NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
1. ORGANIZATION AND LINE OF BUSINESS
Organization
CleanSpark,
Inc. (“we”, “our”, the "Company") was incorporated in the state of Nevada on October 15, 1987
as SmartData Corporation. SmartData conducted a 504-public offering in the State of Nevada in December 1987 and began trading
publicly in January 1988. Due to a series of unfortunate events, including the untimely death of the founding CEO, SmartData discontinued
active business operations in 1992.
On March 25,
2014, we began operations in the alternative energy sector.
In December
2014, the Company changed its name to Stratean Inc. through a short-form merger in order to better reflect the new business plan.
On July 1, 2016,
the Company entered into an Asset Purchase Agreement, as amended (the “Purchase Agreement”), with CleanSpark Holdings
LLC, CleanSpark LLC, CleanSpark Technologies LLC and Specialized Energy Solutions, Inc. (together, the “Seller”).
Pursuant to the Purchase Agreement, the Company acquired CleanSpark, LLC and all the assets related to the Seller and its line
of business and assumed $200,000 in liabilities.
In October 2016,
the Company changed its name to CleanSpark, Inc. through a short-form merger in order to better reflect the brand identity.
Line
of Business
Through
the acquisition of CleanSpark, LLC, the Company provides microgrid solutions to military, commercial and residential properties.
The
services offered consist of turn-key microgrid implementation services, microgrid design and engineering, project development
consulting services and solar photovoltaic installation and consulting. The work is performed under fixed price bid contracts
and negotiated price contracts. The Company performed all of its work in California during the year ended September 30, 2018.
2. SUMMARY OF
SIGNIFICANT POLICIES
This summary
of significant accounting policies of CleanSpark Inc. is presented to assist in understanding the Company’s consolidated
financial statements. The consolidated financial statements and notes are representations of the Company’s management, who
are responsible for their integrity and objectivity. 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 consolidated financial statements.
Basis of
Presentation
The Company
has incurred losses for the past several years while developing infrastructure and its software platforms. As shown in the accompanying
audited consolidated financial statements, the Company incurred net losses of $47,006,165 and $13,498,526 during the years ended
September 30, 2018 and September 30, 2017, respectively. Additionally, as of September 30, 2018, the Company had a working capital
deficit of approximately $801,207. In response to these conditions, subsequent to September 30, 2018 we have raised additional
capital through the sale of debt and equity securities pursuant to a registration statement on Form S-3. (See Note 17 for additional
details.)
The
Company’s
independent registered public accounting firm expressed in its report on the
Company’s
financial statements for the year ended September 30, 2017 a substantial doubt about the
Company’s
ability to continue as a going concern. Based on
management’s
plans
and the capital raised subsequent to the year ended September 30, 2018, that substantial doubt has been alleviated.
Principles
of Consolidation
The
accompanying consolidated financial statements include the accounts of CleanSpark, Inc., and its wholly owned operating subsidiaries,
CleanSpark, LLC, CleanSpark, II, LLC and CleanSpark Acquisition, Inc. All material intercompany transactions have been eliminated
upon consolidation of these entities.
Use
of estimates
–
The preparation of consolidated financial statements in conformity
with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the
consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. Significant estimates include estimates used to review the Company’s goodwill impairment,
impairments and estimations of long-lived assets, revenue recognition on percentage of completion type contracts, allowances for
uncollectible accounts, derivative instruments valuation, and the valuations of non-cash capital stock issuances. The Company bases
its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Revenue Recognition
–The Company recognizes revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting
Bulletin No. 101, “Revenue Recognition in Financial Statements” and No. 104, “Revenue Recognition”. In
all cases, revenue is recognized only when the price is fixed, or determinable, persuasive evidence of an arrangement exists,
the service is performed and collectability is reasonably assured. For the years ended September 30, 2018 and 2017, the Company
reported revenues of $578,635 and $447,963, respectively.
Revenues
and related costs on construction contracts are recognized using the “percentage of completion method” of accounting
in accordance with ASC 605-35, Accounting for Performance of Construction-Type and Certain Production Type Contracts (“ASC
605-35”). Under this method, contract revenues and related expenses are recognized over the performance period of the contract
in direct proportion to the costs incurred as a percentage of total estimated costs for the entirety of the contract. Costs include
direct material, direct labor, subcontract labor and any allocable indirect costs. All un-allocable indirect costs and corporate
general and administrative costs are charged to the periods as incurred. However, in the event a loss on a contract is foreseen,
the Company will recognize the loss as it is determined.
Revisions
in cost and profit estimates during the course of the contract are reflected in the accounting period in which the facts, which
require the revision, become known. Provisions for estimated losses on uncompleted contracts are made in the period
in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including
those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and
are recognized in the period in which the revisions are determined.
The
Asset, “Costs in excess of billings”, represents revenues recognized in excess of amounts billed on contracts in progress.
The Liability, “Billings in excess of costs”, represents billings in excess of revenues recognized on contracts in
progress. At September 30, 2018 and September 30, 2017, the costs in excess of billings balance were $52,439 and $0, and the billings
in excess of costs balance were $0 and $0, respectively.
Accounts
receivables are recorded on contracts for amounts currently due based upon progress billings, as well as retention, which are
collectible upon completion of the contracts. Accounts payable to material suppliers and subcontractors are recorded for
amounts currently due based upon work completed or materials received, as are retention due subcontractors, which are payable
upon completion of the contract. General and administrative expenses are charged to operations as incurred and are
not allocated to contract costs. Retention receivable is the amount withheld by a customer until a contract is completed.
Retention receivables of $17,751 and $0 were included in the balance of trade accounts receivable as of September 30, 2018 and
September 30, 2017, respectively.
Accounts
Receivable
– Accounts receivable is comprised of uncollateralized customer obligations due under normal trade terms.
The Company performs ongoing credit evaluation of its customers and management closely monitors outstanding receivables based
on factors surrounding the credit risk of specific customers, historical trends, and other information. The carrying amount of
accounts receivable is reviewed periodically for collectability. If management determines that collection is unlikely, an allowance
that reflects management’s best estimate of the amounts that will not be collected is recorded. Accounts receivable are
presented net of an allowance for doubtful accounts of $0 and $0 at September 30, 2018, and September 30, 2017, respectively.
Cash and
cash equivalents
– For purposes of the statements of cash flows, the Company considers all highly liquid investments
and short-term debt instruments with original maturities of three months or less to be cash equivalents. There was $412,777 and
$57,128 in cash and no cash equivalents as of September 30, 2018 and September 30, 2017, respectively.
Concentration
Risk
At times throughout
the year, the Company may maintain cash balances in certain bank accounts in excess of FDIC limits. As of September 30, 2018,
the cash balance in excess of the FDIC limits was $149,429. The Company has not experienced any losses in such accounts and believes
it is not exposed to any significant credit risk in these accounts.
The Company had certain
customers whose revenue individually represented 10% or more of the Company’s total revenue. (See Note 17 for details.)
Warranty
Liability
– The Company establishes warranty liability reserves to provide for estimated future expenses as a result
of installation and product defects, product recalls and litigation incidental to the Company’s business. Liability
estimates are determined based on management’s judgment, considering such factors as historical experience, the likely current
cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action,
consultations with third party experts such as engineers, and discussions with the Company’s general counsel and outside
counsel retained to handle specific product liability cases. The Company’s manufacturers and service providers
currently provide substantial warranties between ten to twenty-five years with full reimbursement to replace and install replacement
parts. Warranty costs and associated liabilities for the years ended September 30, 2018 and 2017 were $0 and $0, respectively.
Stock-based
compensation
– The Company follows the guidelines in FASB Codification Topic ASC 718-10 “
Compensation-Stock
Compensation,
” which requires companies to measure the cost of employee services received in exchange for an award of
an equity instrument based on the grant-date fair value of the award. Stock-based compensation expense is recognized on a straight-line
basis over the requisite service period. The Company accounts for non-employee share-based awards in accordance with FASB ASC
505-50 under which the awards are valued at the earlier of a commitment date or upon completion of the services, based on the
fair value of the equity instruments, and are recognized as expense over the service period. On June 9, 2017, the Company implemented
an employee stock-based compensation plan and since inception of the plan has issued 319,206 options to purchase shares of the
Company’s common stock under this plan as of September 30, 2018. The options are exercisable between $0.80 to $3.45 per
share. The Company may issue compensatory shares for services including, but not limited to, executive, management, accounting,
operations, corporate communication, financial and administrative consulting services.
Earnings
(loss) per share
– The Company reports earnings (loss) per share in accordance with Financial Accounting Standards Board’s
(“FASB”) Accounting Standards Codification (“ASC”) 260-10 “
Earnings Per Share,
” which
provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes
no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares
outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings
of an entity. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common
shares are excluded if their effect is anti-dilutive. As of September 30, 2018, there are 9,461,102 shares issuable upon exercise
of outstanding options, warrants and convertible debt which have been excluded as anti-dilutive.
Long-lived
Assets
– In accordance with the Financial Accounting Standards Board ("FASB") Accounts Standard Codification
(ASC) ASC 360-10, "Property, Plant and Equipment," the carrying value of intangible assets and other long-lived assets
is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes
impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment
losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. During the years
ended September 30, 2018 and 2017 the Company recorded an impairment expense of $1,896,090 related to a patent and client lists
acquired in 2016 which the Company does not anticipate utilizing in future periods and $8,551,321 related to impairment of software,
microgrid and gasification assets, respectively.
Intangible
Assets and Goodwill
– The Company accounts for business combinations under the acquisition method of accounting in accordance
with ASC 805, “Business Combinations,” where the total purchase price is allocated to the tangible and identified
intangible assets acquired and liabilities assumed based on their estimated fair values. The purchase price is allocated using
the information currently available, and may be adjusted, up to one year from acquisition date, after obtaining more information
regarding, among other things, asset valuations, liabilities assumed and revisions to preliminary estimates. The purchase price
in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as
goodwill.
The
Company reviews its indefinite lived intangibles and goodwill for impairment annually or whenever events or circumstances indicate
that the carrying amount of the asset exceeds its fair value and may not be recoverable. In accordance with its policies, the
Company performed an assessment of indefinite lived intangibles and goodwill and determined there was no impairment for the years
ended September 30, 2018 and 2017.
Software
Development Costs
– The Company capitalizes software development costs under guidance of ASC 985-20 “Costs of Software
to be Sold, Leased or Marketed”. Software development costs include payments made to independent software developers under
development agreements, as well as direct costs incurred for internally developed products. Software development costs are capitalized
once the technological feasibility of a product is established and such costs are determined to be recoverable. Technological
feasibility of a product requires both technical design documentation and infrastructure design documentation, or the completed
and tested product design and a working model. Significant management judgments and estimates are utilized in the assessment of
when technological feasibility is established, and the evaluation is performed on a product-by-product basis. For products where
proven technology exists, such as mPulse 2.0 and mVSO 2.0 this may occur early in the development cycle. Prior to a product's
release, if and when we believe capitalized costs are not recoverable, we expense the amounts as part of "Product development."
Capitalized costs for products that are cancelled or are expected to be abandoned are charged to "Product development"
in the period of cancellation. Amounts related to software development which are not capitalized are charged immediately to "Product
development."
Commencing
upon a product's release, capitalized software development costs are amortized to "Cost of revenues—software amortization
" based on the ratio of current revenues to total projected revenues for the specific product, generally resulting in an
amortization period of seven years for our current product offerings. In accordance with ASC 985-35 in recognition of the uncertainties
involved in estimating future revenue, amortization will never be less than straight-line amortization of the products remaining
estimated economic life.
We
evaluate the future recoverability of capitalized software development costs on a quarterly basis. For products that have been
released in prior periods, the primary evaluation criterion is the actual performance of the software platform to which the costs
relate. For products that are scheduled to be released in future periods, recoverability is evaluated based on the expected performance
of the specific products to which the costs relate. Criteria used to evaluate expected product performance include: historical
performance of comparable products developed with comparable technology; market performance of comparable software; orders for
the product prior to its release; pending contracts and general market conditions.
Significant
management judgments and estimates are utilized in assessing the recoverability of capitalized costs. In evaluating the recoverability
of capitalized costs, the assessment of expected product performance utilizes forecasted sales amounts and estimates of additional
costs to be incurred. If revised forecasted or actual product sales are less than the originally forecasted amounts utilized in
the initial recoverability analysis, the net realizable value may be lower than originally estimated in any given quarter, which
could result in an impairment charge. Material differences may result in the amount and timing of expenses for any period if matters
resolve in a manner that is inconsistent with management's expectations. If an impairment occurs the reduced amount of the capitalized
software costs that have been written down to the net realizable value at the close of each annual fiscal period will be considered
the cost for subsequent accounting purposes.
Income
taxes
– The Company accounts for its income taxes in accordance with FASB Codification Topic ASC 740-10, “
Income
Taxes
”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases
and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences 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 in the period that includes the enactment date.
Reclassifications
– Certain prior year amounts have been reclassified for consistency with the current year presentation. On the Company’s
consolidated balance sheet as of September 30, 2017 $4,020,269, net of $333,139 in accumulated depreciation has been reclassified
from Flexpower system assets to intangible assets. This amount was associated with engineering and trade secrets. Flexpower assets
have been reclassified as capitalized software to more clearly reflect the nature of the assets. In addition, $1,067,556 in amortization
and depreciation expense related to the capitalized software has been reclassified to product development expense for the year
ended September 30, 2017. These reclassifications had no effect on the reported results of operations or net assets of the Company.
Segment
Reporting
– Operating segments are defined as components of an enterprise for which separate financial information
is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method to
allocate resources and assess performance. The Company currently has one reportable segment for financial reporting purposes,
which represents the Company's core business.
Recently
issued accounting pronouncements
-
In May 2014,
the FASB issued Accounting Standards Update No. 2014-09
Revenue from Contracts with Customers
(“ASU 2014-09”),
which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize
revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an
entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle
and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing
U.S. GAAP. Additionally, the new guidance requires enhanced disclosures about the nature, amount, timing, and uncertainty of revenue
and cash flows arising from customer contracts, including revenue recognition policies to identify performance obligations, assets
recognized from costs incurred to obtain and fulfill a contract, and significant judgments in measurement and recognition.
In July 2015,
the FASB made a decision to defer the effective date of the new standard for one year and permit early adoption as of the original
effective date. The new standard will be effective for the Company as of October 1, 2018. The Company has evaluated
the impact of the adoption of this standard on its revenue recognition policy and does not believe it will have a material impact
on its financial statements.
The
Company has evaluated all other recent accounting pronouncements, and believes that none of them will have a material effect on
the Company's financial position, results of operations or cash flows.
3. COSTS AND
ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
The
Asset, “Costs in excess of billings”, represents revenues recognized in excess of amounts billed on contracts in progress.
The Liability, “Billings in excess of costs”, represents billings in excess of revenues recognized on contracts in
progress. At September 30, 2018 and September 30, 2017, the costs in excess of billings balance were $52,439 and $0, and the billings
in excess of costs balance were $0 and $0, respectively.
The
following is a summary of the costs and estimated earnings on contracts as of September 30, 2018. There were no open percentage-of-completion
method contracts as of September 30, 2017.
|
|
Year
ended September 30, 2018
|
Costs incurred on contracts
|
|
$
|
292,990
|
Estimated earnings
|
|
|
114,471
|
|
|
|
407,461
|
|
|
|
|
Less billings to date
|
|
|
(355,022)
|
Total
|
|
|
52,439
|
|
|
|
|
Costs and estimated earnings in excess of billings
|
|
|
52,439
|
Billings in excess of costs and estimated
earnings
|
|
|
—
|
Total
|
|
$
|
52,439
|
All
contracts open as of September 30, 2018 are expected to be completed in the fiscal year ending September 30, 2019.
4.
CAPITALIZED SOFTWARE
Capitalized
software consists of the following as of September 30, 2018 and September 30, 2017:
|
|
September 30,
2018
|
|
September 30,
2017
|
mVSO software
|
|
$
|
4,708,203
|
|
|
$
|
4,663,513
|
MPulse software
|
|
|
6,334,772
|
|
|
|
5,923,197
|
Less: accumulated amortization
|
|
|
(2,256,749
|
)
|
|
|
(877,266)
|
Capitalized Software, net
|
|
$
|
8,786,226
|
|
|
$
|
9,709,444
|
In accordance
with ASC 985-20 the Company capitalized $456,265 in software development costs (including capitalized stock compensation cost
of $60,175) related to the enhancements created for our mPulse and mVSO 2.0 platforms during the year ended September 30, 2018.
Capitalized
software amortization recorded as product development expense for the years ended September 30, 2018 and 2017 was $1,379,483 and
$1,067,556, respectively.
During the year
ended September 30, 2017, the Company recorded an impairment of $5,039,078 related directly to components of our original software
that were replaced.
5.
INTANGIBLE ASSETS
Intangible assets
consist of the following as of September 30, 2018 and September 30, 2017:
|
|
September
30, 2018
|
|
September
30, 2017
|
Patents
|
|
$
|
71,962
|
|
|
$
|
89,473
|
Websites
|
|
|
16,482
|
|
|
|
14,532
|
Brand and Client lists
|
|
|
—
|
|
|
|
2,497,472
|
Trademarks
|
|
|
5,928
|
|
|
|
5,928
|
Engineering trade secrets
|
|
|
4,020,269
|
|
|
|
4,020,269
|
Software
|
|
|
26,990
|
|
|
|
26,990
|
Less: accumulated amortization
|
|
|
(927,164
|
)
|
|
|
(750,978)
|
Intangible assets, net
|
|
$
|
3,214,467
|
|
|
$
|
5,903,686
|
Amortization
expense for the years ended September 30, 2018 and 2017 was $802,287 and $675,379, respectively.
During the years
ended September 30, 2018 and 2017 the Company recorded an impairment of $1,894,847 and $0, respectively.
6. FIXED ASSETS
Fixed assets
consist of the following as of September 30, 2018 and September 30, 2017:
|
|
September 30,
2018
|
|
September 30,
2017
|
Machinery and equipment
|
|
$
|
130,191
|
|
|
$
|
133,061
|
Furniture and fixtures
|
|
|
54,251
|
|
|
|
74,393
|
Total
|
|
|
184,442
|
|
|
|
207,454
|
Less: accumulated depreciation
|
|
|
(97,711
|
)
|
|
|
(82,013)
|
Fixed assets, net
|
|
$
|
86,731
|
|
|
$
|
125,441
|
Depreciation
expense for the years ended September 30, 2018 and 2017 was $52,694 and $102,054, respectively.
In 2017, the
Company also recorded additional depreciation expense of $1,601,936 related to microgrid assets, which were impaired in the year
ended September 30, 2017.
During the years
ended September 30, 2018 and 2017 the Company recorded an impairment of fixed assets of $1,243 and $3,512,243, respectively.
7. LOANS
Long term
|
|
September
30, 2018
|
|
September
30, 2017
|
Long-term loans
payable consist of the following:
|
|
|
|
|
|
|
|
|
|
Promissory
notes
|
|
$
|
150,000
|
|
|
$
|
150,000
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
150,000
|
|
|
$
|
150,000
|
On
November 11, 2017, the Company executed a 10% secured promissory note with a face value of $100,000 with an investor. Under the
terms of the promissory note the Company received $100,000 and agreed to make monthly interest payments and repay the note principal
24 months from the date of issuance. The note is secured by 100,000 shares which would be issued to the note holder only in the
case of an uncured default. As of September 30, 2018, the Company owed $100,000 in principal and $822 in accrued interest under
the terms of the agreement and recorded interest expense of $6,411 for the year ended September 30, 2018.
On
December 5, 2017, the Company executed a 9% secured promissory note with a face value of $50,000 with an investor. Under the terms
of the promissory note the Company received $50,000 and agreed to make monthly interest payments and repay the note principal
24 months from the date of issuance. The note is secured by 50,000 shares which would be issued to the note holder only in the
case of an uncured default. As of September 30, 2018, The Company owed $50,000 in principal and $370 in accrued interest under
the terms of the agreement and recorded interest expense of $2,552 for the year ended September 30, 2018.
Current
|
|
September
30, 2018
|
|
September
30, 2017
|
Current loans payable consist of the following:
|
|
|
|
|
|
|
|
|
|
Promissory notes
|
|
$
|
628,951
|
|
|
$
|
—
|
Insurance
financing loans
|
|
|
10,257
|
|
|
|
7,712
|
Unamortized
debt discount
|
|
|
(181,629
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
Total,
net of unamortized discount
|
|
$
|
457,579
|
|
|
$
|
7,712
|
Promissory
Notes
On
September 5, 2017, the Company executed a 9% secured promissory note with a face value of $150,000 with an investor. Under the
terms of the promissory note, the Company received $150,000 and agreed to make monthly interest payments and repay the note principal
24 months from the date of issuance. The note is secured by 150,000 shares which are held in escrow and would be issued to the
note holder only in the case of an uncured default. As of September 30, 2018, the Company owed $150,000 in principal and $0 in
accrued interest under the terms of the agreement and recorded interest expense of $13,500 during the year ended September 30,
2018.
On
October 6, 2017, the Company executed an unsecured variable interest rate promissory note with a maximum interest rate of 58.3%
and a face value of $45,000 with a financial institution. Under the terms of the promissory note the Company received $45,000
and agreed to repay the note evenly over 12 months. As of September 30, 2018, the Company owed $3,750 in principal and $450 in
accrued interest under the terms of the agreement and recorded interest expense of $14,175 during the year ended September 30,
2018. The Company repaid all principal and outstanding interest on October 1, 2018.
On
November 20, 2017, the Company executed a 10% unsecured promissory note with a face value of $80,000 with an investor. Under the
terms of the promissory note the Company received $80,000 and agreed to make monthly interest payments and repay the note principal
12 months from the date of issuance. As of September 30, 2018, the Company owed $80,000 in principal and $0 in accrued interest
under the terms of the agreement and recorded interest expense of $6,882 during the year ended September 30, 2018. On November
21, 2018, the investor extended the maturity date to December 31, 2018. The Company repaid all principal and outstanding interest
on December 31, 2018.
On
January 12, 2018, the Company executed an unsecured variable interest rate promissory note with a maximum interest rate of 58.5%
and a face value of $18,400 with a financial institution. Under the terms of the promissory note the Company received $18,400
and agreed to repay the note and interest evenly over 12 months. As of September 30, 2018, the Company owed $6,133 in principal
and $184 in accrued interest under the terms of the agreement and recorded interest expense of $5,520 during the year ended September
30, 2018. The Company repaid all principal and outstanding interest on October 1, 2018.
On
February 27, 2018, we entered into an unsecured promissory note pursuant to which we borrowed $125,000. The note carries an original
issue discount of 5.6% ($7,000). Interest under the promissory note was 10% per annum. Under the terms of the promissory note
the Company agreed to make interest and principal payments equal to $2,500 or greater on a monthly basis. All unpaid balances
under the note were due in full on August 1, 2018. The note was settled in full on August 1, 2018 through the issuance of a new
promissory note. The Company recorded interest expense of $5,453 during the year ended September 30, 2018. The aggregate original
issued issue discount has been accreted and charged to interest expenses as a financing expense in the amount of $7,000 during
the year ended September 30, 2018.
On
May 22, 2018, the Company executed an unsecured variable interest rate promissory note with a maximum interest rate of 51.0% and
a face value of $24,500 with a financial institution. Under the terms of the promissory note the Company received $24,500 and
agreed to repay the note and interest evenly over 12 months. As of September 30, 2018, the Company owed $18,375 in principal and
$1,960 in accrued interest under the terms of the agreement and recorded interest expense of $4,900 during the year ended September
30, 2018. The Company repaid all principal and outstanding interest on October 1, 2018.
On
June 15, 2018, we entered into a 10% secured promissory note with a face value of $116,600 pursuant to which we received $110,000,
net of an original issue discount of 6% ($6,600). The Company also issued 116,600 5-year warrants exercisable at $0.80 in connection
with issuance of the promissory note. Under the terms of the promissory note the Company agreed to make monthly interest payments
and repay the note principal on December 15, 2018. The note is secured by the Company’s accounts receivable. As of September
30, 2018, the Company owed $116,600 in principal and $0 in accrued interest under the terms of the agreement and recorded interest
expense of $3,418 during the year ended September 30, 2018. The Company has determined the value associated with the warrants
issued in connection with the note to be $110,000 which has been recorded as a debt discount. The aggregate original issue discount,
and debt discount related to the warrants have been accreted and charged to interest expenses as a financing expense in the amount
of $68,176 for the year ended September 30, 2018. The unamortized discount as of September 30, 2018 amounted to $48,424. The Company
repaid all principal and outstanding interest on January 2, 2019.
On
August 1, 2018, we entered into a 10% secured promissory note with a face value of $130,625 pursuant to which we received $125,000,
net of an original issue discount of 4.5% ($5,625). The Company also issued 25,000 5-year warrants exercisable at $0.80 in connection
with purchase of the promissory note. The proceeds of the note were used to settle in full a note issued on February 27, 2018.
Under the terms of the promissory note the Company agreed to make monthly interest only payments and repay the note principal
on November 30, 2018. The note is secured by the Company’s accounts receivable. As of September 30, 2018, the Company owed
$127,748 in principal and $0 in accrued interest under the terms of the agreement and recorded interest expense of $2,171 during
the year ended September 30, 2018. The Company has determined the value associated with the warrants issued in connection with
the note to be $71,373 which has been recorded as a debt discount. The aggregate original issue discount, and debt discount related
to the warrants have been accreted and charged to interest expenses as a financing expense in the amount of $38,499 the year ended
September 30, 2018. The unamortized discount as of September 30, 2018 amounted to $38,499. The Company repaid all principal and
outstanding interest on January 2, 2019.
On
August 14, 2018, the Company executed an unsecured variable interest rate promissory note with a maximum interest rate of 58.57%
and a face value of $19,600 with a financial institution. Under the terms of the promissory note the Company received $19,600
and agreed to repay the note and interest evenly over 12 months. As of September 30, 2018, the Company owed $17,967 in principal
and $784 in accrued interest under the terms of the agreement and recorded interest expense of $1,568 during the year ended September
30, 2018. The Company repaid all principal and outstanding interest on October 1, 2018.
On
September 20, 2018, the Company executed a 10% unsecured promissory note with a face value of $52,500 with an investor, net of
an original issue discount of 5% ($2,500). Under the terms of the promissory note the Company received $50,000 and agreed to repay
the note principal and all accrued interest on December 31, 2018. The Company also issued 25,000 5-year warrants exercisable at
$0.80 in connection with purchase of the promissory note. As of September 30, 2018, the Company owed $50,000 in principal and
$144 in accrued interest under the terms of the agreement and recorded interest expense of $144 during the year ended September
30, 2018. The Company has determined the value associated with the warrants issued in connection with the notes to be $50,000
which has been recorded as a debt discount. The aggregate original issue discount, and debt discount related to the warrants have
been accreted and charged to interest expenses as a financing expense in the amount of $5,147 the year ended September 30, 2018.
The unamortized discount as of September 30, 2018 amounted to $47,353. The Company repaid all principal and outstanding interest
on December 31, 2018
On
September 21, 2018, the Company executed a 10% unsecured promissory note with a face value of $52,500 with an investor, the note
included an original issue discount of 5% ($2,500). Under the terms of the promissory note the Company received $50,000 and agreed
to repay the note principal and all accrued interest on December 31, 2018. The Company also issued 25,000 5-year warrants exercisable
at $0.80 in connection with purchase of the promissory note. As of September 30, 2018, the Company owed $50,000 in principal and
$144 in accrued interest under the terms of the agreement and recorded interest expense of $144 during the year ended September
30, 2018. The Company has determined the value associated with the warrants issued in connection with the notes to be $50,000
which has been recorded as a debt discount. The aggregate original issue discount, and debt discount related to the warrants have
been accreted and charged to interest expenses as a financing expense in the amount of $5,147 the year ended September 30, 2018.
The unamortized discount as of September 30, 2018 amounted to $47,353. The Company repaid all principal and outstanding interest
on December 31, 2018.
Insurance
financing loans
In
February 2018, the Company executed two unsecured 6.1% installment loans with a total face value of $35,089 with a financial institutional
to finance its insurance policies. Under the terms of the installment notes the Company received $35,089 and agreed to make equal
payments and repay the notes’ principal 10 months from their dates of issuance. As of September 30, 2018, the Company owed
$10,257 in principal and $0 in accrued interest under the terms of the agreement. The Company repaid all principal and outstanding
interest on December 1, 2018.
8.
CONVERTIBLE NOTES PAYABLE
Convertible Notes
Payable consists of the following:
|
|
September
30, 2018
|
|
|
|
|
Labrys
Fund, LP – March 23, 2018 Promissory Note Funding
On
March 23, 2018, we entered into a master convertible promissory note pursuant to which we could borrow up to $500,000.
On
March 23, 2018 the Company borrowed $200,000, less debt issuance costs of $15,750. The note carries an original issue
discount of 10% ($20,000). Interest under the convertible promissory note is 12% per annum, and the principal and all
accrued but unpaid interest is due on September 23, 2018. The Lender also received 237,500 commitment shares at execution
as an inducement for entering into the agreement. The Company also incurred $15,750 of debt issuance costs on the note
which was recorded as a debt discount.
The
note was convertible at any date after the issuance date at the noteholder’s option into shares of our common stock
at a variable conversion price, The Conversion price equals the lesser of (1) 70% multiplied by the lowest "Trading
Price" during the previous 20 Trading Day period ending on the latest complete Trading Day prior to the date of this
Note and (2) 70% multiplied by the lowest "Trading Price" for the Common Stock during the 20 Trading Day period
ending on the latest complete Trading Day prior to the Conversion Date. The "Trading Price" as defined by the
agreement is the lesser of: (a) the lowest trade price on the OTC Pink, OTCQB, or applicable trading market (the “OTC
Market”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder
and (b) the lowest closing bid price on the OTC Market as reported by a Reporting Service designated by the Holder.
The
Company recorded a debt discount in the amount of $85,348 in connection with the commitment shares and $98,902 in connection
with the initial valuation of the derivative liability related to the embedded conversion option of the note to be amortized
utilizing the effective interest method of accretion over the term of the note.
On
September 19, 2018, all principal and accrued interest of $220,000 and $12,730, respectively was converted into 258,589
shares of the Company’s common stock.
The
aggregate debt discount have been accreted and charged to interest expenses as a financing expense in the amount of $220,000
during the year ended September 30, 2018, respectively.
|
|
|
—
|
|
|
|
|
Total, net of unamortized
discount
|
|
$
|
—
|
Auctus
Fund, LLC – July 2, 2018 Promissory Note Funding
On
July 2, 2018 the Company entered into a Securities Purchase Agreement with Auctus Fund, LLC (“Auctus”), which
was later amended on July 6, 2018, pursuant to which the Company issued to Auctus a Master Convertible Promissory Note
(“Note”) pursuant to which the Company could borrow up to $500,000. The Company also incurred $11,900 of debt
issuance costs on the note which was recorded as a debt discount.
On
July 11, Auctus paid $225,000 less $26,000 in legal and due diligence fees. The Note has a maturity date of six months
for each tranche funded and the Company has agreed to pay interest on the unpaid principal balance of the Note at the
rate of twelve percent (12%) per annum from the date on which the Note is issued (the “Issue Date”) until
the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company
has the right to prepay the Note, provided it makes a payment to Auctus as set forth in the Note within 180 days of its
Issue Date.
In
connection with the issuance of the Note, the Company issued to Auctus, as a commitment fee, 137,500 shares of its common
stock (the “Returnable Shares”) as well as 150,000 shares of its common stock (the “Non-Returnable Shares”),
as further provided in the Note. The Returnable Shares shall be returned to the Company’s treasury if the Note is
fully repaid and satisfied prior to the date, which is one hundred eighty (180) days following the Issue Date, subject
further to the terms and conditions of the Note.
The
Note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock
at a variable conversion price of 70% of the lowest closing market price of our common stock during the previous 20 days
to the date of the notice of conversion, subject to adjustment in the case of default.
The
Note contains certain covenants, such as restrictions on: (i) distributions on capital stock, (ii) stock repurchases,
(iii) certain loans, (iii) sales and the transfer of assets, and (iv) participation in 3(a)(10) transactions. The Note
also contains certain anti-dilution provisions that apply in connection with any stock split, stock dividend, stock combination,
recapitalization or similar transactions. In addition, subject to limited exceptions, Auctus will not have the right to
convert any portion of the Note if Auctus, together with its affiliates, would beneficially own in excess of 4.99% of
the number of shares of the Company’s common stock outstanding immediately after giving effect to its conversion.
The
Company recorded a debt discount in the amount of $130,829 in connection with the Non-returnable shares and $56,271 in
connection with the initial valuation of the derivative liability related to the embedded conversion option of the Note
to be amortized utilizing the effective interest method of accretion over the term of the Note.
On
September 21, 2018, all principal and accrued interest of $225,000 and $5,474, respectively was converted into 256,082
shares of the Company’s common stock.
The
aggregate debt discount have been accreted and charged to interest expenses as a financing expense in the amount of $225,000
during the year ended September 30, 2018.
|
|
|
—
|
|
|
|
|
Total, net of unamortized
discount
|
|
$
|
—
|
EMA
Financial, LLC – August 21, 2018 Promissory Note Funding
On
August 21, 2018 we entered into a Securities Purchase Agreement with EMA Financial, LLC, (“EMA”), pursuant
to which we issued and sold to EMA a convertible promissory note, dated August 21, 2018 in the principal amount of $225,000
(the “Note”). The Note is due six months from the date of issuance and bears interest at the rate of 12% per
annum. The Company received $199,000 from the investment less fees and debt issuance costs of $26,000 which was recorded
as a debt discount.
In
connection with the issuance of the Note, the Company issued to EMA, as a commitment fee, 137,500 shares of its common
stock (the “Returnable Shares”) as well as 100,000 shares of its common stock (the “Non-Returnable Shares”),
as further provided in the Note. The Returnable Shares shall be returned to the Company’s treasury if the Note is
fully repaid and satisfied prior to the date, which is one hundred eighty (180) days following August 21, 2018, subject
further to the terms and conditions of the Note.
The
Note as amended on September 27, 2018, is convertible at any date after the issuance date at the noteholder’s option
into shares of our common stock at a variable conversion price, equal to the lesser of (i) 70% of the lowest trading price
during the previous 20 days and ending on the latest trading date prior to the date of the Note, or (ii) a 70% of the
lowest trading price for our common stock during the 20 trading day period immediately prior to conversion but subject
to a conversion floor price of $3.05. The floor price is subject to reset under certain conditions.
We
have the right to prepay the Note at any time prior to 180 days following the closing date. If we pay after September
24, 2018, we must pay an additional $25,000 as a prepayment penalty.
The
Note contains customary default events which, if triggered and not timely cured, will result in default interest and penalties.
The Note also contains a right of first refusal provision with respect to future financings by us.
The
Company recorded a debt discount in the amount of $113,727 in connection with the Non-returnable shares and $73,373 in
connection with the initial valuation of the derivative liability related to the embedded conversion option of the Note
to be amortized utilizing the effective interest method of accretion over the term of the Note.
The
aggregate debt discount have been accreted and charged to interest expenses as a financing expense in the amount of $48,955
during the year ended September 30, 2018.
As
of September 30, 2018, the Company owed $225,000 in principal and $2,959 in accrued interest under the terms of the agreement
and recorded interest expense of $2,959 during the year ended September 30, 2018.
|
|
|
225,000
|
Unamortized debt discount
|
|
|
(176,045)
|
|
|
|
|
Total, net of unamortized
discount
|
|
$
|
48,955
|
Labrys
Fund, LP – September 19, 2018 Promissory Note Funding
On
March 23, 2018, we entered into a master convertible promissory note pursuant to which we could borrow up to $500,000.
On
September 19, 2018 borrowed $330,000, less debt issuance costs of $20,700. The note also carries an original issue discount
of 10% ($30,000). Interest under the convertible promissory note is 12% per annum, and the principal and all accrued but
unpaid interest is due six months from the date of issuance.
The
Note, as amended on September 27, 2018, is convertible at any date after the issuance date at the noteholder’s option
into shares of our common stock at a variable conversion price subject to a conversion floor price of $3.05, The Conversion
price equals the lesser of (1) 70% multiplied by the lowest "Trading Price" during the previous 20 Trading Day
period ending on the latest complete Trading Day prior to the date of this Note and (2) 70% multiplied by the lowest "Trading
Price" for the Common Stock during the 20 Trading Day period ending on the latest complete Trading Day prior to the
Conversion Date. The "Trading Price" as defined by the agreement is the lesser of: (a) the lowest trade price
on the OTC Pink, OTCQB, or applicable trading market (the “OTC Market”) as reported by a reliable reporting
service (“Reporting Service”) designated by the Holder and (b) the lowest closing bid price on the OTC Market
as reported by a Reporting Service designated by the Holder. If the note is not repaid within 180 days of issuance the
floor will cease to apply.
The
Company recorded a debt discount in the amount of $279,300 in connection with the initial valuation of the derivative
liability related to the embedded conversion option of the note to be amortized utilizing the effective interest method
of accretion over the term of the note.
The
aggregate debt discount have been accreted and charged to interest expenses as a financing expense in the amount of $20,166
during the year ended September 30, 2018.
|
|
|
330,000
|
Unamortized debt discount
|
|
|
(309,834)
|
Total, net of unamortized
discount
|
|
$
|
20,166
|
|
|
|
|
Total convertible
notes, net
|
|
$
|
69,121
|
The
Company did not enter into any convertible note agreements in the year ended September 30, 2017.
9.
FAIR VALUE OF FINANCIAL INSTRUMENTS AND DERIVATIVE LIABILITIES
The
carrying value of cash, accounts payable and accrued expenses, and debt (See Notes 8 & 9) approximate their fair values because
of the short-term nature of these instruments. Management believes the Company is not exposed to significant interest or credit
risks arising from these financial instruments. The carrying amount of the Company’s long-term debt is also stated at fair
value of $150,000 since the stated rate of interest approximates market rates.
Fair
value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in
the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on
the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use
of unobservable inputs. The Company utilizes a fair value hierarchy based on three levels of inputs, of which the first two are
considered observable and the last unobservable.
|
●
|
|
Level 1
|
|
Quoted prices in
active markets for identical assets or liabilities. These are typically obtained from real-time
quotes for transactions in active exchange markets involving identical assets.
|
|
●
|
|
Level 2
|
|
Quoted prices for
similar assets and liabilities in active markets; quoted prices included for identical or
similar assets and liabilities that are not active; and model-derived valuations in which
all significant inputs and significant value drivers are observable in active markets. These
are typically obtained from readily-available pricing sources for comparable instruments.
|
|
●
|
|
Level 3
|
|
Unobservable inputs, where there is little or no market activity
for the asset or liability. These inputs reflect the reporting entity’s own beliefs about the assumptions that market
participants would use in pricing the asset or liability, based on the best information available in the circumstances.
|
The
following table presents the derivative financial instruments, the Company’s only financial liabilities measured and recorded
at fair value on the Company’s balance sheets on a recurring basis, and their level within the fair value hierarchy as of
September 30, 2018:
|
|
Amount
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
Embedded conversion derivative liability
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
Warrant and option derivative liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
The
embedded conversion feature in the convertible debt instruments that the Company issued (See Note 9), was convertible at issuance
which qualified them as a derivative instrument since the number of shares issuable under the note is indeterminate based on guidance
in ASC Topic No. 815-15, “Derivatives and Hedging (“Topic No. 815-15”). Topic No. 815-15 requires the Company
to bifurcate and separately account for the conversion features as an embedded derivative contained in the Company’s convertible
debt. This convertible debt tainted all other equity linked instruments including all outstanding non-employee options and warrants
on the date that the instrument became convertible. The Company is required to carry the embedded derivative on its balance sheet
at fair value and account for any unrealized change in fair value as a component of results of operations.
On
September 27, 2018, all derivative instruments held by the Company had been either extinguished through settlement of the associated
debts or through amendments to the instruments that removed the derivative aspect of the instrument.
The
Black-Scholes model utilized the following inputs to value the derivative liabilities at the date of issuance of the convertible
note through September 27, 2018 which was the date the derivative liability was terminated:
Fair
value assumptions:
|
|
March
23, 2018 through September 27, 2018
|
Risk free interest rate
|
|
|
1.92-2.81%
|
Expected term (years)
|
|
|
0.26-6.99
|
Expected volatility
|
|
|
134%-334%
|
Expected dividends
|
|
|
0%
|
The
following table presents a summary of the Company’s derivative liabilities associated with its convertible notes as of September
30, 2018:
|
|
Amount
|
Balance September 30, 2017
|
|
$
|
—
|
Debt discount originated from
derivative liabilities
|
|
|
789,219
|
Initial derivative loss recorded
|
|
|
4,160,476
|
Fair value of derivative liability at issuance
reclassified from additional paid in capital
|
|
|
12,537,117
|
Resolution of derivative liability reclassified
to additional paid in capital
|
|
|
(52,291,024)
|
Change in fair market
value of derivative liabilities
|
|
|
34,804,212
|
Balance September 30, 2018
|
|
$
|
—
|
10. RELATED
PARTY TRANSACTIONS
Matthew
Schultz- Chief Executive Officer and Director
The Company
has a consulting agreement with Matthew Schultz, our Chief Executive Officer, for management services. In accordance with this
agreement, as amended, Mr. Schultz provides services to us in exchange for $15,000 in compensation for services plus a $1,000
medical insurance stipend, each month plus a bonus of 0.5% of gross revenue. The Company has also agreed to reimburse Mr. Schultz
for expenses incurred. The term of the agreement is one year and automatically renews until cancelled by either party. During
the year ended September 30, 2018 and 2017, Mr. Schultz earned $194,527 and $193,425, respectively, in accordance with this agreement.
During the year ended September 30, 2018, Mr. Schultz allowed the Company to defer $123,114 as accrued compensation. The Company
owed Mr. Schultz $123,796 and $58,810 in deferred compensation and reimbursable expenses as of September 30, 2018 and 2017, respectively.
Deferred compensation is reported under due to related parties in the consolidated balance sheets.
During the year
ended September 30, 2018, the Company executed two 15% promissory notes with a total face value of $30,000 with the spouse of
the CEO of our Company. Under the terms of the promissory notes the Company received $30,000 and agreed to repay the note on demand.
As of September 30, 2018, Company owed $30,000 in principal and $2,832 in accrued interest under the terms of the agreement. On
January 1, 2019, the Company settled all remaining obligations under the notes through the payment of all outstanding principal
and interest then outstanding.
Zachary
Bradford – President, Chief Financial Officer and Director
The Company
has a consulting agreement with ZRB Holdings, Inc, an entity wholly owned by Zachary Bradford, our Chief Financial Officer and
director, for management services. In accordance with this agreement, as amended, Mr. Bradford provides services to us in exchange
for $15,000 in compensation for services plus a $1,000 medical insurance stipend, each month plus a bonus of 0.5% of gross revenue.
The Company has also agreed to reimburse Mr. Bradford for expenses incurred. The term of the agreement is one year and automatically
renews until cancelled by either party. During the years ended September 30, 2018 and 2017, Mr. Bradford earned $194,527 and $193,425,
respectively, in accordance with this agreement. During the year ended September 30, 2018, Mr. Bradford allowed the Company to
defer $87,746 as accrued compensation. The Company owed Mr. Bradford $89,351and $78,252 in deferred compensation and reimbursable
expenses as of September 30, 2018 and 2017, respectively. Deferred compensation is reported under due to related parties in the
consolidated balance sheets.
On
August 13, 2017, the Company executed a 15% promissory note with a face value of $80,000 with Zachary Bradford, its President
and Chief Financial Officer. Under the terms of the promissory note the Company received $80,000 and agreed to repay the note
evenly over 12 months. The Company repaid $73,333 and 6,667 in principal during the years ended September 30, 2018 and 2017, respectively.
The Company incurred interest expense of $12,000 and $1,800 in interest during the years ended September 30, 2018 and 2017, respectively.
The Company owed $0 and $73,333 in principal and $600 and $0 in accrued interest under the terms of the agreement as of September
30, 2018 and 2017, respectively.
During
the year ended September 30, 2018, the Company executed eleven 15% promissory notes with a total face value of $189,690 with Zachary
Bradford, its President and Chief Financial Officer. Under the terms of the promissory notes the Company received $189,690 and
agreed to repay the notes on demand. As of September 30, 2018, Company owed $189,690 in principal and $10,733 in accrued interest
under the terms of the agreement. On January 3, 2019, the Company settled all remaining obligations under the notes through the
payment of all outstanding principal and interest then outstanding.
Bryan
Huber – Chief operations Officer and Director
The Company
has a consulting agreement with Bryan Huber, our Chief Operations Officer and director, for management services. In accordance
with the original agreement, Mr. Huber provided services to us in exchange for $117,000 in compensation for services plus a $500
medical insurance stipend and a bonus of 0.5% of gross revenue. On August 28, 2018, the Company replaced the original agreement
with an agreement with Zero Positive, LLC an entity controlled by Mr. Huber. In accordance with this agreement with Zero Positive,
LLC, Mr. Huber agrees to provide services through to the Company in exchange for $160,000 in annual compensation plus a $500 medical
insurance stipend and a bonus of 0.5% of gross revenue. Under the agreement Mr. Huber was also granted a one-time bonus of $50,000,
payment of which will be deferred until the Company completes a qualified financing that exceeds three-million dollars or average
monthly revenues of the Company exceed one-million dollars for three months. The Company has also agreed to reimburse Zero Positive,
LLC for expenses incurred. The term of the agreement is one year and automatically renews until cancelled by either party. During
the year ended September 30, 2018 and 2017, Mr. Huber and Zero positive earned $180,612 and $116,377, respectively, in accordance
with this agreement. During the years ended September 30, 2018, Mr. Huber allowed the Company to defer $69,604 as accrued compensation.
The Company owed Mr. Huber $73,625 and $6,288 in deferred compensation and reimbursable expenses as of September 30, 2018 and
2017, respectively. Deferred compensation is reported under due to related parties in the consolidated balance sheets.
On May 10, 2018,
Bryan Huber the Company’s Chief Operations Officer exercised warrants to purchase 1,353 shares of the Company’s $0.001
par value common stock at a purchase price equal to $1.50 for each share of common stock. The Company receive $2,030 as a result
of this exercise.
On September
28, 2018, in connection with the consulting agreement executed with Zero Positive, LLC Company issued warrants to purchase 900,000
shares of common stock at an exercise price of $0.80 per share to Zero Positive. The warrants were valued at $2,607,096 using
the Black Scholes option pricing model based upon the following assumptions: term of 10 years, risk free interest rate of 3.05%,
a dividend yield of 0% and volatility rate of 191%. The warrants vest as follows: 300,000 vested immediately, the balance vest
evenly on the last day of each month over forty-two months beginning August 31, 2018. As of September 30, 2018, 328,571 warrants
had vested, and the Company recorded an expense of $951,797 during the year ended September 30, 2018.
Larry
McNeill – Chairman of the Board of Directors
During
the year ended September 30, 2018, the Company executed eight 15% promissory notes with a total face value of $163,100 with Larry
McNeill, a Director of the Company. Under the terms of the promissory notes the Company received $163,100 and agreed to repay
the note on demand. As of September 30, 2018, Company owed $163,100 in principal and $6,562 in accrued interest under the terms
of the agreement. On December 31, 2018, the Company settled all remaining obligations under the note through the payment of all
outstanding principal and interest then outstanding.
11. STOCKHOLDERS’
EQUITY
Overview
The Company’s
authorized capital stock consists of 100,000,000 shares of common stock and 10,000,000 shares of preferred stock, par value $0.001
per share. As of September 30, 2018, there were 36,116,447 shares of common stock issued and outstanding and 1,000,000 shares
of preferred stock issued and outstanding.
Common Stock
issuances during the year ended September 30, 2018
During the period
commencing October 1, 2017 through September 30, 2018, the Company received $271,900 from 16 investors pursuant to private placement
agreements with the investors to purchase 339,875 shares of the Company’s $0.001 par value common stock at a purchase price
equal to $0.80 for each share of common stock.
During the year
ended September 30, 2018, the Company issued 41,640 shares of the Company’s $0.001 par value common stock to settle accounts
payable. The shares were valued at $75,734 and the Company recorded a loss on settlement of debt of $41,092 result of the issuance.
In connection
with the issuance of the March 23, 2018, Labrys Fund, LP Convertible Note, the Company issued, as a commitment fee, 137,500 shares
of its common stock (the “Returnable Shares”) as well as 100,000 shares of its common stock (the “Non-Returnable
Shares”). The agreement was amended on June 29, 2018 and as a result the returnable shares were no longer returnable. Consequently,
the fair value of the returnable shares of $218,626 was charged to interest expense. On September 19, 2018, all principal and
accrued interest of $220,000 and $12,730, respectively was converted into 258,589 shares of the Company’s common stock.
(See Note 8 for additional details)
In connection
with the issuance of the Auctus Fund, LLC Convertible Note, the Company issued to Auctus, as a commitment fee, 137,500 shares
of its common stock (the “Returnable Shares”) as well as 150,000 shares of its common stock (the “Non-Returnable
Shares”). On September 21, 2018, all principal and accrued interest of $225,000 and $5,474, respectively was converted into
256,082 shares of the Company’s common stock. Subsequent to September 30, 2018, as a result of the conversion the 137,500
returnable shares were returned to the Company and cancelled. (See Note 8 for additional details)
In connection
with the issuance of a the EMA Financial, LLC Convertible Note, the Company issued EMA, as a commitment fee, 137,500 shares of
its common stock (the “Returnable Shares”) as well as 100,000 shares of its common stock (the “Non-Returnable
Shares”). Subsequent to September 30, 2018, the Company repaid all obligations under the note and the 137,500 returnable
shares were returned to the Company and cancelled on January 8, 2019. (See Note 8 for additional details)
On September
11, 2018, the Company entered into an agreement with Regal Consulting, LLC for investor relations services. Under this agreement
the Company agreed to issue 30,000 shares of the Company’s common stock per month as compensation for services plus $20,000
per month in cash. As of September 30, 2018, the Company had issued 30,000 shares of its common stock in accordance with the agreement.
Stock compensation of $55,100 was recorded as a result of the stock issued under the agreement.
Common Stock
issuances during the year ended September 30, 2017
During the period
commencing October 1, 2016 through September 30, 2017, the Company received $880,000 from 38 investors pursuant to private placement
agreements with the investors to purchase 1,101,000 shares of the Company’s $0.001 par value common stock at a purchase
price equal to $0.80 for each share of Common stock.
In
November of 2016, the Company issued 2,932,704 shares of common stock to two officers for the cashless exercise of 3,000,000 options.
In
December of 2016, the Company issued 1,466,352 shares of common stock to a director for the cashless exercise of 1,500,000 options.
On
April 13, 2017, the Company issued 25,000 shares of common stock to a consultant for services. The shares were valued at $2.75
per share or $68,750, which was the quoted closing price of our Common stock on the date of issuance.
On February
9, 2017, the Company entered into a Debt Settlement Agreement with Webcor Construction LP (“Webcor”) to settle $158,753
in debt owed to Webcor. The Company agreed to pay Webcor $58,000 on or before February 28, 2017 and to issue 50,000 shares of
the Company’s common stock within 4 days of execution. Upon receipt of payment, Webcor agreed to release the full amount
of the debt. The shares issued were deemed to have a fair value of $212,500 on the date of the transaction and a loss on settlement
of debt of $111,747 was recorded as a result of the Debt Settlement Agreement. The cash payment was made per the agreement on
February 28, 2017.
12. STOCK WARRANTS
The following
is a summary of stock warrant activity during the years ended September 30, 2018 and September 30, 2017.
|
|
Number
of Warrant Shares
|
|
Weighted
Average Exercise Price
|
Balance, September
30, 2016
|
|
|
13,112,100
|
|
|
$
|
0.59
|
Warrants granted
|
|
|
—
|
|
|
$
|
—
|
Warrants expired
|
|
|
—
|
|
|
|
—
|
Warrants canceled
|
|
|
—
|
|
|
|
—
|
Warrants exercised
|
|
|
(4,500,000
|
)
|
|
|
0.083
|
Balance, September 30,
2017
|
|
|
8,612,100
|
|
|
$
|
0.85
|
Warrants granted
|
|
|
1,191,600
|
|
|
$
|
0.80
|
Warrants expired
|
|
|
—
|
|
|
|
—
|
Warrants canceled
|
|
|
—
|
|
|
|
—
|
Warrants exercised
|
|
|
(814,401
|
)
|
|
|
0.36
|
Balance, September 30,
2018
|
|
|
8,989,299
|
|
|
$
|
0.89
|
As of September
30, 2018, the outstanding warrants have a weighted average remaining term of was 4.85 years and an intrinsic value of $45,021,758.
As of September
30, 2018, there are warrants exercisable to purchase 8,417,870 shares of common stock in the Company and 571,429 unvested warrants
outstanding that cannot be exercised until vesting conditions are met. 4,498,647 of the outstanding warrants require a cash investment
of $1.50 per share to exercise and 4,490,652 of the outstanding warrants contain provisions allowing a cashless exercise at their
respective exercise price.
Warrant activity
for the year ended September 30, 2018
During the year
ended September 30, 2018, certain investors exercised warrants to purchase 258,401 shares of the Company’s common stock
at purchase prices ranging from $0.083 to $1.50. The Company received total proceeds of $44,938 from the warrant exercises.
During the year
ended September 30, 2018, a total of 459,889 shares of the Company’s common stock were issued in connection with the cashless
exercise of 556,000 common stock warrants with an exercise prices of $0.36.
On January 1,
2018, the Company issued warrants to purchase 100,000 shares of common stock at an exercise price of $0.80 per share to an advisor
for business advisory services. The warrants were valued at $234,095 using the Black Scholes option pricing model. The warrants
vest evenly over the six-month service period ended September 30, 2018.
On June 15,
2018, the Company issued 116,600 5-year warrants exercisable at $0.80 to a lender in connection with a promissory note agreement.
(See Note 7 for additional details.)
On August 1,
2018, the Company issued 25,000 5-year warrants exercisable at $0.80 to a lender in connection with a promissory note agreement.
(See Note 7 for additional details.)
On August 28,
2018, in connection with the Consulting agreement executed with Zero Positive, LLC. the Company issued warrants to purchase 900,000
shares of common stock at an exercise price of $0.80 per share to an Zero Positive. The warrants were valued at $2,607,096 using
the Black Scholes option pricing model. The warrants vest as follows: 300,000 warrants vested immediately, the balance vest evenly
on the last day of each month over the forty-two months beginning August 31, 2018. As of September 30, 2018, 328,571 warrants
had vested, and the Company recorded an expense of $951,797 during the year ended September 30, 2018. (See Note 10 for additional
details.)
On September
20, 2018, the Company issued 25,000 5-year warrants exercisable at $0.80 to a lender in connection with a promissory note agreement.
(See Note 7 for additional details.)
On September
21, 2018, the Company issued 25,000 5-year warrants exercisable at $0.80 to a lender in connection with a promissory note agreement.
(See Note 7 for additional details.)
The
Black-Scholes model utilized the following inputs to value the warrants granted during the year ended September 30, 2018:
Fair
value assumptions – Warrants:
|
|
September
30, 2018
|
Risk free interest rate
|
|
|
2.01-3.05%
|
Expected term (years)
|
|
|
5-10
|
Expected volatility
|
|
|
158%-265%
|
Expected dividends
|
|
|
0%
|
Warrant activity
for the year ended September 30, 2017
In
the year ended September 30, 2017, the Company issued 4,399,056 shares of common stock to two officers and a director for the
cashless exercise of 4,500,000 options with a strike price of $0.83.
As of September 30, 2017, the Company
expects to recognize $1,655,299 of stock-based compensation for the non-vested outstanding warrants over a weighted-average period
of 3.33 years.
13.
STOCK OPTIONS
The Company
sponsors a stock-based incentive compensation plan known as the 2017 Incentive Plan (the “Plan”), which was established
by the Board of Directors of the Company on June 19, 2017. A total of 3,000,000 shares were initially reserved for issuance under
the Plan. As of September 30, 2018, there were 2,680,794 shares available for issuance under the plan.
The
Plan allows the Company to grant incentive stock options, non-qualified stock options, stock appreciation right, or restricted
stock. The incentive stock options are exercisable for up to ten years, at an option price per share not less than the fair market
value on the date the option is granted. The incentive stock options are limited to persons who are regular full-time employees
of the Company at the date of the grant of the option. Non-qualified options may be granted to any person, including, but not
limited to, employees, independent agents, consultants and attorneys, who the Company’s Board believes have contributed,
or will contribute, to the success of the Company. Non-qualified options may be issued at option prices of less than fair market
value on the date of grant and may be exercisable for up to ten years from date of grant. The option vesting schedule for options
granted is determined by the Board of Directors at the time of the grant. The Plan provides for accelerated vesting of unvested
options if there is a change in control, as defined in the Plan.
The following
is a summary of stock option activity during the years ended September 30, 2018 and year ended September 30, 2017.
|
|
Number
of Option Shares
|
|
Weighted
Average Exercise Price
|
Balance, September 30, 2016
|
|
|
—
|
|
$
|
—
|
Options granted
|
|
|
6,902
|
|
$
|
3.45
|
Options expired
|
|
|
—
|
|
|
—
|
Options canceled
|
|
|
—
|
|
|
—
|
Options exercised
|
|
|
—
|
|
|
—
|
Balance, September 30,
2017
|
|
|
6,902
|
|
$
|
3.45
|
Options granted
|
|
|
312,304
|
|
$
|
1.13
|
Options expired
|
|
|
—
|
|
|
—
|
Options canceled
|
|
|
—
|
|
|
—
|
Options exercised
|
|
|
—
|
|
|
—
|
Balance, September 30,
2018
|
|
|
319,206
|
|
$
|
1.18
|
As of September
30, 2018, there are options exercisable to purchase 208,932 shares of common stock in the Company and 110,274 unvested options
outstanding that cannot be exercised until vesting conditions are met. As of September 30, 2018, the outstanding options have
a weighted average remaining term of was 2.26 years and an intrinsic value of $2,871,783.
Option activity
for the year ended September 30, 2018
During the year
ended September 30, 2018, the Company issued 62,304 options to purchase shares of the common stock to employees, the shares were
granted at quoted market prices ranging from $1.57 to $3.45. The shares were valued at issuance using the Black Scholes model
and stock compensation expense of $130,000 was recorded as a result of the issuances.
On March 10,
2018 the Company issued a total of 250,000 options to four consultants for advisory services. The options vest evenly 12 months
from issuance. The options expire 24 months after issuance and require a cash investment to exercise. The options were valued
at issuance using the Black Scholes model at $342,500 and amortized of the term of the agreement. During the year ended September
30, 2018, $191,526 was been expensed as stock-based compensation.
The
Black-Scholes model utilized the following inputs to value the options granted during the year ended September 30, 2018:
Fair
value assumptions – Options:
|
|
September
30, 2018
|
Risk free interest rate
|
|
|
1.46-2.78%
|
Expected term (years)
|
|
|
2-3
|
Expected volatility
|
|
|
120%-191%
|
Expected dividends
|
|
|
0%
|
Option activity
for the year ended September 30, 2017
During the year
ended September 30, 2017, the Company issued 6,902 options to purchase shares of the common stock to employees, the shares were
granted at quoted market price of $3.45. The shares were valued at issuance using the Black Scholes model and stock compensation
expense of $16,665 was recorded as a result of the issuances.
The
Black-Scholes model utilized the following inputs to value the options granted during the year ended September 30, 2017:
Fair
value assumptions – Options:
|
|
September
30, 2017
|
Risk free interest rate
|
|
|
1.46-1.50%
|
Expected term (years)
|
|
|
3
|
Expected volatility
|
|
|
116%-120%
|
Expected dividends
|
|
|
0%
|
As of September 30, 2018, the Company
expects to recognize $150,974 million of stock-based compensation for the non-vested outstanding options over a weighted-average
period of 0.44 years.
14. INCOME TAXES
The Company
provides for income taxes under FASB ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the use of an asset and
liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between
the financial statement and tax bases of assets and liabilities and the tax rates in effect currently.
FASB ASC 740
requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more
likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain
whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a
valuation allowance equal to the deferred tax asset has been recorded. The total deferred tax asset is approximately $5.8 million
as of September 30, 2018 which is calculated by multiplying a 21% estimated tax rate by the cumulative net operating loss (NOL)
of approximately $27.6 million.
Due to the enactment
of the Tax Reform Act of 2017, we have calculated our deferred tax assets using an estimated corporate tax rate of 21%. US Tax
codes and laws may be subject to further reform or adjustment which may have a material impact to the Company’s deferred
tax assets and liabilities.
The
significant components of the Company's deferred tax assets and liabilities as of September 30, 2018 and 2017 are as follows:
As of September 30,
|
|
2018
|
|
2017
|
Cumulative tax net operating losses
(in millions)
|
|
$
|
27.6
|
|
|
$
|
21.0
|
|
|
|
|
|
|
|
|
Deferred tax asset (in millions)
|
|
$
|
5.8
|
|
|
$
|
4.4
|
Valuation allowance (in millions)
|
|
|
(5.8
|
)
|
|
|
(4.4)
|
Current taxes payable
|
|
|
—
|
|
|
|
—
|
Income tax expense
|
|
$
|
—
|
|
|
$
|
—
|
As
of September 30, 2018, and 2017, the Company had gross federal net operating loss carryforwards of approximately $27.6 million and
$21.0 million, respectively.
The
Company plans to file its U.S. federal return for the year ended September 30, 2018 upon the issuance of this filing. Upon filing
of the tax return for the year ended September 30, 2018 the actual deferred tax asset and associated valuation allowance available
to the Company may differ from management’s estimates. The tax years 2014-2017 remained open to examination for federal
income tax purposes by the major tax jurisdictions to which the Company is subject. No tax returns are currently under examination
by any tax authorities.
15. COMMITMENTS
AND CONTINGENCIES
Office
leases
The Company’s
corporate offices are located at 70 North Main Street, Suite 105, Bountiful, Utah 84010. The Company occupies the leased space
on a month to month basis at a rate of $850 per month. Future minimum lease payments under the operating leases for the facilities
as of September 30, 2018, are $0.
On May 15, 2018,
the Company executed a 37-month lease agreement, which commenced on July 1, 2018 at 4360 Viewridge Avenue, Suite C, San Diego,
California. The agreement calls for the Company to make payments of $4,057 in base rent per month through July 31, 2021 subject
to an annual 3% rent escalation. Future minimum lease payments under the operating leases for the facilities as of September 30,
2018, are as follows:
Fiscal
year ending September 30, 2019
|
$49,049
|
Fiscal
year ending September 30, 2020
|
$50,521
|
Fiscal
year ending September 30, 2021
|
$43,170
|
Contracts
and awards
The
Company was awarded a $900,000 contract from Bethel-Webcor JV. Under the contract terms we will install a turn-key advanced microgrid
system at the U.S. Marine Corps Base Camp Pendleton. The contract is in direct support of the United States Department of Navy's
communication information system (CIS) operations complex at the U.S. Marine Corps Base Camp Pendleton that was recently awarded
to the Joint-Venture. The Company begin on-site work for this project in February of 2018 and expects to complete its scope of
work in early 2019.
16. MAJOR
CUSTOMERS AND VENDORS
For the
years ended September 30, 2018 and 2017, the Company had the following customers that represented more than 10% of sales.
|
|
September
30, 2018
|
|
September
30, 2017
|
Bethel-Webcor JV-1
|
|
|
70.42
|
%
|
|
|
10.8%
|
Daoust
|
|
|
11.82
|
%
|
|
|
—
|
Jacobs/ HDR a joint venture
|
|
|
—
|
|
|
|
13.0%
|
Macerich
|
|
|
—
|
|
|
|
24.4%
|
Firenze
|
|
|
—
|
|
|
|
20.0%
|
For the years
ended September 30, 2018 and 2017, the Company had the following
suppliers that represented
more than 10% of direct material costs.
|
|
September
30, 2018
|
|
September
30, 2017
|
CED Greentech
|
|
|
13.57
|
%
|
|
|
54.9%
|
Rexel USA, Inc.
|
|
|
27.47
|
%
|
|
|
—
|
ESS, Inc.
|
|
|
19.29
|
%
|
|
|
—
|
Ideal Power, Inc.
|
|
|
14.72
|
%
|
|
|
—
|
Integrated power systems
|
|
|
—
|
|
|
|
11.5%
|
Simpliphi Power
|
|
|
1.8
|
%
|
|
|
27.6%
|
17.
SUBSEQUENT EVENTS
Issuance
of Common stock
During
the period commencing October 1, 2018 through December 10, 2018, the Company received $361,800 from 14 investors pursuant to private
placement agreements with the investors to purchase 452,250 shares of the Company’s $0.001 par value common stock at a purchase
price equal to $0.80 for each share of common stock.
During
the period commencing October 1, 2018 through December 31, 2018, the Company issued 90,000 shares of the Company’s $0.001
par value common stock to Regal Consulting, LLC for investor relations services.
During
the period commencing October 1, 2018 through December 31, 2018, the Company issued 30,000 shares of the Company’s $0.001
par value common stock and 30,000 warrants to a Consultant for services.
Warrant
exercise
On October 2,
2018, an investor exercised warrants to purchase 3,000 shares of the Company’s $0.001 par value common stock at a purchase
price equal to $0.363 for each share of Common stock. The Company receive $1,089 as a result of this exercise.
On January 7,
2019, a total of 1,444,170 shares of the Company’s common stock were issued in connection with the cashless exercise of
1,500,000 common stock warrants with an exercise prices of $0.083.
Issuance
of Stock options to employees
During the period
commencing October 1, 2018 through January 1, 2019, the Company issued 111,682 options to purchase shares of the common stock
to employees, the shares were granted at quoted market prices ranging from $1.51 to $5.90.
Loans
from related parties
During
the year ended September 30, 2018, the Company executed eight 15% promissory notes with a total face value of $163,100 with Larry
McNeill, a Director of the Company. Subsequent to the year ended September 30, 2018, the Company executed one additional 15% promissory
note with a total face value of $50,000. Under the terms of the promissory notes the Company received a total of $213,100 and
agreed to repay the note on demand. On December 31, 2018, the Company settled all remaining obligations under the note through
the payment of all outstanding principal and interest then outstanding of $213,100 and $5,816, respectively.
During
the year ended September 30, 2018, the Company executed eleven 15% promissory notes with a total face value of $189,690 with Zachary
Bradford, its President and Chief Financial Officer. Subsequent to the year ended September 30, 2018, the Company executed two
additional 15% promissory notes with a total face value of $25,030. Under the terms of the promissory notes the Company received
a total of $214,720 and agreed to repay the notes on demand. On January 3, 2019, the Company settled all remaining obligations
under the notes through the payment of all outstanding principal and interest then outstanding of $214,720 and $3,037, respectively.
During
the year ended September 30, 2018, the Company executed two 15% promissory notes with a total face value of $30,000 with the spouse
of the CEO of our Company. Under the terms of the promissory notes the Company received $30,000 and agreed to repay the note on
demand. On January 3, 2019, the Company settled all remaining obligations under the notes through the payment of all outstanding
principal and interest then outstanding of $30,000 and $383, respectively.
Convertible note repayments
EMA
Financial, LLC – August 21, 2018 Promissory Note
On January 3,
2019, the Company settled all remaining obligations under the EMA note through the payment of all outstanding principal, prepayment
penalties and interest then outstanding of $225,000, $35,000 and $10,736, respectively.
In connection
with the issuance of the Note, the Company issued to the Purchaser, as a commitment fee, 137,500 returnable shares of its common
stock. As a result of the repayment the shares were returned to treasury and cancelled on January 8, 2019.
Labrys Fund, LP – September
19, 2018 Promissory Note
On January 3, 2019, the Company settled
all remaining obligations under the Labrys Fund, LP note through the payment of all outstanding principal and interest then outstanding
of $330,000 and $11,609, respectively.
Auctus Fund, LLC –July
2, 2018 Promissory Note
In connection
with the issuance of the Note, the Company issued to the Purchaser, as a commitment fee, 137,500 returnable shares of its common
stock. As a result of the conversion of the note on September 21, 2018, the shares were returned to treasury and cancelled on
December 21, 2018.
Convertible notes executed
On December
31, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) with an otherwise unaffiliated third-party
institutional investor (the “Investor”), pursuant to which the Company issued to the Investor a Senior Secured Redeemable
Convertible Debenture (the “Debenture”) in the aggregate face value of $5,250,000. The note is secured by all assets
of the Company. The Debenture has a maturity date two years from the issuance date and the Company has agreed to pay compounded
interest on the unpaid principal balance of the Debenture at the rate equal 7.5% per annum. Interest is payable on the date the
applicable principal is converted or on maturity. The interest must be paid in cash and, in certain circumstances, may be paid
in shares of common stock.
The transactions
described above closed on December 31, 2018. In connection with the issuance of the Debenture and pursuant to the terms of the
SPA, the Company issued to the Investor 100,000 shares of common stock and a Common Stock Purchase Warrant to acquire up to 3,083,333
shares of common stock for a term of three years (the “Warrant”) on a cash-only basis at an exercise price of $2.00
per share with respect to 1,250,000 Warrant Shares, $2.50 with respect to 1,000,000 Warrant Shares, $5.00 with respect to 500,000
Warrant Shares and $7.50 with respect to 333,333 Warrant Shares.
Pursuant to
the terms of the SPA, the Investor agreed to tender to the Company the sum of $5,000,000, of which the Company received the full
amount as of the closing.
Pursuant to
the SPA, the Company agreed to sell the Debenture, the shares of common stock issuable upon conversion of the Debenture, the Warrant
and the shares of common stock issuable upon exercise of the Warrant pursuant to an effective shelf registration statement on
Form S-3 (Registration No 333-228063), declared effective by the Securities and Exchange Commission on November 20, 2018.
Prior to the
maturity date, provided that no trigger event has occurred, the Company will have the right at any time upon 30 trading days’
prior written notice, in its sole and absolute discretion, to redeem all or any portion of the Debenture then outstanding by paying
to the Investor an amount equal to 140% of the of the portion of the Debenture being redeemed.
The Investor
may convert the Debenture into shares of the Company’s common stock at a conversion price equal to 95% of the mathematical
average of the 5 lowest individual daily volume weighted average prices of the common stock, less $.05 per share, during the period
beginning on the issuance date and ending on the maturity date subject to certain floor price restrictions. In the event certain
equity conditions exist, the Company may require that the Investor convert the Debenture. In no event shall the Debenture be allowed
to affect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by the Investor
and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company.
On January 7,
2019, the investor converted $2,500,000 in principal and $875,000 in interest as a conversion premium, for 1,784,729 shares of
the Company common stock at an effective conversion price of $1.90, due to a trigger event for the Company not filing its annual
report on Form 10-K for the fiscal year ended September 30, 2018 on or before December 31, 2018.
Repayment
of Promissory Notes
Subsequent
to September 30, 2018, the Company settled 8 promissory notes (See Note 8) through the repayment of outstanding principal and
accrued interest totaling to $420,208 and $7,565, respectively.
On
December 31, 2018, the Company settlement a $52,500 promissory note (See Note 8) through the issuance of 25,000 shares of the
Company’s common stock and payment of $27,500 in outstanding principal and interest then outstanding of $1,467.
PART
III
Item
10. Directors, Executive Officers and Corporate Governance
The following
table sets forth the names, ages and positions of our current directors and executive officers.
Name
|
|
|
Age
|
|
|
Position(s)
|
S. Matthew Schultz
|
|
|
49
|
|
|
Chief Executive Officer and Director
|
Zachary K. Bradford
|
|
|
32
|
|
|
President, Chief Financial Officer and
Director
|
Bryan Huber
|
|
|
36
|
|
|
Chief Operating Officer and Director
|
Larry McNeill
|
|
|
76
|
|
|
Chairman and Director
|
Set
forth below is a brief description of the background and business experience of our executive officers and directors.
S. Matthew
Schultz
,
Chief Executive Officer, has been involved in many capacities with
several publicly traded companies. Most recently, he served as the President and CEO of Amerigo Energy, Inc., creating multiple
syndicated offerings of developmental oil production programs, as well as overseeing the operations from permitting through production.
Since 1999, he has assisted numerous development and early stage companies to secure financing and experience significant
growth. As the President of Wexford Capital Ventures, Inc., he was instrumental in funding companies both domestically and
abroad. While serving as the Chairman of Pali Financial Group, Inc., he assisted in market development of dozens of public corporations.
He was a founding member and the Vice President of the Utah Consumer Lending Association. A native of Lander, WY,
he studied management and finance at Weber State University.
Aside
from that provided above, Mr. Schultz does not hold and has not held over the past five years any other directorships in any company
with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d)
of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Mr. Schultz
is qualified to serve on our Board of Directors because of his experience and knowledge in public company reporting and financing
and work in the energy sector.
Zachary
K. Bradford
, President and Chief Financial Officer, is a licensed Certified Public Accountant in Nevada and a member of
the American Institute of Certified Public Accountants. He has served as the managing partner of a public accounting and consulting
firm in Henderson, Nevada since June 2013. Mr. Bradford holds a B.S. in Accounting and a Masters of Accountancy from Southern
Utah University. From March of 2015 to July 31, 2016, Mr. Bradford served as a member of the board of directors and Chief Financial
Officer of Epic Stores Corp.
Aside
from that provided above, Mr. Bradford does not hold and has not held over the past five years any other directorships in any
company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section
15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Mr. Bradford
is qualified to serve on our Board of Directors because of his experience and knowledge in public company reporting and accounting.
Bryan
Huber
, Chief Operating Officer, Mr. Huber has over 13 years of experience in the design-build construction and energy
industries. He has extensive experience and specialization with sustainable energy design and implementation, sustainable building
design and construction, energy efficiency program design and development, renewable energy design and integration, project management,
quality assurance, and project commissioning. In addition, Bryan brings with him a core competency within renewable energy Independent
Power Producer deal structuring, design, forecasting, financial modeling, incentive monetization, project financing, and deployment.
As a Co-Founder of CleanSpark, Bryan continues to be integrally involved in technology development management, refinement, implementation,
and operation of CleanSpark’s Energy Operating Platform.
Bryan holds
a B.S. in Construction Engineering & Management from Purdue University’s School of Civil Engineering, has completed
Master’s coursework in Architecture focusing on integration of Distributed Energy Resource Systems into the built environment,
and is a LEED Accredited Professional through the United States Green Building Council.
Aside
from that provided above, Mr. Huber does not hold and has not held over the past five years any other directorships in any company
with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d)
of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Mr. Huber is
qualified to serve on our Board of Directors because of his experience and knowledge in the renewable energy industry.
Larry
McNeill
, Chairman and Director, has a master’s degree in Business Administration from Armstrong University, a BA
in Business Administration, Economics, and Russian language from Minnesota State University, and has completed the course work
towards his PhD in Business Management.
Larry has a
diverse business background that includes a range of broad business skills gained from his many roles in Real Estate, Finance,
Research, Legal, Management, and Business Strategies. These roles include serving as the Director of Safeway Grocery Stores, Inc's
Consumer, Sales, and Store Location research departments where he was responsible for the expansion of Safeway in Europe, Australia
and Canada. The Director of Market Research for A&P where he was responsible for the Company's expansion into Saudi Arabia.
An Executive Officer of Smiths Food and Drug Centers for 17 years; most recently as the Senior Vice President of Corporate Development
overseeing the Research, Real Estate, and Legal Departments. Mr. McNeill retired from Smith’s Food & Drug Stores in
1996 after the Fred Meyer merger was completed.
Aside
from that provided above, Mr. McNeill does not hold and has not held over the past five years any other directorships in any company
with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d)
of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Mr. McNeill
s qualified to serve on our Board of Directors because of his experience and knowledge in business management and financing.
Term
of Office
Our directors
are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from
office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the
board.
Family
Relationships
There
are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become
directors or executive officers.
Involvement
in Certain Legal Proceedings
To the
best of our knowledge, during the past ten years, none of the following occurred with respect to a present or former director,
executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general
partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in
a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type
of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the
SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment
has not been reversed, suspended or vacated.
Committees
of the Board
Our
company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does
our company have a written nominating, compensation or audit committee charter. Our directors believe that it is not necessary
to have such committees, at this time, because the functions of such committees can be adequately performed by the board of directors.
Our
company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations
for directors. The board of directors believes that, given the stage of our development, a specific nominating policy would be
premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently
have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process
or procedure for evaluating such nominees. The board of directors will assess all candidates, whether submitted by management
or shareholders, and make recommendations for election or appointment.
A
shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to the Chairman
of our Board of Directors, Larry McNeill, at the address appearing on the first page of this annual report.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires the Company’s directors and executive officers and persons who beneficially own more
than ten percent of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership
and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater
than ten percent beneficial shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms
they file. To the best of the Company’s knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments thereof)
received by us during or with respect to the year ended September 30, 2018, the following persons have not filed on a timely basis,
the identified reports required by Section 16(a) of the Exchange Act during fiscal year ended September 30, 2018:
Name
and principal position
|
|
|
Number
of late reports
|
|
|
|
Transactions
not timely reported
|
|
|
|
Known
failures to file a required form
|
S. Matthew Schultz, CEO
|
|
|
0
|
|
|
|
1
|
|
|
|
0
|
Zachary Bradford, President and CFO
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
Bryan Huber, COO and Director
|
|
|
1
|
|
|
|
1
|
|
|
|
0
|
Larry McNeill, Chairman and Director
|
|
|
0
|
|
|
|
1
|
|
|
|
0
|
Code
of Ethics
We have
adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer
or controller. We will provide, at no cost, a copy of the Code of Ethics to any shareholder upon receiving a written request sent
to the Company’s address shown on Page 1 of this report.
Item
11. Executive Compensation
The table below summarizes all compensation awarded to, earned by, or paid to our former
or current executive officers for the fiscal years ended September 30, 2017 and 2018.
SUMMARY
COMPENSATION TABLE
|
Name and principal position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
S. Matthew Schultz
CEO
|
2017
2018
|
-
-
|
-
2,527
|
-
-
|
-
-
|
-
-
|
25,673
123,114
|
168,052
68,886
|
193,725
194,527
|
Zachary Bradford
CFO
|
2017
2018
|
-
-
|
-
2,527
|
-
-
|
-
-
|
-
-
|
26,360
87,746
|
167,365
104,254
|
193,725
194,527
|
Bryan
Huber
COO
|
2017
2018
|
-
-
|
-
52,527
|
-
-
|
-
951,797
|
-
-
|
6,288
19,604
|
110,023
108,481
|
116,311
1,132,409
|
Narrative Disclosure to the Summary Compensation Table
Matthew
Schultz- Chief Executive Officer and Director
The Company
has a consulting agreement with Matthew Schultz, our Chief Executive Officer, for management services. In accordance with this
agreement, as amended, Mr. Schultz provides services to us in exchange for $15,000 in compensation for services plus a $1,000
medical insurance stipend, each month plus a bonus of 0.5% of gross
revenue. The
Company has also agreed to reimburse Mr. Schultz for expenses incurred. The term of the agreement is one year and automatically
renews until cancelled by either party. During the year ended September 30, 2018 and 2017, Mr. Schultz earned $194,527 and $193,425,
respectively, in accordance with this agreement. During the year ended September 30, 2018, Mr. Schultz allowed the Company to
defer $123,114 as accrued compensation. The Company owed Mr. Schultz $123,796 and $58,810 in deferred compensation and reimbursable
expenses as of September 30, 2018 and 2017, respectively. Deferred compensation is reported under due to related parties.
Zachary
Bradford – President, Chief Financial Officer and Director
The Company
has a consulting agreement with ZRB Holdings, Inc, an entity wholly owned by Zachary Bradford, our Chief Financial Officer and
director, for management services. In accordance with this agreement, as amended, Mr. Bradford provides services to us in exchange
for $15,000 in compensation for services plus a $1,000 medical insurance stipend, each month plus a bonus of 0.5% of gross revenue.
The Company has also agreed to reimburse Mr. Bradford for expenses incurred. The term of the agreement is one year and automatically
renews until cancelled by either party. During the years ended September 30, 2018 and 2017, Mr. Bradford earned $194,527 and $193,425,
respectively, in accordance with this agreement. During the year ended September 30, 2018, Mr. Bradford allowed the Company to
defer $87,746 as accrued compensation. The Company owed Mr. Bradford $89,351and $78,252 in deferred compensation and reimbursable
expenses as of September 30, 2018 and 2017, respectively. Deferred compensation is reported under due to related parties in the
consolidated balance sheets.
Bryan
Huber – Chief operations Officer and Director
The Company
has a consulting agreement with Bryan Huber, our Chief Operations Officer and director, for management services. In accordance
with the original agreement, Mr. Huber provided services to us in exchange for $117,000 in compensation for services plus a $500
medical insurance stipend and a bonus of 0.5% of gross revenue. On August 28, 2018, the Company replaced the original agreement
with an agreement with Zero Positive, LLC an entity controlled by Mr. Huber. In accordance with this agreement with Zero Positive,
LLC, Mr. Huber agrees to provide services through to the Company in exchange for $160,000 in annual compensation plus a $500 medical
insurance stipend and a bonus of 0.5% of gross revenue. Under the agreement Mr. Huber was also granted a one-time bonus of $50,000,
payment of which will be deferred until the Company completes a qualified financing that exceeds three-million dollars or average
monthly revenues of the Company exceed one-million dollars for three months. The Company has also agreed to reimburse Zero Positive,
LLC for expenses incurred. The term of the agreement is one year and automatically renews until cancelled by either party. During
the year ended September 30, 2018 and 2017, Mr. Huber and Zero positive earned $180,612 and $116,377, respectively, in accordance
with this agreement. During the years ended September 30, 2018, Mr. Huber allowed the Company to defer $69,604 as accrued compensation.
The Company owed Mr. Huber $73,625 and $6,288 in deferred compensation and reimbursable expenses as of September 30, 2018 and
2017, respectively. Deferred compensation is reported under due to related parties.
On September
28, 2018, in connection with the Consulting agreement executed with Zero Positive, LLC Company issued warrants to purchase 900,000
shares of common stock at an exercise price of $0.80 per share to an Zero Positive. The warrants were valued at $2,607,096 using
the Black Scholes option pricing model based upon the following assumptions: term of 10 years, risk free interest rate of 3.05%,
a dividend yield of 0% and volatility rate of 191%. The warrants vest as follows: 300,000 vested immediately, the balance vest
evenly on the last day of each month over the forty-two months beginning August 31, 2018. As of September 30, 2018, 328,571 warrants
had vested, and the Company recorded an expense of $951,797 during the year ended September 30, 2018.
Other
than disclosed above there are no formal agreements to compensate any officers for their services. Our officers and directors
are reimbursed for expenses incurred on our behalf. However, our officers and directors have received benefits in the form of
shares of our common stock and warrants.
Outstanding
Equity Awards at Fiscal Year-End
On June
9, 2017, our Board of Directors adopted the 2017 Equity Incentive Plan (the “Plan”). The purpose of the Plan is to
attract and retain the best available personnel for positions of substantial responsibility with us, to provide additional incentive
to employees, directors and consultants, and to promote our success. Under the initial Plan, we were able to issue up to an aggregate
total of 3,000,000 incentive or non-qualified options to purchase our common stock, or stock awards.
The
table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive
officer as of September 30, 2018.
OUTSTANDING EQUITY AWARDS
AT FISCAL YEAR-END
|
OPTION AWARDS
|
STOCK AWARDS
|
Name
|
Number of Securities
Underlying Unexercised Options (#) Exercisable
|
Number of Securities
Underlying Unexercised Options (#) Unexercisable
|
Equity Incentive Plan
Awards: Number of Securities Underlying Unexercised Unearned Options (#)
|
Option Exercise Price
($)
|
Option Expiration Date
|
Number of Shares or
Units of Stock That Have Not Vested (#)
|
Market Value of Shares
or Units
of Stock That Have
Not Vested ($)
|
Equity Incentive Plan
Awards: Number of Unearned Shares, Units or Other Rights That Have
Not Vested (#)
|
Equity Incentive Plan
Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#)
|
S. Matthew Schultz
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Zachary Bradford
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Bryan Huber
|
328,571
|
571,429
|
-
|
$0.80
|
09/28/2018
|
-
|
-
|
-
|
-
|
Director
Compensation
The
table below summarizes all compensation of our directors for the year ended September 30, 2018.
DIRECTOR COMPENSATION
|
Name
|
Fees
Earned or Paid in Cash ($)
|
Stock
Awards ($)
|
Option
Awards ($)
|
Non-Equity
Incentive Plan Compensation ($)
|
Non-Qualified
Deferred Compensation Earnings ($)
|
All
Other Compensation ($)
|
Total
($)
|
Larry McNeill
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following
table sets forth as of January 9, 2019 the number and percentage of the 39,740,596 shares of outstanding common stock which, according
to the information supplied to the Company, were beneficially owned by (i) each person who is currently a director of the Company,
(ii) each executive officer, (iii) all current directors and executive officers of the Company as a group and (iv) each person
who, to the knowledge of the Company, is the beneficial owner of more than 5% of the outstanding common stock. Except as
otherwise indicated, the persons named in the table have sole voting and dispositive power with respect to all shares beneficially
owned, subject to community property laws where applicable.
Except
as otherwise indicated, the address of each of the persons named in the table below is c/o CleanSpark, Inc., 70 North Main Street,
Ste. 105 Bountiful, Utah 84010.
Name
of Beneficial Owner
|
|
Number
of Shares of Par Value $0.001 Common Stock Beneficially Owned
|
|
Percentage
of Class
|
5% or Greater Stockholders
|
|
|
|
|
|
|
CleanSpark Holdings, LLC
9666
Businesspark Ave Unit 207
San Diego, CA 92131
|
|
|
2,782,470
|
|
|
7.0%
|
Bruce Lybbert
1366 Skyline Dr.
Bountiful,
UT 84010
|
|
|
3,541,691
(1)
|
|
|
8.9%
|
|
|
|
|
|
|
|
Directors and named executive officers
|
|
|
|
|
|
|
S. Matthew Schultz
|
|
|
5,709,956
(2)
|
|
|
14.4%
|
Zachary Bradford
|
|
|
3,608,632
(3)
|
|
|
9.0%
|
Larry McNeill
|
|
|
1,880,713
(4)
|
|
|
4.7%
|
Bryan Huber
|
|
|
923,491
(5)
|
|
|
2.2%
|
All Officers and Directors as a Group (4 Persons)
|
|
|
12,122,792
|
|
|
30.3%
|
* Less than 1%
|
(1)
|
Includes
1,541,691 shares of common stock held in his name, 2,000,000 shares of common stock held
by Jacque Lybbert, Mr. Lybbert’s spouse.
|
|
(2)
|
Includes
4,800,000 shares of common stock held in the S M Schultz IRRV TR to which Mr. Schultz
is the beneficial owner, 500,000 shares of common stock held in his name and 409,956
shares of common stock held by his spouse.
|
|
(3)
|
Includes
3,238,632 shares of common stock held in ZRB Holdings Inc. in which Mr. Bradford is the
beneficial owner, 120,000 shares of common stock held in BlueChip Advisors LLC in which
Mr. Bradford shares beneficial ownership and warrants to purchase 250,000 shares of common
stock.
|
|
(4)
|
Includes
489,361 shares of common stock held in his name, 716,352 shares of common stock held
in his Roth IRA, 175,000 shares held by his son living with him and warrants to purchase
500,000 shares of common stock.
|
|
(5)
|
Includes
23,491 shares of common stock held in his name and warrants to purchase 900,000 shares
of common stock.
|
The following
table sets forth as of January 9, 2018 the number and percentage of the 1,000,000 shares of outstanding Series A Preferred Stock
which, according to the information supplied to the Company, were beneficially owned by (i) each person who is currently a director
of the Company, (ii) each executive officer, (iii) all current directors and executive officers of the Company as a group and
(iv) each person who, to the knowledge of the Company, is the beneficial owner of more than 5% of the outstanding shares of Series
A Preferred Stock. Except as otherwise indicated, the persons named in the table have sole voting and dispositive power
with respect to all shares beneficially owned, subject to community property laws where applicable.
Except
as otherwise indicated, the address of each of the persons named in the table below is c/o CleanSpark, Inc., 70 North Main Street,
Ste. 105 Bountiful, Utah 84010.
Name
of Beneficial Owner
|
|
Number
of Shares of Par Value $0.001 Series A Preferred Stock Beneficially Owned
|
|
Percentage
of Class
|
5% or Greater Stockholders
|
|
|
|
|
|
|
|
Bruce Lybbert
|
|
|
250,000
|
|
|
|
25%
|
Directors and named executive officers
|
|
|
|
|
|
|
|
S. Matthew Schultz
|
|
|
250,000
|
|
|
|
25%
|
Zachary Bradford
|
|
|
250,000
|
|
|
|
25%
|
Bryan Huber
|
|
|
—
|
|
|
|
0%
|
Larry McNeill
|
|
|
250,000
|
|
|
|
25%
|
All Officers and Directors as a Group (5 Persons)
|
|
|
750,000
|
|
|
|
75%
|
Item
13. Certain Relationships and Related Transactions, and Director Independence
Except
as provided below and in “Executive Compensation” set forth above, for the past two fiscal years there have not been,
and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a participant
in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets
at year-end for the last two completed fiscal years($191,742), and in which any director, executive officer, holder of 5% or more
of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct
or indirect material interest.
Zach
Bradford, President, CFO and Director
On
August 13, 2017, the Company executed a 15% promissory note with a face value of $80,000 with Zachary Bradford, its President
and Chief Financial Officer. Under the terms of the promissory note the Company received $80,000 and agreed to repay the note
evenly over 12 months. The Company repaid $73,333 and $6,667 in principal during the years ended September 30, 2018 and 2017,
respectively. The Company incurred interest expense of $12,000 and $1,800 in interest during the years ended September 30, 2018
and 2017, respectively. The Company owed $0 and $73,333 in principal and $600 and $0 in accrued interest under the terms of the
agreement as of September 30, 2018 and 2017, respectively.
During
the year ended September 30, 2018, the Company executed eleven 15% promissory notes with a total face value of $189,690 with Zachary
Bradford, its President and Chief Financial Officer. Under the terms of the promissory notes the Company received $189,690 and
agreed to repay the notes on demand. As of September 30, 2018, Company owed $189,690 in principal and $10,733 in accrued interest
under the terms of the agreement. On January 3, 2019, the Company settled all remaining obligations under the notes through the
payment of all outstanding principal and interest then outstanding.
Larry
McNeil, Chairman and Director
During
the year ended September 30, 2018, the Company executed eight 15% promissory notes with a total face value of $163,100 with Larry
McNeill, a Director of the Company. Under the terms of the promissory notes the Company received $163,100 and agreed to repay
the note on demand. As of September 30, 2018, Company owed $163,100 in principal and $6,562 in accrued interest under the terms
of the agreement. On December 31, 2018, the Company settled all remaining obligations under the note through the payment of all
outstanding principal and interest then outstanding.
Item
14. Principal Accounting Fees and Services
Below
is the table of Audit Fees billed by our auditors in connection with the audits of the Company’s annual financial statements
for the years ended:
Financial
Statements for the
Year Ended September 30
|
|
Audit
Services
|
|
Audit
Related Fees
|
|
Tax
Fees
|
|
Other
Fees
|
2018
|
|
|
$
|
45,639
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
2017
|
|
|
$
|
36,615
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|