RealSource Residential, Inc

Following the change in control, as described above, the board of directors determined to establish the Company in the rapidly-growing cannabis industry, initially in the State of California. 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. In order to fund our proposed business plan, we intend to raise funds from investors by issuing common stock, preferred stock and/or debt securities. Upon the consummation of such fundraising efforts and the commencement of such operations, it is expected that our company will cease being a shell company.

In accordance with ASC 470 - Debt, the Company has allocated the cash proceeds amounts of the Notes among the Notes, the warrants and the conversion feature. The relative fair value of the warrants issued totaled approximately $3,000 and of the beneficial conversion totaled approximately $0, which amounts are being amortized and expensed over the term of the Notes. As of March 31, 2021, the amortization expense was approximately $3,000.

On January 11, 2021, the Company issued promissory note with a principal value of $15,000. The interest on the Note shall accrue, beginning from the date of issuance, at an interest rate of 8% per annum. The principal and any accrued interest is payable on or before March 11, 2022 (maturity date). During any event of default under the Note, the interest rate shall increase to 10% per annum (default interest). Events of default include failure to pay principal or interest, breach of covenants, breach of representations and warranties, borrower’s assignment of substantial part of its property or business, any money judgment, writ, or similar process shall be entered or filed against the borrower or any subsidiary of the borrower or any of its properties or other assets for more than $100,000, bankruptcy, liquidation of business, and cessation of operations.

On February 19, 2021, the Company issued promissory note with a principal value of $25,000. The interest on the unpaid principal balance accrues at a rate of 10% per annum. The principal and any accrued interest shall be paid in a single installment on or before February 19, 2022 (maturity date). In the event that the Company fails to pay the balance of this Note in full on the due date or fails to make any payment due within 15 days of the due date, any unpaid principal shall accrue interest at the rate of 15% per annum during the default (default interest). Events of default include failure to make any payment including accrued interest when due, voluntary or involuntary petition of bankruptcy, appointment of a receiver, custodian, trustee or similar party to take possession of the Company’s assets or property, or assignment made by the Company for the benefit of creditors.

In February 2021, the Company signed a new consulting agreement that granted one of its shareholders an option to purchase 750,000 shares of the Company’s common stock at $0.001 per share for the consultancy work provided from August 2020 to February 2021. The options were fully vested on the date of issuance. The fair value of the options was approximately $52,000, as of the grant date, of which approximately $37,000 was expensed and accrued during the year ended December 31, 2020. The remaining fair value of approximately $15,000 was expensed during the three months ended March 31, 2021.

On March 1, 2021 we sold OID Convertible Promissory Note in the principal amounts of $55,000 for purchase price of $50,000, such promissory note bear interest at the rate of 10% per annum only if not paid at maturity on March 1, 2022 and convert into shares of our common stock, par value $0.001 per share, at the option of the holders at a conversion price of $1.00 per share, subject to adjustment for issuances of common stock below the conversion price and for stock splits, stock combinations and the like. In connection with the issuance of such promissory notes, we issued to the purchasers on March 1, 2021, for no additional consideration warrants to purchase 27,500 shares of our common stock for a purchase price of $1.50 per share, subject to adjustment for stock splits, stock combinations and the like, that expire on March 1, 2024. If such warrants are exercised for cash, the holders will receive a new three-year warrant to purchase the number of shares of common stock purchased upon such exercise at a purchase price of $1.50 per share, subject to adjustment for stock splits, stock combinations and the like.