NOTES
TO FINANCIAL STATEMENTS
As
of June 30, 2020 (Unaudited) and for the Three and Six Months Then Ended (Unaudited)
NOTE
1: ORGANIZATION AND NATURE OF OPERATIONS
EDGE
DATA SOLUTIONS, INC. (the “Company”), formerly Blockchain Holdings Capital Ventures, Inc. (formerly Southeastern Holdings,
Inc., formerly Safe Lane Systems, Inc.) was incorporated in the State of Colorado on September 10, 2013. Safe Lane Systems, Inc.
redomiciled to become a Delaware holding corporation in September of 2016. On September 22, 2016, Safe Lane Systems, Inc. formed
two wholly owned subsidiaries, SLS Industrial, Inc and Southeastern Holdings, Inc. (both Delaware corporations) and on September
30, 2016 completed a merger and reorganization in which Southeastern Holdings, Inc. (now Edge Data Solutions, Inc.) became the
holding company. On December 1, 2016, the Company spun off its wholly owned subsidiary, SLS Industrial, Inc., along with its assets
and liabilities, leaving Southeastern Holdings, Inc. as the only surviving entity.
On
August 23, 2018, the Company entered into a Bill of Sale and Assignment and Assumption Agreement with Blockchain Holdings, LLC
(“Blockchain”), pursuant to which the Company purchased all of the assets of Blockchain which are used in the business
of sourcing of blockchain mining equipment from various suppliers for their customers and also providing management of the equipment
hosted, mining pools and tech work on such equipment. The Company issued 300,000,000 (equivalent to 3,000,000 after the reverse
split) shares of its common stock, par value $.0001 to the members of Blockchain in exchange for the assets of Blockchain.
On
August 30, 2018, the Company changed its name to Blockchain Holdings Capital Ventures, Inc.
On
January 13, 2020, the Company changed its name to Edge Data Solutions, Inc.
Business
description
Edge
Data Solutions, Inc. (EDSI) is poised to be an
industry-leading edge datacenter and cloud infrastructure provider. EDSI’s proprietary Edge Performance Platform (EPP) allows
us to deploy next-generation edge datacenters where they are needed most. EDSI’s datacenters provide next-generation immersion
cooling technology that improves performance, reduces energy costs and latency. Key industries we serve more computing power are
fintech, cloud gaming, telecom 5G, 3D/video/AI rendering, video streaming, remote desktop, IoT, autonomous vehicles. Centralized
infrastructure facilities servicing multiple geographical areas encounter many issues with data latency, congestion and weak network
connections. To address this, data processing is moving closer to the customer. EDSI offers green, low-cost, secure colocation
and private data hosting to meet this demand for Edge datacenters. EDSI will deploy to strategic locations based on demand for
Tier 2 and Tier 3 cities outside the major metropolitans to underserved markets, supporting both edge customers and areas of projected
growth. With the rise and proliferation of this technology adoption we will solidify our footprint by securing multiple locations
across the US. The modular design and ability to add additional datacenters as needed, preserves up front capital allowing for
rapid deployment and scalability as business demand increases.
NOTE
2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America
(GAAP). The Company maintains the calendar year as its basis of reporting.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Cash
Equivalents and Concentration of Cash Balance
The
Company considers all highly liquid securities with an original maturity of less than three months to be cash equivalents. The
Company’s cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits. As of June
30, 2020, and December 31, 2019, the Company’s cash balances did not exceed federally insured limits.
EDGE
DATA SOLUTIONS, INC. (Formerly Southeastern Holdings, Inc.)
NOTES
TO FINANCIAL STATEMENTS
As
of June 30, 2020 (Unaudited) and for the Three Months Then Ended (Unaudited)
Right
of Use Assets and Lease Liabilities
In
February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires lessees to recognize almost all
leases on the balance sheet as a Right-of-Use (“ROU”) asset and a lease liability and requires leases to be classified
as either an operating or a finance type lease. The standard excludes leases of intangible assets or inventory. The standard became
effective for the Company beginning January 1, 2019. Since the Company had no leases in place prior to or during 2019, the Company
has adopted ASC 842 prospectively and has applied it to its first lease agreement in 2020.
Under
ASC 842, the Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement
date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only
payments that are fixed and determinable at the time of commencement. As most of the Company’s leases do not provide an
implicit rate, the Company estimated the incremental borrowing rate in determining the present value of lease payments. The ROU
asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. The Company’
lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise
such options.
Property
and Equipment
Property
and equipment are stated at cost net of accumulated depreciation and amortization, and accumulated impairment, if any. Depreciation
and amortization of property and equipment is provided using the straight-line method over estimated useful lives, which are all
currently estimated at three years.
As
of June 30, 2020, the Company’s property and equipment consisted of $55,683 of datacenter equipment and $13,347 of capitalized
labor associated with readying the equipment for service, net of $4,210 of accumulated depreciation. Depreciation expense for
the three and six months ended June 30, 2020 was $4,129 and $4,210, respectively.
Long-Lived
Assets
The
Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances have indicated that
an asset may not be recoverable. Long-lived assets are grouped with other assets at the lowest level for which identifiable cash
flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted
cash flows is less than the carrying value of the assets, the assets are written down to the estimated fair value. As of June
30, 2020, the Company determined that its long-lived assets have not been impaired.
Accounts
Payable and Accrued Liabilities
Accounts
payable consisted of $74,434 of liabilities incurred by the issuer prior to the merger as of each June 30, 2020 and 2019. The
remaining accounts payable of $67,346 and $88,926 as of June 30, 2020 and December 31, 2019, respectively, consisted of amounts
due for professional services and various other general and administrative expenses incurred after the acquisition.
As
of December 31, 2019, accrued expenses consisted of $1,811 of state and local taxes payable, $1,903 of accrued interest due to
a vendor and $7,266 of accrued interest on convertible debt. As of June 30, 2020, accrued expenses consisted of $1,811 of state
and local taxes payable, $1,005 of accrued interest under the finance lease discussed in Note 8, and $13,528 of accrued interest
on convertible debt.
As
of December 31, 2019, accrued liabilities included $41,000 of accrued consulting fees payable to entities owned by the CEO and
COO ($22,000 and $19,000, respectively). During the quarter ended June 30, 2020, the Company paid out the $41,000 of accrued compensation,
and accrued an additional $10,000 of compensation for the COO, for accrued related party compensation payable of $10,000 as of
June 30, 2020.
EDGE
DATA SOLUTIONS, INC. (Formerly Southeastern Holdings, Inc.)
NOTES
TO FINANCIAL STATEMENTS
As
of June 30, 2020 (Unaudited) and for the Three Months Then Ended (Unaudited)
Fair
Value of Financial Instruments
Financial
Accounting Standards Board (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs
to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent
sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices
in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level
3 measurement). The three levels of the fair value hierarchy are as follows:
Level
1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to
access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices
such as exchange-traded instruments and listed equities.
Level
2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly (e.g., quoted prices of similar assets or liabilities inactive markets, or quoted prices for identical or similar assets
or liabilities in markets that are not active).
Level
3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined
using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.
The
carrying amounts reported in the balance sheets approximate their fair value.
Revenue
Recognition
The
Company recognizes revenue under ASC 606, using the following five-step model, which requires that the Company: (1) identify a
contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4)
allocate the transaction price to performance obligations and (5) recognize revenue as performance obligations are satisfied.
The Company’s current and anticipated revenue streams consist of:
|
1.
|
GPU
as a Service– The Company owns and operates high performance servers to provide hardware acceleration for rendering
farms to process 3D and video rendering and gaming. In addition, these multi-purpose servers produce revenue from mining when
the servers are not processing other jobs to ensure zero idle time and have the ability to run AI and HPC processing as well.
|
During
the quarter ended June 30, 2020, the Company recognized $6,307 of revenue from its customers’ usage of datacenter credits.
The Company further recognized a deferred revenue liability of $5,391 for prepaid usage credits not yet used by its customers
as of June 30, 2020. While the Company generated limited revenue in the second quarter of 2020, there can be no assurances that
service lines will generate satisfactory revenue or continue to generate revenue.
Stock-Based
Compensation
The
Company accounts for share-based payments pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company
records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and
restricted stock awards using the Black-Scholes option pricing model.
Stock
compensation expense for stock options is recognized over the vesting period of the award or expensed immediately when stock or
options are awarded for previous or current service without further recourse.
On
February 18, 2020, the Company issued 50,000 shares of common stock to an advisor and recorded $9,500 of stock-based compensation
expense.
On
May 6, 2020, the Company agreed to issue 60,000 shares of common stock to a consultant for services rendered, resulting in stock-based
compensation expense of $11,400.
On
June 19, 2020, the Board of Directors approved the issuance of 750,000 fully vested common shares to its board members and officers
as compensation for services rendered, consisting of 250,000 shares to Delray Wannemacher, CEO and Director, 250,000 shares to
Daniel Wong, COO and Director, and 250,000 shares to Austin Bosarge, Director. In connection with this issuance, the Board further
approved the issuance of 375,000 common shares on July 1, 2021 and 375,000 common shares on July 1, 2022. Each of these future
issuances will result in the issuance of 125,000 common shares to each director and officer. The Company recorded stock-based
compensation expense of $142,500 upon approving issuance of the first 750,000 shares.
EDGE
DATA SOLUTIONS, INC. (Formerly Southeastern Holdings, Inc.)
NOTES
TO FINANCIAL STATEMENTS
As
of June 30, 2020 (Unaudited) and for the Three Months Then Ended (Unaudited)
Income
Taxes
The
Company is subject to taxation in various jurisdictions and may be subject to examination by various authorities.
Deferred
tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and
credit carryforwards, 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. Deferred income tax expense represents
the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets
and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the
deferred tax assets will not be realized.
The
Company recognizes the amount of taxes payable or refundable for the current year and recognizes deferred tax liabilities and
assets for the expected future tax consequences of events and transactions that have been recognized in the Company’s financial
statements or tax returns.
NOTE
3: GOING CONCERN
As
shown in the accompanying financial statements as of June 30, 2020, the Company had $53,401 of cash and $64,251 of current assets,
as compared to total current liabilities of $682,323, has incurred substantial operating losses, and had an accumulated deficit
of $962,849. Furthermore, the Company’s revenue history has been limited and unstable, and there can be no assurances
of future revenues.
Given
these factors, the Company is dependent on financing from outside parties, and management intends to pursue outside capital through
debt and equity vehicles. There is no assurance that these efforts will materialize or be successful or sufficient to fund operations
and meet obligations as they come due.
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern, however, the
above conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements
do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the
amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
NOTE
4: STOCKHOLDERS’ DEFICIENCY
The
Company has designated ten million (10,000,000) shares of its preferred stock, par value $0.001 as Class A Preferred Super Majority
Voting Stock (“Class A”). The Class A shares have the right to vote upon matters submitted to the holders of common
stock, par value $0.0001 of the Company. Class A shares have a vote equal to the number of shares of common stock of the Company
which would give the holders of the Class A shares a vote equal to sixty percent (60%) of the common stock. This vote shall be
exercised pro-rata by the holders of the Class A. The Company shall have the right to redeem, in its sole and absolute discretion,
at any time one (1) year after the date of issuance of such Class A shares, all or any portion of the shares of Class A at a price
of one cent ($0.01) per share. On October 4, 2018, the Company issued a total of 7,000,000 Class A shares to its CEO and COO as
stock-based compensation for services rendered.
The
Company has not currently authorized a Class B designation of Preferred Stock.
EDGE
DATA SOLUTIONS, INC. (Formerly Southeastern Holdings, Inc.)
NOTES
TO FINANCIAL STATEMENTS
As
of June 30, 2020 (Unaudited) and for the Three Months Then Ended (Unaudited)
The
Company has designated ten million (10,000,000) shares of its preferred stock, par value $0.001 as Class C Convertible Preferred
Non-Voting Stock (“Class C”). Each share of Class C shall be convertible into five (5) shares of common stock. The
holders of Class C shall be entitled to receive the same dividend as the holders of the common stock and such dividend shall be
paid pro rata per share on a fully converted basis. The holders of Class C shall have piggyback registration rights. The Company
shall have the right to redeem, in its sole and absolute discretion, at any time after five (5) years, all or any portion of the
shares of Class C at a price of five dollars ($5.00) per share. The Class C shares shall be considered to have a junior liquidation
preference to Class A shares and a senior dividend preference to Class A shares. On October 4, 2018, the Company issued a total
of 7,000,000 Class C shares to its CEO and COO as stock-based compensation for services rendered. Subsequently, in April 2019,
the Company filed an amended and restated certificate of designation, which restricts the CEO and COO from converting the 7,000,000
shares into common stock for 36 months from the issuance date.
On
January 20, 2020, the Company purchased datacenter equipment components for 32,000 shares of common stock and capitalized $6,083
based on the estimated value of surrounding equity transactions.
In
January 2020, the Company issued 627,862 equity units at $0.25 to two individuals in exchange for conversion of $100,000 of convertible
notes and $6,966 of accrued interest and an additional $50,000 of cash. Each equity unit consists of one three-year warrant to
purchase two shares of the Company’s common stock for $0.50 each, and one share of the Company’s common stock. The
Company may call the warrants in the event its common stock trades for $1.00 or more per share for ten out of fifteen consecutive
trading days. In connection with these transactions, the Company assigned $119,665 of value to the common stock and $37,301 to
the warrants using the Black-Scholes model with the following inputs:
Risk-free interest rate
|
|
|
1.44%-1.51
|
%
|
Expected life of warrants
|
|
|
3 years
|
|
Annualized volatility
|
|
|
60
|
%
|
Dividend rate
|
|
|
0
|
%
|
The
following table sets forth the Company’s warrant activity through June 30, 2020:
|
|
Warrants
|
|
|
Shares
Under
Warrant
|
|
|
Term
|
|
|
Exercise
Price
|
|
|
Remaining
Life
|
|
Balance, December 31, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued with equity units
|
|
|
627,862
|
|
|
|
1,255,724
|
|
|
|
3 years
|
|
|
$
|
0.50
|
|
|
|
|
|
Balance, March 31, 2020
|
|
|
627,862
|
|
|
|
1,255,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No new issuances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2020
|
|
|
627,862
|
|
|
|
1,255,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
further discussed in Note 2, the Company issued 50,000 common shares and 860,000 common shares to management, board members and
consultants for services rendered, resulting in stock-based compensation expense of $9,500 and $163,400 for the three and six
months ended June 30, 2020, all respectively.
As
of June 30, 2020, the Company was authorized to issue 150,000,000 shares of common stock. All common stock shares have full dividend
and voting rights. However, it is not anticipated that the Company will be declaring dividends in the foreseeable future.
As
of June 30, 2020, the Company had 7,171,079 common shares outstanding.
As
of June 30, 2020, 7,000,000 shares of Class A Preferred Stock and 7,000,000 shares of Class C Preferred Stock were issued and
outstanding.
NOTE
5: RELATED PARTY TRANSACTIONS
During
the six months ended June 30, 2020, the Company paid out previously accrued consulting fees payable to the CEO and COO of $22,000
and $19,000, respectively, paid $40,000 and $35,000 of current compensation, and paid $6,600 and $3,909 in health insurance premiums
for the CEO and COO, respectively. The Company does not currently have consulting or employment agreements with these individuals,
and as a result, these fees may fluctuate from time to time. While the Company believes these individuals were appropriately classified
as contractors and has accordingly neither paid nor accrued payroll taxes, these payments may result in future tax liabilities
should the Internal Revenue Service deem these individuals to be employees. As of June 30, 2020, the Company owed $0 of outstanding
compensation to the CEO and COO.
During
the six months ended June 30, 2020, the Company’s CEO and COO paid expenses on behalf of the Company totaling $59,995 and
$42,687, and the Company repaid $64,758 and $41,976 of related party advances, respectively. As of June 30, 2020, the Company
was indebted to the CEO for $54,476 and to the COO for $29,901, respectively, for expenses paid on behalf of the company.
In June 2020, Austin Bosarge joined the Company’s
Board of Directors. In connection with his appointment to the Board of Directors, he forgave $33,000 of outstanding fees due to
his company for previous professional services rendered, resulting in a deemed contribution of $33,000 for the three and
six months ended June 30, 2020.
EDGE
DATA SOLUTIONS, INC. (Formerly Southeastern Holdings, Inc.)
NOTES
TO FINANCIAL STATEMENTS
As
of June 30, 2020 (Unaudited) and for the Three Months Then Ended (Unaudited)
NOTE
6: CONVERTIBLE NOTES
As
discussed in Note 4, in January, two individuals converted a total of $100,000 of outstanding principal and $6,966 of accrued
interest into 427,862 equity units, each consisting of one common share and a three-year warrant to purchase two shares of common
stock at $0.50 per share, in connection with additional subscriptions totaling $50,000 to purchase 200,000 of these equity units.
In
February 2020, the Company issued two short-term convertible notes for total proceeds of $110,000. These notes mature one year
from execution and accrue interest at a rate of 10% per annum. Conversion terms call for conversion of principal and accrued interest
at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.
In
April 2020, the Company issued three short-term convertible notes for total proceeds of $150,000. These notes mature one year
from execution and accrue interest at rates ranging from 10-12% per annum. Conversion terms call for conversion of principal and
accrued interest at 70% of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.
In
June 2020, the Company issued another short-term convertible note for total proceeds of $50,000. This note matures one year from
execution and accrues interest at 10% per annum. Conversion terms call for conversion of principal and accrued interest at 70%
of the stock price upon closing any offering resulting in aggregate financing of at least $1,000,000.
The
Company evaluated the convertible notes in light of ASC 470 and determined that a beneficial conversion feature exists. However,
given the contingent nature of the holder’s option and the lack of a market for the Company’s stock, the Company concluded
that such a feature is not currently ascertainable and allocated the full principal amount to the convertible note liability.
During
the three and six months ended June 30, 2020 and 2019, the Company recognized $8,864 and $13,228 and $1,322 and $1,322 of interest
expense on convertible debt, all respectively. As of June 30, 2020 and 2019, accrued interest on convertible debt was $13,528
and $7,267, net of converted interest of $6,966 and $0 during the periods then ended, respectively.
NOTE
7: SIGNIFICANT AGREEMENTS
On
January 29, 2020, the Company entered into a master service agreement with Charter Trading Corporation (“Charter”),
a Texas company, under which Charter will provide materials and various engineering and design services in connection with the
Company’s development of planned datacenters. The Company has not yet realized any financial impacts pertaining to this
agreement.
Effective
March 1, 2020, the Company entered into a consulting agreement with a capital formation consultant, with the intent that the consultant
will make introductions to potential capital sources. The consulting agreement calls for a monthly cash fee of $10,000 for the
first six months and 100,000 shares of restricted common stock upon the earlier of (a) closing of $500,000 of debt or equity financing
or (b) the second agreement renewal. Upon the earlier of (a) a $2,500,000 debt or equity financing or (b) the second agreement
renewal, the consultant’s base compensation will increase to $15,000 per month. In the event the Company achieves at least
$2,500,000 of debt or equity funding, the consultant will receive 250,000 fully vested warrants to purchase shares of the Company’s
common shares at $0.25 each for the next three years. The Company may, at the option of the Board, issue additional equity as
an annual performance bonus.
On
June 24, 2020, the Company entered into a reseller agreement with a Texas-based technology company under which it can purchase
and resell datacenter-related equipment. The Company has not yet realized any financial impacts.
NOTE
8: FINANCE LEASE
On
March 27, 2020, the Company entered into a 36-month lease for datacenter equipment. Terms of the lease call for 36 monthly payments
of $1,292, with the first payment due at inception, together with a $7,753 security deposit, $3,140 of sales tax and a $500 origination
fee, for a total of $12,685 due up front. The Company paid the $12,685 on March 27, 2020.
The
Company evaluated the lease in light of ASC 842 and determined that it was a long-term finance lease, since (a) the lease term
is for the major part of the remaining economic life of the underlying asset and (b) the present value of the sum of lease payments
equals or substantially exceeds the fair value of the underlying asset. At lease inception, the Company recognized a right of
use asset for $38,895, prepaid tax of $3,140 and a lease liability of $38,895. The Company will ratably amortize the right of
use asset and prepaid tax to lease expense over the lease’s life. Based on the present value, term and payment schedule,
the Company determined the lease’s implicit rate to be 12.55% and will record interest expense accordingly over the life
of the lease.
During
the six months ended June 30, 2020, the Company paid a total of $1,464, including $1,292 of principal and $172 of interest, to
the lessor and recognized $3,503 of lease expense for the three and six months ended June 30, 2020.
EDGE
DATA SOLUTIONS, INC. (Formerly Southeastern Holdings, Inc.)
NOTES
TO FINANCIAL STATEMENTS
As
of June 30, 2020 (Unaudited) and for the Three Months Then Ended (Unaudited)
As
of June 30, 2020, lease-related assets and liabilities consisted of:
Assets
|
|
|
|
|
Prepaid expense
|
|
$
|
2,878
|
|
Right of use asset - finance lease
|
|
|
35,654
|
|
Security deposit
|
|
|
7,753
|
|
Total lease-related assets
|
|
$
|
46,285
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Accrued interest
|
|
$
|
1,005
|
|
Lease liability - finance, current portion
|
|
|
14,430
|
|
Lease liability - finance, non-current portion
|
|
|
23,173
|
|
Total lease-related liabilities
|
|
$
|
37,603
|
|
Future
maturities of the lease liability are as follows:
2020
|
|
$
|
8,374
|
|
2021
|
|
|
12,500
|
|
2022
|
|
|
14,186
|
|
2023
|
|
|
2,543
|
|
Total future maturities
|
|
$
|
37,603
|
|
NOTE
9: ACQUISITION DEPOSITS
During
the six months ended June 30, 2020, the Company issued $25,000 of payments in anticipation of an acquisition of the assets of
Blockchain Resources Corp. On June 26, 2020, the parties terminated the agreement. In connection with these payments, a contractor
received $2,000 for services directly pertaining to the buildout of the Company’s datacenter equipment. As a result, the
Company capitalized the $2,000 and wrote off the remaining $23,000 as unrecoverable losses.
NOTE
10: CONCENTRATIONS, COMMITMENTS AND CONTINGENCIES
During
the three and six months ended June 30, 2020, one customer comprised 99% of revenue, and the loss of this customer would be detrimental
to the Company’s newly formed revenue stream. Management has determined that no other significant concentrations, commitments,
or contingencies existed as of June 30, 2020.
NOTE
11: SMALL BUSINESS ADMINISTRATION GRANT
During
the six months ended June 30, 2020, the Company applied for a United States Small Business Administration loan under the March
27, 2020 Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. In connection with this application, the Company
received a one-time grant of $1,000 and recognized it as other income.
EDGE DATA SOLUTIONS, INC. (Formerly Southeastern
Holdings, Inc.)
NOTES TO FINANCIAL STATEMENTS
As of June 30, 2020 (Unaudited) and for
the Three Months Then Ended (Unaudited)
NOTE
12: DEBT FORGIVENESS
On
May 5, 2020, a vendor forgave $12,250 of outstanding balances due from the Company pertaining to professional services previously
provided, resulting in a $12,250 gain for the three and six months ended June 30, 2020.
NOTE
13: RECENT ACCOUNTING PRONOUNCEMENTS
In
February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842). This ASU requires a lessee to recognize a right-of-use
asset and a lease liability under most operating leases in its balance sheet. The ASU is effective for annual and interim periods
beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company
has adopted this accounting policy on January 1, 2019 and applied the standard to its current capital lease.
Management
does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the
accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under
the circumstances.
NOTE
14: SUBSEQUENT EVENTS
On
July 2, 2020, the Company entered into a colocation agreement with a datacenter service provider, under which the Company will
pay $1,375 per month for the next twelve months in exchange for dedicated, secure physical space for its servers, with guaranteed
uptime.
On
July 7, 2020, the Board approved the issuance of 1,000,000 common shares to management, consisting of 500,000 to the CEO and 500,000
to the COO in recognition of services rendered.
On
July 19, 2020, the Company entered into another $25,000 convertible note with an existing noteholder. The note matures on July
19, 2021, bears interest at 10% per annum, and is convertible into common stock at a 15% discount in the event of a future offering
of at least $1,000,000.
On
August 7, 2020, the Company entered into a convertible promissory note with Intecon, LLC for proceeds of $100,000. The note matures
in one year, bears 10% interest per annum and is convertible at a 15% discount in the event of a $1,000,000 or greater financing.
Management
has evaluated significant subsequent events through the date these financial statements were available to be issued and has identified
no other significant events requiring disclosure.
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This
report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of
1995. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management and information
currently available to management. The use of words such as “believes”, “expects”, “anticipates”,
“intends”, “plans”, “estimates”, “should”, “likely” or similar expressions,
indicates a forward-looking statement. In connection with, and because we desire to take advantage of, the “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements
in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical
information and which relate to future operations, strategies, financial results or other developments. Forward looking statements
are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions,
are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ
materially from those expressed in any forward-looking statements made by, or on our behalf. We disclaim any obligation to update
forward-looking statements.
The
identification in this report of factors that may affect our future performance and the accuracy of forward-looking statements
is meant to be illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding
of their inherent uncertainty.