Issuer and reporting period
Important identification discrepancy: The request names CLEANSPARK, INC., but the supplied Form 10-Q identifies the registrant as Smartdata Corporation, a Nevada development-stage company. It reports the quarter ended December 31, 2012, and was signed February 6, 2013. The filing does not identify CleanSpark. Verify the issuer and filing before relying on these figures.
The interim financial statements are unaudited. The company reported no operating business or revenue and described its objective as finding a business opportunity or completing a business combination.
Financial performance and position
| Metric | Quarter ended Dec. 31, 2012 | Comparable 2011 quarter |
|---|---|---|
| Revenue | $0 | $0 |
| General and administrative expense | $8,176 | $4,811 |
| Interest expense | $1,568 | $1,320 |
| Net loss | $9,744 | $6,131 |
| Net cash from operating activities | $70 | $179 |
Revenue and profit margins are not meaningful because the company had no revenue. General and administrative expense increased about 70% year over year, while net loss increased about 59%. Management attributed G&A primarily to accounting and stock-transfer fees.
At December 31, 2012, cash was $483, prepaid expenses were $818, and total assets were $1,301. Current and total liabilities were $89,730, including $65,818 payable to officers and a $16,000 convertible promissory note. The officer advances bear no stated interest and are payable on demand; the company records imputed interest at 8%. Stockholders’ deficit was $88,429. Cash was $70 higher than at September 30, 2012.
Quarterly operating cash flow was positive $70, principally because of increases in accounts payable and related-party advances, despite the net loss. The filing reports no investing or financing cash flows for the quarter. No interest or income taxes were paid.
Changes, outlook, and risks
- The company continued to report no operations or revenue. The quarterly net loss rose from $6,131 to $9,744 compared with the prior-year quarter.
- For the next 12 months, management planned to evaluate industries, adopt a business plan, and seek to begin operations through funding or acquisition of an operating company. No target or industry had been selected or identified.
- Management anticipated continued losses from legal, accounting, compliance, and acquisition-search costs, and no revenue before a business combination. It said funding needs could increase substantially after a combination.
- The filing states that accumulated losses and the absence of revenue-generating activities raise substantial doubt about the company’s ability to continue as a going concern. Management expected to seek loans or equity funding, potentially from management or principal stockholders, but gave no assurance of obtaining capital or achieving profitability.
- Management said existing capital, together with possible management support, was expected to cover compliance and business-combination efforts for an indefinite period, while acknowledging that funding may be inadequate and management was not obligated to provide it.
- Disclosure controls and procedures were reported as ineffective at quarter-end. Management said remediation costs would further strain limited capital; it reported no material changes in internal control over financial reporting during the quarter.
- No pending or threatened legal proceedings, unregistered equity sales, or defaults upon senior securities were reported.
Investor verification priorities
- Confirm that this Smartdata Corporation filing—not a CleanSpark filing—is the intended document and verify the reporting period.
- Check the balance and terms of the $65,818 demand payable to officers and the $16,000 convertible note, including any conversion provisions not clear in the supplied text.
- Assess the company’s very limited cash, going-concern warning, and reliance on discretionary insider funding.
- Verify any subsequent business combination, financing, or operating developments; none was identified in this filing.
- Review the ineffective disclosure-controls conclusion and the company’s stated decision not to remediate because of cost.