE LIABILITIES

 

The Company has issued convertible notes payable, warrants and Series B preferred stock with put back rights and has entered into exchange and subscription agreements that contain certain provisions that have been identified as derivatives. The Company has determined that the number of common shares to be issued under these agreements is indeterminate; therefore, the Company concluded that the equity environment is tainted and all additional warrants, stock options convertible debt and obligations to issue common shares are included in the value of derivative liabilities. 

 

The Company estimates the fair value of the derivative liabilities at the issuance date and at each subsequent reporting date, using a multinomial lattice model simulation. The model is based on a probability weighted discounted cash flow model using projections of the various potential outcomes.

 

 
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Integrated Ventures, Inc.

Notes to Condensed Financial Statements

Nine Months Ended March 31, 2020 and 2019

(Unaudited)

 

During the nine months ended March 31, 2020, we had the following activity in our derivative liabilities:

 

 

 

Convertible
Notes Payable

 

 

Exchange Agreement

 

 

Common Stock Subscription

 

 


Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities at June 30, 2019

 

$ 382,052

 

 

$ 1,227,200

 

 

$ 8,522

 

 

$ 1,617,774

 

Addition to liabilities for new debt

 

 

270,354

 

 

 

-

 

 

 

-

 

 

 

270,354

 

Decrease due to conversions/assignments

 

 

(330,391 )

 

 

(479,800 )

 

 

-

 

 

 

(810,191 )

Change in fair value

 

 

(68,098 )

 

 

(747,400 )

 

 

(7,911 )

 

 

(823,409 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities at March 31, 2020

 

$ 253,917

 

 

$ -

 

 

$ 611

 

 

$ 254,528

 

 

Key inputs and assumptions used in valuing the Company’s derivative liabilities as of March 31, 2020 are as follows:

 

 

·

Stock prices on all measurement dates were based on the fair market value

 

 

 

 

·

Risk-free interest rate of 1.55% to 1.57%

 

 

 

 

·

The probability of future financing was estimated at 100%

 

 

 

 

·

Computed volatility ranging from 216% to 263%

  

These inputs are subject to significant changes from period to period and to management's judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.

 

12. DIGITAL CURRENCY THEFT LOSS

 

During nine months ended March 31, 2019, we incurred a digital currency theft loss of $33,037 where a hacker obtained unauthorized access to our online digital currency processing service and transferred digital currencies out of our account. The theft loss has been included as an other expense in the accompanying statement of operations for the nine months ended March 31, 2020.

 

13. SUBSEQUENT EVENTS

 

Management has evaluated subsequent events according to the requirements of ASC TOPIC 855, and has reported the following:

 

Amendment to Convertible Promissory Note

 

On April 24, 2020, the Company and Armada entered into an Amendment to Convertible Promissory Note pursuant to which the maturity date of the Armada Investment Fund, LLC #2 note was extended to August 15, 2020.

 

 
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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

 

We believe that it is important to communicate our future expectations to our security holders and to the public. This report, therefore, contains statements about future events and expectations which are "forward-looking statements" within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934, including the statements about our plans, objectives, expectations and prospects under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations." You can expect to identify these statements by forward-looking words such as "may," "might," "could," "would," "will," "anticipate," "believe," "plan," "estimate," "project," "expect," "intend," "seek" and other similar expressions. Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement. Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved.

 

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the "Risk Factors" section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019 and in our subsequent filings with the Securities and Exchange Commission. The following discussion of our results of operations should be read together with our financial statements and related notes included elsewhere in this report.

 

GENERAL

 

We were incorporated in the State of Nevada on March 22, 2013 under the name Lightcollar, Inc. On March 22, 2015, we changed our name to EMS Find, Inc., and in May 2017, we changed our name to Integrated Ventures, Inc. We have licensed our Ems Find platform and related technologies to EpicMD, Inc. via a Licensing Agreement and management has determined to focus our business on developing and operating digital currency assets. Our offices are located at 73 Buck Road, Suite 2, Huntingdon Valley, Pennsylvania 19006.

 

We have discontinued our prior operations and changed our business focus, from our prior technologies relating to the EMS Find platform to acquiring, launching and operating companies in the cryptocurrency sector, mainly in digital currency mining, equipment manufacturing, and sales of branded mining rigs, as well as blockchain software development.

 

Financial

 

On November 22, 2017, we successfully launched our cryptocurrency operations. From that date through March 31, 2020, we had total revenues of $959,602, consisting of: (1) revenues from mining operations of $811,607 received primarily in digital currencies and (2) equipment and parts retail sales of $147,995.

 

The Company has consolidated it cryptocurrency operations in one facility in Carthage, New York. The Carthage lease and power purchase agreement was entered into on May 10, 2019 for an initial term of 90 days, with an option to continue the lease for a subsequent 36 months. The Company’s sole obligation under the lease is to pay the lessor a contractual rate per kilowatt hour of electricity consumed in the Company’s cryptocurrency mining operations.

 

We have funded our operations primarily from cash generated from our digital currency mining operations and proceeds from convertible notes payable. Most recently, we received cash proceeds totaling $210,000 from three convertible notes payable issued in January and February 2020.

 

 
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The Digital Asset Market

 

The Company is focusing on the mining of digital assets, as well as blockchain applications (“blockchain”) and related technologies. A blockchain is a shared immutable ledger for recording the history of transactions of digital assets—a business blockchain provides a permissioned network with known identities. A Bitcoin is the most recognized type of a digital asset that is issued by, and transmitted through, an open source, math-based protocol platform using cryptographic security that is known as the “Bitcoin Network.” The Bitcoin Network is an online, peer-to-peer user network that hosts the public transaction ledger, known as the blockchain, and the source code that comprises the basis for the cryptography and math-based protocols governing the Bitcoin Network. 

 

Bitcoins, for example, can be used to pay for goods and services or can be converted to fiat currencies, such as the US Dollar, at rates determined on Bitcoin exchanges or in individual end-user-to-end-user transactions under a barter system. The networks utilized by digital coins are designed to operate without any company or government in charge, governed by a collaboration of volunteer programmers and computers that maintain all the records. These blockchains are typically maintained by a network of participants which run servers while securing their blockchain. Third party service providers such as Bitcoin exchanges and bitcoin third party payment processing services may charge significant fees for processing transactions and for converting, or facilitating the conversion of, bitcoins to or from fiat currency.

 

This market is rapidly evolving and there can be no assurances that we will remain competitive with industry participants that have or may have greater resources or experience in in this industry than us, nor that the unproven digital assets that we mine will ever have any significant market value.

 

The Company, like many cryptocurrency mining operators, is currently operating at a non-profitable status following record historic runs in market prices of digital currencies. Market prices of digital currencies have not been high enough to cover the operating costs of mining companies, including significant power costs and high levels of equipment depreciation. The Company is addressing these operational challenges through considering alternative sources of power, further consolidation of facilities, and potential hosting arrangements. There can be no assurance that the Company will be successful in these efforts and attain profitable levels of operations.

 

FINANCIAL OPERATIONS REVIEW

 

As discussed above, in November 2017 revenues commenced from our cryptocurrency mining operations and from sales of cryptocurrency mining equipment. Prior to that date, revenues were generated substantially from the now discontinued Ambulance services, which we have discontinued to focus on new revenue sources. 

 

We are incurring increased costs as a result of being a publicly traded company. As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. We also have paid compensation through the issuance of shares of our common stock and warrants, the valuation of which has resulted in significant stock-based compensation. In addition, the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the Securities and Exchange Commission, have required changes in corporate governance practices of public companies and will require us to comply with these rules. These new rules and regulations have will increase our legal and financial compliance costs and have made some activities more time-consuming and costlier. In addition, these new rules and regulations have made it more difficult and more expensive for us to obtain director and officer liability insurance, which we currently cannot afford to do. As a result of the new rules, it may become more difficult for us to attract and retain qualified persons to serve on our Board of Directors or as executive officers. We cannot predict or estimate the amount of additional costs we may incur as a result of being a public company or the timing of such costs.

 

To operate our digital currency mining facilities and to fund future operations, we will need to raise additional capital. The amount and timing of future funding requirements will depend on many factors, including the timing and results of our ongoing development efforts, the potential expansion of our current development programs, potential new development programs and related general and administrative support. We anticipate that we will seek to fund our operations through further liquidation of our marketable securities, public or private equity or debt financings or other sources, such as potential collaboration agreements. We cannot be certain that anticipated additional financing will be available to us on favorable terms, or at all.

 

 
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RESULTS OF OPERATIONS

 

THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2020 COMPARED TO THE THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2019

 

Revenues

 

In November 2017 we commenced operations in our first cryptocurrency mining location. Our cryptocurrency mining revenues increased to $130,062 in the three months ended March 31, 2020 from $45,496 in the three months ended March 31, 2019, and increased to $363,541 in the nine months ended March 31, 2020 from $223,874 in the nine months ended March 31, 2019. This increase in revenues resulted primarily from additional mining machines deployed in the current fiscal year in our new facility in New York.

 

We also have revenues from the sale of cryptocurrency mining units that have been assembled or refurbished for resale and spare parts. Such sales totaled $848 and $1,108 in the three months ended March 31, 2020 and 2019, respectively, and totaled $10,511 and $25,445 in the nine months ended March 31, 2020 and 2019, respectively. Sales of equipment and parts will fluctuate from period to period depending on the current retail demand for our model of cryptocurrency mining units and parts.

 

Cost of Revenues

 

Cost of revenues was $261,484 and $193,563 in the three months ended March 31, 2020 and 2019, respectively, and $753,703 and $627,719 in the nine months ended March 31, 2020 and 2019, respectively. The increases in our cost of revenues result primarily from higher depreciation and amortization expense. Expenses associated with running our cryptocurrency mining operations, such as equipment depreciation and amortization, rent, operating supplies, utilities and monitoring services are recorded as cost of revenues. Also included in cost of revenues are the costs of purchasing or assembling the cryptocurrency mining units sold. We currently are experiencing a gross loss on revenues primarily due to high utility costs and a conservative, short useful life for mining equipment depreciation and amortization.

 

Operating Expenses

 

General and administrative expenses decreased to $205,465 in the three months ended March 31, 2020 from $339,987 in the three months ended March 31, 2019, and decreased to $399,990 in the nine months ended March 31, 2020 from $1,070,421 in the nine months ended March 31, 2019. The decreases are due primarily to a decrease in non-cash stock-based compensation to related parties, partially offset by increases in other expenses supporting our expanded cryptocurrency mining operations. Stock-based compensation – related party totaled $120,000 in the nine months ended March 31, 2020 and $669,000 in the nine months ended March 31, 2019. The value of the stock-based compensation is computed using the market price of our common stock.

 

We performed a lower of cost or market impairment analysis on the cryptocurrency machines purchased in the August 2018 Asset Purchase Agreement, including writing off the purchase price allocated to the defective machines, and recorded an impairment expense of $2,097,930 during the nine months ended March 31, 2019. We reported no impairment expense for the three months or nine months ended March 31, 2020.

 

 
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Other Income (Expense)

 

Our other income (expense) was comprised of the following:

 

 

 

Three Months Ended
March 31:

 

 

Nine Months Ended
March 31:

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

$ (90,824 )

 

$ (60,889 )

 

$ (573,561 )

 

$ (105,541 )

Realized loss on investments

 

 

(562 )

 

 

(1,060 )

 

 

(6,158 )

 

 

(33.564 )

Loss on conversion of debt

 

 

10,168

 

 

 

-

 

 

 

(4,592 )

 

 

-

 

Digital currency theft loss

 

 

-

 

 

 

-

 

 

 

(33,037 )

 

 

-

 

Change in fair value of derivative liabilities

 

 

(27,414 )

 

 

2,744

 

 

 

823,409

 

 

 

1,968,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other income (expense)

 

$ (108,632 )

 

$ (59,205 )

 

$ 206,061

 

 

$ 1,829,154

 

 

The increase in our interest expense in the current fiscal year, which includes the amortization of debt discount and original issue discount, resulted from new convertible debt incurred.

 

The realized loss on investments in all periods presented resulted primarily from losses recorded on our digital currencies, as we experienced the negative impact of fluctuating market values.

 

The loss on extinguishment of debt in the current fiscal year resulted from conversion of convertible notes to common stock were the conversion terms were outside the related agreements.

 

During the nine months ended March 31, 2020, we incurred a digital currency theft loss of $33,037 where a hacker obtained unauthorized access to our online digital currency processing service and transferred digital currencies out of our account.

 

We estimate the fair value of the derivatives associated with our convertible notes payable, warrants, put-back rights associated with two asset purchase agreements, common stock issuable pursuant to a Series B preferred stock Exchange Agreement and a stock subscription payable using, as applicable, either the Black-Scholes pricing model or multinomial lattice models that value the derivative liability based on a probability weighted discounted cash flow model using future projections of the various potential outcomes. We estimate the fair value of the derivative liabilities at the inception of the financial instruments, and, in the case of our convertible notes payable, at the date of conversions to equity and at each reporting date, recording a derivative liability, debt discount, additional paid-in capital and a gain or loss on change in derivative liabilities as applicable. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. These inputs are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.

 

Net Loss

 

As a result, we reported net losses of $444,671 and $546,151 for the three months ended March 31, 2020 and 2019, respectively, and $573,580 and $1,717,597 for the nine months ended March 31, 2020 and 2019, respectively.

 

 
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LIQUIDITY AND CAPITAL RESOURCES

 

Overview

 

As of March 31, 2020, we had total current assets of $107,837, including cash of $101,337, and total current liabilities of $866,951, resulting in a working capital deficit of $759,114. Included in current liabilities as of March 31, 2020 are derivative liabilities totaling $254,528, which we do not anticipate will require the payment of cash to settle.

 

We have funded our operations primarily from cash generated from our digital currency mining operations and proceeds from convertible notes payable. During the nine months ended March 31, 2020, we received net proceeds from convertible notes payable of $403,692 (net of debt repaid in cash of $130,308).

 

Sources and Uses of Cash

 

We used net cash in operations of $639,079 in the nine months ended March 31, 2020 as a result of our net loss of $573,580, non-cash gain of $823,409, increase in digital currencies of $453,070, increase in prepaid expenses and other current assets of $3,250 and decrease in accounts payable of $2,021, partially offset by non-cash expenses totaling $1,135,656 and increases in accrued expenses of $41,060 and due to related party of $39,535.

 

By comparison, we used net cash in operations of $483,836 in the nine months ended March 31, 2019 as a result of our net loss of $1,717,597, non-cash gain of $1,968,259 and increase in digital currencies of $224,933, partially offset by non-cash expenses totaling $3,358,290, decrease in prepaid expenses and other current assets of $2,500 and increases in accounts payable of $10,877, accrued expenses of $1,998 and due to related party of $53,288.

 

During the nine months ended March 31, 2020, we had net cash provided by investing activities of $288,414 comprised of net proceeds from the sale of investments of $411,763, partially offset by the purchase of property and equipment of $123,349.

 

During the nine months ended March 31, 2019, we had net cash provided by investing activities of $161,116 comprised of net proceeds from the sale of investments of $203,563, partially offset by the purchase of property and equipment of $42,447.

 

During the nine months ended March 31, 2020, we had net cash provided by financing activities of $403,692 comprised of proceeds from convertible notes payable of $534,000, partially offset by repayment of convertible notes payable of $130,308.

 

During the nine months ended March 31, 2019, we had net cash provided by financing activities of $363,945 comprised of proceeds from convertible notes payable of $338,945 and proceeds from stock subscription payable of $25,000.

 

We will have to raise funds to successfully operate our digital currency mining operations and to fund our operating expenses. We will have to borrow money from shareholders or issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently have no arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. Since we have no such arrangements or plans currently in effect, our inability to raise funds for our operations will have a severe negative impact on our ability to remain a viable company.

 

Going Concern

 

The Company has reported recurring operating losses since its inception and used net cash in operating activities of $639,079 in the nine months ended March 31, 2020. As of March 31, 2020, the Company had an accumulated deficit of $21,556,787. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

 

 
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The accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The ability of the Company to reach a successful level of operations is dependent on the execution of management's plans, which include the raising of capital through the debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. If the Company were not to continue as a going concern, it would likely not be able to realize its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the financial statements.

 

There can be no assurances that the Company will be successful in attaining a profitable level of operations or in generating additional cash from the equity/debt markets or other sources fund its operations. The financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary. Should the Company not be successful in its business plan or in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all operational activities and/or contemplate the sale of its assets, if necessary.

 

Current and Future Impact of Covid-19

 

The Covid-19 pandemic continues to have a material negative impact on capital markets. While we continue to incur operating losses, we are currently dependent on debt or equity financing to fund our operations and execute our business plan. We believe that the impact on capital markets of Covid-19 may make it more costly and more difficult for us to access these sources of funding.

 

SIGNIFICANT ACCOUNTING POLICIES

 

Our significant accounting policies are disclosed in Note 2 to our condensed financial statements and in the notes to our audited financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2019. The following is a summary of those accounting policies that involve significant estimates and judgment of management.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Because of the use of estimates inherent in the financial reporting process, actual results could differ significantly from those estimates.

 

Digital Currencies

 

Digital currencies consist of Bitcoin, Litecoin and Ethereum, generally received for the Company’s own account as compensation for cryptocurrency mining services. Given that there is limited precedent regarding the classification and measurement of cryptocurrencies under current Generally Accepted Accounting Principles (“GAAP”), the Company has determined to account for these digital currencies as indefinite-lived intangible assets in accordance with Accounting Standards Update ("ASU") No. 350, Intangibles – Goodwill and Other, for the period covered by this report and in future reports unless and until further guidance is issued by the Financial Accounting Standards Board (“FASB”). 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. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not than an impairment exists. If it is determined that it is more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. Realized gains or losses on the sale of digital currencies are included in other income (expense) in the statements of operations.

 

 
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Property and Equipment

 

Property and equipment, consisting primarily of computer and other cryptocurrency mining equipment (transaction verification servers) and leasehold improvements, is stated at the lower of cost or estimated realizable value and is depreciated when placed into service using the straight-line method over estimated useful lives. The Company operates in an emerging industry for which limited data is available to make estimates of the useful economic lives of specialized equipment. Management has assessed the basis of depreciation of these assets and believes they should be depreciated over a three-year period due to technological obsolescence reflecting rapid development of hardware that has faster processing capacity and other factors. During the nine months ended March 31, 2019, the Company wrote down cryptocurrency mining equipment by $2,097,930 to estimated net realizable value. Maintenance and repairs are expensed as incurred and improvements are capitalized. Gains or losses on the disposition of property and equipment are recorded upon disposal.

 

Management has determined that the three-year diminishing value best reflects the current expected useful life of transaction verification servers. This assessment takes into consideration the availability of historical data and management’s expectations regarding the direction of the industry including potential changes in technology. Management will review this estimate annually and will revise such estimates as and when data becomes available.

 

To the extent that any of the assumptions underlying management’s estimate of useful life of its transaction verification servers are subject to revision in a future reporting period, either as a result of changes in circumstances or through the availability of greater quantities of data, then the estimated useful life could change and have a prospective impact on depreciation expense and the carrying amounts of these assets.

 

Derivatives

 

The Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The result of this accounting treatment is that under certain circumstances the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under this accounting standard are reclassified to liability at the fair value of the instrument on the reclassification date.

 

Where the number of warrants or common shares to be issued under these agreements is indeterminate, the Company has concluded that the equity environment is tainted, and all additional warrants and convertible debt are included in the value of the derivatives.

 

We estimate the fair value of the derivatives associated with our convertible notes payable, common stock issuable pursuant to a Series B preferred stock Exchange Agreement and a stock subscription payable using, as applicable, either the Black-Scholes pricing model or multinomial lattice models that value the derivative liability based on a probability weighted discounted cash flow model using future projections of the various potential outcomes. We estimate the fair value of the derivative liabilities at the inception of the financial instruments, and, in the case of our convertible notes payable, at the date of conversions to equity and at each reporting date, recording a derivative liability, debt discount, additional paid-in capital and a gain or loss on change in derivative liabilities as applicable. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. These inputs are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.

 

Impairment of Long-Lived Assets

 

All assets, including intangible assets subject to amortization, are reviewed for impairment when changes in circumstances indicate that the carrying amount of the asset may not be recoverable in accordance with ASC 350 and ASC 360. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value or net realizable value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations. Total impairment expense, consisting of write downs for cryptocurrency mining equipment totaled $2,097,930 for the nine months ended March 31, 2019. We reported no impairment expense in the current fiscal year.

 

 
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Fair Value of Financial Instruments

 

Disclosures about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of March 31, 2020 and June 30, 2019, the amounts reported for cash, prepaid expenses and other current assets, equipment deposits, accounts payable, accrued expenses and due to related party approximate fair value because of their short maturities.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

 

 

·

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

 

 

 

 

·

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

 

 

 

 

·

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

 

Our derivative liabilities are measured at fair value on a recurring basis and estimated as follows:

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

March 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

$ 254,528

 

 

$ -

 

 

$ -

 

 

$ 254,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities measured at fair value

 

$ 254,528

 

 

$ -

 

 

$ -

 

 

$ 254,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

$ 1,617,774

 

 

$ -

 

 

$ -

 

 

$ 1,617,774

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities measured at fair value

 

$ 1,617,774

 

 

$ -

 

 

$ -

 

 

$ 1,617,774

 

 

Stock-Based Compensation

 

The Company accounts for all equity-based payments in accordance with ASC Topic 718, Compensation – Stock Compensation. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock awards, stock options, warrants and other equity-based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The fair value of a stock award is recorded at the fair market value of a share of the Company’s stock on the grant date. The Company estimates the fair value of stock options and warrants at the grant date by using an appropriate fair value model such as the Black-Scholes option pricing model or multinomial lattice models.

  

The Company accounts for non-employee share-based awards based upon ASC 505-50, Equity-Based Payments to Non-Employees. ASC 505-50 requires the costs of goods and services received in exchange for an award of equity instruments to be recognized using the fair value of the goods and services or the fair value of the equity award, whichever is more reliably measurable. The fair value of the equity award is determined on the measurement date, which is the earlier of the date that a performance commitment is reached or the date that performance is complete. Generally, our awards do not entail performance commitments. When an award vests over time such that performance occurs over multiple reporting periods, we estimate the fair value of the award as of the end of each reporting period and recognize an appropriate portion of the cost based on the fair value on that date. When the award vests, we adjust the cost previously recognized so that the cost ultimately recognized is equivalent to the fair value on the date the performance is complete.

 

 
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Revenue Recognition

 

Effective July 1, 2018, we adopted ASC 606, Revenue from Contracts with Customers, as amended, using the modified retrospective method, which requires the cumulative effect of adoption to be recognized as an adjustment to opening retained earnings in the period of adoption. There was no cumulative effect of adopting the new standard and no impact on our financial statements. The new standard provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific guidance. The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, ASC 606 includes provisions within a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation.

 

Our revenues currently consist of cryptocurrency mining revenues and revenues from the sale of cryptocurrency mining equipment recognized in accordance with ASC 606 as discussed above. Amounts collected from customers prior to shipment of products are recorded as deferred revenue. 

 

The Company earns its cryptocurrency mining revenues by providing transaction verification services within the digital currency networks of cryptocurrencies, such as Bitcoin, Litecoin and Ethereum. The Company satisfies its performance obligation at the point in time that the Company is awarded a unit of digital currency through its participation in the applicable network and network participants benefit from the Company’s verification service. In consideration for these services, the Company receives digital currencies, which are recorded as revenue using the closing U.S. dollar price of the related cryptocurrency on the date of receipt. Expenses associated with running the cryptocurrency mining operations, such as equipment depreciation, rent, operating supplies, rent, utilities and monitoring services are recorded as cost of revenues.

 

There is currently no specific definitive guidance in GAAP or alternative accounting frameworks for the accounting for the production and mining of digital currencies and management has exercised significant judgment in determining appropriate accounting treatment for the recognition of revenue for mining of digital currencies. Management has examined various factors surrounding the substance of the Company’s operations and the guidance in ASC 606, including identifying the transaction price, when performance obligations are satisfied, and collectability is reasonably assured being the completion and addition of a block to a blockchain and the award of a unit of digital currency to the Company. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies which could result in a change in the Company’s financial statements.

 

OFF BALANCE SHEET ARRANGEMENTS

 

The Company has consolidated it cryptocurrency operations in one facility in Carthage, New York. The Carthage lease and power purchase agreement was entered into on May 10, 2019 for an initial term of 90 days, with an option to continue the lease for a subsequent 36 months. The Company’s sole obligation under the lease is to pay the lessor a contractual rate per kilowatt hour of electricity consumed in the Company’s cryptocurrency mining operations.

 

The Company retained its operating lease for its Pennsylvania administrative location, which is on a month-to-month basis at $750 per month.

 

We currently have no other material off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

 
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RECENTLY ISSUED ACCOUNTING POLICIES

 

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” (Income Taxes Topic 740). The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general provision of Topic 740. The amendments also improve consistent application of and simplify General Accepted Accounting Principles for other areas of Topic 740 by clarifying and amending existing practice. For public entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption of the amendments is permitted. The Company is currently unable to determine the impact on its consolidated financial statements of the implementation of this ASU.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. This new pronouncement, as amended, was effective January 1, 2019 for calendar-year-end public companies, and was adopted by the Company on July 1, 2019.

 

Adoption of the new lease pronouncement did not have a material impact on the Company’s financial statements. The Company concluded that the new lease pronouncement is not applicable to its New York lease and power purchase agreement, for which the Company’s sole obligation is to pay the lessor a contractual dollar amount per kilowatt hour of electricity consumed in the Company’s cryptocurrency mining operations.

 

Although there are other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a smaller reporting company, as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

The Securities and Exchange Commission defines the term "disclosure controls and procedures" to mean a company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer's management, including its chief executive and chief financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to the chief executive and interim chief financial officer to allow timely decisions regarding disclosure.

 

 
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As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures are not effective as of such date. The Chief Executive Officer and Chief Financial Officer have determined that the Company continues to have the following deficiencies which represent a material weakness:

 

1.

As of March 31, 2020, we did not maintain effective controls over the control environment. Specifically, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-B. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

2.

As of March 31, 2020, due to the inherent issue of segregation of duties in a small company, we have relied heavily on entity or management review controls and engaged an outside financial consultant to lessen the issue of segregation of duties over accounting, financial close procedures and controls over financial statement disclosure. Accordingly, management has determined that this control deficiency constitutes a material weakness.

 

3.

As of March 31, 2020, we did not establish a written policy for the approval, identification and authorization of related party transactions. Accordingly, management has determined that this control deficiency constitutes a material weakness.

 

Because of these material weaknesses, management has concluded that the Company did not maintain effective internal control over financial reporting as of March 31, 2020, based on the criteria established in "Internal Control-Integrated Framework" issued by the COSO.

 

Changes in Internal Control Over Financial Reporting. 

 

There have been no changes in the Company's internal control over financial reporting through the date of this report or during the quarter ended March 31, 2020, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

 

 
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PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

There are no pending legal proceedings in which we are a party or in which any of our directors, officers or affiliates, any owner of record or beneficiary of more than 5% of any class of our voting securities is a party adverse to us or has a material interest adverse to us, except as stated below. Our property is not the subject of any pending legal proceedings.

 

ITEM 1A. RISK FACTORS

 

The future impact of the Covid-19 pandemic on companies is evolving and we are currently unable to assess with certainty the broad effects of Covid-19 on our business.

 

The future impact of the Covid-19 pandemic on companies is evolving and we are currently unable to assess with certainty the broad effects of Covid-19 on our business, particularly on the digital currency markets. As of March 31, 2020, our investment in property and equipment of $752,837 could be subject to impairment or change in valuation due to Covid-19 if our crypocurrency mining revenues significantly decrease or we are not able to raise capital sufficient to fund our operations. In addition, current travel restrictions and social distancing requirements make it difficult for our management to access and oversee our operations in the State of New York.

 

As of March 31, 2020, the reported values of the Company’s material convertible debt and derivative liabilities are based on multiple factors, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. We believe these inputs will be subject to even more significant changes due to the impact on capital markets of Covid-19, and the future estimated fair value of these liabilities may fluctuate materially from period to period. 

 

The Covid-19 pandemic continues to have a material negative impact on capital markets, including the market prices of digital currencies. While we continue to incur operating losses, we are currently dependent on debt or equity financing to fund our operations and execute our business plan, including ongoing requirements to replace old and nonprofitable mining machines. We believe that the impact on capital markets of Covid-19 may make it more costly and more difficult for us to access these sources of funding.

 

Our business can potentially be impacted by the effects of the COVID-19 as follows: (1) effect our financial condition, operating results and reduce cash flows; (2) cause disruption to the activities of equipment suppliers; (3) negatively effect the Company's mining activities due to imposition of related public health measures and travel and business restrictions; (4) create disruptions to our core operations in New York due to quarantines and self-isolations; (5) restrict the Company's ability and that of its employees to access facilities and perform equipment maitenance, repairs, and programming which will lead to inability to monitor and service miners, resulting in reduced ability to mine cryptocurrencies due to miners being offline.

 

In addition, our partners such as manufacturers, suppliers and sub-contractors will be disrupted by absenteeism, quarantines and travel restrictions resulting in their employees’ ability to work. The Company's supply chain, shipments of parts and purchases of new products may be negatively affected. Such disruptions could have a material adverse effect on our operations.

 

 
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The coronavirus pandemic is an emerging serious threat to health and economic wellbeing affecting our employees, investors and our sources of supply.

 

The sweeping nature of the novel Coronavirus (COVID-19) pandemic makes it extremely difficult to predict how the Company’s business and operations will be affected in the long run. However, the likely overall economic impact of the pandemic is viewed as highly negative to the general economy. To date, we have not been classified as an essential business in the New York, and we may not be allowed to access our mining facilities. The duration of such impact cannot be predicted.

 

The Bitcoin (“BTC”) block reward is scheduled to drop in May 2020, which will negatively impact currency mining profitability.

 

The BTC block reward will drop from 12,5 to 6.25 on approximately May 12, 2020, potentially halving the Company’s mining profitability for this digital currency.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

During the three months ended March 31, 2020, the Company issued a total of 25,198,448 shares of its common stock: in conversion of $158,677 note principal, $16,632 accrued interest payable, and fees of $2,200, resulting in the extinguishment of derivative liabilities totaling $56,118.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

 
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ITEM 6. EXHIBITS.

 

(a) Exhibits.

 

Exhibit Number

Exhibit Description

 

 

 

31.1

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer and Principal Financial Officer. Filed herewith.

 

 

 

32.1

Section 1350 Certification of Chief Executive Officer and Principal Financial Officer. Filed herewith.

 

101.INS

XBRL Instance Document *

 

 

 

101.SCH

XBRL Taxonomy Extension Schema *

 

 

 

101.CAL

XBRL Taxonomy Extension Calculation Linkbase *

 

 

 

101.DEF

XBRL Taxonomy Extension Definition Linkbase *

 

 

 

101.LAB

XBRL Taxonomy Extension Label Linkbase *

 

 

 

101.PRE

XBRL Taxonomy Extension Presentation Linkbase *

__________

 
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SIGNATURES

 

In accordance with the requirements of the Exchange Act, the Company has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

INTEGRATED VENTURES, INC.

 

Dated:  May 11, 2020

By:

/s/ Steve Rubakh

 

President and Chief Executive Officer and Principal Financial Officer

 

 

40

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