CLEANSPARK, INC. quarterly report, Q2 FY2013

Filing identity and period

Important: The supplied filing is for Smartdata Corporation, a Nevada development-stage company—not CLEANSPARK, INC. It is a Form 10-Q for the quarter ended March 31, 2013, covering the six months ended that date. The financial statements are unaudited.

Financial performance and position

  • Revenue was zero for both the three and six months ended March 31, 2013; the company reported no operations. Profit margins are not meaningful.
  • Six-month general and administrative expense was $12,586, up from $7,547 in the prior-year period. Net loss was $15,799, versus $10,220; six-month loss per share was $0.02, versus $0.01.
  • For the quarter, general and administrative expense was $4,410, compared with $2,736, and net loss was $6,055, compared with $4,089.
  • At March 31, cash was $796 and total current assets were $2,023, against current liabilities of $94,862. The company reported a stockholders’ deficit of $92,839.
  • Six-month operating cash outflow was $7,617; financing provided $8,000, and cash increased by $383 to $796. No investing cash flows were reported.
  • Current liabilities included a $16,000 related-party convertible promissory note and $70,317 payable to shareholders. The filing also describes $86,317 in total officer advances and shareholder payables; these balances are payable on demand. The advances bear no stated interest, but the company recorded imputed interest at 8%.

Changes, outlook, and risks

  • Compared with the prior-year six-month period, expenses and net loss increased, while cash provided by financing rose from $1,000 to $8,000. No revenue was reported in either period.
  • Management planned to evaluate industries, adopt a business plan, and seek a business combination or acquisition. No target or selected industry had been identified as of the filing.
  • Management expected continued losses and no revenue until a business combination; it anticipated using management or shareholder loans and/or stock sales to fund expenses. Further financing needs could increase substantially after a combination, and funding is not assured.
  • The filing states that recurring losses and no revenue-generating activity raise substantial doubt about the company’s ability to continue as a going concern.
  • Management concluded disclosure controls and procedures were not effective; it said remediation costs would further strain limited capital. No material changes in internal control over financial reporting were reported.
  • A 1-for-39 reverse stock split became effective February 26, 2013; the financial statements were retroactively adjusted. Authorized shares remained 100 million.

Most important facts to verify

  1. Confirm the filing is relevant to the requested company: the document names Smartdata Corporation, not CLEANSPARK, INC.
  2. Verify the going-concern uncertainty, cash position, and reliance on on-demand related-party and shareholder funding.
  3. Review the stated control deficiency and the effect of the reverse split on historical share data.
  4. Confirm that no business combination or revenue-generating operations had been identified or begun as of the filing.