10-K 1 blcs0809form10k2017.htm FORM 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

. ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 333-197749

BLOCKCHAIN SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

Nevada		46-5546647
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

319 Clematis Street, Suite 714
West Palm Beach, FL		33401
(Address of principal executive offices)		(Zip Code)

(561) 249-6511

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☐ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☑

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

Large accelerated filer ☐	Accelerated filer ☐

Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☑ No ☐

As of June 30, 2017, the aggregate market value of the voting and non-voting common equity held by non-affiliates was $89,281.

The number of shares outstanding of the registrant’s $0.001 par value Common Stock as of July 31, 2019, was 1,200,043 shares.

DOCUMENTS INCORPORATED BY REFERENCE

None

Table of Contents

	PART I	Page

Item 1	Business		4
Item 1A	Risk Factors		5
Item 1B	Unresolved Staff Comments		5
Item 2	Properties		5
Item 3	Legal Proceedings		5
Item 4	Mine Safety Disclosures		5

	PART II

Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		6
Item 6	Selected Financial Data		6
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations		7
Item 7A	Quantitative and Qualitative Disclosures About Market Risk		13
Item 8	Financial Statements and Supplementary Data		13
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		13
Item 9A	Controls and Procedures		13
Item 9B	Other Information		15

	PART III

Item 10	Directors, Executive Officers and Corporate Governance		15
Item 11	Executive Compensation		16
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		17
Item 13	Certain Relationships and Related Transactions, and Director Independence		17
Item 14	Principal Accountant Fees and Services		18

	PART IV

Item 15	Exhibits and Financial Statement Schedules		18
	Signatures		21

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements. The Securities and Exchange Commission (the “SEC”) encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as “project”, “believe”, “anticipate”, “plan”, “expect”, “estimate”, “intend”, “should”, “would”, “could”, or “may”, or other such words, verbs in the future tense and words and phrases that convey similar meaning and uncertainty of future events or outcomes to identify these forward–looking statements. There are a number of important factors beyond our control that could cause actual results to differ materially from the results anticipated by these forward–looking statements. While we make these forward–looking statements based on various factors and using numerous assumptions, you have no assurance the factors and assumptions will prove to be materially accurate when the events they anticipate actually occur in the future.

The forward–looking statements are based upon our beliefs and assumptions using information available at the time we make these statements. We caution you not to place undue reliance on our forward–looking statements as (i) these statements are neither predictions nor guaranties of future events or circumstances, and (ii) the assumptions, beliefs, expectations, forecasts and projections about future events may differ materially from actual results. We undertake no obligation to publicly update any forward–looking statement to reflect developments occurring after the date of this report.

PART I

ITEM 1. DESCRIPTION OF BUSINESS.

(a) General Business Development

Corporate History

Blockchain Solutions, Inc. (the “Company” or “Blockchain”), was originally formed as Cabinet Grow, Inc. (“CGNV”) and began operations in California in 2008, doing business as Universal Hydro (“Hydro”). Prior to April 2014, CGNV was a sole proprietorship owned by its’ former chief operating officer and stockholder. On April 28, 2014, the Company registered with the Secretary of State of California as Cabinet Grow, Inc. (CGCA), and all of the business, assets and liabilities of Hydro were assigned to CGCA. On May 14, 2014, the Company filed Articles of Incorporation with the Nevada Secretary of State. On May 15, 2014, CGCA merged with CGNV, with CGNV being the surviving entity.

On November 24, 2015, the Company announced as a result of a working capital deficiency the Company has significantly reduced its’ cabinet making operations, including the layoff of all non-executive employees and has stopped taking new orders from customers.

On June 13, 2017, the Company formed a wholly owned subsidiary, Data420 and filed Articles of Incorporation with the Nevada Secretary of State. Also, on June 13, 2017, the Company formed a wholly owned subsidiary, 420 Data Sciences L.L.C. (“420 Data”) and filed Articles of Organization Limited-Liability Company, with the Nevada Secretary of State. On June 16, 2017, 420 Data filed an Amendment to the Articles of Organization changing the name of 420 Data to Data420 Sciences, LLC (“Data420 Sciences”). On November 8, 2017, the Company filed Articles of Merger (the “Merger”) by and between the Company and its wholly owned subsidiary, Data420, with the Nevada Secretary of State. Pursuant to the Merger, Cabinet Grow, Inc. was the surviving entity and effectuated a name change in the State of Nevada to Data420.

On February 2, 2018, the Company formed and filed Blockchain with the Nevada Secretary of State, as a wholly owned subsidiary of the Company. On February 5, 2018, the Company filed Articles of Merger (the “Merger”) by and between the Company and Blockchain, with the Nevada Secretary of State, and Amended and Restated Articles of Incorporation were filed pursuant to the Merger to reflect the Company was the surviving entity and as part of the Merger, the Company effectuated a name change to Blockchain Solutions, Inc. The name change was effective March 6, 2018.

(b) Financial Information about Segments

The Company currently operates in one reporting segment

(c) Narrative Description of Business

Through December 2015, we assembled and sold cabinet-based horticultural systems. The Company purchased cabinets, as well as lights, filters and fans, from third party suppliers. Upon receipt of an order from a customer, the Company assembled the parts into a “finished horticulture” cabinet for sale. The design and production of our hydroponic and soil grow cabinets make the process of growing in a self-contained cabinet automated and simplified.

On November 24, 2015, the Company announced as a result of a working capital deficiency that the Company has significantly reduced operations, including the layoff of all non-executive employees and has stopped taking new orders from customers.

On December 31, 2015, the Company agreed to purchase a 100% membership interest (the “Membership Interest”) in Quasar, LLC, a Utah limited liability company (“Quasar”), from Tonaquint, Inc., a Utah corporation (“Seller”). The Company has agreed to purchase (the “Purchase”) the Membership Interest from the Seller for a purchase price of $180,000.00 pursuant to the terms of a Membership Interest Purchase Agreement (the “Purchase Agreement”).

Also on December 31, 2015, Quasar entered into a one year lease agreement, whereby the base rent is $1,000 and the tenant is responsible for all operating costs and real estate taxes of the leased property.

Blockchain is a company focused on developing blockchain technologies to deliver advanced solutions to industry-specific problems. The company has identified opportunities in markets including cannabis, insurance, and healthcare. In the cannabis industry, the Company is developing a blockchain solution to help government entities collect taxes through smart contracts. Across all market opportunities, the Company seeks to deliver security, efficiency, and integration through blockchain technology.

In conjunction with the Purchase, other than the sale of 3 cabinets in January 2016, the Company ceased its prior business as a manufacturer and distributor of cabinet-based horticultural systems, and the Company’s current business activity is in the land leasing business.

Employees

As of December 31, 2017, we had no employees.

ITEM 1A. RISK FACTORS

Not required for a smaller reporting company.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not required for a smaller reporting company.

ITEM 2. PROPERTIES.

During the year ended December 31, 2017, the Company was charged a pro-rata rate for the cost and use of an apartment, utilized by an officer of Data420 Sciences, our wholly owned subsidiary. Net rent expense was $2,155 and $36,034 for years ended December 31, 2017 and 2016, respectively, and the 2016 amount is included in loss from discontinued operations.

For public reporting purposes and corporate correspondences regarding such, the Company utilizes the office address of a company controlled by our CEO in West Palm Beach, FL at no charge.

ITEM 3. LEGAL PROCEEDINGS.

We are not a party to any material litigation, nor, to the knowledge of management, is any litigation threatened against us that may materially affect us.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

The following table sets forth for the periods indicated the high and low bid quotations for our common stock. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown, or commission and may not represent actual transactions. The prices below have been adjusted for the 1 for 250 reverse split that was effective March 9, 2017.

Period	High		Low
Fiscal Year 2017
First Quarter (January 1, 2017 – March 31, 2017)	$	417.5	$	1.00
Second Quarter (April 1, 2017 – June 30, 2017)	$	4.00	$	1.61
Third Quarter (July 1, 2017 – September 30, 2017)	$	1.25	$	0.61
Fourth Quarter (October 1, 2017 – December 31,2017)	$	4.00	$	1.25

Period		High		Low
Fiscal Year 2016
First Quarter (January 1, 2016 – March 31, 2016)	$	4.975	$	2.50
Second Quarter (April 1, 2016 – June 30, 2016)	$	4.50	$	2.25
Third Quarter (July 1, 2016 – September 30, 2016)	$	4.25	$	1.25
Fourth Quarter (October 1, 2016 – December 31,2016)	$	12.25	$	1.50

(b) Holders.

The number of record holders of our common stock as of July 31, 2019 is 59.

The Company did not declare any cash dividends for the years ended December 31, 2017 and 2016. Our Board of Directors does not intend to distribute any cash dividends in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the Board of Directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the Board of Directors considers relevant. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend.

(d) Securities authorized for issuance under equity compensation plans

None.

Recent Sales of Unregistered Equity Securities

On July 27, 2016, Dove converted $920,306 of principal and accrued and unpaid interest under the Company Note into 1,051,779 shares of common stock.

All such shares were issued in reliance on the exemption found in Section 4(a)(2) of the Securities Act of 1933, as amended. Each share recipient was provided with access to information which would be required to be included in a registration statement and such issuances did not involve a public offering.

ITEM 6. SELECTED FINANCIAL DATA.

Not applicable to a smaller reporting company.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OR PLAN OF OPERATION.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and notes thereto for the years ended December 31, 2017 and 2016.

The independent auditor’s report on our financial statements for the years ended December 31, 2017 and 2016 includes a “going concern” explanatory paragraph that describes substantial doubt about our ability to continue as a going concern. Management’s plans in regard to the factors prompting the explanatory paragraph are discussed below and also in Note 11 to the audited consolidated financial statements.

While our financial statements are presented on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time, our auditor has raised substantial doubt about our ability to continue as a going concern.

Through December 2015, we assembled and sold cabinet-based horticultural systems.

On November 24, 2015, the Company announced as a result of a working capital deficiency the Company has significantly reduced operations, including the layoff of all non-executive employees and has stopped taking new orders from customers.

In conjunction with the Purchase, other than the sale of 3 cabinets in January 2016, the Company ceased its prior business as a manufacturer and distributor of cabinet-based horticultural systems and began operations in the land leasing business.

Results of Operations

For the year ended December 31, 2017 compared to December 31, 2016

Operating Expenses

Operating expenses for the year ended December 31, 2017 were $144,885 compared to $85,421 for the year ended December 31, 2016. The expenses were comprised of the following:

	Year ended December 31,
Description	2017		2016
Professional fees	$	88,357	$	82,153
Depreciation		173		1,034
Loss on fixed asset disposal		1,242		—
Gain on debt payments		—		(16,184	)
Other general and administrative		55,113		18,418
Total	$	144,885	$	85,421

Other Expenses

Other expense for the year ended December 31, 2017, were $1,945,015 compared to $2,299,182 for the year ended December 31, 2016. Amounts included in other expenses for the 2017 period was an expense of $1,463,052 for the change in the fair value of derivative liabilities, compared to $604,575 for the 2016 period. Other income - related party for the years ended December 31, 2017, and 2016, were $12,000, pursuant to a lease, whereby effective December 31, 2015, Quasar LLC, the Company’s wholly owned subsidiary, entered into a one- year lease agreement with a related party tenant. Pursuant to the lease the tenant will pay $1,000 per month to Quasar. Interest expense, other for the year ended December 31, 2017 and 2016 were as follows:

	Year ended December 31,
Description	2017		2016
Amortization of discount on convertible notes	$	121,286	$	987,245
Interest, convertible notes		348,349		359,637
Debt default penalty		—		344,654
Amortization of deferred financing costs		13,626		3,288
Other		10,720		11,783
Total	$	493,963	$	1,706,607

Net Loss

Net loss for the year ended December 31, 2017, was $2,089,800 compared to $2,416,622 for the year ended December 31, 2016, primarily as a result of derivative expenses of $1,463,052 and $604,575, for the years ended December 31, 2017 and 2016, respectively. Interest expense for the years ended December 31, 2017, and 2016, of $493,963 and $1,706,607, respectively, contributed to the loss, as well as operating losses of $132,885 and $73,421 for the years ended December 31, 2017, and 2016, respectively. Included in the net loss for the year ended December 31, 2016 is the loss of discontinued operations of $32,020.

Capital Resources and Liquidity

Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. As of December 31, 2017, we had $13,582 in cash or cash equivalents on hand. At December 31, 2017, we had current liabilities of $4,744,184 compared to current assets of $14,300 which resulted in a negative working capital position of $4,729,884. The current liabilities are comprised principally of accounts payable, accrued expenses, convertible note payable (related party), derivative liabilities and note payable to a stockholder.

Operating Activities

Cash flows provided from continuing operations was $21,592 for the year ending December 31, 2017 compared to cash provided of $250,859 for the year ended December 31, 2016. For the year ended December 31, 2017, adjustments to the net loss including non-cash activity of; $135,084 of amortization of discounts and fees on convertible notes, $1,463,052 of derivative liability expense, as well as an increase in accounts payable and accrued expenses of $459,433.

For the year ended December 31, 2016, non-cash activity of; $1,500,502 of amortization of discounts and fees on convertible notes, $604,575 of derivative liability expense and $32,020 of a net loss on discontinued operations were major factors to adjust net loss to net cash used in operating activities.

Investing Activities

There was no cash flow activity from continuing operations related to investing activities for the years ended December 31, 2017, and 2016.

Financing Activities

Net cash used in financing was $10,000 for the year ended December 31, 2017. There was no cash provided by or used in financing activities from continuing operations for the year ended December 31, 2016.

Capital Resources and Recent Financings

The Company’s cash position is not sufficient to support its operations. The Company relies predominantly on CVP for paying all of the Company’s expenses. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenues and in its ability to raise additional funds.

On June 3, 2014, the Board authorized the Company to enter into a Securities Purchase Agreement (“SPA”) with Chicago Venture Partners, L.P. (“CVP”). Pursuant to the SPA, the Company agreed to issue to CVP a Secured Convertible Promissory Note in the principal amount of $1,657,500 (the “Note”).

On April 29, 2016, CVP and Tonaquint sold and transferred all of their ownership and rights under the CVP SPA and Note and the Tonaquint SPA and related Purchase documents to The Dove Foundation (“Dove”). On May 7, 2018, the Company consented to an Assignment and Assumption Agreement, whereby Dove assigned all of its rights and interests in and to the Securities and the Tonaquint Note to CVP. The Securities as defined in the Securities Purchase Agreement by and between Dove and CVP include the June 6, 2014 CVP Note and the CVP Warrant

On June 6, 2014, the Company executed the SPA with CVP, for the sale of the Company Note in the principal amount of up to $1,657,500 (which included CVP’s legal expenses in the amount of $7,500 and a $150,000 OID) for $1,500,000, consisting of $500,000 paid in cash on June 11, 2014 (the “Closing Date”), two $250,000 secured promissory notes and two $250,000 promissory notes (the “Investor Notes”), aggregating $1,000,000, bearing interest at the rate of 10% per annum. The Investor Notes are due 30 months from the Closing Date and may be prepaid, without penalty.

As security for the Note, the Company’s CEO and former COO each pledged to CVP their 50 shares of Class A Preferred Stock. On August 5, 2016, Dove acquired all of the Class A Preferred Stock.

Pursuant to the terms of the Note, the Company was required to deliver the Installment Amount (as defined in the Note) on or before each Installment Date (as defined in the Note) until the Note was repaid. The Company failed to deliver the Installment Amount in June 2015, July 2015 and August 2015 (each, a “Breach” and collectively, the “Breaches”). Each such Breach would constitute a separate event of default pursuant to the terms of the Note if so declared by the Lender.

On September 10, 2015, the Company entered into a forbearance and standstill agreement (the “Forbearance and Standstill Agreement”) with CVP and Matt Lee and Sam May, pursuant to which CVP agreed to refrain and forbear temporarily from exercising and enforcing remedies under the Note.

On May 17, 2016, the Company received notification that Dove has waived the 9.99% ownership limitation contained in the CVP Note, thereby creating a potential change in control of the Company.

On July 27, 2016, the Company received a Notice of Breach of Secured Convertible Promissory Note from Dove regarding the December 2015 and January 2016 installment payments. Pursuant to the terms and conditions of the default, the lender elected to multiply the outstanding balance by 125%, or $270,056 for the December default (included in the December 31, 2015, balances) and $344,654 for the January default. The Lender also increased the interest rate to 22% per annum pursuant to the default. Also, on July 27, 2016, Dove sent the Company a conversion notice to issue 1,051,778 shares of common stock in exchange for the cancellation of $920,306 of interest and principal due. Immediately after the conversion Dove owned approximately 87.6% of the common stock of the Company.

The Note may be converted at the option of the holder, on the date that is six months from the Trading Date (defined in the Purchase Agreement as the date on which the Common Stock is first trading on an Eligible Market, but in any event the Company shall cause its Common Stock to be trading on an Eligible Market within nine months of the Closing Date of June 11, 2014) or at any time thereafter at a conversion price of $49.40. The conversion price is equal to $6,500,000 divided by 132,000 (the amount of fully diluted shares of Common Stock of the Company on the date the Company filed its’ Registration Statement). In the event the Company elects to prepay all or any portion of the Company Note, the Company is required to pay to CVP an amount in cash equal to 125% multiplied by the sum of all principal, interest and any other amounts owing. On July 16, 2015, CVP converted $50,000 of accrued and unpaid interest under the Company Note into 1,015 shares of common stock.

We presently have 300,000,000 shares of common stock authorized, of which 1,200,043 shares were issued and outstanding as of December 31, 2017 and 2016.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

BASIS OF PRESENTATION

The accompanying financial statements are prepared in accordance with Generally Accepted Accounting Principles in the United States of America.

EMERGING GROWTH COMPANY

We qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.

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 amount of revenues and expenses during the reported period. Actual results could differ from those estimates.

DISCONTINUED OPERATIONS

On December 31, 2015, the Company’s Board of Directors approved the purchase of certain real property as described in Note 1. As a result of the purchase, the Company’s prior business operations have been (re)classified as discontinued operations on a retrospective basis for all periods presented herein.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents.

LAND, PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, and depreciation is provided by use of straight-line methods over the estimated useful lives of the assets. The estimated useful lives of property and equipment are as follows:

Manufacturing equipment	10 years
Office equipment and furniture	7 years
Computer hardware and software	3 years

The Company's property and equipment consisted of the following at December 31, 2017 and 2016:

	2017			2016
Furniture and Equipment	$	—		$	3,318
Manufacturing equipment		826			826
Software		2,912			2,912
Land		180,000			180,000
Accumulated depreciation		(3,504	)		(5,407	)
Balance	$	180,234		$	181,649

Depreciation expense for the year ended December 31, 2017, was $173 and was $1,034 for the year ended December 31, 2016.

REVENUE RECOGNITION

The Company recognizes revenue in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, “Revenue Recognition.” ASC 605 requires that the following four basic criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably assured. The Company recognizes revenue from leased property as other income during the month the tenant is responsible for payment. Revenues from the sale of cabinets are included in net loss from discontinued operations for all periods presented herein.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value measurements are determined under a three-level hierarchy for fair value measurements that prioritizes the inputs to valuation techniques used to measure fair value, distinguishing between market participant assumptions developed based on market data obtained from sources independent of the reporting entity (“observable inputs”) and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (“unobservable inputs”).

Fair value is the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company primarily uses prices and other relevant information generated by market transactions involving identical or comparable assets (“market approach”). The Company also considers the impact of a significant decrease in volume and level of activity for an asset or liability when compared with normal activity to identify transactions that are not orderly.

The highest priority is given to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Financial instruments are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The three hierarchy levels are defined as follows:

Level 1 – Quoted prices in active markets that is unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly;

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

Credit risk adjustments are applied to reflect the Company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the Company’s own credit risk as observed in the credit default swap market.

The Company's financial instruments consist primarily of cash, accounts receivable, accounts payable and accrued expenses, note payable and convertible debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The Company’s derivative liability (conversion option and warrant derivative) is valued using the level 3 inputs. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market exchange or from future earnings or cash flows.

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2017 and December 31, 2016 for each fair value hierarchy level:

December 31, 2017	Derivative Liability		Total
Level I	$	—	$	—
Level II	$	—	$	—
Level III	$	2,538,644	$	2,538,644
December 31, 2016
Level I	$	—	$	—
Level II	$	—	$	—
Level III	$	954,884	$	954,884

INCOME TAXES

Prior to May 2014, the Company was organized as a sole proprietorship and was not subject to income taxes. Rather, the Company’s sole stockholder was subject to income taxes on the Company’s taxable activity. In May 2014, the Company became subject to income taxes and will be subject to Federal and State income taxes as a corporation.

The Company accounts for income taxes in accordance with ASC 740-10, “Income Taxes.” Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.

ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed, nor paid, any interest or penalties.

Uncertain tax positions are measured and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized.

EARNINGS (LOSS) PER SHARE

The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. For the periods ending ended December 31, 2017 and 2016, 1,776,794 and 445,603 shares of common stock, respectively, underlying convertible debt and warrants have been excluded from the computation diluted earnings per share because they are antidilutive.

RECENT ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements issued by the FASB and the SEC did not have, or are not believed by management to have, a material impact on the Company's present or future consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting companies.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to Financial Statements and Financial Statement Schedules appearing on pages F-1 to F-17 of this annual report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

A review and evaluation was performed by the Company’s management, including the Company’s Chief Executive Officer who is also the Chief Financial Officer (the “CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this annual report. Based on that review and evaluation, the CEO/CFO has concluded that as of December 31, 2017, the Company’s disclosure controls and procedures, were not effective at ensuring that the material information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported as required in the application of SEC rules and forms.

Management’s Report on Internal Controls over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a set of processes designed by, or under the supervision of, a company’s principal executive and principal financial officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:

●	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and disposition of our assets;
●	Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
●	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be noted that any system of internal control, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our Principal Executive Officer and CFO have evaluated the effectiveness of our internal control over financial reporting as described in Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report based upon criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a result of this evaluation, we concluded that our internal control over financial reporting was not effective as of December 31, 2017 as described below.

We assessed the effectiveness of the Company’s internal control over financial reporting as of evaluation date and identified the following material weaknesses:

Insufficient Resources: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.

Inadequate Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures.

Lack of Audit Committee: We do not have a functioning audit committee, resulting in lack of independent oversight in the establishment and monitoring of required internal controls and procedures.

We have discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.

This annual report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management’s report in this annual report on Form 10-K.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our directors are elected by the shareholders to a term of one year and serve until their successors are elected and qualified. Our officers are appointed by the Board of Directors to a term of one year and serve until their successors are duly appointed and qualified, or until the officer is removed from office. The Board of Directors has no nominating, audit or compensation committees.

The names, ages and positions of our officers and directors are set forth below:

Name		Age		Positions Held
Barry Hollander		62		Chief Executive Officer, Chief Financial Officer and Sole Director

Barry Hollander, Chief Executive Officer, Chief Financial Officer and Director. On January 12, 2016, Mr. Barry Hollander was appointed Chief Executive Officer and Chief Financial Officer of the Company and was also appointed to serve as a member of the Board of Directors. Mr. Hollander was previously the Chief Financial Officer from May 14, 2014, until November 19, 2015. Mr. Hollander has nearly 30 years of business experience including 15 years as Chief Financial Officer of private and public companies. In 2010, Mr. Hollander founded Venture Equity, LLC, a Florida limited liability corporation that offers financial and business consulting services. Mr. Hollander began his career in 1981 in the accounting department of Macgregor Sporting Goods, and became part of the executive management team. Over his career, Mr. Hollander contributed to acquisitions, mergers assisting company’s preparing to go public and public reporting responsibilities, thereafter. Mr. Hollander has a BS degree from Fairleigh Dickinson University.

Corporate Governance

Our directors have not established any committees, including an Audit Committee, a Compensation Committee or a Nominating Committee, or any committee performing a similar function. The functions of those committees are being undertaken by our officers and directors. Because we do not have any independent directors, our officers and directors believe that the establishment of committees of the Board would not provide any benefits to our company and could be considered more form than substance.

We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our officers and directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our officers and directors have not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors.

Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all current members of our Board will participate in the consideration of director nominees.

As with most small, early stage companies until such time our company further develops our business, achieves a stronger revenue base and has sufficient working capital to purchase directors and officers insurance, we do not have any immediate prospects to attract independent directors. When we are able to expand our Board of Directors to include one or more independent directors, we intend to establish an Audit Committee of our Board of Directors. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, and to the best of our knowledge, all executive officers, directors and persons holding greater than 10% of our issued and outstanding stock have filed the required reports in a timely manner during 2015.

ITEM 11. EXECUTIVE COMPENSATION

The following table summarizes all compensation recorded by us for the years ended December 31, 2017 and December 31, 2016 for the officers listed.

SUMMARY COMPENSATION TABLE

Name & Principal Position	Year		Salary		Stock Awards		Option Awards		All Other Compensation		Total
Barry Hollander		2017	$	48,000	$	—	$	—	$	—	$	48,000
Chief Executive Officer		2016	$	36,500	$	—	$	—	$	—	$	36,500

There are no compensatory plans or arrangements, including payments to be received from the Company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, or our subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company.

Employment Agreements with Executive Officers

There are no current employment agreements between the Company and our executive officer or understandings regarding future compensation.

Outstanding Equity Awards at Fiscal Year-End

None.

Compensation of Directors

Our current directors do not receive compensation for their service on the Board of Directors. The Board of Directors has the authority to fix the compensation of directors. We do not intend to pay employee directors a separate fee for their services.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding beneficial ownership of our common stock and preferred stock as of July 31, 2019, by (i) each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, (ii) each director and each of our Named Executive Officers and (iii) all executive officers and directors as a group. As of July 31, 2019, there were 1,200,043 shares of our common stock outstanding and 100 shares of our Class A Preferred Stock outstanding.

The number of shares of common stock beneficially owned by each person is determined under the rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which such person has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days after the date hereof, through the exercise of any stock option, warrant or other right. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.

	Common Stock					Class A Preferred Stock
Name and Address of Beneficial Owner (1)	Amount and Nature of Beneficial Ownership		Percent of Class			Amount and Nature of Beneficial Ownership		Percent of Class
Barry Hollander 319 Clematis Street, Suite 714West Palm Beach, FL 33401		1,858		0.1	%		-0-		-0-

The Dove Foundation 5812 South Homan Avenue Chicago, IL 60629		1,051,779		87.7	%		100		100	%

All Officers and Directors as a group (1 person)		1,858		0.1	%		-0-		-0-

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Related Party Transactions

On May 15, 2014, the Company filed Articles of Merger (the “Merger”) with the Secretary of State of Nevada whereby Cabinet Grow, Inc. (a California Corporation) merged with and into the Company. Pursuant to the Merger, the Company issued in the aggregate 1200,000 shares of common stock (60,000 shares each to Mr. May and Mr. Lee, the two shareholders of the California Corporation).

During the year ended December 31, 2015, The Company’s former COO loaned the Company various amounts for Company expenses. Included in the advances and repayments is the activity from several credit cards that are in the name of the stockholder but were used for Company purposes (see note 6). The Company recorded interest expense of $984 for the years ended December 31, 2017 and 2016, respectively. As of December 31, 2017, the former COO was owed accrued interest of $5,595 and is included in liabilities of discontinued operations on the December 31, 2017, balance sheet.

As of December 31, 2017, the Company owed $14,424, $22,766 and $16,350 to the former CEO, former COO and former CFO, respectively, for accrued and unpaid fees. Of this amount, $37,190 is included in liabilities of discontinued operations and $16,350 is included in accounts payable and accrued liabilities, stockholders, on the December 31, 2017, balance sheet.

Management Fees

For the years ended December 31, 2017 and 2016, the Company paid its’ sole officer $48,000 and $36,500, respectively.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table shows the fees that were billed for the audit and other services for the fiscal year ended December 31, 2017, provided by Sadler & Gibbs and for the year ended December 31, 2016 to D. Brooks and Associates CPA’s P.A., MaloneBailey, LLP and KLJ & Associates, LLP.

	2017		2016

Audit Fees	$	17,500	$	36,560
Audit-Related Fees		—		—
Tax Fees		—		—
All Other Fees		—		—
Total	$	17,500	$	36,560

Audit Fees — This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.

Audit-Related Fees — This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.”

Tax Fees — This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice.

All Other Fees — This category consists of fees for other miscellaneous items.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)	1.	Financial Statements

		The consolidated financial statements and Report of Independent Registered Public Accounting Firm are included on pages F-1 through F-17.

	2.	Financial Statement Schedules

		All schedules for which provisions made in the applicable accounting regulations of the SEC are either not required under the related instructions, are not applicable (and therefore have been omitted), or the required disclosures are contained in the financial statements included herein.

	3.	Exhibits (including those incorporated by reference).

Exhibit Number		Description of Exhibit
3.1		Articles of Incorporation filed with the California Secretary of State on April 28, 2014. (Incorporated herein by reference to Exhibit 3.1 as part of the Company’s Registration Statement on Form S-1 as filed with the SEC on July 31, 2014).
3.2		Articles of Incorporation filed with the California Secretary of State on April 28, 2014. (Incorporated herein by reference to Exhibit 3.2 as part of the Company’s Registration Statement on Form S-1 as filed with the SEC on July 31, 2014).
3.3		Bylaws of Cabinet Grow, Inc. (California Corporation). (Incorporated herein by reference to Exhibit 3.3 as part of the Company’s Registration Statement on Form S-1 as filed with the SEC on July 31, 2014).
3.4		Articles of Merger and Agreement and Plan of Merger filed with the Nevada Secretary of State on May 16, 2014. (Incorporated herein by reference to Exhibit 3.4 as part of the Company’s Registration Statement on Form S-1 as filed with the SEC on July 31, 2014).
3.5		Bylaws of Cabinet Grow, Inc. (Nevada corporation). (Incorporated herein by reference to Exhibit 3.5 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
3.6		Amended and Restated Articles of Incorporation as filed with the Nevada Secretary of State on May 2, 2016. (Incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K as filed with the SEC on May 6, 2016).
3.7		Amended and Restated Articles of Incorporation as filed with the Nevada Secretary of State on January 17, 2017. (Incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K as filed with the SEC on March 8, 2017).
3.8		Articles of Merger filed with the Nevada Secretary of State dated November 9, 2017 (Incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K as filed with the SEC on March 6, 2018).
3.9		Articles of Merger filed with the Nevada Secretary of State dated February 5, 2018 (Incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K as filed with the SEC on March 6, 2018).
4.1		Certificate of Designation Class A Preferred Stock. (Incorporated herein by reference to Exhibit 4.1 as part of the Company’s Registration Statement on Form S-1 as filed with the SEC on July 31, 2014).
4.2		Class A Preferred Stock Purchase Agreement between Cabinet Grow, Inc. and Sam May dated June 6, 2014. (Incorporated herein by reference to Exhibit 4.2 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.3		Class A Preferred Stock Purchase Agreement between Cabinet Grow, Inc. and Matt Lee dated June 6, 2014. (Incorporated herein by reference to Exhibit 4.3 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.4		$22,000 Convertible Promissory Note with Gary Gilman. (Incorporated herein by reference to Exhibit 4.4 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.41		$22,000 Convertible Promissory Note with Sean Cook. (Incorporated herein by reference to Exhibit 4.41 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.42		$22,000 Convertible Promissory Note with Maureen Lee. (Incorporated herein by reference to Exhibit 4.42 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.5		Security Purchase Agreement (“SPA”) Chicago between Cabinet Grow, Inc. and Chicago Venture Partners, L.P. dated June 6, 2014. (Includes Exhibit N). (Incorporated herein by reference to Exhibit 4.5 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.6		Secured Convertible Promissory Note between Cabinet Grow, Inc. and Chicago Venture Partners, L.P. dated June 6, 2014. (Incorporated herein by reference to Exhibit 4.6 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.7		Pledge Agreement between Sam May and Chicago Venture Partners, L.P. dated June 6, 2014. (Incorporated herein by reference to Exhibit 4.7 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).

4.8		Pledge Agreement between Matt Lee and Chicago Venture Partners, L.P. dated June 6, 2014. (Incorporated herein by reference to Exhibit 4.8 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.9		Warrant to Purchase Common Stock between Cabinet Grow, Inc. and Chicago Venture Partners, L.P. dated June 6, 2014. (Incorporated herein by reference to Exhibit 4.9 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.10		Amended form of Subscription Agreement. (Incorporated herein by reference to Exhibit 4.10 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.11		Membership Interest Pledge Agreement (Buyer Pledge Agreement). (Incorporated herein by reference to Exhibit 4.11 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.12		Allocation of Purchase Price. (Incorporated herein by reference to Exhibit 4.12 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.13		Secured Buyer Note #2. (Incorporated herein by reference to Exhibit 4.13 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.14		Secured Buyer Note #4. (Incorporated herein by reference to Exhibit 4.14 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.15		Security Agreement. (Incorporated herein by reference to Exhibit 4.15 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.16		Irrevocable Transfer Agent Instructions. (Incorporated herein by reference to Exhibit 4.16 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.17		Secretary’s Certificate. (Incorporated herein by reference to Exhibit 4.17 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
4.18		Share Issuance Resolution. (Incorporated herein by reference to Exhibit 4.18 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
10.1		Agreement to Assign Assets between Cabinet Grow, Inc. and Matt Lee dated April 30, 2014. (Incorporated herein by reference to Exhibit 10.1 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
10.2		Merger Agreement. (Incorporated herein by reference to Exhibit 10.2 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
10.3		Promissory Note between Cabinet Grow, Inc. and Matt Lee dated April 29, 2014. (Incorporated herein by reference to Exhibit 10.3 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
10.4		Secured Buyer Note #1. (Incorporated herein by reference to Exhibit 10.4 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
10.5		Secured Buyer Note #3. (Incorporated herein by reference to Exhibit 10.5 as part of the Company’s Registration Statement on Form S-1 Amendment No. 1 as filed with the SEC on September 26, 2014).
10.6⁺		Cabinet Grow, Inc. 2015 Equity Compensation Plan. (Incorporated herein by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q as filed with the SEC on May 15, 2015).
10.7⁺		Form of Stock Option Agreement under the Cabinet Grow, Inc. 2015 Equity Compensation Plan. (Incorporated herein by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q as filed with the SEC on May 15, 2015).
10.8⁺		Form of Stock Award Agreement for Restricted Stock under the Cabinet Grow, Inc. 2015 Equity Compensation Plan. (Incorporated herein by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q as filed with the SEC on May 15, 2015).
10.9		Forbearance and Standstill Agreement dated September 10, 2015 by and among Chicago Venture Partners, L.P., Cabinet Grow, Inc., Matt Lee and Sam May (Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on September 24, 2015).
10.10		Membership Interest Purchase Agreement, dated as of December 31, 2015, between Cabinet Grow, Inc. and Tonaquint, Inc. (Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on January 6, 2016).
10.11		Secured Promissory Note issued by Cabinet Grow, Inc. to Tonaquint, Inc. (Incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the SEC on January 6, 2016).

10.12		Membership Interest Pledge Agreement, dated as of December 31, 2015, between Cabinet Grow, Inc. and Tonaquint, Inc. (Incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K as filed with the SEC on January 6, 2016).
10.13		Deed of Trust, Security Agreement and Financing Statement, dated as of December 31, 2015, between Cabinet Grow, Inc. and Tonaquint, Inc. (Incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K as filed with the SEC on January 6, 2016).
31.1*		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer and Chief Financial Officer
32.1*		Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
101.INS**		XBRL Instance
101.SCH**		XBRL Taxonomy Extension Schema
101.CAL**		XBRL Taxonomy Extension Calculation Linkbase
101.DEF**		XBRL Taxonomy Extension Definition Linkbase
101.LAB**		XBRL Taxonomy Extension Labels Linkbase
101.PRE**		XBRL Taxonomy Extension Presentation Linkbase

* Filed herewith.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of this annual report on Form 10-K for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

⁺ Management contract or compensatory plan or arrangement.

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Blockchain Solutions, Inc.

By:	/s/ Barry Hollander
	Barry Hollander
	Chief Executive Officer

Date:	August 14, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Barry Hollander	Chief Executive Officer, Chief Financial Officer and Director (principal executive officer and principal financial officer)	August 14, 2019

BLOCKCHAIN SOLUTIONS, INC.

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firms		F-2
Consolidated Balance Sheets as of December 31, 2017 and 2016		F-3
Consolidated Statements of Operations for the years ended December 31, 2017 and 2016		F-4
Consolidated Statement of Changes in Stockholders Deficit for the years ended December 31, 2017 and 2016		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2017 and 2016		F-6
Notes to Consolidated Financial Statements		F-7 – F-17

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Blockchain Solutions, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Blockchain Solutions, Inc. (the Company) as of December 31, 2017 and 2016, and the related statements of operation, stockholders’ deficit, and cash flows for each of the years in the two period ended December 31, 2017, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the two period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 9 to the financial statements, at as of December 31, 2017, the Company had an accumulated deficit of $9,692,309 and as of December 31, 2017, a working capital deficit of $4,729,884. These factors, among others, raise substantial doubt regarding the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 9 to the accompanying financial statements. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Prager Metis CPA’s LLC

We have served as the Company’s auditor since 2019.

Hackensack, New Jersey August 13, 2019

F-2

BLOCKCHAIN SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,
	2017			2016

ASSETS

Current Assets:
Cash and cash equivalents	$	13,582		$	1,582
Prepaid assets and other		718			4,000
Total current assets		14,300			5,583

Land, property and equipment, net of accumulated depreciation of $3,504 (2017) and $5,377 (2016), respectively		180,234			181,649
Total assets	$	194,534		$	187,232

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
Accounts payable and accrued expenses	$	516,997		$	144,425
Accounts payable and accrued expenses, stockholders		16,351			20,960
Note payable		170,000			180,000
Convertible notes payable, related party		1,379,245			1,229,360
Derivative liability		2,538,644			954,884
Liabilities of discontinued operations		122,947			117,352
Total current liabilities		4,744,184			2,646,981

Stockholders' Deficit:
Common stock, $0.001 par value; 300,000,000 shares authorized; 1,200,043 shares issued and outstanding		1,200			1,200
Preferred stock, $0.001 par value; 10,000,000 shares authorized Series A preferred stock, $0.001 par value; 100 shares issued and outstanding		—			—
Additional paid-in capital		5,141,459			5,141,459
Accumulated deficit		(9,692,309	)		(7,602,409	)

Total stockholders' deficit		(4,549,650	)		(2,459,750	)

	$	194,534		$	187,232

See notes to consolidated financial statements.

F-3

BLOCKCHAIN SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2017			2016

Operating Expenses:
Professional fees	$	88,357		$	82,153
General and administrative		55,113			18,418
Depreciation and amortization		173			1,034
Loss on fixed asset disposal		1,242			—
Gain on debt settlements		—			(16,184	)

Loss from operations		144,885			85,421

Other income (expenses):
Rental income - related party		12,000			12,000
Loss on changes in fair value of derivative liability		(1,463,052	)		(604,575	)
Interest expense		(493,963	)		(1,706,607	)
Total other expense, net		(1,945,015	)		(2,299,182	)

Net loss from continuing operations		(2,089,900	)		(2,384,602	)
Discontinued operations:
Loss from discontinued operations, net of income taxes		—			(32,020	)
Net loss	$	(2,089,900	)	$	(2,416,622	)

Basic and diluted net loss per share:
Continuing operations	$	(1.74	)	$	(4.42	)
Discontinued operations	$	—		$	(0.05	)

	$	(1.74	)	$	(4.47	)
Weighted average number of common shares outstanding
Basic and diluted		1,200,043			600,630

See notes to consolidated financial statements.

F-4

BLOCKCHAIN SOLUTIONS, INC

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

YEARS ENDED DECEMBER 31, 2017 and 2016

									Additional					Total
	Common stock				Preferred Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balances January 1, 2016		148,221		148		100		—		2,486,880		(5,185,787	)		(2,698,759	)

Common stock issued for settlement of convertible note and accrued interest		1,051,779		1,052		—		—		2,654,579		—			2,655,631

Rounding up of shares from reverse split		43		—		—		—		—		—			—

Net loss		—		—		—		—		—		(2,416,622	)		(2,416,622	)
Balances December 31, 2016		1,200,043		1,200		100		—		5,141,459		(7,602,409	)		(2,459,750	)

Net loss		—		—		—		—		—		(2,089,900	)		(2,089,900	)
Balances December 31, 2017		1,200,043	$	1,200		100	$	0	$	5,141,459	$	(9,692,309	)	$	(4,549,650	)


See notes to consolidated financial statements.

F-5

BLOCKCHAIN SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,089,900	)	$	(2,416,622	)
Net loss from discontinued operation		—			32,020
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss on disposal of fixed assets		1,242			—
Depreciation		173			1,034
Non-cash interest		134,911			1,497,214
Change in fair value of derivative liabilities		1,463,052			604,575
Expenses paid by related party		49,399			—
Amortization of deferred financing fees		—			3,288
Changes in operating assets and liabilities:
Decrease in :
Rent receivable		—			4,000
Prepaid assets and other		3,282			—
Increase (decrease) in :
Accounts payable and accrued expenses		459,433			529,867
Accounts payable and accrued expenses, stockholder		—			(4,515	)
Net cash provided by operating activities- continuing operations		21,592			250,859
Net cash provided by (used in) operating activities- discontinued operations		408			(214,814	)
Net cash provided by operating activities		22,000			36,045

Cash flows from investing activities:
Net cash used in investing activities- discontinued operations		—			—
Net cash used in investing activities		—			—

Cash flows from financing activities:
Repayments of notes payable		(10,000	)		—
Net cash used in financing activities- continuing operations		(10,000	)		—
Net cash used in financing activities- discontinued operations		—			(36,750	)
Net cash used in financing activities		(10,000	)		(36,750	)

Net increase (decrease) in cash and cash equivalents		12,000			(705	)
Cash and cash equivalents, beginning of year		1,582			2,287

Cash and cash equivalents, end of year	$	13,582		$	1,582

Supplemental disclosure of cash flow information:

Cash paid for interest	$	406		$	9,995

Cash paid for income taxes	$	—		$	—

Schedule of non-cash financing activities:
Original issue discount on convertible promissory notes	$	—		$	18,676

Accounts payable paid directly by related party lender	$	86,860		$	186,758

Debt discount for derivatives	$	121,286		$	452,865

Reclassification of derivative liability for note and interest converted	$	—		$	1,735,324

See notes to consolidated financial statements.

F-6

BLOCKCHAIN SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

NOTE 1 - ORGANIZATION

BUSINESS

On March 18, 2016, the Board of Directors (the “Board”) of the Company, acting pursuant to a Majority Consent of Stockholders, approved an amendment to the Articles of Incorporation (the “Amended and Restated Articles”) to among other matters, clarify that of the 310,000,000 shares of authorized capital stock of the Company, 300,000,000 shares are designated as common stock and 10,000,000 shares are designated as preferred stock, and to clarify that of the 10,000,000 shares of preferred stock, 100 have been designated as Class A Preferred Stock. Additionally, the Board has the authority to create and designate the rights and preferences of, additional series of preferred stock, without further stockholder approval. The Board also approved a resolution giving the Board the authority to effect between a 1:10 and a 1:250 consolidation of the outstanding common stock at any time before December 31, 2016, and to leave the authorized shares of common stock unchanged at 300,000,000. On May 2, 2016, the Company filed the Amended and Restated Articles with the Nevada Secretary of State. On December 30, 2016, the Board authorized a consolidation, whereby every 250 shares of the Company’s common stock would be consolidated into 1 share. The consolidation became effective on March 9, 2017. All share amounts for all periods presented have been retroactively adjusted to reflect the Reverse Split.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying financial statements are prepared in accordance with Generally Accepted Accounting Principles in the United States of America.

F-7

EMERGING GROWTH COMPANY

USE OF ESTIMATES

DISCONTINUED OPERATIONS

On December 31, 2015, the Company’s Board of Directors approved the purchase of certain real property as described in Note 5. As a result of the purchase, the Company’s prior business operations have been (re)classified as discontinued operations on a retrospective basis for all periods presented herein.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents.

LAND, PROPERTY AND EQUIPMENT

Manufacturing equipment	10 years
Office equipment and furniture	7 years
Computer hardware and software	3 years

The Company's property and equipment consisted of the following at December 31, 2017 and 2016:

	2017			2016
Furniture and Equipment	$	—		$	3,318
Manufacturing equipment		826			826
Software		2,912			2,912
Land		180,000			180,000
Accumulated depreciation		(3,504	)		(5,407	)
Balance	$	180,234		$	181,649

Depreciation expense for the years ended December 31, 2017 and 2016, was $173 and $1,034, respectively.

F-8

REVENUE RECOGNITION

FAIR VALUE OF FINANCIAL INSTRUMENTS

The three hierarchy levels are defined as follows:

Level 1 – Quoted prices in active markets that is unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

F-9

December 31, 2017	Derivative Liability		Total
Level I	$	—	$	—
Level II	$	—	$	—
Level III	$	2,538,644	$	2,538,644
December 31, 2016
Level I	$	—	$	—
Level II	$	—	$	—
Level III	$	954,884	$	954,884

INCOME TAXES

EARNINGS (LOSS) PER SHARE

The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. For the periods ending ended December 31, 2017 and 2016, 1,766,705 and 445,603 shares of common stock, respectively, underlying convertible debt and warrants have been excluded from the computation diluted earnings per share because they are antidilutive.

RECENT ACCOUNTING PRONOUNCEMENTS

F-10

NOTE 3 – CONVERTIBLE NOTES PAYABLE

THE DOVE FOUNDATION, RELATED PARTY

A summary of the convertible note payable balance as of December 31, 2017 and 2016, is as follows:

	2017		2016
Beginning balance	$	1,229,360	$	1,306,007
Convertible notes-newly issued		149,885		205,434
Debt default penalty		—		344,654
Payments of convertible notes		—		(36,750	)
Conversions of convertible notes		—		(589,985	)
Total	$	1,379,245	$	1,229,360

The newly issued funded amounts for the year ended December 31, 2017, were made directly to various vendors from Dove and includes $13,621 of OID. The Company has also not recorded the remaining balance of the Investor Notes issued by Dove to the Company. The OID is amortized immediately to interest expense, due to the Note being in default. The embedded conversion feature was bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of the derivative instruments for the fundings of the Note that occurred during the year ended December 31, 2017, were recorded as a liability on the consolidated balance sheet with the corresponding amount recorded as a discount to the Note. The discount was amortized immediately to interest expense, due to the Note being in default. The change in the fair value of the liability for derivative contracts are recorded in other income or expenses in the consolidated statements of operations at the end of each quarter, with the offset to the derivative liability on the balance sheet.

As security for the Note, the Company’s CEO and former COO each pledged to CVP their 50 shares of Class A Preferred Stock (see Note 8). On August 5, 2016, Dove acquired all of the Class A Preferred Stock.

The Company began trading as a public Company on July 13, 2015, and on that date the Company determined that the conversion feature of the Note represented an embedded derivative since the Note contains provisions that automatically reduce the conversion price. Accordingly, on July 13, 2015, the Note was not considered to be conventional debt under ASC 815 and the embedded conversion feature was bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of the derivative instruments for the fundings of the Note that occurred prior to July 13, 2015, were recorded as a liability on July 13, 2015, on the consolidated balance sheet with the corresponding amount recorded as a discount to the Note. The discount was amortized from the date of issuance to the maturity date of the Note. The change in the fair value of the liability for derivative contracts are recorded in other income or expenses in the consolidated statements of operations at the end of each quarter, with the offset to the derivative liability on the balance sheet.

F-11

On May 17, 2016, the Company received notification that Dove waived the 9.99% ownership limitation contained in the CVP Note.

On July 8, 2016, Dove acquired all of the Class A Preferred Stock.

On July 27, 2016, the Company received a Notice of Breach of Secured Convertible Promissory Note from Dove regarding the December 2015 and January 2016 installment payments. Pursuant to the terms and conditions of the default, the lender elected to multiply the outstanding balance by 125%, or $270,056 for the December 2015 default and $344,654 for the January 2016 default. The Lender also increased the interest rate to 22% per annum pursuant to the default. Also, on July 27, 2016, Dove sent the Company a conversion notice to issue 1,051,779 shares of common stock in exchange for the cancellation of $920,306 of interest and principal due. Immediately after the conversion Dove owned approximately 87.6% of the common stock of the Company.

The Note may be converted at the option of the holder, on the date that is six months from the Trading Date (defined in the Purchase Agreement as the date on which the Common Stock is first trading on an Eligible Market, but in any event the Company shall cause its Common Stock to be trading on an Eligible Market within nine months of the Closing Date of June 11, 2014) or at any time thereafter at a conversion price of $0.1976. The conversion price is equal to $6,500,000 divided by 33,000,000 (the amount of fully diluted shares of Common Stock of the Company on the date the Company filed its’ Registration Statement). In the event the Company elects to prepay all or any portion of the Company Note, the Company is required to pay to CVP an amount in cash equal to 125% multiplied by the sum of all principal, interest and any other amounts owing.

WARRANT

The Company also issued a five- year warrant to CVP (the “CVP Warrant”) to purchase the number of shares equal to $420,000 divided by 70% of the average of the three lowest closing bid prices in the 20 trading days immediately after becoming public (the “Market Price”). Since the Company was not public and could not determine the Market Price, based on the current discounted cash flow valuation, the Company initially estimated that CVP can purchase 24,000 shares of common stock, with an exercise price of $50 per share. As of December 31, 2017, and 2016, based on the Market Price, the Company estimated the number of shares that CVP can purchase to be 6,545.

Accounting Standard Codification “ASC” 815 – Derivatives and Hedging, which provides guidance on determining what types of instruments or embedded features in an instrument issued by a reporting entity can be considered indexed to its own stock for the purpose of evaluating the first criteria of the scope exception in the pronouncement on accounting for derivatives. These requirements can affect the accounting for warrants issued by the Company. As the detachable warrants issued with the Note do not have fixed settlement provisions because their exercise prices may be lowered if the Company issues securities at lower prices in the future, we have concluded that the warrants are not indexed to the Company’s stock and are to be treated as derivative liabilities.

The warrants were valued using the Black-Scholes option pricing model. In order to calculate the fair value of the warrants, certain assumptions were made regarding components of the model, including the closing price of the underlying common stock, risk-free interest rate, volatility, expected dividend yield, and expected life. Changes to the assumptions could cause significant adjustments to valuation. Since the Company was not public, an estimated a volatility factor utilizing an average of comparable published volatilities of peer companies was utilized. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant for treasury securities of similar maturity. The warrants associated with the Note were initially valued and recorded a derivative liability of $577,100 using the Black-Scholes valuation methodology and the Company also recorded an initial derivative liability expense of $77,100 and a discount to the Note of $500,000.

F-12

On December 31, 2017, the Company revalued the warrant at $9,745 using the Black- Scholes option pricing model and recorded a credit to derivative liability expense for the year ended December 31, 2017, and decreased the derivative liability by $2,598 on the balance sheet as of December 31, 2017.

NOTE 4 –DERIVATIVE LIABILITIES

The change in the fair value of the liability for derivative contracts are recorded in other income or expenses in the consolidated statements of operations at the end of each quarter, with the offset to the derivative liability on the balance sheet.

A summary of the derivative liability balance as of December 31, 2017 and 2016, is as follows:

	2017		2016
Beginning balance	$	954,884	$	1,648,255
Newly issued initial derivative liability		183,921		509,969
Fair value change		1,399,839		531,984
Reduction for debt payments/conversions		—		(1,735,324	)
Total	$	2,538,644	$	954,884

The fair value on the commitment dates for the Note fundings from January 1, 2017 through December 31, 2017, and the re-measurement date for the Company’s derivative liabilities were based upon the following management assumptions:

	Commitment Date	Re-Measurement Date
Expected dividends	-0-	-0-
Expected volatility	360%-395%	371%
Expected term	.25 years	.25 years
Risk free interest	1.01%-1.39%	1.39%

NOTE 5 – RELATED PARTY TRANSACTIONS

As of December 31, 2017, and 2016, the Company owed $37,190 to former officers of the Company (included in liabilities of discontinued operations) and $16,350 to the current CEO (included in accounts payable and accrued expenses, stockholders).

NOTE PAYABLE, STOCKHOLDER

The Company’s former COO loaned the Company various amounts for Company expenses. The Company recorded interest expense of $984 for the years ended December 31, 2017 and 2016. As of December 31, 2017, and 2016, the former COO was owed accrued interest of $5,595 and $4,610, respectively, which is included liabilities of discontinued operations on the balance sheets presented herein. As of December 31, 2017, and 2016, the loan balance was $12,482, which is included in liabilities of discontinued operations.

NOTE PAYABLE, RELATED PARTY

On December 31, 2015, the Company agreed to purchase a 100% membership interest (the “Membership Interest”) in Quasar, LLC, a Utah limited liability company (“Quasar”), from Tonaquint, Inc., (“Tonaquint”) a Utah corporation (“Seller”). Tonaquint is a related party to CVP as the same person is the control person of both Tonaquint and CVP. The Company has agreed to purchase (the “Purchase”) the Membership Interest from the Seller for a purchase price of $180,000 pursuant to the terms of a Membership Interest Purchase Agreement (the “Purchase Agreement”).

F-13

The Company paid for the Purchase by delivering to Seller at the closing a Secured Promissory Note (the “Note”). The Note is secured by the Company’s pledge of the Membership Interest pursuant to a Membership Interest Pledge Agreement (the “Pledge Agreement”) and by a first position Deed of Trust, Security Agreement and Financing Statement in favor of Seller encumbering certain real property owned by Quasar (the “Trust Deed,” and together with the Purchase Agreement, the Note, the Pledge Agreement, and all other documents entered into in conjunction therewith, the “Purchase Documents”). On November 17, 2017, the maturity of the Note was extended from June 30, 2016 to June 30, 2018. On August 31, 2018, the maturity of the Note was extended from June 30, 2018 to December 31, 2018. On February 6, 2019, the Secured Promissory Note was extended from December 31, 2018 to December 31, 2019.

Also, on December 31, 2015, Quasar entered into a one- year lease, with automatic month to month renewals, thereafter, of the property to Miller Fabrication, LLC (“Miller”). Miller is controlled by the same individual as Tonaquint and CVP, and therefore is a related party to the Company. The lease can be terminated by either party by giving the other party, not less than thirty (30) days of its’ intention to terminate the lease.

NOTE 6 – COMMITMENTS AND CONTINGENCIES

LEASE AGREEMENTS

Effective August 1, 2014, the Company moved into a 4,427 square foot facility under a new lease agreement, in an industrial complex in Irvine California. The Company entered into a 26 month lease, pursuant to which, there is no base rent for the first two months, beginning October 1, 2014, the monthly lease is $4,870 plus CAM charges of $354 and rent increases to $5,091 on October 1, 2015 for the final twelve months. The Company was straight lining the 24 months costs over the 26 month term of the lease through December 31, 2015, and in January 2016, the Company realized as an expense the remainder of the lease and recorded a liability. Effective February 19, 2016, the Company entered into a sublease with an unaffiliated third party, whereby, pursuant to the sublease CVP was to receive $5,500 per month through September 30, 2016 from the sub-tenant. For the year ended December 31, 2016, $36,750 was received under the terms of the sublease. The Company reduced the CVP convertible note for the proceeds and reduced rent expense. During the year ended December 31, 2017, the Company was charged a pro-rata rate for the cost and use of an apartment, utilized by an officer of Data420 Sciences, our wholly owned subsidiary. Net rent expense was $2,155 and $36,034 for years ended December 31, 2017 and 2016, respectively, and the 2016 amount is included in loss from discontinued operations. For public reporting purposes and corporate correspondences regarding such, the Company utilizes the office address of a company controlled by our CEO in West Palm Beach, Florida at no charge.

NOTE 7 – STOCKHOLDERS’ EQUITY

COMMON STOCK

On March 18, 2016, the Board of Directors of the Company, acting pursuant to a Majority Consent of Stockholders, approved an amendment to the Articles of Incorporation (the “Amended and Restated Articles”) to among other matters, clarify that of the 310,000,000 shares of authorized capital stock of the Company, 300,000,000 shares are designated as common stock and 10,000,000 shares are designated as preferred stock, and to clarify that of the 10,000,000 shares of preferred stock, 100 have been designated as Class A Preferred Stock. Additionally, the Board has the authority to create and designate the rights and preferences of, additional series of preferred stock, without further stockholder approval. On May 2, 2016, the Company filed the Amended and Restated Articles with the Nevada Secretary of State. The Board also approved a resolution giving the Board the authority to effect between a 1:10 and a 1:250 consolidation of the outstanding common stock at any time before December 31, 2016, and to leave the authorized shares of common stock unchanged at 300,000,000. On December 30, 2016, the Board authorized a consolidation, whereby every 250 shares of the Company’s common stock would be consolidated into 1 share. The consolidation become effective on March 9, 2017.

On July 27, 2016, the Company issued 1,051,779 shares of common stock in exchange for the cancellation of $920,306 of interest and principal due on a convertible note.

As of December 31, 2017, and 2016, there are 1,200,043 shares of common stock outstanding.

F-14

CLASS A PREFERRED STOCK

On June 3, 2014, the Company’s Board of Directors adopted and approved the Class A Preferred Stock Certificate of Designation, establishing the terms, conditions and relative rights of the Class A Preferred Stock, including that the holders of the Class A Preferred Stock (the “Class A Holders”) shall have limited voting rights and powers compared to the voting rights and powers of holders of Common Stock and other series of Preferred Stock. The Class A Holders shall be entitled to notice of any shareholders meeting in accordance with the Bylaws of the Corporation, and shall be entitled to vote, but only with respect to the following matters (collectively, the “Class A Voting Matters”): (i) the appointment and/or removal of any member of the Company’s board of directors, (ii) any matter related to or transaction (or series of transactions) pursuant to which the Company would sell or license all or substantially all of its assets or the stockholders of the Company would sell all or substantially all of their shares of the Company’s stock or where the Company would merge with or into any other entity, (iii) causing the Company to register its Common Stock for trading pursuant to the Securities Exchange Act of 1934, as amended, including by filing a Registration Statement on Form S-1 with the Securities Exchange Commission and filing and obtaining FINRA approval of a Form 15c2-11, and (iv) with respect to any matter involving a transaction whereby the Company will become part of or merge into an existing public company. For so long as Class A Preferred Stock is issued and outstanding, the holders of Class A Preferred Stock shall vote together as a single class with the holders of the Corporation’s Common Stock and the holders of any other class or series of shares entitled to vote with the Common Stock, with the holders of Class A Preferred Stock being entitled to fifty-one percent (51%) of the total votes on only Class A Preferred Voting Matters regardless of the actual number of shares of Class A Preferred Stock then outstanding, and the holders of Common Stock and any other shares entitled to vote being entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power for any Class A Preferred Voting Matter. The Board also approved the issuance of 50 shares each of the Class A Preferred Stock to the Company’s Chief Executive Officer and Chief Operating Officer. The issued shares of the Class A Preferred Stock were valued at $428,000 based primarily on management’s estimate of the fair value of the control features embedded in the Class A preferred stock. On July 8, 2016, in two private transactions, Dove purchased in the aggregate, 100 shares of Class A Preferred Stock from two shareholders (50 shares each), representing 100% of the issued and outstanding Class A Preferred Stock.

NOTE 8 – DISCONTINUED OPERATIONS

In December 2015, the Company’s board of directors approved the purchase of certain real property and completed the purchase on December 31, 2015. In January 2016, the Company ceased its’ prior business activity of marketing, manufacturing and selling horticulture cabinets.

ASC 205-20 “Discontinued Operations” establishes that the disposal or abandonment of a component of an entity or a group of components of an entity should be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. As a result, the Company’s results of operations have been reclassified as discontinued operations on a retrospective basis for all periods presented. Accordingly, the assets and liabilities of this component are separately reported as “assets and liabilities of discontinued operations” as of December 31, 2017 and 2016. The results of operations of this component, for all periods, are separately reported as “discontinued operations”.

The Company did not have any activity in discontinued operations for the year ended December 31, 2017. A reconciliation of the major classes of line items constituting the loss from discontinued operations, net of income taxes as is presented in the Consolidated Statements of Operations for the year ended December 31, 2016 are summarized below

	2016
Sales	$	7,350
Cost of goods sold		—
Gross margin		7,350
Operating expenses:
Rent		36,034
General and administrative		7,417
Other		(4,081	)
Total operating expenses		39,370
Loss from discontinued operations
net of income taxes	$	(32,020	)

F-15

The following table presents the reconciliation of carrying amounts of major classes of assets and liabilities of the Company classified as discontinued operations in the consolidated balance sheets at December 31, 2017 and 2016:

	2017		2016
Carrying amounts of major classes of assets
included as part of discontinued operations
Current assets:
Cash and cash equivalents	$	—	$	—
Accounts receivable, net		—		—
Prepaid expenses and other current assets		—		—
Total current assets included in the assets of discontinued operations	$	—	$	—

Carrying amounts of major classes of liabilities
included as part of discontinued operations
Current liabilities:
Accounts payable and accrued expenses	$	67,680	$	67,680
Accounts payable and accrued expenses, stockholders		42,786		37,190
Customer deposits		—		—
Note payable, stockholder		12,482		12,482
Total current liabilities included in the liabilities of discontinued operations	$	122,948	$	117,352

NOTE 9 – GOING CONCERN

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of December 31, 2017, the Company had an accumulated deficit of $9,692,309 and as of December 31, 2017, a working capital deficit of $4,729,884. These conditions, among others, raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management’s Plans

As a result of a working capital deficiency the Company ceased its prior business as a manufacturer and distributor of cabinet-based horticultural systems operations. On December 31, 2015, the Company agreed to purchase a 100% membership interest (the “Membership Interest”) in Quasar, LLC, a Utah limited liability company (“Quasar”), from Tonaquint, Inc., a Utah corporation (“Seller”). Quasar (prior to the purchase) and Tonaquint are related parties to CVP, the Company’s main lender. The Company purchased the Membership Interest from the Seller for a purchase price of $180,000 pursuant to the terms of a Membership Interest Purchase Agreement. The Company now operates in the land leasing business and is also focused on developing blockchain technologies to deliver advanced solutions to industry-specific problems. The company has identified opportunities in markets including cannabis, insurance, and healthcare. In the cannabis industry, the Company is developing a blockchain solution to help government entities collect taxes through smart contracts. Across all market opportunities, the Company seeks to deliver security, efficiency, and integration through blockchain technology.

NOTE 10 – INCOME TAXES

A reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:

	December 31, 2017			December 31, 2016
Net loss before income taxes	$	(506,721	)	$	(271,371	)
Income tax rate		34	%		34	%
Income tax recovery		(172,132	)		(92,266	)
Non-deductible		—			—
Valuation allowance change		172,132			92,266

Provision for income taxes	$	—		$	—

F-16

The significant component of deferred income tax assets at December 31, 2017 and December 31, 2016, is as follows:

	December 31, 2017			December 31, 201
Net operating loss carry-forward	$	4,917,478		$	4,411,207
Valuation allowance		(4,917,478	)		(4,411,207	)

Net deferred income tax asset	$	—		$	—

The amount taken into income as deferred income tax assets must reflect that portion of the income tax loss carry forwards that is more likely-than-not to be realized from future operations. The Company has chosen to provide a full valuation allowance against all available income tax loss carry forwards. The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When circumstances change and which cause a change in management’s judgment about the realizability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income.

As of December 31, 2017, and December 31, 2016, the Company has no unrecognized income tax benefits. The Company’s policy for classifying interest and penalties associated with unrecognized income tax benefits is to include such items as tax expense. No interest or penalties have been recorded during the years ended December 31, 2017, and December 31, 2016 and no interest or penalties have been accrued as of December 31, 2017, and December 31, 2016. As of December 31, 2017, and December 31, 2016, the Company did not have any amounts recorded pertaining to uncertain tax positions.

The tax years from 2016 and forward remain open to examination by federal and state authorities due to net operating loss and credit carryforwards. The Company is currently not under examination by the Internal Revenue Service or any other taxing authorities.

NOTE 11 – SUBSEQUENT EVENTS

On February 2, 2018, the Company formed and filed Blockchain Solutions, Inc. (“Blockchain”) with the Nevada Secretary of State, as a wholly owned subsidiary of the Company.

On February 5, 2018, the Company filed Articles of Merger (the “Merger”) by and between the Company and Blockchain, with the Nevada Secretary of State, and Amended and Restated Articles of Incorporation were filed pursuant to the Merger to reflect the Company was the surviving entity and as part of the Merger, the Company effectuated a name change to Blockchain Solutions, Inc. The name change was effective March 6, 2018.

On May 7, 2018, the Company consented to an Assignment and Assumption Agreement, whereby Dove assigned all of its rights and interests in and to the Securities and the Tonaquint Note to CVP. The Securities as defined in the Securities Purchase Agreement by and between Dove and CVP include the June 6, 2014 CVP Note and the CVP Warrant (see Note 3).

On August 31, 2018, the maturity of the Secured Promissory Note (see Note 5) was extended from June 30, 2018 to December 31, 2018, and on February 6, 2019, the Secured Promissory Note was extended from December 31, 2018 to December 31, 2019.

Since January 1, 2018, expenses of the Company had been funded by CVP. As of June 30, 2019, the approximate principal balance of the CVP convertible note is $1,510,000.

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2017, to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements other than the events described above.

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