TerraVolt Holdings, Inc. 10-K

Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity Securities. Our common stock is listed for quotation on the OTC Pink Market under the trading symbol “BUUZ”. Trading in our common stock in the over-the-counter market has been limited and the quotations set forth below are not necessarily indicative of actual market values. The following table sets forth, for the periods indicated, the high and low closing prices for each quarter within the last two fiscal years ended December 31, 2020 as reported by the quotation service operated by the OTC Markets Group. All quotations for the OTC Pink Market reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Quarter Ended High Low December 31, 2020 $ 0.0200 $ 0.0200 September 30, 2020 0.1100 0.1100 June 30, 2020 0.1100 0.1100 March 31 2020 1.2500 1.2500 December 31, 2019 1.1000 1.1000 September 30, 2019 1.1000 1.1000 June 30, 2019 1.6000 1.6000 March 31 2018 1.5000 1.5000 On May 31, 2021, the closing price for our common stock on the OTC Pink Market as reported by the quotation service operated by the OTC Markets Group was $1.00. Transfer Agent Nevada Agency and Transfer Company is the registrar and transfer agent for our common shares. Their address is 50 West Liberty, Suite 880 Reno, Nevada, 89501 Telephone: 775-322-0626, Facsimile: 775-322-5623. Holders of Our Common Stock As of May 31, 2021, there were 52 registered holders of record of our common stock. As of such date, 12,960,621 shares of common stock were issued and outstanding. The number of our shareholders of record excludes any estimate by us of the number of beneficial owners of shares held in street name, the accuracy of which cannot be guaranteed. Dividend Policy We have not declared or paid any cash dividends since inception. Although there are no restrictions that limit our ability to pay dividends on our common shares, we do not intend to pay dividends for the foreseeable future. Equity Compensation Plan Information We currently do not have an equity compensation plan in place. Item 6. Selected Financial Data. We are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation. The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this Annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this Annual Report. 9 Our audited financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles. Plan of Operations Following the Change of Control Transactions, as described above, our board of directors determined to establish our company in the rapidly-growing legal California cannabis industry and as of December 31, 2020, in the high-performance computer industry focused on developing hardware solutions for cryptocurrency, tokens and blockchain-based transaction processing systems. As of the filing of this Report, our management is in the process of refining and finalizing the course of action needed to implement our proposed new business operations. As a result, management has not determined our actual short-term or long-term cash requirements, which management expects to be substantial. We will require substantial financing to commence meaningful business operations and to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development plans, any commercialization efforts or other operations. We may not be able to secure financing on favorable terms, or at all, to meet our future capital needs. In addition, even if we are able to obtain sufficient funding to commence our business operations, we may need to pursue additional financing in the future to make expenditures and/or investments to support the growth of our business and may require additional capital to pursue our business objectives and respond to new competitive pressures, pay extraordinary expenses or fund our growth, including through acquisitions. Additional funds, however, may not be available when we need them on terms that are acceptable to us, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to commence our proposed business operations, to continue to grow and support our business and to respond to business challenges could be significantly limited. Over the course of 2019 and the first three quarters of 2020, our Chief Executive Officer, Michael Campbell, and our former President, Piers Cooper, developed a plan to build a chain of large-format retail stores and event centers facilities to serve the needs of the rapidly-growing Southern California cannabis market. During such period, we entered into various agreements to purchase or lease facilities for our initial retail store and event center, which would have required us to raise substantial capital to acquire the necessary governmental licenses and permits, buildout, furnish and equip our initial retail store and event center and for working capital. Due primarily to a downturn in the equity markets for cannabis-related companies and the effects and impact of the COVID-19 pandemic, we were unable to raise the capital during that period necessary to build that business. As a result, management determined to seek other business opportunities for our company. It is the current intention of the board of directors for our company to develop and manufacture a next generation high-performance computer system that is scalable, upgradeable, and cost effective for processing cryptocurrencies, tokens and blockchain-based transactions. Results of Operations for the years ended December 31, 2020 and 2019 The following summary should be read in conjunction with our audited financial statements for the years ended December 31, 2020 and 2019 For the years ended December 31, 2020 2019 Revenues $ − $ − Operating Expenses Professional fees 340,000 1,154,000 General and administrative 51,000 40,000 Total Expenses 391,000 1,194,000 Financing costs (227,000 ) (305,000 ) Loss on extinguishment of series A convertible preferred stock (138,000 ) − Net loss $ (756,000 ) $ (1,499,000 ) 10 Revenue For the years ended December 31, 2020 and 2019, we had no revenues. Expenses Our operating expenses decreased from $1,194,000 in year ended December 31, 2019 to $391,000 in the year ended December 31, 2020, which represented a decrease of $803,000. The decrease was attributable to the (1) lower consultant fees since there are no warrants granted during the year for the services rendered by the consultants compared to the prior year which approximates to $577,000, (2) the use of legal services for approximately $42,000, (3) accounting and auditing fees for approximately $80,000, and (3) general and administrative expenses for approximately $51,000. Financing Costs Our financing cost of approximately $227,000 is attributable to the amortization of the relative fair value of warrants, original issue discount, the value ascribed to the beneficial conversion all of which related to the issuance of convertible debentures and interest on default convertible notes. Loss on extinguishment of series A convertible preferred stock Our loss on extinguishment of series A convertible preferred stock of approximately $138,000 is attributable to the difference between the fair value of the issued Notes as an extinguishment and book basis of the series A preferred stock, and the fair value of the warrants issued. Liquidity and Capital Resources Our financial position as of December 31: Working Capital For the years ended December 31, 2020 2019 Current Assets $ 2,000 $ 125,000 Current Liabilities (1,325,000 ) (686,000 ) Working (Deficit) Capital $ (1,323,000 ) $ (561,000 ) Working capital decreased from a $561,000 deficit as of December 31, 2019 to a deficit of $1,323,000 as of December 31, 2020 for a total change of $(762,000). The change was a result of our increase in accruals for services rendered by consultants and legal counsel during the year ended December 31, 2020. Also, the issuance of convertible debentures with a face value of $213,000, which included an original issue discount of $6,000 and $147,000 from conversion of series A preferred stock, for net proceeds of $60,000. The net proceeds were allocated between the relative fair value of $3,000 for the associated warrants issued and $0 associated with the beneficial conversion feature of the convertible debentures. Cash Flows For the years ended December 31, 2020 2019 Net cash used by operating activities $ (183,000 ) $ (418,000 ) Net cash provided by investing activities − 12,000 Net cash provided by financing activities 60,000 529,000 Change in cash during the period (123,000 ) 123,000 Cash, beginning of period 123,000 − Cash, end of period $ − $ 123,000 Cash used in operating activities decreased by approximately $235,000, which predominantly related to lower legal and consultant fees incurred during the year. Operating activities used $418,000 in cash for the year ended December 31, 2019 for operating expenses. Cash provided by financing activities related to the approximately $60,000 from the sale of our convertible promissory notes. 11 Going Concern The audited financial statements included in this Report have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. We are a “shell company” with no meaningful assets or operations presently. Our company has not generated revenues in the last two fiscal years, has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon: (i) continued financial support from our shareholders; (ii) the ability of our company to continue raising necessary debt or equity financing to achieve its operating objectives; and (iii) our ability to acquire assets and establish a business or merge or otherwise acquire business opportunities. Our independent auditors included an explanatory paragraph in their report on our financial statements for the year ended December 31, 2020 regarding concerns about our ability to continue as a going concern. In addition, our financial statements contain further note disclosures in this regard. The implementation of our business plan is dependent upon our ability to continue raising sufficient new capital from equity or debt markets in order to fund our on-going operating losses and real estate acquisition activities. The issuance of additional equity securities could result in a significant dilution in the equity interests of our current stockholders. Application of Critical Accounting Policies The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures of our company. Although these estimates are based on management’s knowledge of current events and actions that our company may undertake in the future, actual results may differ from such estimates. Basis of Presentation The financial statements and related notes included in this Annual Report are presented in accordance with United States generally accepted accounting principles (“US GAAP”) and are expressed in US dollars. Use of Estimates and Assumptions The preparation of financial statements in conformity with US GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We base our estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are readily apparent from other sources. The actual results experienced by our company may differ materially from our management’s estimates. To the extent there are material differences, future results may be affected. Estimates used in preparing these financial statements include the fair value of share-based payments, deferred income taxes, financial instruments and assumptions relating to going concern. Income Taxes We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial statements and the tax basis of assets and liabilities, and net operating loss carry forwards based on using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the year that includes the enactment date. Deferred tax assets are only recognized to the extent that it is considered more likely than not that the assets will be realized. 12 Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing the net loss by the weighted average number of outstanding common shares during the year. Diluted loss per share gives effect to all potentially dilutive common shares outstanding during the year, including convertible debt, stock options and share purchase warrants, using the treasury stock method. The computation of diluted loss per share does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on loss per share. Recent Accounting Pronouncements We do not believe that any recently issued, but not yet effective accounting standards if currently adopted, will have a material effect on our financial statements. Off-Balance Sheet Arrangements We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial position, revenues and expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide this information. Item 8. Financial Statements and Supplementary Data. Our financial statements and notes thereto and the reports of RBSM LLP, our independent registered public accounting firm, are set forth on pages F-1 through F -18 of this Report. Item 9. Changes In and Disagreements With Accountants On Accounting and Financial Disclosure. Not Applicable