Item
8.01
Other Events.
As
mentioned above we have ceased all business operations related to the sale of e-cigarettes and vapor products and changed
the nature of our business to GPU cryptocurrency mining and related activities. Below is a summary of our change in
operations and our plans moving forward.
There
have been no changes to our Board of Directors or to our current serving officers. All current officers and directors will be
maintaining their current positions and roles with the Company.
Nature
of Business
“Mining
Rigs”, “Computers”, and “Machines” are synonymous throughout this Form 8-K.
Nodechain, Inc. has, as of this time, ceased
any and all activities relating to the sale of e-cigarettes and vapor products. As such, all former assets and inventory of
the Company pertaining to the vape industry are to be sold. At present, the Company does not have a definitive plan for
the disposition of such assets, with the exception that the Company intends to use traditional sales channels.
Nodechain,
Inc.’s current business operations are comprised
of activities revolving around the blockchain, with a particular
emphasis on digital cryptocurrency mining and transaction validation. The Company utilizes, at present, five mining computers
(rigs) that include seven 1070Ti GPUs per unit. Our mining rigs are capable of efficiently mining approximately $400-$500 per
day in Ethereum cryptocurrency and $500-600 per month in Bitcoin cryptocurrency per rig.
Cryptocurrency mining is the underlying system that allows Bitcoin,
Ethereum, and other cryptocurrencies, to be traded in a decentralized manner. It revolves around a ledger, or database, that is
continuously updated and accessible to the public. Nodes have a copy of the ledger and verify the transactions by completing difficult
mathematical problems by utilizing the GPU of the mining rigs. The validators are called “miners”. They authenticate
and group transactions into cryptographically protected “blocks” which are then added to the public “chain”.
Cryptocurrency miners are slowly rewarded with Bitcoin or Ethereum for carrying out this work, which involves substantial computing
power.
In addition to our five current mining rigs we may, in
the future, create additional mining rigs to increase our operations. The majority of mining companies purchase ASIC based
mining rigs from China, which requires a long waiting period. In contrast, we believe all of our mining rigs will be created
in-house with hardware from US based suppliers. It is the belief of the Company that building rigs from the ground up will
allow us to scale our mining operations significantly faster than many competitors.
At present we will focus on mining Bitcoin and Ethereum, which have
seen substantial and very public growth since their introduction. Our mining rigs are capable of mining alternative cryptocurrencies
and we may evaluate, in the future, mining additional cryptocurrencies such as Zcash, Ethereum Classic, Bitcoin Gold and Monero.
Such plans have not been fully developed at this point in time. We store our mined Bitcoin and Ethereum in a high-security, state-of-the-art
cold storage wallets using the advanced cold storage wallet system provided by Coinbase.
In order to market and increase awareness of our Company
we have hired a third party graphic artist and website developer to create and build a new
website for our Company. This website is currently under development, although we anticipate it will be fully completed
within several months.
In the future, the Company intends to, through as of yet unidentified
means, expand its operations into different sectors related to the blockchain including, but not strictly limited to, dynamic
cryptocurrency mining applications, blockchain applications, solidity smart contract development, cryptocurrency hashpower leasing,
sales, service and B2B cryptocurrency consultation.
At present all of our mining rigs are managed and operated
solely by our officers and directors.
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Risk Factors
Relating to our Change in Business Activity
Please consider the following risk factors and other
information in this Form 8-K relating to our business before deciding to invest in our common stock.
This offering and any investment in our common stock involves
a high degree of risk. You should carefully consider the risks described below and all of the information contained in this Form
8-K before deciding whether to purchase our common stock.
If any of the
following risks actually occur, our business, financial condition and results of operations could be harmed. The trading
price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.
We consider the following to be the material risks for
an investor making an investment in our stock. Our company should be viewed as a high-risk investment and
speculative in nature. An investment in our common stock may result in a complete loss of the invested amount. An investment
in our common stock is highly speculative, and should only be made by persons who can afford to lose their entire investment
in us. You should carefully consider the following risk factors and other information in this Form 8-K before deciding to
become a holder of our common stock. If any of the following risks actually occur, our business and financial results
could be negatively affected to a significant extent.
There are cyber security risks related to cryptocurrency trading.
Trading platforms and third party service providers may be vulnerable
to hacking or other malicious activity. As an example, in August 2016 nearly 120,000 units of Bitcoin, representing nearly 72 billion
USD, was stolen from the Bitfinex exchange in Hong Kong. This theft led to an immediate 23% drop in pricing. Further details regarding
this event can be found at: https://www.reuters.com/article/us-bitfinex-hacked-hongkong/bitcoin-worth-72-million-stolen-from-bitfinex-exchange-in-hong-kong-idUSKCN10E0KP.
This is just one example, and there could be many scenarios in which the blockchain is significantly altered by malicious activity
and/or the value of certain cryptocurrency, or cryptocurrencies in general, are negatively affected by malicious activity. While
we have taken steps to protect our cryptocurrency by utilizing the cold storage wallet system provided by Coinbase, we are not
immune to changes that effect the entire blockchain. In this event, the value of the results of our mining activities could be
significantly impacted in unpredictable ways, thus adding volatility and uncertainty to our fiscal projections.
Loss of confidence in digital currencies could negatively impact
our business.
Digital currencies are part of a newly emerging digital assets industry,
and due to its nature as a new industry, as well as the general volatility of the value of cryptocurrencies, there exists a large
amount of uncertainty relating to the industry. Despite the fact that there has been relatively little use for digital currencies
in the retail and commercial marketplace, cryptocurrencies have still generated a large amount of trading activity due to their
position as an alternative to traditional investment opportunities. Most cryptocurrencies have no backing from a central bank and/or
assets or other credit. As such, their value is determined solely by the value the market places upon them. In the event that there
is a loss of confidence in specific cryptocurrencies, or cryptocurrencies in general, their value may drop significantly or, in
a worst case scenario, collapse entirely.
Regulation regarding the trading of digital currencies may change
in the future.
Cryptocurrencies are still in their infancy, and as regulators attempt
to determine how to regulate the trading of digital currencies there may be changes made in the future that could negatively impact
the value of cryptocurrency we hold. At present, there are significant inconsistencies among difference regulators with respect
to the legal status of cryptocurrencies, and it is possible that certain countries could impose regulations that restrict the right
to acquire, own, hold, sell or otherwise use cryptocurrencies. If we fail to adjust to such regulations, then the results of our
business could suffer.
Taxation of digital securities could negatively impact the results
of our operations.
At present there is significant uncertainty with respect to
the tax treatment of an investment in digital securities. Bitcoins and other cryptocurrencies may be considered assets in
certain areas, or currency in others. As such, it is difficult to determine exactly how cryptocurrency will be taxed in any
given year which could negatively impact the results of our operations.
Should the computers we use for mining cryptocurrency fail
or suffer any sort of mechanical failure(s) you may lose some or all of your investment.
There exists the possibility that our computers we use for
mining cryptocurrency may fail or at some point suffer some sort of mechanical failure(s). This may limit our ability to mine
cryptocurrency which may have a negative effect on your investment. There is the possibility that in the case of
such failure(s) we may need to hire technical service providers to come out and fix our mining rigs. This could
potentially be extremely costly and the Company may not have suitable funds on hand to pay for such repairs.
Should we suffer a power outage for any reason our operations
may be negatively impacted.
Our devices run on electricity and as a result, the loss of
electricity would temporarily limit our ability to mine cryptocurrency. Should this occur we would rely heavily, if
not exclusively, on third parties to remedy the loss of power which could be costly. This could negatively impact your
investment.
Our mining rigs are not insured. Any irreparable
damage could negatively impact your investment.
Should a mining rig suffer irreparable
damage for any reason it would hamper our ability to operate and could be costly as the machine would have a value
significantly less than if it were functioning properly or if at all. We do not have insurance to cover such losses. If such
damage were to ever occur to our mining rig(s) your investment could be negatively impacted.
At this time our employees consist exclusively of our two
officers and directors. At this time our officers and directors are solely responsible for managing and operating our mining
rigs.
Should our
operations expand, or should current operations require more time than is anticipated of our officers and directors, we may
need to hire more employees which could be costly. This could negatively impact your investment.
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