Notes to the Consolidated Financial Statements
March 31, 2018 (Unaudited)
NOTE l: NATURE OF ORGANIZATION
Mining Power Group, Inc. formerly known as Rich Cigars, Inc. (the "Company") was a Florida Corporation incorporated
on July 29, 2013, and was established to manufacture and distribute high-quality, hand rolled, premium cigars under the Rich Cigars
brand name, the Company has branded custom cigars to be sold via the internet and through retail locations. The Company's primary
operations are currently in the Miami, Florida area, and management intends to conduct our business principally
in the U.S. through our own sales and marketing team
In November 2017, the Company underwent a change in control and became a Colorado corporation. As a result of this change, the
Company changed the business name to Intercontinental Technology, Inc. in order to reflect a change in the Company's direction
and overall strategy. The Company's new strategic direction will be to focus on the acquisition, development, and marketing of
proprietary patented products that are readily marketable internationally, and at the same time, its entering the business of
cryptocurrency mining by the ownership of multiple cryptocurrency mining machines.
On December 26, 2017, the Company completed a reorganization. Rich Cigars, Inc., having been renamed to RCGR SUB, Inc., became
a direct, wholly-owned subsidiary of a newly formed Delaware corporation, First Intercontinental Technology, Inc. First Intercontinental
Technology, Inc. was then considered the parent and is now the public entity. Additionally, another Delaware corporate was formed,
Intercontinental Services, Inc. As of the effective time of the merger, all outstanding shares of common stock and preferred stock
of Rich Cigars, Inc. were automatically converted into identical shares of common stock or preferred stock in the parent on a
one-for-one basis.
On February 16, 2018, the Company's Board of Directors voted to annul and vitiate the series of transactions in Delaware by filing
certificates of correction with Delaware's Secretary of State. On February 21, 2018, the Company amended and restated the Articles
of incorporation in order to change the Company's name to Mining Power Group, Inc.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements of Mining Power Group, Inc. (formerly Rich Cigars, Inc.) includes its wholly
owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
Accounting policies refer to specific accounting principles and the methods of applying those principles to fairly present the
company's financial position and results of operations in accordance with generally accepted accounting principles. The policies
discussed below include those that management has determined to be the most appropriate in preparing the company's financial statements
and are not discussed in a separate footnote.
Certain prior year amounts have
been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported
results of operations. This change in classification does not materially affect previously reported cash flows from operations
or from financing activities in the Statement of Cash Flows and had no effect on the previously reported Statement of Operations
for any period.
Basis of Presentation
The accompanying financial statements have been prepared by the Company in accordance with Generally Accepted Accounting Principles
(“GAAP”) in the United States of America. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at March 31, 2018
and 2017 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial
statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. The Company
suggests these condensed financial statements be read in conjunction with the December 31, 2017 audited financial statements and
notes thereto included in the Company’s Form 10-K. The results of operations for the periods ended March 31, 2018 and 2017
are not necessarily indicative of the operating results for the full year.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to adopt accounting policies
and make estimates and assumptions that affect amounts reported in the consolidated financial statements,
Cash and Cash Equivalents
The Company considers all investments with a maturity date of three months or less when purchased to be cash equivalents. The
Company had cash in the amount of $0 and $0 as March 31, 2018 and December 31, 2017 respectively.
Beneficial Conversion Feature
If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value at issuance,
this feature is characterized as a beneficial conversion feature ("BCF"). A BCF is recorded by the Company as a debt
discount pursuant to Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC")
Topic 470-20
Debt with Conversion and Other Options.
In those circumstances, the convertible debt is recorded net of the
discount related to the BCF, and the Company amortizes the discount to interest expense over the life of the debt using the effective
interest method.
Embedded Conversion Features
The Company evaluates embedded conversion features within convertible debt under ASC 815 "Derivatives and Hedging" to
determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative
at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment
under ASC 815, the instrument is evaluated under ASC 470-20 "Debt with Conversion and Other Options" for consideration
of any beneficial conversion features.
Derivative Financial Instruments
Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt
or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value,
the Company uses the Black-Scholes option-pricing model in assessing the convertible debt instruments, management determines if
the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature
requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation
process of these instruments as derivative financial instruments.
Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or
decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition,
the fair value of freestanding derivative instruments such as warrants, are also valued using the Black Scholes option-pricing
model.
Revenue Recognition
The Company recognizes revenue on arrangements in accordance with ASC 606
Revenue Recognition.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of
future tax benefits, such as net operating loss carryforwards, is required to the extent that realization of such benefits is
more likely than not. Deferred tax assets and liabilities are determined using enacted tax rates expected to apply to taxable
income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.
In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company's
assets and liabilities result in deferred tax assets, an evaluation of the probability of being able to realize the future benefits
indicated by such asset is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more
likely than not that some or all of the deferred tax asset will not be realized. In assessing the realizability of the deferred
tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax
planning strategies.
The Company files income tax returns in the United States and Florida, which are subject to examination by the tax authorities
in these jurisdictions. Generally, the statute of limitations related to the Company's federal and state income tax return is
three years. The state impact of any federal changes for prior years remains subject to examination for a period up to five years
after formal notification to the states.
Management has evaluated tax positions in accordance with ASC 740,
Income Taxes,
and has not identified any significant
tax positions, other than those disclosed. All of the Company's tax years since inception remain subject to examination by Federal
and State jurisdictions.
Advertising and Promotion
The Company expenses advertising and promotion costs as incurred. The Company did not incur any advertising and promotion expenses
during the quarter ended March 31, 2018 and 2017 respectively.
Earnings Per Share
Basic net income per common share (“
Basic EPS
”) excludes dilution and is computed by dividing net income by
the weighted average number of common shares outstanding during the period. Diluted net income per common share (“
Diluted
EPS
”) reflects the potential dilution that could occur if stock options or other contracts to issue shares of common
stock were exercised or converted into common stock. The computation of Diluted EPS does not assume exercise or conversion of
securities that would have an anti-dilutive effect on net income per common share.
The following table presents the components of the computation of basic and diluted earnings per share for the
periods indicated:
|
Three Months Ended
|
|
March
31,
|
|
|
2018
|
|
2017
|
Numerator
|
|
|
|
|
|
|
|
|
Net income applicable to common shareholders
|
|
|
4,059,985
|
|
|
|
(303,146
|
)
|
Denominator
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic
|
|
|
24,817,133
|
|
|
|
2,694,299
|
|
Convertible preferred stock
|
|
|
963,000,000
|
|
|
|
—
|
|
Convertible promissory notes
|
|
|
1,808,946
|
|
|
|
—
|
|
Weighted average common shares outstanding, diluted
|
|
|
989,626,079
|
|
|
|
2,694,299
|
|
Net income per share –Basic
|
|
$
|
0.16
|
|
|
$
|
(0.11
|
)
|
Net income per share –Diluted
|
|
$
|
0.00
|
|
|
$
|
(0.11
|
)
|
NOTE 3: GOING CONCERN
These condensed consolidated financial statements have been prepared on a going concern basis which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business for the foreseeable future. As of March
31, 2018, the Company has incurred net losses of 1,162,974 since inception. This raises substantial doubt about the Company's
ability to continue as a going concern.
Management's plans include raising capital through the equity markets to fund operations and eventually generating of revenue
through its business; however, there can be no assurance that the Company will be successful in such activities. These consolidated
financial statements do not include any adjustments relating to the recovery of the recorded assets or the classifications of
the liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 4: DISCONTINUED OPERATIONS
On November 27, 2017, the Company entered into a Subscription Agreement for the purchase of 1,000,000 shares of restricted
Series A Convertible Preferred Supermajority voting stock Pursuant to this agreement, the Company announced a shift in the strategic
focus.
As a result of this shift, the Company has recognized a cessation of it business operations for Rich Cigars in accordance with
Accounting Standards Codification (ASC) 205-20, Discontinued Operations. As such, the historical results of the Company
have been classified as discontinued operations. As of the year ended December 31, 2017, assets of discontinued operations
consisted of property and equipment of $498. As of the period ended March 31, 2018 all property and equipment was
written-off.
Results of the discontinued operations for the six months ended June 30, 2018 and 2017 are as follows:
|
|
Three
Months Ended March 31, 2018
|
|
Three
Months Ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$
|
—
|
|
|
$
|
2,497
|
|
COST OF SALES
|
|
|
—
|
|
|
|
1,651
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
—
|
|
|
|
846
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Professional Fees
|
|
|
—
|
|
|
|
28,912
|
|
Officers Compensation
|
|
|
—
|
|
|
|
25,465
|
|
Legal
Fees
|
|
|
—
|
|
|
|
20,280
|
|
Travel
Expense
|
|
|
—
|
|
|
|
19,363
|
|
Accounting
and Audit
|
|
|
—
|
|
|
|
6,703
|
|
Other General and Administrative
|
|
|
—
|
|
|
|
4,901
|
|
Meal
and Entertainment
|
|
|
—
|
|
|
|
4,793
|
|
Marketing
Expense
|
|
|
—
|
|
|
|
1,762
|
|
Transfer
Agent Fees
|
|
|
—
|
|
|
|
1,670
|
|
Amortization Expense
|
|
|
—
|
|
|
|
425
|
|
Depreciation
Expense
|
|
|
|
|
|
|
107
|
|
Total
operating income (expenses)
|
|
|
—
|
|
|
|
114,381
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
|
$
|
—
|
|
|
$
|
(113,535
|
)
|
Cash from discontinued operations for the three months ended March 31, 2018 and 2017 are as follows:
|
|
Three Months Ended
March 31 2018
|
|
Three Months Ended
March 31 2017
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net Income (loss) from operations
|
|
$
|
—
|
|
|
$
|
(113,535
|
)
|
Adjustments to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
|
—
|
|
|
|
532
|
|
Stock issued for services
|
|
|
—
|
|
|
|
10,000
|
|
Change in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
—
|
|
|
|
(877
|
)
|
Prepaid expenses
|
|
|
—
|
|
|
|
(5,381
|
)
|
Inventory
|
|
|
—
|
|
|
|
871
|
|
Accounts payable and accrued expenses
|
|
|
—
|
|
|
|
9,489
|
|
Net cash used in operating activities
|
|
$
|
—
|
|
|
$
|
(108,901
|
)
|
NOTE 5: CONVERTIBLE NOTES PAYABLE
1 - On March 27, 2017, the Company entered into a potentially dilutive convertible advance with Crown Bridge Partners LLC. The
agreement provides that the Company may borrow up to $675,000. Borrowings under the line bear interest at 8% upon maturity and
include a 10% issue discount. The maturity date for each tranche funded shall be 12 months from the effective date of each tranche.
As of December 31, 2017, the Company has drawn a $75,000 credit line against this facility. The advance, was payable on March
27, 2018. The note was issued at a 10% discount. The net proceeds received after issuance costs and fees was $63,750. In accordance
with ASC 835-30-45, Interest, the Company records the fees, costs, and original issue discount as reduction of the carrying amount
of the debt and amortizes the balances over the life of the debt instrument. Additionally, the note is convertible at the holder's
discretion into shares of the Company's common stock based on a conversion formula of 55% multiplied by the lowest price of the
common shares for the 20 trading prior to which the Notice of Conversion is received. If at any time the market price of the Company's
common stock is trading below $0.50, then an additional 10% discount shall be factored into the Conversion Price, resulting in
a discount of 55%. In the event the Company fails to maintain its status as "DTC Eligible" for any reason, or if the
lowest trading prices of the common stock is equal to or lower than $0.01, then an additional 5% discount shall be factored into
the Conversion Price, resulting in a total discount of 60%. The conversion formula created an embedded derivative conversion feature.
The Company valued this conversion feature as of March 31, 2018 at $43,176 and as of December 31, 2017 at $1,247,022
using the Black Scholes valuation model with the following assumptions: dividend yield of zero, 86 day term to maturity, risk
free interest rate of 1.76% and annualized volatility of 63.54%. The value of the conversion feature was assigned to the
derivative liability and created a debt discount to be amortized over the life of the convertible debt.
During the period ended December 31, 2017, the convertible option of the debt was exercised, resulting in 635,910 shares issued
for $5,656 in principal and $2,000 in accrued interest. Accrued interest related to this advance was $4,000 and $3,086
at March 31, 2018 and at December 31, 2017 respectively, and is included in accrued interest on the Balance Sheets.
Face Value balance as of March 31, 2018 is $29,344 and $69,918 as of December 31, 2017. Interest expenses as of December
31, 2017 was $29,566 and $4,000 as pf March 31, 2018
On February 21, 2018 Crown Bridge Partners LLC, sold $40,000 of its potentially dilutive convertible advance to a Company’s
related party D&D Capital, Inc.
2 - On March 24, 2017, the Company entered into a potentially dilutive convertible advance with Eagle Equities LLC. The advance,
with a face value of $75,000, bears interest at 8% per annum and is payable on March 24, 2018. The note was issued at a 10% discount.
The net proceeds received after issuance costs and fees was $63,750. In accordance with ASC 835-30-45, Interest, the Company records
the fees, costs, and original issue discount as reduction of the carrying amount of the debt and amortizes the balances over the
life of the debt instrument. Additionally, the note is convertible at the holder's discretion into shares of the Company's common
stock based on a conversion formula of 55% multiplied by the lowest price of the common shares for the 20 trading prior to which
the Notice of Conversion is received. In the event the Company experiences a DTC Chill on its shares, the Conversion Price shall
be decreased to 45% instead of 55% while that chill is in effect. If the Company fails to maintain the share reserve at the 4x
discount of the note 60 days after the issuance of the note, the conversion discount shall be increased by 10%. The conversion
formula created an embedded derivative conversion feature.
The Company valued this conversion feature as of December 31, 2017 at $1,188,270 and as of March 31, 2018 at $82,388
using the Black Scholes valuation model with the following assumptions: dividend yield of zero, 83 day term to maturity, risk
free interest rate of 1.76% and annualized volatility of 63.54%. The value of the conversion feature was assigned to the
derivative liability and created a debt discount to be amortized over the life of the convertible debt.
During the period ended December 31, 2017, the convertible option of the debt was exercised, resulting in 947,100 shares issued
for $15,800 in principal and $645 in accrued interest. Accrued interest related to this advance was $5,244 and $3,608 at
March 31, 2018 and December 31, 2017, respectively, and is included in accrued interest on the Balance Sheets. Face Value balance
was $61,050 and $ 59,200 as of December 31, 2017 and March 31, 2018 respectively.
3 - On May 30, 2017, the Company entered into a potentially dilutive convertible advance with Power Up Lending Group, LTD. The
advance, with a face value of $38,000, bears interest at 12% per annum and is payable on March 5, 2018. The note was issued at
a 7% discount. The net proceeds received after issuance costs and fees was $35,000. In accordance with ASC 835-30-45, Interest,
the Company records the fees, costs, and original issue discount as reduction of the carrying amount of the debt and amortizes
the balances over the life of the debt instrument. Additionally, the note is convertible at the holder's discretion into shares
of the Company's common stock based on a conversion formula of 60% multiplied by the lowest price of the common shares for the
20 trading prior to which the Notice of Conversion is received.
The conversion formula created an embedded derivative conversion feature. The Company valued this conversion feature as
of December 31, 2017 at $553,851 and as of March 31, 2018 at $30,096 using the Black Scholes valuation model
with the following assumptions: dividend yield of zero, 150 day term to maturity, risk free interest rate of 1.76%
and annualized volatility of 63.54%. The value of the conversion feature was assigned to the derivative liability and
created a debt discount to be amortized over the life of the convertible debt.
During the period ended December 31, 2017, the convertible option of the debt was exercised, resulting in 545,930 shares issued
for $7,955 in principal. Accrued interest related to this advance was $2,610 and $2.280 at December 31, 2017 and March
31, 2018, respectively, and is included in accrued interest on the Balance Sheets. Face Value balance was $32,385 and $3,510
as of December 31, 2017 and March 31, 2018 respectively.
During the period ended March 31, 2018 the convertible option of the debt was exercised, resulting in 265,902 shares issued for
$45,068 in principal.
4 - On May 15, 2017, the Company entered into a potentially dilutive convertible advance with Kodiak Capital Group, LLC. The agreement
provides that the Company may borrow up to $337,500. Borrowings under the line bear interest at 8% per annum and include a 10%
issue discount. On May 15, 2017, drew against this debt facility. The net proceeds received after issuance costs and fees was
$30,000. In accordance with ASC 835-30-45, Interest, the Company records the fees, costs, and original issue discount as reduction
of the carrying amount of the debt and amortizes the balances over the life of the debt instrument. Additionally, the note is
convertible at the holder's discretion into shares of the Company's common stock based on a conversion formula of 55% multiplied
by the lowest price of the common shares for the 20 trading prior to which the Notice of Conversion is received. The conversion
formula created an embedded derivative conversion feature.
The Company valued this conversion feature as of December 31, 2017 at $680,625 and $ 46,859 as of March 31, 2018
using the Black Scholes valuation model with the following assumptions: dividend yield of zero, 135 day term to maturity,
risk free interest rate of 1.76% and annualized volatility of 63.54%. The value of the conversion feature was assigned
to the derivative liability and created a debt discount to be amortized over the life of the convertible debt.
During the period ended December 31, 2017, the convertible option of the debt was exercised, resulting in 258,849 shares issued
for $3,416 in principal. Accrued interest related to this advance was $2,630 and $1,890 at March 31, 2018 and December
31, 2017 respectively, and is included in accrued interest on the Balance Sheets. Face Value balance as of December 31, 2017 was
$34,084 same as of March 31, 2018.
5 - On September 27, 2017, the Company entered into a potentially dilutive convertible advance with Power Up Lending Group, LLC.
The advance, with a face value of $28,000, bears interest at 12% per annum and is payable on July 10, 2018. The note was issued
at a 10% discount. The net proceeds received after issuance costs and fees was $25,000. In accordance with ASC 835-30-45, Interest,
the Company records the fees, costs, and original issue discount as reduction of the carrying amount of the debt and amortizes
the balances over the life of the debt instrument. Additionally, the note is convertible at the holder's discretion into shares
of the Company's common stock based on a conversion formula of 58% multiplied by the lowest price of the common shares for the
15 trading prior to which the Notice of Conversion is received. The conversion formula created an embedded derivative conversion
feature.
The Company valued this conversion feature as of December 31, 2017 at $353,071 and as of March 31, 2018 at $34,492 using
the Black Scholes valuation model with the following assumptions: dividend yield of zero, 192 day term to maturity, risk
free
interest rate of 1.76% and annualized volatility of 63.54%. The value of the conversion feature was assigned to the derivative
liability and created a debt discount to be amortized over the life of the convertible debt.
During the period ended December 31, 2017, the convertible option of the debt was not exercised, At December 31, 2017 and 2016,
the convertible note was recorded at $963 and $0, respectively. Accrued interest related to this advance was $1,703 and $875 at
March 31, 2018 and December 31, 2017 respectively, and is included in accrued interest on the Balance Sheets. At March 31 2018
and December 31, 2017, the convertible notes payable were recorded at $28,000 and $30,040, respectively.
NOTE 6 RELATED PARTY LOANS
: according to ASC 850, an entity and its principal owners and members of their immediate
families are considered related parties.
Convertible Notes Payable
On February 21, 2018 Crown Bridge Partners LLC, sold part of its potentially dilutive convertible advance to D&D Capital,
Inc, a related party. Accrued interest related to this advance was $386 and $0 at March 31, 2018 and December 31, 2017
respectively, and is included in accrued interest on the Balance Sheets. Face value balance as of March 31, 2018 is $40,000.
The Company valued this conversion feature using the Black Scholes valuation model with the following assumptions: (i) as
of March 31, 2018 dividend yield of zero, 321 days term to maturity, risk free interest rate of 2.09% and annualized volatility
of 61.32%, valued at $27,334. The value of the conversion feature was assigned to the derivative liability and created
a debt discount to be amortized over the life of the convertible debt.
Other Loans
During the three months ended March 31, 2018, Mining Power borrowed $38,401 from Consultant Capital Group Inc. in a form of
related party loan that bears no interest and due on demand.
NOTE 7 RESTATEMENT
On February 16, 2018 the Company issued 2,000,000 shares of common stock to D&D Capital, Inc., valued at the conversion
price of $0.01963. The shares were issued in exchange for $39,250 from certain Convertible Promissory Note, dated March 27, 2017
between Rich Cigars, Inc and Crown Bridge Partners, LLC which sold the note to related party D&D Capital, Inc, who finally
submitted the Conversion Note. On April 16, 2018, D&D Capital, Inc. cancelled the share issuance and returned the 2,000,000
shares. As a result of the cancellation, the Company is filing this amendment of its 10-Q filed for the period ended
March 31, 2018 to reflect the cancellation.
The following financials shows the original filing, this restated filing and the differences between both:
Balance Sheet
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
March 31, 2018
|
|
March 31, 2018
|
|
|
(Unaudited as Filed)
|
|
(Adjustments)
|
|
(Unaudited and Restated)
|
Total current assets
|
|
$
|
4,500
|
|
|
$
|
—
|
|
|
$
|
4,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
364,104
|
|
|
$
|
27,356
|
|
|
$
|
391,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A Convertible Preferred Stock
|
|
$
|
121,300
|
|
|
$
|
—
|
|
|
$
|
121,300
|
|
Total shareholders’ equity (deficit)
|
|
$
|
(480,904
|
)
|
|
$
|
(27,356
|
)
|
|
$
|
(386,960
|
)
|
Statements of Operation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
March 31, 2018 (Unaudited as Filed)
|
|
March 31, 2018 (Adjustments)
|
|
March 31, 2018 (Unaudited and Restated)
|
|
|
|
|
|
|
|
Total operating expense
|
|
$
|
(38,301
|
)
|
|
|
—
|
|
|
$
|
(38,301
|
)
|
Total other income (expense)
|
|
$
|
4,086,391
|
|
|
$
|
11,894
|
|
|
$
|
4,098,285
|
|
Income (Loss) from continuing operations
|
|
$
|
4,048,090
|
|
|
$
|
11,894
|
|
|
$
|
4,059,984
|
|
Income (Loss) from discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
NET INCOME (LOSS)
|
|
$
|
4,048,090
|
|
|
$
|
11,894
|
|
|
$
|
4,059,984
|
|
Net income (loss) per share applicable to common stockholders - basic (continuing operations)
|
|
$
|
0.16
|
|
|
$
|
0.00
|
|
|
$
|
0.16
|
|
Net income (loss) per share applicable to common stockholders - basic (discontinued operations)
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
Net income (loss) per share applicable to common stockholders - diluted (continuing operations)
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
Net income (loss) per share applicable to common stockholders - diluted (discontinued operations)
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
Weighted average number of common shares outstanding - basic
|
|
|
25,661,578
|
|
|
|
(844,445
|
)
|
|
|
24,817,133
|
|
Weighted average number of common shares outstanding – diluted
|
|
|
988,661,578
|
|
|
|
964,501
|
|
|
|
989,626,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements
of Cash Flows
|
|
|
Three
months ended
|
|
|
March
31, 2018 - Filed
|
|
March
31, 2018 Adjusted
|
|
March
31, 2018 - Restated -
|
|
|
|
|
|
|
|
Net
cash used in operating activities continuing operations
|
|
$
|
(38,301
|
)
|
|
$
|
—
|
|
|
$
|
(38,301
|
)
|
Net
cash provided by financing activities
|
|
$
|
38,301
|
|
|
$
|
—
|
|
|
$
|
38,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
CHANGE IN CASH
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
CASH,
beginning of period
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
CASH,
end of period
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
NOTE 8: PROPERTY AND EQUIPMENT
Property and Equipment consists of the following:
|
|
March 31,
|
|
December 31,
|
|
|
2018
|
|
2017
|
Furniture and Equipment
|
|
$
|
—
|
|
|
$
|
2,131
|
|
Less Accumulated Depreciation
|
|
|
—
|
|
|
|
(1,633
|
)
|
Property and Equipment, net
|
|
$
|
—
|
|
|
$
|
498
|
|
The Company recorded Depreciation Expense $ 0 and $423 for the period ended years ended March 31, 2018 and December 31, 2017 As
of March 31, 2018 all Property and Equipment was written-off.
NOTE 9: EQUITY
On November 27, 2017, the Company issued 1,000,000 shares of Series A Convertible preferred stock for $125,000. The Preferred
Stock is convertible in the Company's common stock. Each share of the Company's Series A Convertible preferred stock is convertible
into 1,000 shares of the Company's common stock at a cost basis equivalent to par value per share, or $0.0001. Each share of the
Series A Convertible preferred stock votes at the equivalent of 20,000 shares of common stock.
On January 10, 2018 the
Company issued 37,000,000 common stock restricted shares, $0.0001 par value per share, converting 37,000 shares of the
one million (1,000,000) Series A Preferred Stock,
On February 28, 2018 the Company issued 156,333 shares of common stock valued at the conversion price of $0.18. The shares
were issued to convert $28,140 of the principal amount of the Note dated as of May 30, 2017 having as beneficiary to Power Up
Lending Group Ltd.
On March 6, 2018 the Company issued 109,569 shares of common stock valued at the conversion price of $0.1753. The shares were
issued to convert $16,928 of the principal amount and $2,280 of accrued and unpaid interest of the Note dated as of May
30, 2017 having as beneficiary to Power Up Lending Group Ltd.
NOTE 10:
COMMITMENTS AND CONTINGENCIES;
During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation,
it evaluates the merits of the case in accordance with ASC 450-20-50,
Contingencies.
The Company evaluates its exposure
to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines
that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. As of March 31,
2018, the Company is not aware of any contingent liabilities that should be reflected in the accompanying consolidated financial
statements.
NOTE 12: SUBSEQUENT EVENTS AFTER MARCH 31, 2018
The Company has evaluated subsequent events that occurred through the date of the filing of the Company's first quarter 2018 Form
10-Q.
Asset Purchase and Rescission
On January 31, 2018, the Company completed the purchase of the intellectual property assets of Simple Cork, Inc., a Florida corporation,
and wholly-owned subsidiary of Vapor Group, Inc. (the "Asset Purchase").
On July 10, 2018, the Company, Vapor Group, Inc. and Simple Cork, Inc., the non-publicly-traded subsidiary company of Vapor Group,
Inc. jointly announced that they had reached a settlement and resolution pertaining to the Asset Purchase, dated January 31, 2018,
Under the terms and conditions of the settlement and resolution, the Asset Purchase Agreement in its
entirety is rescinded ab
initio. In its place, the Company and Vapor Group shall issue a share dividend of common stock of Simple Cork, Inc., which is
being spun-off pursuant to the provisions of a Tier 2 Regulation A filing with the Securities and Exchange Commission not
later than by Friday, September 14, 2018, which date has been set as the ex-dividend date or the issuance date for shareholders
of record of either Company. The ratio of the quantity of shares of Simple Cork, Inc. to be issued per shares held of either of
the Company and Vapor Group, Inc. will be announced at a later date.
In addition, each shareholder of the Company and Vapor Group, Inc. shall receive rights to acquire additional shares of Simple
Cork, Inc. as the spun-off company at a 50% discount to the IPO price as set in the Reg A+ filing for new shareholders. The new
Simple Cork, Inc. shareholders, not shareholders of the Company or Vapor Group, Inc., shall not be entitled to such rights.
The result is that neither the Company nor Vapor Group, Inc. will own the intellectual property assets of Simple Cork, Inc. Instead,
Simple Cork, Inc., as a separate public entity, will own such intellectual property rights and will in turn be owned, separately,
by its own shareholders. Simple Cork, Inc. shall separately assume responsibility for the development of “Simple Cork™”.
Share Issuances
and Cancellations
On April 25, 2018 the Company issued 45,000 shares of common stock value at the conversion price of $0.078.
The shares were issued to convert $3,510 of the principal amount of the Note dated as of May 30, 2017, having
as beneficiary to Power Up Lending Group Ltd.
On April 25, 2018 the Company issued 187,533 shares of common stock value at the conversion price of $0.0754. The
shares were issued to convert $14,140 of the principal amount of the Note dated as of September 27, 2017, having
as beneficiary to Power Up Lending Group Ltd.
On May 3, 2018, the Company issued 2,500,000 shares of restricted common stock to a Shelby White. The issuance was cancelled
by the Company on July 3, 2018, as the issuance was in error.
On July 6, 2018 the Company issued 10,000,000 common stock restricted shares, $0.0001 par value per share, converting 10,000
shares of the 963,000 Series A Preferred Stock, based on the Articles of Incorporation of Power Mining Group, Inc, filed with
the State of Colorado.
On July 6, 2018 the Company issued 1,715,961 shares of common stock value at the conversion price of $0.3897.
The shares were issued to convert $59,200 of the principal amount and $7,671 interest of the Note dated as of
March 24, 2017, having as beneficiary to Eagle Equities LLC.
On August 3, 2018 the Company issued 2,298,212 shares of common stock value at the conversion price of
$0.0413. The shares were issued to convert $95,008.08 of principal, interest including penalty charge of the Note
dated as of March 27, 2017, having as beneficiary to D&D Capital, Inc.
On August 6, 2018 the Company issued 50,000 common stock restricted shares, $0.0001 par value per share, to each
of three persons, 150,000 shares total, for services rendered.
On August 8, 2018 the Company issued 812,000 shares of common stock value at the conversion price of $0.06.
The shares were issued to convert $44,016 of the principal amount and $4,204 interest of the Note dated as of March
27, 2017, having as beneficiary to Crown Bridge Partners LLC.
On September 12, 2018 the Company issued 2,450,000 shares of common stock value at the conversion price of $0.0413. The shares
were issued to convert $101,283.00 of principal, interest including penalty charge of the Note dated as of May 15, 2017, having
as beneficiary to S&E Capital, LLC.
Change In Officers and Directors
On May 10, 2018, the Company appointed Yaniv Nahon, a member of its Board of Directors. Following Mr. Nahon’s appointment
and acceptance as a member of the Board of Directors, the Board of Directors accepted the resignation of Richard Davis as the
President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer and a member of the Board of Directors. Immediately
following the resignation of Mr. Davis, the Board of Directors appointed Yaniv Nahon, a member of the Board of Directors, as the
Corporation’s President/Chief Executive Officer, Secretary, Treasurer and Chief Financial Officer of the Company. Therefore,
the sole member of the Board of Directors is Yaniv Nahon.
Mr. Davis did not resign as a result of any disagreement with the Company on any matter relating to the Company’s operations,
policies or practices.
On August 1, 2018, the Company appointed Dror Svorai to its Board of Directors. Following Mr. Svorai’s appointment and
acceptance as a member of the Board of Directors, the Board of Directors accepted the resignation of Yaniv Nahon as the President/Chief
Executive Officer, Secretary, Treasurer/Chief Financial Officer and a member of the Board of Directors. Immediately following
the resignation of Mr. Nahon, the Board of Directors appointed Dror Svorai, a member of the Board of
Directors, as the Corporation’s
President/Chief Executive Officer, Secretary, Treasurer and Chief Financial Officer of the Company. Therefore, as of August 1,
2018, the sole member of the Board of Directors and sole officer of the Company is Dror Svorai.
Mr. Nahon did not resign as a result of any disagreement with the Company on any matter relating to the Company’s operations,
policies or practices.
Acquisition of Northway Mining, LLC and Pending Purchase
Contract
On August 1, 2018, the Company entered into an acquisition agreement (the “Acquisition Agreement”) to acquire the
majority ownership interest of Northway Mining, LLC (“Northway”). a New York limited liability company, located at
707 Flats Road, Athens, New York. Northway is a cryptomining data center hosting third-party owned and operated cryptomining machines
within its 5000 square feet facility. It currently is hosting over 1,100 machines in its facilities at Flats Road under individual
service agreements with third-party machine owners.
Pursuant to the Acquisition Agreement the Company acquired fifty-five percent (55%) of the ownership units of Northway in return
for an investment of $1,100,000 (U.S.) for the purposes of providing working capital and funds to Northway for improvements to,
and expansion of, its facilities, and the purchase of 30-acres of flat land and buildings at its Athens, New York address owned
by a third party per that separate “Agreement for Purchase of Property between Northway Mining, LLC and CSX4236 Motorcycle
Salvage LLC” (the “Land Purchase Agreement”). (The “Acquisition”) Under the terms and conditions
of the Acquisition, Northway has amended and restated its New York State limited liability company Operating Agreement under which
it is stated that it will maintain its current management.
In addition, per the Acquisition Agreement, the Company is providing the current Northway management with a performance-based
stock option for two and a half million (2,500,000) shares of the Company’s restricted common stock as earned over a period
of six (6) months for the achievement of performance goals as established by the Board of Directors of the Company.
Separately in connection with the Acquisition Agreement, the Company assigned a purchase contract in total amount of $950,000
(“Purchase .Amount’) to Northway that it has entered into pending the closing of the Acquisition for the purchase
of a building located at 2 Flint Mine Road, Coxsackie, NY 12051, SBL Nos. 71.00-1-20 and 71.00-1-3.112 (the “Purchase Contract”)
which is to be used solely by Northway (the “Agreement for Purchase of Property between Mining Power Group, Inc. and Northway
Mining, LLC” or the “Building Purchase Agreement”). Under the terms of Building Purchase Agreement, the Company
shall pay on behalf of Northway, which shall own the building, $350,000 at closing, with Northway paying the remainder of the
Purchase Amount over time per the terms of the Purchase Contract.