Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended December 31, 2010, for Smartdata Corporation (noted as "CLEANSPARK, INC." in metadata, but identified as Smartdata Corporation in the filing). The company is classified as a Development Stage Company and a Shell Company. It has no active revenue-generating operations and is currently seeking a business combination or acquisition target. The financial statements are unaudited.
Key Financial Metrics
| Metric | Three Months Ended Dec 31, 2010 | Three Months Ended Dec 31, 2009 |
|---|---|---|
| Revenues | $0 | $0 |
| Net Income (Loss) | $(1,407) | $142 |
| Operating Expenses | $659 | $2,211 |
| Cash Balance (Ending) | $40 | $0 |
| Total Assets | $40 | $40 |
| Total Liabilities | $43,193 | $42,534 |
| Stockholders' Equity (Deficit) | $(43,153) | $(42,494) |
| Loss Per Share (Basic/Diluted) | $(0.01) | $0.00 |
Debt and Liquidity: The company holds $40 in cash. Current liabilities include $5,958 in accounts payable, a $10,000 convertible promissory note, and $27,235 payable to a shareholder (related party advances). The company has no line of credit.
Material Changes vs. Prior Period
- Profitability Shift: The company moved from a net income of $142 in the prior year quarter to a net loss of $1,407. The prior period income was driven by a $2,353 gain on the forgiveness of debt, which did not occur in the current period.
- Expense Reduction: General and administrative expenses decreased significantly from $2,211 to $659, primarily due to lower accounting and stock transfer fees.
- Interest Expense: The current period recorded $748 in imputed interest expense on related-party notes (calculated at 8%), whereas the prior period had no such expense recorded.
- Cash Flow: Net cash used by operating activities was $0 for the current quarter, compared to $0 in the prior quarter (though the cumulative cash flow from inception shows a net use of $210,110).
Outlook, Risks, and Management Commentary
- Going Concern: Management explicitly states that the company's losses and lack of revenue raise substantial doubt about its ability to continue as a going concern. Financial statements do not include adjustments for potential outcomes of these uncertainties.
- Plan of Operations: The company intends to identify an industry, adopt a business plan, and commence operations via funding or acquisition. No specific target has been identified.
- Financing Needs: Future operations depend on loans from management or principal stockholders. There is no assurance that additional capital will be raised or that existing credit extensions will continue.
- Controls and Procedures: Management concluded that disclosure controls and procedures were not effective as of the end of the period, citing the cost of remediation as a strain on limited capital.
- Legal Proceedings: No legal proceedings are pending or threatened.
Investor Verification Checklist
- Verify the company's status as a shell company with no active operations and minimal assets ($40).
- Confirm the reliance on related-party loans ($27,235 outstanding) and the lack of external financing.
- Assess the "Going Concern" warning and the absence of a defined business plan or acquisition target.
- Note the ineffectiveness of internal disclosure controls and the potential for further capital depletion.
- Review the cumulative deficit of $(276,213) accumulated since re-entering the development stage in 1991.