UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2018
Commission File Number: 001-51554
GREENBOX POS | |
(Exact name of registrant as specified in its charter) |
Nevada | 22-3962936 | |
(State or other jurisdiction of incorporation or organization) | ( |
8880 Rio San Diego Drive, Suite 102 San Diego, CA | 92108 | |
(Address of principal executive | (Zip Code) |
Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class | Name of each exchange on which registered | |
N/A | N/A |
Securities registered pursuant to Section 12(g) of the Act:
Title of class | ||
Common Stock, par value $0.001 per share |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined inby Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date fileData File required to be submitted and posted pursuant to Rule 405 of RegulationsRegulation S-T (Section232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’sthe registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes o No x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-212b–2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☐ | Smaller reporting company | ☒ | ||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ☐No ☒
The aggregate market value of the 7,992,169 voting common stock held by non-affiliates of the registrant as of June 30, 2018 was $1,598,433 based on the closing price of $0.20 per share of the registrant’s common stock as quoted on the OTC Pink Current Information marketplace on that date.
As of April 12, 2019, there were 166,390,363 shares of registrant's common stock outstanding.
Documents Incorporated by Reference: None.
TABLE OF CONTENTSto Annual Report on Form 10-Kfor the Fiscal Year Ended December 31, 2017
PAGE | ||||||
PART I | ||||||
Item 1. | 5 | |||||
Item 1A. | 6 | |||||
Item 1B. | 6 | |||||
Item 2. | 6 | |||||
Item 3. | ||||||
7 | ||||||
Item 4. | ||||||
7 | ||||||
PART II | ||||||
Item 5. | 8 | |||||
Item 6. | 8 | |||||
Item 7. | 8 | |||||
Item 7A. | 10 | |||||
Item 8. | 10 | |||||
Item 9. | ||||||
11 | ||||||
Item 9A. | ||||||
11 | ||||||
Item 9B. | ||||||
12 | ||||||
PART III | ||||||
Item 10. | 13 | |||||
Item 11. | ||||||
15 | ||||||
Item 12. | ||||||
16 | ||||||
Item 13. | ||||||
16 | ||||||
Item 14. | ||||||
17 | ||||||
PART IV | ||||||
Item 15. | 18 | |||||
20 | ||||||
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements based upon current expectations that involve certain risks and uncertainties. Such forward-looking statements“forward-looking statements” within the meaning of Section 27a27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21e21E of the Securities Exchange Act of 1934, as amended, includeor the Exchange Act. These statements regarding, among other things, and specifically inare often identified by the sections entitled “Description of Business” and “Management’s Discussion and Analysis or Plan of Operations,” or otherwise incorporated by reference into this document contain “forward-looking statements” (as such term is defined in the Private Securities Litigation Reform Act of 1995).. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “plan”,such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project”“would” or the negative or plural of these words or other variations on these wordssimilar expressions or comparable terminology. This information may involve known and unknownvariations. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that maycould cause our actual results performance, or achievementsand the timing of certain events to bediffer materially different from the future results performance, or achievements expressed or implied by anythe forward-looking statements. These statements may be foundFactors that could cause or contribute to such differences include, but are not limited to, those identified herein, including those discussed in the section titled “Risk Factors”, set forth in Part I, Item 1A of this Annual Report under the sections entitled “Description of Business”on Form 10-K and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Actual events or results may differ materially from those discussed in our other SEC filings. You should not rely upon forward-looking statements as a resultpredictions of various factors, including, without limitation, the risks outlined under the section herein entitled “Risk Factors” and matters described in this Annual Report generally. In light of these risks and uncertainties, there can be no assurance that thefuture events. Furthermore, such forward-looking statements contained inspeak only as of the date of this Annual Report will in fact occurreport. Except as projected.
In this Annual Report unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to “common shares”on Form 10-K, the terms “the Company,” “we,” “our”, and “us” refer to the common shares in our capital stock. As used in this Annual Report, the terms “we,” “us,” “our” and the “Company” mean ASAP Expo Inc. unless otherwise indicated.
PART I
Corporate Structure
The Company was originally incorporated on April 10, 2007, under the laws of the State of Nevada.
On March 23, 2018, the controlling shareholder of ASAP Expo, Inc., entered into a stock purchase agreement whereby ASAP Expo, Inc. sold 144,445,000 shares of ASAP Expo Inc.’s common stock to GreenBox POS LLC (“GreenBox POS”), a Washington limited liability company, representing 90% of ASAP Expo, Inc.’s issued and outstanding common stock. Following the signing of this stock purchase agreement, ASAP Expo, Inc. entered into and closed, on April 12, 2018, an asset purchase agreement whereby it assigned the entirety of its assets to ASAP Property Holdings, Inc. in consideration of assumption of the entirety of its liabilities.
The transaction contemplated in the March 23, 2018 stock purchase agreement was closed on May 3, 2018, and a change of control of ASAP Expo, Inc. was effected. On May 3, 2018, the Company changed its name to GreenBox POS LLC.
Below are the names and positions of the Company’s executive officers and directors who were appointed effective as of the May 3, 2018 closing of the stock purchase agreement.
Name | Position | |
Ben Errez | Chairman of the Board of Directors; Executive Vice President (Principal Financial Officer and Principal Accounting Officer) | |
Fredi Nisan | Director; Chief Executive Officer |
On December 13, 2018, the Company changed its name to GreenBox POS.
Business Overview
Since April 12, 2018, the Company’s operations have consisted of providing management and business development services.
Related Party Note
On August 7, 2018, in anticipation of a merger, the Company entered into a Promissory Note with GreenBox POS, whereby GreenBox POS received $250,000 to be used to facilitate business operations in anticipation of transferring such operations from GreenBox POS to the bridge between ChinaCompany. GreenBox POS promised to pay the Company $250,000 plus interest at maturity (the “Note Receivable”). GreenBox POS is an affiliated company. The Note Receivable bears interest at a rate of 7.25% per annum and matures following the Western world.
Advance to Related Entity
As of December 31,2018, the Company had issued funds to a limited number of similar investment consulting and commercial real estate firmsrelated entity in the market who focuses on similar Chinese clients, but,amount of $736,000 in anticipation of acquiring or merging with the future, there might be other new players that enter intoCompany. This amount includes the business and compete with us, despite the intellectual and financial capital required.
As of December 31, 2018, the Company entered into a series of promissory convertible notes (see Note 6 to the audited financial statements) totaling $486,000.
On August 6, 2018, the Company entered into a Securities Purchase Agreement with respect to certain forward-looking statements, including statementsthe issuance of certain risksa promissory note (the “August 6 Note”) convertible into equity issued on the same date with gross proceeds of $253,000. The August 6th Note shall bear interest at a rate of 10% per annum until the same becomes due and uncertainties that could cause actual resultspayable, whether pursuant to vary materiallythe one-year term or upon acceleration or prepayment. The note holder may elect to convert the August 6th Note at any time from 180 days from the future results referreddate of issuance at a variable price of per share equal to 65% of the average of the 3 lowest trading prices in the 10 days prior to such forward-looking statements.
On September 27, 2018, the Company issued a promissory note convertible into equity with gross proceeds of $53,000 (the “September 27 Note”). The September 27 Note shall bear interest at a rate of 10% per annum until the same becomes due and regulations that govern the financial guarantee industry in China, including those adopted by China’s central bank, the People’s Bank of China (“PBOC”), which sets monetary policy and, together with the State Administration of Foreign Exchange (“SAFE”), foreign-exchange policies. Accordingpayable, whether pursuant to the 1995 Central Bank law,one-year term or upon acceleration or prepayment. The note holder may elect to convert the State Council maintains oversightSeptember 27th Note at any time from 180 days from the date of PBOC policies.
On November 26, 2018, the Company issued a promissory note convertible into equity with gross proceeds of $200,000 (the “November 26 Note”). The November 26 Note shall bear interest at a rate of 12% per annum until the same becomes due and Reform Commission, or SDRC, and SAFE, that require registration with, and approval from, PRC government authorities in connection with direct or indirect offshore investment activities by individuals who are PRC residents and PRC corporate entities. These regulations may applypayable, whether pursuant to the Company’s future offshoreone-year term or cross-border acquisitions, as well asupon acceleration or prepayment. The note holder may elect to convert the November 26th Note at any time from 180 days from the date of issuance at a fixed price of per share equal to $4.50.
On December 13, 2018, the Company issued a promissory note convertible into equity with gross proceeds of $83,000 (the “December 13 Note”). The December 13 Note shall bear interest at a rate of 10% per annum until the same becomes due and payable, whether pursuant to the equity interests in offshore companies held byone-year term or upon acceleration or prepayment. The noted holder may elect to convert the Company’s PRC shareholders who are considered PRC residents. The Company intendsDecember 13th Note at any time from 180 days from the date of issuance at a variable price of per share equal to make all required applications and filings and will require the shareholders65% of the offshore entitiesaverage of the 3 lowest trading prices in the Company’s corporate group who are considered PRC residents10 days prior to make the application and filings as required under these regulations and under any implementing rules or approval practices that may be established under these regulations. However, because these regulations are relatively new and lacking implementing rules or reconciliation with other approval requirements, it remains uncertain how these regulations and any future legislation concerning offshore or cross-border transactions will be interpreted and implemented by the relevant government authorities.
On December 17, 2018, the Company cannot provideissued a promissory note convertible into equity with gross proceeds of $150,000 (the “December 17 Note”). The December 17 Note shall bear interest at a rate of 12% per annum until the same becomes due and payable, whether pursuant to the one-year term or upon acceleration or prepayment. The note holder may elect to convert the December 17th Note at any assurances that we will be abletime from 180 days from the date of issuance at a variable price of per share equal to comply with, qualify under or obtain any registration or approval as required by these regulations or other related legislations. Further, we cannot assure you that our shareholders would not be considered PRC residents, given uncertainties as to what constitutes a PRC resident for the purposes50% of the regulation, or that if they are deemed PRC residents, they would (or would be able to) comply with the requirements. Our failure or the failure of our PRC resident shareholders to obtain these approvals or registrations may restrict our ability to acquire a company outside of China or use our entities outside of China to acquire or establish companies inside of China, which could negatively affect our business and future prospects.
Employees
The Company has two part-time employees.
We are a less efficient market than markets suchsmaller reporting company as NASDAQ or other national exchanges, and which make it more difficult for the Company’s shareholders to conduct trades. It may also make it more difficult for the Company to obtain future financing. Further, the Company’s securities are subject to the “penny stock rules” adopted pursuant to Section 15 (g)defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange(“Exchange Act”). The penny stock rules apply and are not required to non-NASDAQ companies whose common stock trades at less than $5.00 per share or which have tangible net worth of less than $5,000,000 ($2,000,000 ifprovide the company has been operating for three or more years). Such rules require, among other things, that brokers who trade “penny stock” to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade “penny stocks” because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. In the event that the Company remains subject to the “penny stock rules” for any significant period, there may develop an adverse impact on the market, if any, for the Company’s securities. Because the Company’s securities are subject to the “penny stock rules”, investors will find it more difficult to dispose of the Company’s securities. Further, for companies whose securities are traded in the over-the-counter market, it is more difficult to obtain accurate quotations and to obtain coverage for significant news events because major wire services, such as the Dow Jones News Service, generallythis item.
Item 1B – Unresolved Staff Comments
Not applicable.
We do not publish press releases about such companies.
The Company is not a party to any legal proceedings.
Not applicable.
PART II
Market Information
Our common stock began tradingtrades on the Over-the-Counter Bulletin Board (“OTC-BB”) on January 20, 2010OTC Pink Current Information marketplace under the symbol “ASAE”. “GRBX.”
As of April 14, 2018,12, 2019, there has been limited trading volume.
Securities Authorized for Issuance Under Equity Compensation Plans
The Company has not paid dividends in prior years and has no plans to pay dividends in the near future. The Company intends to reinvest its earnings on the continued development and operationnever had an equity compensation plan.
Recent Sales of its business. Any payment of dividends would depend upon the Company’s pattern of growth, profitability, financial condition, and such other factors, as the Board of Directors may deem relevant.
During the year ended December 31, 2017,2018, we issued the following securities that were not registered under the Securities Act and were not previously reported on a Current Report on Form 8-K or a Quarterly Report on Form 10-Q. Except where noted, all of the securities discussed in this Item 5 were issued in reliance on the exemption under Section 4(a)(2) of the Securities Act.
In October 2018, and in anticipation of a merger, the Company earned consulting feesissued 7,500,000 shares to an investor at a price per share of $2,079,068 including $1,648,050$0.001 in conversion of a promissory note issued by an affiliated company.
Item 6 – Selected Financial Data
Not applicable.
Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management's current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as “may”“will,”“expect,”“anticipate,”“believe,”“estimate” and “continue,” or similar words. Those statements include statements regarding the intent, belief or current expectations of us and members of its management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from affiliated companiesthose contemplated by such forward-looking statements.
Readers are urged to carefully review and consider the various disclosures made by us in whichthis report and in our other reports filed with the Company’s officersSecurities and Exchange Commission. Important factors currently known to us could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that its assumptions are also small owners, as comparedbased upon reasonable data derived from and known about our business and operations and the business and operations of the Company. No assurances are made that actual results of operations or the results of our future activities will not differ materially from its assumptions. Factors that could cause differences include, but are not limited to, consulting fees of $1,715,522expected market demand for the same period last yearCompany's services, fluctuations in pricing for materials, and competition.
Overview
The Company was originally incorporated on April 10, 2007, under the laws of which $1,267,072 were from affiliated companies. During the year ended December 31, 2017,State of Nevada as ASAP Expo, Inc. Prior to July 2011, the Company also earned management feeinvestment banking services division was the core business of $55,200, from one hotel client. The increase in consulting fees in 2017 was mainly because the Company closed three hotel acquisition dealsASAP Expo. ASAP Expo helped small and one hotel refinance deal versus two acquisitions in year 2016, in addition, the Company also received more consulting fees from more hotel clients.
On March 23, 2018, the controlling shareholder of sales consisting mainlyASAP Expo, Inc., entered into a stock purchase agreement whereby ASAP Expo, Inc., sold 144,445,000 shares of consulting expenses, is primarilyASAP Expo Inc.’s common stock to GreenBox POS LLC (the “GreenBox POS”), a Washington limited liability company, representing 90% of ASAP Expo, Inc.’s issued and outstanding common stock. Following the resultsigning of this stock purchase agreement, ASAP Expo, Inc. entered into and closed, on April 12, 2018, an asset purchase agreement whereby it assigned the entirety of its assets to ASAP Property Holdings, Inc. in consideration of assumption of the commissionsentirety of its liabilities.
The transaction contemplated in the March 23, 2018 stock purchase agreement was closed on May 3, 2018, and other incentive compensation incurred directly related to acquisition advisory services. Therefore, the fluctuation in revenue may directly impact the costa change of sales.
On December 13, 2018, the Company closed more hotel acquisition deals,changed its name to GreenBox POS.
Since April 12, 2018, the Company’s operations have consisted of providing management and accordingly incurred higher consulting expenses related to the acquisition.
Results of administrative personnel costs, facilities expenses, and professional fee expenses.
Net Income
The Company recorded a net incomeloss from continuing operations of $89,471$53,298 for the year ended December 31, 2017, as compared to a net income of $57,858 for the same period last year.2018. The increasedecrease in net income was mainly due to the higher gross profit, and the lack of loss on settlement, offset by higher G&A expenses, higher interest expense and higher income tax provisions.
Liquidity and Capital Resources
Our working capital for the periods presented is summarized as follows:
As of December 31, 2017 ($) | As of December 31, 2016 ($) | |||||||
| Current assets | $ | 111,163 | $ | 62,369 | ||||
| Current liabilities | 685,751 | 722,148 | ||||||
| Working capital | $ | (574,588 | ) | $ | (659,779 | ) | ||
As of December 31, 2018 | As of December 31, 2017 | |||||||
Current assets | $ | 749,775 | $ | - | ||||
Current liabilities | 659,342 | - | ||||||
Working capital | $ | 90,433 | $ | - | ||||
The following table shows cash flows for the periods presented:
| Twelve Months Ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| Net cash provided by (used in) operating activities | $ | 467,324 | $ | 29,920 | ||||
| Net cash provided by investing activities | (7,239 | ) | (3,655 | ) | ||||
| Net cash provided by (used in) financing activities | (402,564 | ) | (40,176 | ) | ||||
| Net increase (decrease) in cash | $ | 57,521 | $ | (13,911 | ) | |||
Twelve Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
Net cash provided by (used in) operating activities | $ | 92,464 | $ | 467,324 | ||||
Net cash provided by (used in) investing activities | (813,492 | ) | (7,239 | ) | ||||
Net cash provided by (used in) financing activities | 721,028 | (402,564 | ) | |||||
Net increase (decrease) in cash | $ | - | $ | 57,521 | ||||
Operating Activities
For the twelve monthsyear ended December 31, 2018, net cash provided by operating activities was $92,464, which was primarily due to a net loss of $53,298 from continuing operations, adjusted by non-cash related expenses of amortization of the discount on the Company's convertible note payable of $43,381, amortization of debt issuance costs of $1,000, increases in accrued interest expense of $15,192 and discontinued operations of $92,464, offset by an increase in accrued interest receivable from an affiliated company of $6,275.
For the year ended December 31, 2017, net cash provided by operating activities was $467,324. This was primarily due to a net income of $89,471, adjusted by non-cash related expenses of depreciation of $11,086 and non-cash related gain on disposal of fixed assets of $5,277, then increased by favorable changes in working capital of $372,044. The favorable changes in working capital resulted from an increase in accounts payable and accrued expenses and accrued expenses - officer of $314,968, an increase in income tax payable of $48,350, and a decrease in due from affiliated companies of $8,727.
Investing activities
For the twelve monthsyear ended December 31, 2016,2018, net cash used in operatinginvesting activities was $57,775. This was primarily due to a net income of $57,858, adjusted by non-cash related expenses of depreciation of $10,474, then decreased by unfavorable changes in working capital of $38,412. The unfavorable changes in working capital resulted$813,492, resulting from a decreasepayment for note receivable in accounts payableanticipation of merger for $736,000 and accrued expensesdiscontinued operations of $107,986, a decrease in income tax payable of $18,121, and a decrease in due from affiliated companies of $87,695.
For the twelve monthsyear ended December 31, 2017, net cash provided by investing activities was $1,487. This was due to the acquisition of property and equipment of $7,239.
Financing activities
For the twelve monthsyear ended December 31, 2016,2018, net cash provided by investingfinancing activities was $84,040. This was due$721,028, which resulted from the issuance of convertible notes payable of $739,000, offset by payments for loan origination fees of $3,000, and cash flows related to the purchasediscontinued operations of a computer for $3,655.
For the twelve monthsyear ended December 31, 2017, net cash used in financing activities was $402,564 which was mainly due to net repayment to note payable from officers of $398,812, offset by payments on auto loan of $3,752.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in the our financial statements and the accompanying notes. The amounts of assets and liabilities reported on our balance sheet and the amounts of revenues and expenses reported for each of our fiscal periods are affected by estimates and assumptions, which are used for, but not limited to, the accounting for revenue recognition, stock based compensation and the valuation of deferred taxes.assumptions. Actual results could differ from these estimates. The following critical accounting policies are significantly affected by judgments, assumptions and estimates used in the preparation of the financial statements:
Revenue Recognition
Accounting Standards Codification (“ASC”) 605, “Revenue Recognition”606, Revenue from Contracts with Customers outlines the basic criteria that must be met to recognize revenue and provide guidance for presentation of revenue and for disclosure related to revenue recognition policies in financial statements filed with Securities and Exchange Commission. Management believes the Company’s revenue recognition policies conform to ASC 605.
Income Taxes
The Company accounts for income taxes under ASC 740, “Income Taxes.”Income Taxes. Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Management provides a valuation allowance for significant deferred tax assets when it is more likely than not that such asset will not be recovered.
Item 7A – Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8 – Financial Statements and Supplementary Data
Our financial statements and accompanying notes and the FASB issued Accounting Standards Updates ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases. ASU 2016-02 will also require new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertaintyreport of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently reviewing the provisions of this ASU 2016-02 to determine if there will be any impactour independent registered public accounting firm are listed in Part IV starting on the Company’s financial statements.
None
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
(a) Evaluation of disclosure controls and procedures.
Our management, with the participation of our management, we conducted an evaluation ofChief Executive Officer and Executive Vice President, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e)pursuant to Rule 13a-15 under the Securities Exchange ActAct. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of 1934,achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on management's evaluation, our Chief Executive Officer and Executive Vice President concluded that, as a result of the end of the period covered by this Annual Report. Based on this evaluation, our President and Chief Financial Officer concludedmaterial weaknesses described below, as of December 31, 2017 that2018, our disclosure controls and procedures were effective suchare not designed at a reasonable assurance level and are ineffective to provide reasonable assurance that the information we are required to be discloseddisclose in our reports filed withthat we file or submit under the SECExchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Executive Vice President, as appropriate, to allow timely decisions regarding required disclosure.
(i) We did not have sufficient personnel in our accounting and financial reporting functions. As a result, we were not able to achieve adequate segregation of duties and Reportwere not able to provide for adequate reviewing of the financial statements. This control deficiency, which is pervasive in nature, results in a reasonable possibility that material misstatements of the financial statements will not be prevented or detected on Internal Controla timely basis.
Management believes that the hiring of additional personnel who have the technical expertise and knowledge with the non-routine or technical issues we have encountered in the past will result in both proper recording of these transactions and a much more knowledgeable finance department as a whole. Due to the fact that our accounting staff consists of a Chief Financial Officer, additional personnel will also ensure the proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support us if personnel turnover issues within the department occur. We believe this will eliminate or greatly decrease any control and procedure issues we may encounter in the future.
We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal controls over Financial Reporting
(ii) Changes in internal control over financial reporting.
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 under the Exchange Act that occurred during the year ended December 31, 2018 that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
(iii) Management's report on internal control over financial reporting.
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Our President and Chief Financial Officer have evaluatedreporting, as defined in Exchange Act Rule 13a-15(f). Management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2017 based on the criteria establishedframework in Internal Control – Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO - 2013).of the Treadway Commission. Based on this evaluation, management concluded that as of December 31, 2017, our internal control over financial reporting iswas not effective in providing reasonable assurance regardingas of December 31, 2018 for the reliabilityreasons discussed above.
This Annual Reportannual report does not include an attestation report by Pinnacle Accountancy Group of Utah (a DBA of Heaton & Co., PLLC), our independent registered public accounting firm regarding internal control over financial reporting. Management’sAs a smaller reporting company, our management's report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SECSecurities and Exchange Commission that permit us to provide only management’smanagement's report in this Annual Report.
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The following are thenames of our executive officers and directors and executive officers of the Companytheir age, title, and biography as of March 31, 2018.
Name | Age | Positions | ||
Ben Errez, Chairman of the Board of Directors and Executive Vice President since May 3, 2018; | 58 | Chairman of the Board of Directors, Executive Vice President (Principal Financial Officer and Principal Accounting Officer) | ||
Fredi Nisan, Director and Chief Executive Officer since May 3, 2018; | 36 | Director, Chief Executive Officer |
Ben Errez, Chairman CEO and CFO since 2007
Mr. Errez has had a storied career as a pioneer in the tech industry. His past positions have an audit committee or a compensation committee, dueincluded positions at large companies like Microsoft and Intel. He has brought this expertise to the small sizeCompany to help build the Company into being at the forefront of blockchain financial software, services, and hardware.
Mr. Errez was one of the Board.early managers of Microsoft in 1991. From 1991 to 2004, he served as S/W Development Lead for the Microsoft International Product Group. He led the International Microsoft Office Components (Word, Excel, PowerPoint) team in design, engineering, development, and successful deployment. He also served as Executive Representative of Microsoft Office and was a founding member of the Microsoft Trustworthy Computing Forum, both within the company, and internationally. Mr. Errez co-authored the first Microsoft Trustworthy Computing Paper on Reliability. At Microsoft, Mr. Errez was responsible for the development of the first Microsoft software translation SDK in Hebrew, Arabic, Thai, and Simplified Chinese, the development of the first bidirectional extensions to RTF file format, all bidirectional extensions in text converters for Microsoft Office, and contributed to the development of the international extensions to the Unicode standard to include bidirectional requirements under the w3c consortium.
In 2004, Mr. Errez transitioned into the world of consulting, forming the start-up IHC Capital and holding the position of Principal Consultant from founding to the present date, through which he advises clients in the South Pacific region with market capitalizations ranging from $50M to $150M on matters such as commerce, security, reliability, and privacy.
From IHC Mr. Errez was courted into AuroraView where he assumed the positions of Director and Principal Consultant which he held from August 2015 to March 2016. Here his duties included the creation of Business Intelligence Programs, Business Metrics and Analysis tools, from concept development through deployment over varying network and mobile platforms for a Fortune 500 client. Mr. Errez personally developed all Excel, VBA and SharePoint back-end tools: metrics, statistical modeling, gauges, reporting engines, data distribution, direct connection to all data sources and GUI for customized reports. Mr. Errez designed and deployed E2E team and client views and customize-able dashboards supporting A-Level executives through team leads and individual contributors and deployed consumable reports over Microsoft PowerBI front-end. He also added support for reporting in a host of output formats, including XLS, XML, PDF, HTML and DOC.
From AuroraView, Mr. Errez was asked to take over the Microsoft Alumni Network for the Southern California region as a regional director immediately before launching the Washington LLC. Here he helped to formally organize the network, develop success metrics, goals and objectives, KPI reports, web content, social media strategies, and funding strategies. Mr. Errez was also key to the deployment of the University Ambassador Program.
Fredi Nisan, Director, Chief Executive Officer
Mr. Nisan’s career in tech began in 2005 in Israel, where he worked for Zicon Israel, a hardware and software producer. At Zicon, he supervised all of Zicon’s inventory operations, worked on quality controls for motherboards and chips and educated customers and software and hardware product functionality. From Zicon, Mr. Nisan moved to San Diego, CA, where he was a business coach for One Coach. One Coach specialized in customized growth solutions for small business owners. At One Coach, he hit the ground running and consistently ranked as the top sales person for small business coaching for the company and provided his clients with the latest strategies for sales, internet marketing, branding, and ROI.
From One Coach, Mr. Nisan took the plunge into the world of start-ups and launched his own company, Brava POS, where he served as President until 2015. Brava POS provided point of sale systems for specialty retail companies. Mr. Nisan developed software to provide clients with solutions for issues ranging from inventory management to payroll to processing a high volume of transactions in the form of a cloud-based point of sale system. This system had the capability to manage multiple stores with centralized inventory and process sales without an internet connection, and offered a secure login for each employee. It included advanced inventory management and reporting plus powerful functionality for its end users.
In May 2016, Mr. Nisan founded QuickCitizen for which he has served as CEO and Director since its founding. Through QuickCitizen, Mr. Nisan conceptualized and created a software that simplifies the immigration paperwork process for lawyers and law firms, reducing the processing time from approximately three hours to fifteen minutes. The Board of Directors also does not have an audit committee financial expert.
Employment Agreements
The Company doeshas not entered into employment agreements or other compensation agreements with its executive officers.
Family Relationships
There are no family relationships between any of our directors or executive officers and any other directors or executive officers.
Section 16(a) Beneficial Owner Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% owners are required by certain SEC regulations to furnish us with copies of all Section 16(a) forms they file.
Based solely upon a review of copies of such forms filed on Forms 3, 4, and 5, and amendments thereto furnished to us, we believe that as of December 31, 2018 our executive officers, directors and greater than 10 percent beneficial owners have formal written valuescomplied on a timely basis with all Section 16(a) filing requirements, with the exception of the following: our two executive officers and ethical standards,directors have not yet filed a Form 3 following the closing of the change in control of the Company.
Code of Ethics
We have not previously adopted a Code of Ethics due to the small number of officers and employees and the size of our operations. It is anticipated that during 2019 we will adopt a Code of Ethics that applies to all of the Company’s directors and executive officers serving in any capacity, including our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.
Board Composition, Committees, and Independence
We are not required to have any independent members of management. the Board of Directors. As we do not have any board committees, the board as a whole carries out the functions of nominating and compensation committees, and such “independent director” determination has been made pursuant to the committee independence standards.
Involvement in Certain Legal Proceedings
Our two executive officers and directors have not been involved in any of the following events during the past ten years:
1. | any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time (a); | |
2. | any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); | |
3. | being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities; | |
4. | being found by a court of competent jurisdiction in a civil action, the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; | |
5. | being subject of, or a party to, any federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or | |
6. | being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Item 11 – Executive Compensation
ITEM 10. EXECUTIVE COMPENSATIONSummary Compensation Table
The following table sets forthsummarizes information concerning the compensation we haveawarded to, earned by, or paid to, each executive officerour Chief Executive Officer (Principal Executive Officer) and allour two most highly compensated executive officers as a group, forother than the Principal Executive Officer during fiscal years ended December 31,2018 and 2017 and 2016, annual compensation, including salary and bonuses paid by(collectively, the Company to the Chief“Named Executive Officer. No other executive officers received more than $150,000 during the fiscal years-ended December 31, 2017 and 2016. The Company does not currently have a long-term compensation plan and does not grant any long-term compensation to its executive officers or employees.
Name and principal position | Fiscal Year | Salary ($) | Bonus ($) | Stock ($)(1) | |||||||||||||||||||||||||||||||||||
Option Awards ($) | Non-equity incentive plan compensation ($) | Non-qualified deferred compensation ($) | |||||||||||||||||||||||||||||||||||||
All other compensation ($) | Total ($) | ||||||||||||||||||||||||||||||||||||||
Ben Errez, Executive Vice President since May 3, 2018 | 2018 | - | - | ||||||||||||||||||||||||||||||||||||
| - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Fredi Nisan, Chief Executive officer since May 3, 2018 | 2018 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
Frank Yuan, CFO, COO and Director until May 3, 2018 | 2018 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
Frank Yuan, CFO, COO and Director until May 3, 2018 | 2017 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
Option/SAR Grants in the course of fulfilling their duties as directors of theFiscal Year Ended December 31, 2018
The Company and do not receive any payroll.
Outstanding Equity Awards at Fiscal Year-End Table
The Company has never had an equity compensation plan.
Employment/Consulting Contracts, Termination of Employment, Change-in-Control Arrangements
The Company has not entered into employment agreements or other compensation agreements with its executive officers.
Director Compensation
Our two current directors are executive officers of the Company. Our former director was also an executive officer of the Company. During 2018 we did not separately compensate our Directors for their service on the Board of Directors.
Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
The following table sets forth, as of April 12, 2019, certain information as of the date hereof with respect to the holdings of: (1) each person known to us to be the beneficial owner of more than 5% of our common stock; (2) each of our directors, nominees for director and named executive officers; and (3) all directors and executive officers as a group. To the best of our knowledge, each of the persons named in the table below as beneficially owning the shares set forth therein has sole voting power and sole investment power with respect to such shares, unless otherwise indicated. Unless otherwise specified, the address of each of the persons set forth below is in care of the Company, at the address of: 8880 Rio San Diego Drive, Suite 102, San Diego, CA.
Name and Address of Owner | Shares of Common Stock Owned Beneficially | Percent of Class | ||||||
Five Percent Stockholders: | ||||||||
Named Executive Officers and Directors | ||||||||
Ben Errez (1) | 69,333,600 | 44 | % | |||||
Fredi Nisan (2) | 69,333,600 | 44 | % | |||||
Total | 138,667,200 | 88 | % | |||||
(1) Ben Errez is Chairman of the Board of Directors and Executive Vice President of the Company. These shares are held via Mr. Errez’s control of 48% of GreenBox POS which purchased 144,445,000 shares of the Company formerly controlled by Mr. Yuan.
(2) Fredi Nisan is a Director and Chief Executive Officer of the Company. These shares are held via Mr. Nisan’s control of 48% of GreenBox POS which purchased 144,445,000 shares of the Company formerly controlled by Mr. Yuan.
There are no arrangements, known to the Company, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.
Item 13 – Certain Relationships and Related Transactions and Director Independence.
At December 31, 2018 and December 31, 2017, the Company was owed $0 and $20,881 from affiliated companies in which the Company’s officers were also owners and officers. This was related to the Company’s former CEO.
The Company had a revolving line of credit totaling $1,800,000 with Frank Yuan, CEO and Jerome Yuan.Yuan, his son. The line of credit bearsbore interest at 6% per annum starting October 1, 2010 and iswas due upon demand, as amended. On December 31, 2014, the convertible note was amended to waive the right of conversion and was to be used as a line of credit. On April 12, 2018, Frank Yuan converted $144,445 of the line of credit to 144,445,000 shares. During fiscalthe years ended December 31, 2018 and 2017, and 2016, the Company incurred interest expense totaling $32,100$3,333 and $21,441$32,100 in connection with the line of credit.Line. The balance of the credit line as of December 31, 2018 was $0 and the accrued interest on the line of credit was $0. The balance of the credit line as of December 31, 2017 was $212,140 and the accrued interest on the note was $32,100. The balance$32,100 and were reclassed to current liabilities of the note payable as of December 31, 2016 was $610,952 including accrued interest of $312,750 which was transferred to the principal at December 31, 2016.
The son of the Company’s officer (“Son”) receivesreceived salary from the Company for work performed. During yeartwelve months ended December 31, 2018 and 2017, and 2016, Thethe Son received a total salary of $160,000$0 and $180,000,$120,000, respectively.
On April 12, 2018, the Company entered into an asset purchase agreement whereby it assigned the entirety of its assets to ASAP Property Holdings, Inc., an affiliated entity owned and operated by Frank Yuan, in consideration of assumption of the Company’s officer (“Brother”entirety of its liabilities.
On August 7, 2018, in anticipation of a transaction, the Company entered into a Promissory Note with GreenBox POS, whereby GreenBox POS received $250,000 to be used to facilitate business operations in anticipation of transferring such operations from GreenBox POS to the Company. GreenBox POS promised to pay the Company $250,000 plus interest at maturity (the “Note Receivable”). GreenBox POS is receiving consulting feesan affiliated company. The Note Receivable bears interest at a rate of 7.25% per annum and matured on February 28, 2019. As of December 31, 2018, the balance of the Note Receivable was $250,000 and the balance of interest receivable was $6,275. This is a related party loan from the Company for work performed. During year 2017to GreenBox POS in anticipation of a transaction between the two entities. The transaction has not yet closed and 2016, the Brother earned a total consulting fee of $0 and $72,000, respectively.
On September 20, 2018, the Company and GreenBox POS entered into a definitive material agreement pursuant to which the Company will be assigned any and all assets related to GreenBox POS’s blockchain gateway and payment system business, point of sale system business, delivery business, kiosk business (collectively, the “Business”), and all intellectual property thereto owned by GreenBox POS in consideration of assuming any and all liabilities incident to the operation of the Business that have been incurred in the normal course of business. The transfer has not been effected as of this date as the Company is currently accounting for the transaction.
As of December 31, 2018, the Company is owed $736,000 by a related entity in anticipation of a merger or acquisition of the entity. This amount includes the August 7, 2018 Note Receivable referenced above.
In October 2018, and in anticipation of a merger, the Company issued 7,500,000 shares to an investor at a price per share of $0.001 in conversion of a promissory note issued by an affiliated company. The Company recorded a receivable in the amount of $7,500.
Item 14 – Principal Accounting Fees and Services
Audit Fees. The aggregate fees billed by our independent registered public accounting firm, Pinnacle Accountancy Group of Utah, PLLC (a DBA of Heaton & Co., PLLC), for professional services rendered for the auditsaudit of theour annual financial statements for the years ended December 31, 2018 and 2017, including review of our interim financial statements were $12,000 and $14,400, respectively.
Audit Related Fees. We incurred fees to our independent registered public accounting firm of $0 and $0 for audit related fees during the fiscal years ended December 31, 2018 and 2017, respectively, which related to filings with the SEC.
Tax and Other Fees. We incurred fees to our independent registered public accounting firm of $0 and $0 for tax and fees billed for otherduring the fiscal years ended December 31, 2018 and 2017.
The Board of Directors pre-approves all auditing services rendered by its principal accountants:
| Type of Services Rendered | 2017 | 2016 | ||||||
| Audit Fees | $ | 14,400 | $ | 12,600 | ||||
| Audit-Related Fees | $ | - | $ | 9,450 | ||||
| Tax Fees | $ | - | $ | - | ||||
| All Other Fees | $ | - | $ | - | ||||
PART IV
(a) The following documents are filed as part of this Annual Report on Form 10-K:
1. Financial StatementsStatements:
Our financial statements and the Report of Independent Registered Public Accounting Firm are included herein on page F-1.
2. Financial Statement Schedules:
The financial statement schedules are omitted as they are either not applicable or the information required is presented in the financial statements and notes thereto on page F-1.
3. Exhibits:
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3.1 |
| Amended and Restated Articles of Incorporation, filed August 29, 2007 |
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| 3.2 | Certificate of Amendment to Articles of Incorporation, filed October 18, 2017 | X | ||||||||
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| 3.4 | Certificate of Amendment to Articles of Incorporation, filed December 13, 2018 | X | ||||||||
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| Convertible Promissory Note issued August 6, 2018, to Power Up Lending Group Ltd. |
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| 21.1 | Subsidiaries of the Registrant - None. | X | ||||||||
31.1 | X | |||||||||
31.2 | X | |||||||||
32.1 | X | |||||||||
32.2 | X | |||||||||
101.INS | XBRL Instance Document | X | ||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | X | ||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | X |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
GreenBox POS | |||
Date: April 16, 2019 | By: | /s/ Fredi Nisan | |
Fredi Nisan | |||
Chief Executive Officer and Director (Principal Executive Officer) | |||
Date: April 16, 2019 | By: | /s/ Ben Errez | |
Ben Errez | |||
Chairman of the Board and Executive Vice President (Principal Financial Officer and Principal Accounting Officer) | |||
GREENBOX POS
Index To Financial Statements
Page | |||||
F-1 | |||||
F-2 | |||||
F-3 | |||||
F-4 | |||||
F-5 | |||||
F-6 | |||||
To Thethe Board of Directors and Stockholders of
GreenBox POS:
Opinion on the Financial Statements
We have audited the accompanying balance sheetssheet of ASAP Expo, Inc.GreenBox POS, (the “Company”) as of December 31, 20172018 and 2016,2017, and the related statements of operations, stockholders’ equity (deficit),deficit, and cash flows for each of the years in the two-year period ended December 31, 2018 and 2017 and the related notes (collectively referred to as the financial statements)“financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and 2016, and the resultsresult of its operations and its cash flows for each of the years in the two-year periodyear ended December 31, 2018 and 2017, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph Regarding Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred losses, and has not yet generated revenue These factors raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditaudits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/Pinnacle Accountancy Group of Utah
We have served as the Company’s auditor since 2017
Farmington, Utah
April 18, 2018
| ASAP EXPO, INC. | ||||||||
| BALANCE SHEETS | ||||||||
| December 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 90,282 | $ | 32,761 | ||||
| Due from affiliated companies | 20,881 | 29,608 | ||||||
| Total Current Assets | 111,163 | 62,369 | ||||||
| Furniture and equipment, net | 78,763 | 60,675 | ||||||
| Total Assets | $ | 189,926 | $ | 123,044 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 342,924 | $ | 69,957 | ||||
| Accrued expenses – officer | 42,000 | - | ||||||
| Auto loan, current | 4,003 | 4,905 | ||||||
| Line of credit, officers | 212,140 | 610,952 | ||||||
| Income tax payable | 84,684 | 36,334 | ||||||
| Total Current Liabilities | 685,751 | 722,148 | ||||||
| Long-Term Liabilities | ||||||||
| Auto loan, noncurrent | 16,261 | 2,453 | ||||||
| Equipment loan, noncurrent | 12,299 | 12,299 | ||||||
| Total Long-Term Liabilities | 28,560 | 14,752 | ||||||
| Total Liabilities | 714,311 | 736,900 | ||||||
| Stockholders’ Deficit | ||||||||
| Preferred stock, 5,000,000 shares authorized; zero shares issued and outstanding | - | - | ||||||
Common stock, $.001 par value, 495,000,000 shares authorized, 14,445,363 and 14,445,363 shares issued and outstanding at September 30, 2017 and December 31, 2016 | 14,445 | 14,445 | ||||||
| Additional paid in capital | (902,272 | ) | (902,272 | ) | ||||
| Retained earnings | 363,442 | 273,971 | ||||||
| Total Stockholders’ Deficit | (524,385 | ) | (613,856 | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | 189,926 | $ | 123,044 | ||||
BALANCE SHEETS
December 31, | December 31, | |||||||
2018 | 2017 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash & equivalents | - | - | ||||||
Note receivable – affiliated company | 743,500 | - | ||||||
Interest receivable - affiliated company | 6,275 | - | ||||||
Total current assets | 749,775 | - | ||||||
Current assets of discontinued operations | - | 111,163 | ||||||
Furniture and equipment of discontinued operations, net | - | 78,763 | ||||||
Total Assets | $ | 749,775 | $ | 189,926 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities | ||||||||
Accrued interest | $ | 15,192 | - | |||||
Convertible notes payable, net of unamortized debt discount of $92,850 and $0 and unamortized loan origination costs of $2,000 and $0 at December 31, 2018 and 2017, respectively | 158,150 | - | ||||||
Notes payable | 486,000 | - | ||||||
Total current liabilities | 659,342 | - | ||||||
Current Liabilities of Discontinued Operations | 259,717 | 685,751 | ||||||
Long-term liabilities of discontinued operations | - | 28,560 | ||||||
Total Liabilities | 919,059 | 714,311 | ||||||
Stockholders’ Deficit | ||||||||
Common stock $0.001 par value, 495,000,000 shares authorized, 166,390,363 shares and 14,445,363 shares issued and outstanding at December 31, 2018 and 2017, respectively | 166,390 | 14,445 | ||||||
Additional paid in capital | (664,930 | ) | (902,272 | ) | ||||
Retained earnings | 329,256 | 363,442 | ||||||
Total Stockholders’ Deficit | (169,284 | ) | (524,385 | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | 749,775 | $ | 189,926 | ||||
The accompanying notes are an integral part of these audited financial statements.
| ASAP EXPO, INC. | ||||||||
| STATEMENTS OF OPERATIONS | ||||||||
| Year Ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| Revenues: | ||||||||
| Consulting fees | $ | 431,018 | $ | 448,450 | ||||
| Consulting fees, related parties | 1,648,050 | 1,267,072 | ||||||
| Management Fee | 55,200 | - | ||||||
| Total revenues | 2,134,268 | 1,715,522 | ||||||
| Cost of Sales | ||||||||
| Consulting expense | 777,300 | 520,297 | ||||||
| Consulting expense, related parties | 293,500 | 297,000 | ||||||
| Total cost of sales | 1,070,800 | 817,297 | ||||||
| Gross Profit | 1,063,468 | 898,225 | ||||||
| Operating expenses: | ||||||||
| General and administrative | 867,722 | 784,778 | ||||||
| Total operating expenses | 867,722 | 784,778 | ||||||
| Income from operations | 195,746 | 113,447 | ||||||
| Other Income (Expense) | ||||||||
| Other income | - | 15,000 | ||||||
| Gain on disposal of fixed assets | 5,277 | - | ||||||
| Interest expense | (33,578 | ) | (22,128 | ) | ||||
| Loss on Settlement | - | (11,438 | ) | |||||
| Total other income (expense), net | (28,301 | ) | (18,566 | ) | ||||
| Income before income taxes | 167,445 | 94,881 | ||||||
| Income taxes provision | 77,974 | 37,023 | ||||||
| Net (loss) Income | $ | 89,471 | $ | 57,858 | ||||
| Net income (loss) per common share | ||||||||
| Basic and diluted | $ | 0.01 | $ | 0.00 | ||||
| Weighted average common shares outstanding | ||||||||
| Basic and diluted | 14,445,363 | 14,445,363 | ||||||
STATEMENTS OF OPERATIONS
Year Ended | ||||||||
December 31, December 31, | ||||||||
2018 | 2017 | |||||||
Revenue | $ | - | $ | - | ||||
Operating expenses | - | - | ||||||
Operating loss | - | - | ||||||
Other income (expense) | ||||||||
Interest income | 6,275 | - | ||||||
Interest expense | (59,573 | ) | - | |||||
Gain on disposal of fixed assets | - | - | ||||||
Total non-operating income (expense) | (53,298 | ) | - | |||||
Net (loss) income from continuing operations before income taxes | (53,298 | ) | - | |||||
Net income from discontinued operations, net of income taxes | 19,112 | 89,471 | ||||||
Net income (loss) | $ | (34,186 | ) | $ | 89,471 | |||
Net income (loss) per basic common share | ||||||||
Continuing operations | $ | (0.00 | ) | $ | 0.00 | |||
Discontinued operations | 0.00 | 0.01 | ||||||
| $ | (0.00 | ) | $ | 0.01 | ||||
Weighted average common shares outstanding | 119,942,719 | 14,445,363 | ||||||
The accompanying notes are an integral part of these audited financial statements.
| Additional | Total | |||||||||||||||||||
| Common stock | paid in | (Accumulated | stockholders’ | |||||||||||||||||
| Shares | Amount | capital | deficit) | deficit | ||||||||||||||||
| BALANCE, DECEMBER 31, 2015 | 1,445,363 | $ | 14,445 | $ | (902,272 | ) | $ | 216,113 | $ | (671,714 | ) | |||||||||
| Net income | - | - | - | 57,858 | 57,858 | |||||||||||||||
| 1,445,363 | $ | 14,445 | $ | (902,272 | ) | $ | 273,971 | $ | (613,856 | ) | ||||||||||
| - | - | - | 89,471 | 89,471 | ||||||||||||||||
| 1,445,363 | $ | 14,445 | $ | (902,272 | ) | $ | 363,442 | $ | (524,385 | ) | ||||||||||
Additional | Total | |||||||||||||||||||
Common stock | paid in | Accumulated | stockholders’ | |||||||||||||||||
Shares | Amount | capital | deficit | deficit | ||||||||||||||||
BALANCE, DECEMBER 31, 2016 | 14,445,363 | $ | 14,445 | $ | (902,272 | ) | $ | 273,971 | $ | (613,856 | ) | |||||||||
Net income | - | - | - | 89,471 | 89,471 | |||||||||||||||
BALANCE, DECEMBER 31, 2017 | 14,445,363 | $ | 14,445 | $ | (902,272 | ) | $ | 363,442 | $ | (524,385 | ) | |||||||||
Conversion of Line of credit, officers to shares of common stock | 144,445,000 | 144,445 | 105,555 | - | 250,000 | |||||||||||||||
Recognition of debt discount and loan origination costs | - | - | 131,787 | 131,787 | ||||||||||||||||
Shares issued for note receivable – affiliated company | 7,500,000 | 7,500 | - | 7,500 | ||||||||||||||||
Net loss | (34,186 | ) | (34,186 | ) | ||||||||||||||||
BALANCE, DECEMBER 31, 2018 | 166,390,363 | $ | 166,390 | $ | (664,930 | ) | $ | 329,256 | $ | (169,284 | ) | |||||||||
The accompanying notes are an integral part of these audited financial statements.
| ASAP EXPO, INC. | ||||||||
| STATEMENTS OF CASH FLOWS | ||||||||
| Year Ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| Operating Activities: | ||||||||
| Net Income (loss) | $ | 89,471 | $ | 57,858 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation expense | 11,086 | 10,474 | ||||||
| (5,277 | ) | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable and accrued expenses | 272,967 | (107,986 | ) | |||||
| Accrued expenses - officer | 42,000 | - | ||||||
| Income tax payable | 48,350 | (18,121 | ) | |||||
| Due from affiliated companies | 8,727 | 87,695 | ||||||
| Net cash provided by (used in) operating activities | 467,324 | 29,920 | ||||||
| Investing Activities: | ||||||||
(7,239 | ) | (3,655 | ) | |||||
| Net cash provided by (used in) investing activities | (7,239 | ) | (3,655 | ) | ||||
| Financing Activities: | ||||||||
| Payments on auto loan | (3,752 | ) | (4,905 | ) | ||||
| Payments on equipment loan | - | (5,271 | ) | |||||
| Proceeds from borrowings on line of credit from officers | 376,298 | 195,000 | ||||||
| Repayments of borrowings on line of credit from officers | (775,110 | ) | (225,000 | ) | ||||
| Net cash provided by (used in) financing activities | (402,564 | ) | (40,176 | ) | ||||
| Net increase (decrease) in cash | 57,521 | (13,911 | ) | |||||
| Cash, beginning of period | 32,761 | 46,672 | ||||||
| Cash, end of period | $ | 90,282 | $ | 32,761 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid during the period | ||||||||
| Interest | $ | 1,452 | $ | 513 | ||||
| Income taxes | $ | 29,624 | $ | 55,144 | ||||
| Non-cash investing and financing activities: | ||||||||
| Vehicle purchased through auto loan | $ | 22,789 | $ | 17,570 | ||||
| Loan paid by vehicle trade-in | $ | 6,130 | $ | - | ||||
| Accrued interest transferred to line of credit, officers | $ | - | $ | (312,750 | ) | |||
STATEMENTS OF CASH FLOWS
Year Ended December 31, | ||||||||
2018 | 2017 | |||||||
Operating Activities: | ||||||||
Net Income (loss) from continuing operations | $ | (53,298 | ) | $ | - | |||
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities: | ||||||||
Accretion of discount on convertible note payable | 43,381 | - | ||||||
Amortization of debt issuance costs included in interest expense | 1,000 | - | ||||||
Changes in operating assets and liabilities | ||||||||
Interest receivable from affiliated company | (6,275 | ) | - | |||||
| Accrued interest | 15,192 | - | ||||||
Net cash provided by (used in) operating activities - continuing operations | - | - | ||||||
Net cash provided by (used in) operating activities - discontinued operations | 92,464 | 467,324 | ||||||
Net cash provided by operating activities | 92,464 | 467,324 | ||||||
Investing Activities: | ||||||||
Note receivable in anticipation of merger | (736,000 | ) | - | |||||
Net cash provided by (used in) investing activities - continuing operations | (736,000 | ) | - | |||||
Net cash provided by (used in) investing activities - discontinued operations | (77,492 | ) | (7,239 | ) | ||||
Net cash provided by (used in) investing activities | (813,492 | ) | (7,239 | ) | ||||
Financing Activities: | ||||||||
Proceeds from borrowings on convertible note payable | 739,000 | - | ||||||
Payments of loan origination fees | (3,000 | ) | - | |||||
Net cash provided by (used in) financing activities – continuing operations | 736,000 | - | ||||||
Net cash provided by (used in) financing activities – discontinued operations | (14,972 | ) | (402,564 | ) | ||||
Net cash provided by (used in) financing activities | 721,028 | (402,564 | ) | |||||
Net increase (decrease) in cash | - | 57,521 | ||||||
Cash, beginning of period | - | 32,761 | ||||||
Cash, end of period | $ | - | $ | 90,282 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period | ||||||||
Interest | $ | - | $ | 1,452 | ||||
Income taxes | $ | - | $ | 29,624 | ||||
Non-cash investing and financing activities | ||||||||
Vehicle purchased through auto loan | $ | - | $ | 22,789 | ||||
Loan paid by vehicle trade-in | $ | - | $ | 6,130 | ||||
Loss on conversion | $ | 101,111 | ||||||
Conversion of Line of credit, officers to shares of common stock | $ | 144,445 | ||||||
The accompanying notes are an integral part of these audited financial statements.
December 31, 2018 and 2017
NOTE 1 -– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
GreenBox POS (“ASAP Expo”GreenBox” or the “Company”) d.b.a. ASAP International Holdings, was originally incorporated on April 10, 2007 under the laws of the State of Nevada.
On March 23, 2018, Frank Yuan, the controlling shareholder of ASAP Expo, Inc., entered into a stock purchase agreement whereby it sold 144,445,000 shares of ASAP Expo Inc.'s common stock to GreenBox POS LLC, representing 90% of ASAP Expo, Inc.'s issued and outstanding shares of common stock. Pursuant to this transaction, on April 12, 2018, ASAP Expo, Inc. entered into an asset purchase agreement whereby it assigned the entirety of its assets to ASAP Property Holdings, Inc. in consideration of assumption of the entirety of its liabilities.
The transaction contemplated in the March 23, 2018 stock purchase agreement was closed on May 3, 2018, and a change of control of ASAP Expo, Inc. was effected. Thereafter, the Company changed its name to “GreenBox POS LLC” and subsequently to “GreenBox POS.”
Since April 12, 2018, the Company’s operations have consisted of providing management and business development services.
BASIS OF PRESENTATION
The financial statements include the accounts of Greenbox POS, LLC, a Nevada Corporation. All amounts are presented in U.S. Dollars unless otherwise stated. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, cash on deposit with banks, and highly liquid debt investments with a maturity of three months or less when purchased. The Company has no cash equivalents of $nil and $nil as of December 31, 20172018 and 2016, respectively.
GOING CONCERN
As of December 31, 2018, the Company had cash of $nil, has incurred losses and has accumulated a stockholders’ deficit of $524,385significant deficit. During the year ended December 31, 2018 and a negative working capital of $574,588, which mainly resulted from the accumulated deficit of its former parent company that was transferred to the Company upon its spin-off from the parent company, and a lack of profitable operating history. The Company hopes to increase revenues from its real estate business and financial advisory services business. In the absence of significant increases in revenues, the Company intends to fund operations through additional debt and equity financing arrangements. The successful outcome of future activities cannot be determined at this time and there are no assurances that if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results.
The Company intends to raise additional capital through private placements of debt and equity securities, but there can be no assurance that these funds will be available on terms acceptable to the Company, or will be sufficient to enable the Company to fully complete its development activities or sustain operations. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.
Accordingly, the accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the classification of liabilitiesadjustment that might result from the outcome of these uncertainties.this uncertainty.
The Company’s financial instruments consist of cash, prepaid expensesa note receivable from related party and otherinterest receivables accountsfrom related party, convertible notes payable and accrued liabilities and due to/from affiliated company.liabilities. The fair value of these financial instruments approximate their carrying amounts reported in the balance sheets due to the short term maturity of these instruments.
Fair Value Measurements
ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
CONVERTIBLE PROMISSORY NOTE
The Company’s financial instruments consisted of cash,Company accounts payablefor convertible promissory notes in accordance with ASC 470-20, Debt with Conversion and accrued liabilities, advancesOther Options. The Company evaluates embedded conversion features within convertible debt to due to ordetermine whether the embedded conversion feature should be bifurcated from affiliated companies, notes payable to officers. The estimatedthe host instrument and accounted for as a derivative at fair value with changes in fair value recorded in the Income Statement. If the conversion feature does not require recognition of cash, accounts payablea bifurcated derivative, the convertible debt instrument is evaluated for consideration of any beneficial conversion feature (“BCF”) requiring separate recognition. When the Company records a BCF, the intrinsic value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument with an offset to additional paid-in capital and accrued liabilities, dueamortized to or from affiliated companies, and notes payable approximates its carrying amount due tointerest expense over the short maturitylife of these instruments.
USE OF ESTIMATES
The preparation of financial statements in conformity with theU.S. GAAP requires 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.
LEASES
Lease for office space at our corporate headquarters is classified as an operating lease in accordance with ASC 840, Leases. Rent expense is recognized on a straight-line basis over the terms of the leases and, accordingly, we record the cumulative difference between cash rent payments and the recognition of rent expense as a deferred rent liability. When an operating lease includes lease incentives, such as a rent abatements or leasehold improvement allowances, or requires fixed escalations of the minimum lease payments, the aggregate rental expense, including such incentives or increases, is recognized on a straight-line basis over the term of the lease.
Aggregate future minimum annual payments under aforementioned leases at December 31, 2018, are as follows:
Year | Operating Leases | |||
2018 | $ | 10,648 | ||
2019 | 131,614 | |||
2020 | 135,562 | |||
2021 | 139,629 | |||
Total minimum rentals | $ | 417,453 | ||
Accounting Standards Codification (“ASC”) 605, 606, Revenue Recognitionfrom Contracts with Customers, which outlines the basic criteria that must be met to recognize revenue and provide guidance for presentation of revenue and for disclosure related to revenue recognition policies in financial statements filed with Securities and Exchange Commission. Management believes the Company’s revenue recognition policies conform to ASC 605.
As of December 31, 2018, the Company has not generated any revenues from real estate advisory services that are subject to refund are recorded as deferred revenue until the project is completed and the fees are no longer refundable.
INCOME TAXES
Income taxes are accounted for under the asset and liability method. Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, net of operating loss carry forwards and credits, by applying enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is not more likely than not that some portion or all of the deferred tax assets will be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
EARNINGS PER SHARE
A basic earnings per share is computed by dividing net income to common stockholders by the weighted average number of shares outstanding for the year. Dilutive
RECENT ACCOUNTING PRONOUNCEMENTS
In July 2017, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), and Derivatives and Hedging (Topic 815) (“ASU 2017-11”). ASU 2017-11 changes the classification analysis of certain equity-linked financial instruments (or embedded features) with down-round features. The amendments require entities that present earnings per share include(“EPS”) in accordance with Topic 260 to recognize the effect of any potentially dilutive debt or equity under the treasury stock method, if including such instruments is dilutive. As of December 31, 2017 and 2016, the Company did not have any potentially dilutive instruments.
In AugustFebruary 2016, the FASB issued Accounting Standards Update ASU 2016-15, “StatementNo. 2016-02, Leases (Topic 842), which requires lessees to recognize “right of Cash Flows (Topic 230): Classification of Certain Cash Receiptsuse” assets and Cash Payments”. The updated guidance aims to reduce diversity in presentation and classification of certain cash receipts and cash payments by addressing eight specific cash flow issues including (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instrumentsliabilities for all leases with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned Life Insurance Policies; (6) Distributions Received from Equity Method Investees; (7) Beneficial Interests in Securitization Transactions and (8) Separately Identifiable Cash Flows and Application of the Predominance Principle. Among the afore-mentioned eight addressed cash flow issues, the category of “Separately Identifiable Cash Flows and Application of the Predominance Principle” requires a reporting entity to classify cash receipts and payments that have aspectslease terms of more than one class of cash flows first by applying specific guidance12 months. The ASU requires additional quantitative and qualitative financial statement footnote disclosures about the leases, significant judgments made in generally accepted accounting principles (GAAP)for those leases and onlyamounts recognized in the absence of specific guidance, by determining each separately identifiable source or use within the cash receipts and cash payments on the basis of the nature of the underlying cash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannotfinancial statements about those leases. The effective date will be separated by source or use, a reporting entity should classify such cash receipts and cash payments by referring to the predominant source or use of cash flows for the item. The updated guidance is effective from reportingfiscal periods beginning after December 15, 2018.2019. The Company is assessingcurrently evaluating the impact of the adoption of this accounting standard update on its financial statements.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 2 – DISCONTINUED OPERATIONS
On April 12, 2018, ASAP Property Holdings Inc. (“Holdings”) entered into an Asset Purchase Agreement (the “Purchase Agreement”) with the Company, to acquire all the assets and all liabilities of the Company (the “Acquired Assets”). On April 12, 2018, the Company completed the sale of its accounting practicesAcquired Assets in an asset purchase transaction (the “Transaction”) pursuant to the terms and financial reporting proceduresconditions of the Purchase Agreement.
As a result of the consummation of the Purchase Agreement, on April 12, 2018, in consideration for the Acquired Assets, Holdings paid the Company $nil in cash and assumed $234,605 of liabilities in excess of assets.
The allocation of the purchase price of the assets acquired and liabilities assumed based on their fair values was as follows:
Cash | $ | 77,292 | ||
Petty Cash | 200 | |||
Other Receivables | 30,790 | |||
Accounts Receivable from Affiliates | 156,312 | |||
Fixed Assets | - | |||
Accounts Payable | (218,195 | ) | ||
Payroll & Payroll Tax | (68,801 | ) | ||
Accrued Expenses | (91,224 | ) | ||
Accrued Interest – Solar Equipment | (262 | ) | ||
Other Accrued Interest | (35,432 | ) | ||
Auto Loan | (4,034 | ) | ||
Promissory Note | (54,048 | ) | ||
Auto Loan | (14,905 | ) | ||
Equipment Loan – Solar Equipment | (12,298 | ) | ||
Total | $ | (234,605 | ) |
Income from discontinued operations during the twelve months ended December 31, 2018, and 2017 is $19,112 and $89,471, respectively.
Holdings agreed to assume responsibility for and fulfill the tax obligations of the Company. Holdings agrees to indemnify and hold harmless the Company for any liability, costs, and/or fees incurred due to Holdings’ failure to fulfill such obligations. Accrued income taxes of $235,946 are recorded as Income tax of discontinued operations payable on the balance sheets.
The Transaction has resulted in the removal of all operations from the original Company.
Below is a reconciliation of the major classes of line items constituting profit (loss) on discontinued operations related to the operations that were removed as a result of the issuanceTransaction with Holdings that are disclosed in Statements of this standard.
Year Ended December 31, | ||||||||
2018 | 2017 | |||||||
Revenues | ||||||||
Consulting fees | $ | 428,334 | $ | 2,079,068 | ||||
Management Fee | 255,161 | 55,200 | ||||||
Total revenues | 683,495 | 2,134,268 | ||||||
Cost of Sales | ||||||||
Consulting expense | 120,500 | 1,070,800 | ||||||
Total cost of sales | 120,500 | 1,070,800 | ||||||
Gross Profit | 562,995 | 1,063,468 | ||||||
Operating expenses: | ||||||||
General and administrative | 422,929 | 867,722 | ||||||
Total operating expenses | 422,929 | 867,722 | ||||||
Income from discontinued operations | 140,066 | 195,746 | ||||||
Other Income (Expense) | ||||||||
Net gain on asset purchase agreement | 159,848 | - | ||||||
Gain on sale of fixed assets | ̶ | 5,277 | ||||||
Loss on settlement of debt | (41,161 | ) | - | |||||
Interest expense | (3,695 | ) | (33,578 | ) | ||||
Total other income (expense, net) | 114,992 | (28,301 | ) | |||||
Income before income taxes | 255,058 | 167,445 | ||||||
Income taxes provision | 235,946 | 77,974 | ||||||
Net (loss) Income from Discontinued Operations | $ | 19,112 | $ | 89,471 | ||||
The following table summarizes the operating, investing and financing cash flows of discontinued operations related to the operations that were removed as a result of the following:
| December 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| Furniture & Fixtures | $ | 35,812 | $ | 35,159 | ||||
| Computer and office Equipment | 10,510 | 6,740 | ||||||
| Automobile | 27,657 | 24,527 | ||||||
| Leasehold Improvements | 24,527 | 21,710 | ||||||
| 98,506 | 88,136 | |||||||
| Less: Accumulated depreciation | (19,743 | ) | (27,461 | ) | ||||
| $ | 78,763 | $ | 60,675 | |||||
Year Ended December 31, | ||||||||
2018 | 2017 | |||||||
Operating Activities: | ||||||||
Net Income (loss) from discontinued operations | $ | 19,112 | $ | 89,471 | ||||
Adjustments to reconcile net income from discontinued operations to net cash provided by operating activities: | ||||||||
Depreciation expense | 4,004 | 11,086 | ||||||
Capital gain | - | (5,277 | ) | |||||
Assets distributed in asset purchase agreement, net | (159,848 | ) | - | |||||
Loss on settlement of debt | 41,161 | - | ||||||
Changes in operating assets and liabilities | ||||||||
Due from affiliates | (135,431 | ) | 50,727 | |||||
Prepaid expenses and other current assets | (30,790 | ) | - | |||||
Accounts payable and accrued expenses | 28,991 | 272,967 | ||||||
Income tax payable | 234,983 | 48,350 | ||||||
Net cash provided by (used in) operating activities | 2,182 | 467,324 | ||||||
Investing Activities: | ||||||||
Cash disbursed in conjunction with asset purchase agreement | (77,492 | ) | - | |||||
Acquisitions of furniture and equipment | - | (7,239 | ) | |||||
Net cash used in investing activities | (77,492 | ) | (7,239 | ) | ||||
Financing Activities: | ||||||||
Payments on auto loan | (1,324 | ) | (3,752 | ) | ||||
Proceeds from borrowings on note payable from officers | - | 376,298 | ||||||
Repayments of borrowings on note payable form officers | (13,648 | ) | �� | (775,110 | ) | |||
Net cash provided by (used in) financing activities | (14,972 | ) | (402,564 | ) | ||||
Net increase (decrease) in cash | (90,282 | ) | 57,521 | |||||
Cash, beginning of the period | 90,282 | 32,761 | ||||||
Cash, end of the period | $ | - | $ | 90,282 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period | ||||||||
Interest | $ | - | $ | 1,452 | ||||
Income taxes | $ | - | $ | 29,624 | ||||
Non-cash investing and financing activities | ||||||||
Vehicle purchased through auto loan | $ | - | $ | 22,789 | ||||
Loan paid by vehicle trade-in | 6,130 | |||||||
Conversion of Line of credit, officers to shares of common stock | $ | 381,787 | $ | - | ||||
NOTE 3 – FIXED ASSETS
Fixed assets consist of the following:
December 31, | December 31, | |||||||
2018 | 2017 | |||||||
Fixed assets of discontinued operations, net | $ | - | $ | 78,763 | ||||
| - | 78,763 | |||||||
Less: Accumulated Depreciation | - | - | ||||||
| $ | - | 78,763 | ||||||
NOTE 4 – RELATED PARTY TRANSACTIONS
At December 31, 2018 and $10,474, respectively. During year ended December 31, 2017, an automobile with net asset value of $5,723 was disposed.
The Company hashad a revolving line of credit totaling $1,800,000 with its officer, Frank Yuan,, CEO and Jerome Yuan,, his son.son. The line of credit bearsbore interest at 6% per annum and iswas due upon demand, as amended. On December 31, 2014, the convertible note was amended to waive the right of conversion and willwas to be used as a line of credit. On April 12, 2018, Frank Yuan converted $144,445 of the line of credit to 144,445,000 shares. During fiscalthe twelve months ended December 31, 2018 and 2017, and 2016, the Company incurred interest expense totaling $32,100$3,333 and $21,441$25,964 in connection with the line of credit.Line. The balance of the credit line as of December 31, 2018 was $0 and the accrued interest on the line of credit was $0. The balance of the credit line as of December 31, 2017 was $212,140 and the accrued interest onwas $32,100 and were reclassed to current liabilities of discontinued operations.
On April 12, 2018, the lineCompany entered into an asset purchase agreement whereby it assigned the entirety of credit was $32,100. The balanceits assets to ASAP Property Holdings, Inc., an affiliated entity owned and operated by Frank Yuan, in consideration of assumption of the lineentirety of credit asits liabilities.
On August 7, 2018, in anticipation of December 31, 2016 was $610,952 including accrued interesta merger, the Company entered into a Promissory Note with GreenBox POS, whereby GreenBox POS received $250,000 to be used to facilitate business operations in anticipation of $312,750 which was transferredtransferring such operations from GreenBox POS to the principal at December 31, 2016.
On September 20, 2018, the Company and 2016, The Son receivedthe Company and a total salaryrelated entity entered into a Definitive Material Agreement pursuant to which the Company will be assigned any and all assets related to the affiliated company’s blockchain gateway and payment system business, point of $160,000sale system business, delivery business, kiosk business (collectively, the “Business”), and $180,000, respectively.
As of $0 and $72,000, respectively.
In October 2018, and 2.39% interest. Future minimum payments andin anticipation of a merger, the obligations due underCompany issued 7,500,000 shares to an investor at a price per share of $0.001 in conversion of a promissory note issued by an affiliated company. The Company recorded a receivable in the auto loan are as follows:
| For the Year Ended December 31: | ||||
| 2018 | $ | 4,003 | ||
| 2019 | 4,100 | |||
| 2020 | 4,199 | |||
| 2021 | 4,300 | |||
| 2022 | 3,662 | |||
| Less Current Portion | (4,003 | ) | ||
| Long Term Portion | $ | 16,261 | ||
NOTE 5 - EQUIPMENT LOAN
On August 6, 2018, the Company installedissued a solar systemconvertible preferred note for $253,000. The note incurs interest at 10% per year and the outstanding principal and accrued interest are due on its leased office for $17,570 withAugust 6, 2019, the maturity date. The note includes a 30-year loan at 5.49% interest. Each paymentconversion feature where, beginning 180 days after the issuance date, the lender may convert all or a portion of the outstanding principal and accrued interest balance into shares of the Company’s common stock determined by dividing the conversion amount by the conversion price. During the first 180 days, the Company will payis allowed to prepay the note and all accrued interest in full by paying an increasing prepayment percentage, which starts at least110% of the “Total Amount Due”outstanding principal and interest and increasing by 5% every 30 days (110% from 0-30 days, 115% from 31-60 days, 120% from 61-90 days, 125% from 91-120, 130% from 121-150 days, and 135% from 151-180 days). After this period, the Company is no longer allowed to prepay the note and the conversion feature becomes active. The conversion price is determined by multiplying the market value of the Company’s common stock, as defined, by 65%. This represents a beneficial conversion feature that is displayednot a derivative but must have its value recorded as a discount on the monthly bill.related note. The Total Amount Due will bevalue of the sum of all past due amounts plusconversion feature was calculated using the “Current Monthly Payment” that will be displayed on the monthly bill. Current Monthly Payments will be calculated as follows:intrinsic value method, whereby the amount of kWh produced for the preceding month bydiscount was calculated as the system;difference between the conversion price and the market price of the underlying stock at the date of issuance multiplied by the applicable agreed Equivalent Rate per kWh.number of shares issuable. The “Equivalent Rate per kWh”Company recognized a debt discount of $131,787 on the convertible promissory note related to the beneficial conversion feature upon issuance, which is based upon 5 factors: 1)being amortized to interest expense over the one-year term of the note. For the year months ended December 31, 2018, the Company recognized $43,381 in amortization of the debt discount.
The Company paid $3,000 as loan origination fees on August 6, 2018 in obtaining the loan. The loan origination fee was recorded as deferred financing cost against the loan balance (which includes any accrued interest); 2)balance. For the Loan Term; 3)year ended December 31, 2018, approximately $1,000 in deferred financing cost was amortized.
As of December 31, 2018, the applicable APR; 4) the expected productionprincipal balance of the system;Convertible Note was $253,000, and 5) 2.50 % kWh annualaccrued interest on the Convertible Note was $10,259. During the period ended December 31, 2018, the Company recognized $31,238 in interest expense related to the Convertible Notes.
NOTE 6 –NOTES PAYABLE
On September 27, 2018, the Company issued a promissory note convertible into equity, with gross proceeds of $53,000 (the “September 27 Note”). The September 27 Note shall bear interest at a rate escalator.of 10% per annum until the same becomes due and payable, whether pursuant to the one-year term or upon acceleration or prepayment. The expected productionnote holder may elect to convert the September 27th Note at any time from 180 days from the date of issuance at a variable price of per share equal to 65% of the system is an estimate,average of the actual payments could be higher or lower depending3 lowest trading prices in the 10 days prior to such conversion.
As of December 31, 2018, the principal balance of the September 27 Note was $53,000, and accrued interest on the actual productionConvertible Note was $1,394. During the period ended December 31, 2018, the Company recognized $1,394 in interest expense related to the September 27 Note.
On November 26, 2018, the Company issued a promissory note convertible into equity, with gross proceeds of $200,000 (the “November 26 Note”). The November 26 Note shall bear interest at a rate of 12% per annum until the same becomes due and payable, whether pursuant to the one-year term or upon acceleration or prepayment. The note holder may elect to convert the November 26th Note at any time from 180 days from the system. If there isdate of issuance at a remainingfixed price of per share equal to $4.50.
As of December 31, 2018, the principal balance at the end of the loanNovember 26 Note was $200,000, and accrued interest on the Convertible Note was $2,367. During the period ended December 31, 2018, the Company recognized $2,367 in interest expense related to the Convertible Note.
On December 13, 2018, the Company issued a promissory note convertible into equity, with gross proceeds of $83,000 (the “December 13 Note”). The December 13 Note shall bear interest at a rate of 10% per annum until the same becomes due and payable, whether pursuant to the one-year term or upon acceleration or prepayment. The note holder may elect to convert the outstandingDecember 13th Note at any time from 180 days from the date of issuance at a variable price of per share equal to 65% of the average of the 3 lowest trading prices in the 10 days prior to such conversion.
As of December 31, 2018, the principal balance can be refinanced for an additional 12 monthsof the December 13 Note was $83,000, and accrued interest on the Convertible Note was $432. During the period ended December 31, 2018, the Company recognized $432 in interest expense related to the Convertible Note.
On December 17, 2018, the Company issued a promissory note convertible into equity, with gross proceeds of $150,000 (the “December 17 Note”). The December 17 Note shall bear interest at a rate of 12% per annum until the same becomes due and payable, whether pursuant to the one-year term or forupon acceleration or prepayment. The note holder may elect to convert the December 17th Note at any time from 180 days from the date of issuance at a term that is required by law. Estimated future Current Monthly Payments are as follows:
| For the Year Ended December 31: | ||||
| 2018 | $ | 704 | ||
| 2019 | 717 | |||
| 2020 | 732 | |||
| 2021 | 746 | |||
| 2022 | 761 | |||
| Thereafter | $ | 22,358 | ||
As of December 31, 2018, the principal balance of the December 17 Note was $150,000, and accrued interest on the Convertible Note was $740. During the period ended December 31, 2018, the Company recognized $740 in interest expense related to the Convertible Notes.
NOTE 6 -7 – INCOME TAXES
The income taxes provision for the twelve months ended December 31, 2018 consists of current income tax of $nil.
On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the Tax Act)“Tax Act”) was enacted into law including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate from 34% to 21% effective January 1, 2018, among others. We are required to recognize the effect of the tax law changes in the period ofon enactment, such as determining the transition tax, remeasuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. The Company does not have any foreign earnings and therefore, we do not anticipate the impact of a transition tax. Since the Tax Act was passed late in the fourth quarter of 2017 and ongoing guidance and accounting interpretation are expected over the next 12 months, we consider the accounting of any transition tax, deferred tax re-measurements,remeasurements, and other items to be incomplete due to the forthcoming guidance and our ongoing analysis of final year-end data and tax positions. We expect to complete our analysis within the measurement period in accordance with SAB 118, and no later than fiscal year endended December 31, 2018.
The income taxes provisionCompany reasonably estimated the effects of the U.S. Tax Act and recorded provisional amounts in our financial statements as of December 31, 2017. The Company recorded a provisional tax benefit for the year ended December 31, 2017 consistsimpact of current income taxesthe U.S. Tax Act of $84,684 and over-accruedapproximately $77,974. This amount primarily comprised the remeasurement of federal taxes from 2016 of $8,310.
| Year Ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| Income tax at U.S. statutory rate (34%) | $ | 56,932 | $ | 31,856 | ||||
| State tax | 9,769 | 5,466 | ||||||
| Prior period under-accrual (over-accrual) | (8,310 | ) | (2,194 | ) | ||||
| Nondeductible expenses | 19,583 | 9,185 | ||||||
| Change in valuation allowance | - | (7,290 | ) | |||||
| $ | 77,974 | $ | 37,023 | |||||
Interest associated with unrecognized tax benefits is classified as income tax and penalties are included in selling, general and administrative expenses in the statements of operations and comprehensive income.
For the years ended December 31, | ||||||||
2018 | 2017 | |||||||
Income (loss) before tax | $ | (34,186 | ) | $ | 167,445 | |||
Income tax at U.S. statutory rates (21%) | (7,179 | ) | 56,932 | |||||
State tax | - | 9,769 | ||||||
Prior period over-accrual | - | (8,310 | ) | |||||
Nondeductible expenses | - | 19,583 | ||||||
Change in valuation allowance | 7,179 | - | ||||||
Provision for income taxes | $ | - | $ | 77,974 | ||||
Uncertain Tax Positions
Interest associated with unrecognized tax benefits is classified as income tax and penalties are included in general and administrative expenses in the statements of operations and comprehensive income. For the yearyears ended December 31, 20172018 and 2016,2017, the Company had no unrecognized tax benefits and related interest and penalties expenses. The Company’s 2014, 2015, 2016 and 20162017 tax years remain subject to examination by the U.S. tax authorities.
NOTE 7 -8 – SHAREHOLDERS’ DEFICIT
Common Stock
On July 29, 2017, the Board of Directors of the Company approved to increase the authorized shares of the Company to 500,000,000 (the “Increase”), with 495,000,000 shares being Common Stock and 5,000,000 shares being preferred stock, subject to Stockholder approval. The Majority Stockholder approved the Increase by written consent in lieu of a meeting on July 29, 2017. The increased number of authorized shares werewas retroactively presented on balance sheets.
On April 12, 2018, Frank Yuan converted $144,445 of the line of credit to 144,445,000 shares of the Company's common stock at a price of $0.001 per share. The same shares were subsequently sold for $250,000 to a third party on May 3, 2018. The management believes the $250,000 reflects the fair value of the Company common shares on conversion date due to the proximate time period between the conversion date and the stock sale date. Therefore the Company recorded a loss on the conversion of $105,555 which represented the difference between the principal balance of $144,445 and $250,000.
In October 2018, and in anticipation of a merger, the Company issued 7,500,000 shares to an investor at a price per share of $0.001 in conversion of a promissory note issued by an affiliated company. The Company recorded a receivable in the amount of $7,500.
At December 31, 20172018 and 2016,December 31, 2017, the Company had 166,390,363 and 14,445,363 shares, respectively, issued and outstanding at par value $0.001 per share.
NOTE 9 – CONCENTRATION
On January 1, 2019, the year ended December 31, 2017, five customersCompany consummated the merger with an affiliated entity. The merger is accounted for 75% (21.4% 16.3%as a merger under common control., 16.0%, 11.2%whereby the Company is the acquirer for accounting and 10.1 %)financial reporting purposes and GreenBox POS (Washington Entity) is the legal acquirer. The Company is in the process of completing the audit of Green POS (Washington Entity) and the pro forma information is not yet available at the time of the Company’s consulting fee income, four of which are affiliates offiling this report.
The Company has evaluated subsequent events through April 15, 2019, the Company. Fordate the year ended December 31, 2016, four customers accountedfinancial statements were available for 88.4% (29.7%,, 26.1% 22.2%, and 10.4%) of the Company’s consulting fee income, three of which is an affiliate of the Company. The loss of any of these customers could have a material adverse effect on the Company’s financial position and results of operations.