UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.DC 20549
FORM 10-Q
(Amendment No.1)
(MARK ONE)
☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2018
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
For the transition period from ______________ to ______________
Commission file number: 001-51554
ASAP EXPO, INC.GREENBOX POS LLC
(Exact name of small business issuer as specified in its charter)
Nevada | 22-3962936 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) |
|
|
(Address of principal executive offices) | (Zip Code) |
Issuer's telephone number: (213) 625-1200
ASAP Expo, Inc.
(Former Name of Registrant)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 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 ☐
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"large accelerated filer,” “accelerated" "accelerated filer,” “smaller" "smaller reporting company,”" and “emerging"emerging growth company”company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ |
Non-accelerated filer ☐ (Do not check if a smaller reporting company) | 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 Exchange Act). Yes o ☐ No ☒
Number of shares outstanding of the issuer’sissuer's classes of common equity, as of May 15,November 20, 2018, 14,445,363158,890,363 Shares of Common Stock (One Class)
EXPLANATORY NOTE
As disclosed in our Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on February 21, 2019, on February 19, 2019, the sole officers and directors, Ben Errez and Fredi Nisan (the “Management”) of GreenBox POS (f/k/a GreenBox POS LLC) (the “Company”), concluded that the following previously filed financial statements of the Company should not be relied upon: (1) the Company’s unaudited financial statements for the quarterly period ended June 30, 2018, contained in the Company’s Quarterly Report on Form 10-Q, originally filed with the Securities and Exchange Commission (the “Commission”) on September 6, 2018, as amended on September 10, 2018 (collectively, the “Q2 Report”); and (2) the Company’s unaudited financial statements for the quarterly period ended September 30, 2018, contained in the Company’s Quarterly Report on Form 10-Q, originally filed with the Commission on November 21, 2018 (the “Original Q3 Report”).
As previously disclosed in Note 4 to the financial statements in each of the Q2 Report and the Original Q3 Report, the Company formerly had a revolving line of credit totaling $1,800,000 with Frank Yuan, the Company’s former CEO and Jerome Yuan, the son of Frank Yuan.
As previously disclosed in Note 8 to the financial statements in each of the Q2 Report and the Original Q3 Report, 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 Company, as disclosed in Note 8 in each of the Q2 Report and the Original Q3 Report, calculated that the total fair value of the 144,445,000 shares of common stock was $5,777,800. This resulted in a loss on the settlement of debt in the amount of $5,633,355.
On December 26, 2018, information came to the attention of the Company’s management that led it to investigate whether the Company’s calculation of the total fair value of the 144,445,000 conversion shares was wrong. On February 19, 2019, Management concluded that the price per share of the conversion shares should have been valued using the conversion price of $0.001 and not the April 12, 2018 market price of $0.04.
We are therefore filing this amended 10-Q (“Amended 10-Q”) to the Original Q3 Report, to restate our financial statements and revise related disclosures (including, without limitation, those contained under Item 1, Financial Statements, and Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations), contained in the Original Q3 Report to reflect the correct loss on the settlement of debt.
The amendment to the Q2 Report is being filed concurrently with this Amended 10-Q.
Specifically, this Amended 10-Q is being filed in order to restate:
● | Our balance sheets as of September 30, 2018 by recording additional paid-in-capital of $5,532,244 such that the restated additional paid-in capital is now ($664,930) and retained earnings increased by $5,532,244 such that retained earnings are now $336,828. |
● | Our statements of operations for the three months and nine months ended September 30, 2018. As a result of the restatement, our consolidated net loss for the three months and nine months ended September 30, 2018 decreased by $nil and $5,568,528, respectively. |
As several parts of the Original 10-Q are amended and/or restated by this Amended 10-Q, for convenience, we have repeated the entire text of the Original 10-Q, as amended and/or restated by this Amended 10-Q. Readers should therefore read and rely on this Amended 10-Q in lieu of the Original 10-Q.
Except as amended and/or restated by this Amended 10-Q, no other information included in the Original 10-Q is being amended or updated by this Amended 10-Q. This Amended 10-Q continues to describe the conditions as of the date of the Original 10-Q and, except as contained therein, we have not updated or modified the disclosures contained in the Original 10-Q. Accordingly, this Amended 10-Q should be read in conjunction with our filings made with the SEC subsequent to the filing of the Original 10-Q, including any amendment to those filings.
Page | |||
PART I Financial Information | |||
Item 1. | 3 | ||
3 | |||
4 | |||
5 | |||
6 | |||
Item 2. | 15 | ||
Item 3. | 17 | ||
PART II Other Information | |||
Item 1. | 18 | ||
Item 2. | 18 | ||
Item 3. | 18 | ||
Item 4. | 18 | ||
Item 5. | 18 | ||
Item 6. | 18 | ||
19 | |||
PART I - FINANCIAL INFORMATION
| ASAP EXPO, INC. | ||||||||
| BALANCE SHEETS | ||||||||
| March 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 236,750 | $ | 90,282 | ||||
| Due from affiliated companies | 106,990 | 20,881 | ||||||
| Total Current Assets | 343,740 | 111,163 | ||||||
| Furniture and equipment, net | 75,760 | 78,763 | ||||||
| Total Assets | $ | 419,500 | $ | 189,926 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 325,316 | $ | 342,924 | ||||
| Accrued expenses – officer | 52,500 | 42,000 | ||||||
| Auto loan, current | 4,027 | 4,003 | ||||||
| Income tax payable | 140,533 | 84,684 | ||||||
| Line of credit, officers | 198,492 | 212,140 | ||||||
| Due to affiliated company | 70,000 | - | ||||||
| Total Current Liabilities | 790,868 | 685,751 | ||||||
| Long-Term Liabilities | ||||||||
| Auto loan, noncurrent | 15,245 | 16,261 | ||||||
| Equipment loan, noncurrent | 12,299 | 12,299 | ||||||
| Total Long-Term Liabilities | 27,544 | 28,560 | ||||||
| Total Liabilities | 818,412 | �� | 714,311 | |||||
| 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 March 31, 2018 and December 31, 2017 | 14,445 | 14,445 | ||||||
| Additional paid in capital | (902,272 | ) | (902,272 | ) | ||||
| Retained earnings | 488,915 | 363,442 | ||||||
| Total Stockholders’ Deficit | (398,912 | ) | (524,385 | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | 419,500 | $ | 189,926 | ||||
GREENBOX POS LLC
BALANCE SHEETS
(Unaudited)
September 30, | December 31, | |||||||
2018 | 2017 | |||||||
(Restated) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Note receivable from affiliated company – in anticipation of merger | $ | 250,000 | ||||||
Interest receivable from affiliated company | 2,731 | |||||||
Current assets of discontinued operations | 111,163 | |||||||
Total current assets | 252,731 | 111,163 | ||||||
Furniture and equipment of discontinued operations, net | - | 78,763 | ||||||
Total assets | $ | 252,731 | $ | 189,926 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current liabilities | ||||||||
Accrued interest payable | $ | 27,478 | ||||||
Convertible note payable, net of unamortized discount of $115,704 and $0 and unamortized loan origination costs of $3,523 and $0 at September 30, 2018 and December 31, 2018, respectively | 134,748 | |||||||
Current Liabilities of Discontinued Operations | 259,717 | 685,751 | ||||||
Total current liabilities | 421,943 | 685,751 | ||||||
Long-Term Liabilities | ||||||||
Long-term liabilities of discontinued operations | - | 28,560 | ||||||
Total liabilities | 421,943 | 714,311 | ||||||
Stockholders’ Deficit | ||||||||
Preferred stock, $0.01 par value, 5,000,000 shares authorized; zero shares issued and outstanding | - | - | ||||||
Common stock, $0.001 par value, 495,000,000 shares authorized, 158,890,363 and 14,445,363 shares issued and outstanding at September 30, 2018 and December 31, 2017 | 158,890 | 14,445 | ||||||
Additional paid-in capital | (664,930 | ) | (902,272 | ) | ||||
Accumulated deficit | 336,828 | 363,442 | ||||||
Total Stockholders’ Deficit | (169,212 | ) | (524,385 | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | 252,731 | $ | 189,926 | ||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
| ASAP EXPO, INC. | ||||||||
| CONDENSED STATEMENTS OF OPERATIONS | ||||||||
| (UNAUDITED) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Revenues: | ||||||||
| Consulting fees | $ | 53,544 | $ | 215,000 | ||||
| Consulting fees, related parties | 279,500 | 154,500 | ||||||
| Management fee | - | 19,200 | ||||||
| Management fee, related parties | 255,161 | - | ||||||
| Total revenues | 588,205 | 388,700 | ||||||
| Cost of Sales | ||||||||
| Consulting expense | 99,500 | 252,000 | ||||||
| Total cost of sales | 99,500 | 252,000 | ||||||
| Gross Profit | 488,705 | 136,700 | ||||||
| Operating expenses: | ||||||||
| General and administrative | 304,006 | 136,456 | ||||||
| Total operating expenses | 304,006 | 136,456 | ||||||
| Income from operations | 184,699 | 244 | ||||||
| Other Income (Expense) | ||||||||
| Interest expense | (3,214 | ) | (9,241 | ) | ||||
| Total other income (expense), net | (3,214 | ) | (9,241 | ) | ||||
| Income before income taxes | 181,485 | (8,997 | ) | |||||
| Income taxes provision | 56,012 | 800 | ||||||
| Net (loss) Income | $ | 125,473 | $ | (9,797 | ) | |||
| 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 | ||||||
GREENBOX POS LLC
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(Restated) | (Restated) | |||||||||||||||
Operating Expenses: | ||||||||||||||||
Other income (expense) | ||||||||||||||||
Interest income | 2,731 | 2,731 | ||||||||||||||
Interest expense (including amortization of debt discount of $20,527 and $20,527 respectively | (24,791 | ) | (48,457 | ) | ||||||||||||
Net (loss) income from continuing operations | $ | (22,060 | ) | $ | - | $ | (45,726 | ) | $ | - | ||||||
Net (loss) income from discontinued operations, net of income taxes | - | 22,155 | 19,112 | 55,913 | ||||||||||||
Net income (loss) | $ | (22,060 | ) | $ | 22,155 | $ | (26,614 | ) | $ | 55,913 | ||||||
Net income (loss) per common share | ||||||||||||||||
Continuing operations | $ | (0.00 | ) | $ | - | $ | (0.00 | ) | $ | - | ||||||
Discontinued operations | (0.00 | ) | 0.00 | (0.00 | ) | 0.00 | ||||||||||
| $ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | $ | 0.00 | |||||||
Weighted average common shares outstanding | ||||||||||||||||
Basic and diluted | 158,890,363 | 14,445,363 | 104,921,901 | 14,445,363 | ||||||||||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
| ASAP EXPO, INC. | ||||||||
| CONDENSED STATEMENTS OF CASH FLOWS | ||||||||
| (UNAUDITED) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Operating Activities: | ||||||||
| Net Income (loss) | $ | 125,473 | $ | (9,797 | ) | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation expense | 3,003 | 2,741 | ||||||
| Gain on disposal of fixed assets | - | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and deposit | - | (50,000 | ) | |||||
| Accounts payable and accrued expenses | (17,608 | ) | (19,859 | ) | ||||
| Accrued expenses – officer | 10,500 | 10,500 | ||||||
| Income tax payable | 55,849 | 800 | ||||||
| Due from affiliated companies | (86,109 | ) | (41,648 | ) | ||||
| Net cash provided by (used in) operating activities | 91,108 | (107,263 | ) | |||||
| Net cash provided by (used in) investing activities | - | - | ||||||
| Financing Activities: | ||||||||
| Payments on auto loan | (992 | ) | (1,227 | ) | ||||
| Advance from (Repayment to) affiliated company | 70,000 | - | ||||||
| Outstanding checks payable | - | 70,928 | ||||||
| Proceeds from borrowings on credit line from officers | - | 5,001 | ||||||
| Repayments of borrowings on credit line from officers | (13,648 | ) | - | |||||
| Net cash provided by (used in) financing activities | 55,360 | 74,702 | ||||||
| Net increase (decrease) in cash | 146,468 | (32,561 | ) | |||||
| Cash, beginning of period | 90,282 | 32,761 | ||||||
| Cash, end of period | $ | 236,750 | $ | 200 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid during the period | ||||||||
| Interest | $ | 219 | $ | 103 | ||||
| Income taxes | $ | 163 | $ | - | ||||
GREENBOX POS LLC
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended | ||||||||
September 30, | ||||||||
2018 | 2017 | |||||||
(Restated) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net Income (loss) from continuing operations | $ | (45,726 | ) | |||||
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities: | ||||||||
Accretion of discount on convertible note payable | 20,527 | |||||||
Amortization of debt issuance costs included in interest expense | 452 | |||||||
Changes in operating assets and liabilities | ||||||||
Interest receivable from affiliated company | (2,731 | ) | ||||||
Accrued interest payable | 27,478 | |||||||
Net cash provided by (used in) operating activities - continuing operations | - | - | ||||||
Net cash provided by (used in) operating activities - discontinued operations | 92,464 | 194,177 | ||||||
Net cash provided by operating activities | 92,464 | 194,177 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Payment for note receivable in anticipation of merger | (250,000 | ) | - | |||||
Net cash provided by (used in) investing activities - continuing operations | (250,000 | ) | - | |||||
Net cash provided by (used in) investing activities - discontinued operations | (77,492 | ) | 2,093 | |||||
Net cash provided by (used in) investing activities | (327,492 | ) | 2,093 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from borrowings on convertible note payable | 253,000 | - | ||||||
Payments of loan origination fees | (3,000 | ) | - | |||||
Net cash provided by (used in) financing activities – continuing operations | 250,000 | - | ||||||
Net cash provided by (used in) financing activities – discontinued operations | (14,972 | ) | (191,449 | ) | ||||
Net cash provided by (used in) financing activities | 235,028 | (191,449 | ) | |||||
Net increase (decrease) in cash | - | 4,821 | ||||||
Cash, beginning of period | - | 32,761 | ||||||
Cash, end of period | $ | - | $ | 37,582 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period | ||||||||
Interest | $ | - | $ | 751 | ||||
Income taxes | $ | - | $ | 800 | ||||
Non-cash investing and financing activities | ||||||||
Discount on convertible debt | $ | 136,231 | $ | - | ||||
Vehicle purchased through auto loan | $ | - | $ | 22,789 | ||||
Conversion of Line of credit, officers to shares of common stock | $ | 144,445 | $ | - | ||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
SEPTEMBER 30, 2018
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
GreenBox POS LLC (" GreenBox" or the “Company”"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 23rd 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.”
Since April 12, 2018, the Company’s operations have consisting of providing management and business development services.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with GAAPaccounting principles generally accepted in the United States of America.
Unaudited Interim Financial Information
These unaudited interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial reporting and the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been made. TheOperating results of operations for the interim periods presentedthree and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018.
The balance sheets and certain comparative information as of December 31, 2017 are derived from the audited financial statements and related notes for the year ended December 31, 2017 (“("2017 Annual Financial Statements”Statements"), included in the Company’sCompany's 2017 Annual Report on Form 10-K. These unaudited interim condensed financial statements should be read in conjunction with the 2017 Annual Financial Statements.
BASIS OF PRESENTATION
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 $0 and $0 as of March 31,September 30, 2018 and December 31, 2017, respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company’sCompany's financial instruments consist of cash, prepaid expenses and other receivables, accounts payable, accrued liabilities, notes receivable and amounts and due to/from an affiliated company. 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, which 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 forexpands disclosures about fair value measurements. The valuationstandard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy isfor fair value measurements based uponon the transparencynature of inputs toused in 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.
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company's future operations. These factors raise substantial doubt regarding the Company's ability to continue as a going concern.
REVENUE RECOGNITION
Accounting Standards Codification (“ASC”("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’sCompany's revenue recognition policies conform to ASC 605. 606.
As of September 30, 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 earnings per share include the effect of any potentially dilutive debt or equity under the treasury stock method, if including such instruments is 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 Company’s diluted earnings/lossamendments require entities that present earnings per share ("EPS") in accordance with Topic 260 to recognize the effect of the down round feature when triggered with the effect treated as a dividend and as a reduction of income available to common shareholders in basic EPS. The new standard is effective for nonpublic business entities fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. The new standard is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the sameimpact of the adoption of this accounting standard update.
In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting, which provides clarity and guidance around which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The standard is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual reporting periods. The adoption of this guidance will have no impact on our financial statements as the basic earnings/Company currently does not offer share-based payment.
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 - Restatement
This financial statements for the quarter ended September 30, 2018 have been restated to reflect adjustment made to recognition of loss on settlement of debt that came to management's attention after the financial statements for the quarter ended September 30, 2018 were initially filed.
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 the price of $0.001 per shareshare. The total fair value of the conversion feature was originally valued at $5,777,800, based on common shares equivalent of 144,445,000 shares of common stock at the current trading price. This resulted in a loss on the settlement of debt in the amount of $5,633,355. The loss was recognized immediately and was first reflected in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, which was filed on September 6, 2018.
It came to the management’s attention that the initial valuation approach was not appropriate. The Company was thinly traded with minimal trading activities, and Frank Yuan was the sole shareholder of the Company on the conversion date. ASC 820 defined fair value as, “The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” 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.
The impact of those restatements on the September 30, 2018 unaudited financial statements is reflected in the following table:
Weighted | ||||||||||||||||
September 30, 2018 | average | |||||||||||||||
As Originally | shares | |||||||||||||||
Reported | Adjustments | Restated | outstanding | |||||||||||||
Balance Sheet | ||||||||||||||||
Additional paid-in capital | $ | 4,867,314 | $ | (5,532,244 | ) | $ | (664,930 | ) | ||||||||
Retained earnings | $ | (5,171,750 | ) | $ | 5,508,578 | $ | 336,828 | |||||||||
Stockholders' equity | $ | (145,546 | ) | $ | (23,666 | ) | $ | (169,212 | ) | |||||||
Condensed Statement of Operations - for the three months ended | ||||||||||||||||
Net (loss) income from discontinued operations, net of income taxes | - | - | - | |||||||||||||
Net income (loss) | $ | (22,060 | ) | $ | - | $ | (22,060 | ) | ||||||||
Basic and diluted income (loss) per share | $ | (0.00 | ) | $ | - | $ | (0.00 | ) | 158,890,363 | |||||||
Basic and diluted income (loss) per share - discontinued operations | - | - | ||||||||||||||
Condensed Statement of Operations - for the nine months ended | ||||||||||||||||
Net (loss) income from discontinued operations, net of income taxes | $ | (5,573,082 | ) | $ | 5,592,194 | $ | 19,112 | |||||||||
Net income (loss) | $ | (5,595,142 | ) | $ | 5,568,528 | $ | (26,614 | ) | ||||||||
Basic and diluted income (loss) per share | $ | (0.05 | ) | $ | (0.00 | ) | 104,921,901 | |||||||||
Basic and diluted income (loss) per share - discontinued operations | (0.05 | ) | 0.00 | |||||||||||||
NOTE 3 - DISCONTINUED OPERATIONS (RESTATED)
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 Acquired Assets in an asset purchase transaction (the "Transaction") pursuant to the terms and conditions 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 $0 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 three and nine months ended September 30, 2018 are $nil and $19,112 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 $259,717 are recorded as Income tax of discontinued operations payable on the balance sheets.
The Transaction has resulted in the removal of the previous operations of the Company. Since April 12, 2018, the Company’s operations have consisted of providing management and business development services.
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 Transaction with Holdings that are disclosed in Statements of Operations for the three and nine months ended March 31,September 30, 2018 and 2017,2017.
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(Restated) | (Restated) | |||||||||||||||
Revenues | ||||||||||||||||
Consulting fees | $ | - | $ | 288,160 | $ | 428,334 | $ | 1,117,960 | ||||||||
Management Fee | - | 18,000 | 255,161 | 61,200 | ||||||||||||
Total revenues | - | 306,160 | 683,495 | 1,179,160 | ||||||||||||
Cost of Sales | ||||||||||||||||
Consulting expense | - | 42,400 | 120,500 | 436,100 | ||||||||||||
Total cost of sales | - | 42,400 | 120,500 | 436,100 | ||||||||||||
Gross Profit | - | 263,760 | 562,995 | 743,060 | ||||||||||||
Operating expenses: | ||||||||||||||||
General and administrative | - | 212,255 | 422,929 | 604,797 | ||||||||||||
Total operating expenses | - | 212,255 | 422,929 | 604,797 | ||||||||||||
Income from discontinued operations | - | 51,505 | 140,066 | 138,263 | ||||||||||||
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 | - | (7,407 | ) | (3,695 | ) | (26,737 | ) | |||||||||
Total other income (expense, net) | - | (7,407 | ) | 114,992 | (21,460 | ) | ||||||||||
Income before income taxes | - | 44,098 | 255,058 | 116,803 | ||||||||||||
Income taxes provision | - | 21,943 | 235,946 | 60,890 | ||||||||||||
Net (loss) Income from Discontinued Operations | $ | - | $ | 22,155 | $ | 19,112 | $ | 55,913 | ||||||||
The following table summarizes the operating and investing cash flows of discontinued operations related to the operations that were removed as there are no potential shares outstanding that would have a dilutive effect.result of the Transaction with Holdings for the nine months ended September 30, 2018 and 2017.
Nine Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
(Restated) | ||||||||
Operating Activities: | ||||||||
Net Income (loss) from discontinued operations | $ | 19,112 | $ | 55,913 | ||||
Adjustments to reconcile net income from discontinued operations to net cash provided by operating activities: | ||||||||
Depreciation expense | 4,004 | 8,085 | ||||||
Gain on sale of fixed assets | - | (5,277 | ) | |||||
Assets distributed in asset purchase agreement, net | (159,848 | ) | - | |||||
Loss on settlement of debt | 41,161 | - | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable | - | - | ||||||
Due from affiliates | (135,431 | ) | - | |||||
Prepaid expenses and other current assets | (30,790 | ) | - | |||||
Accounts payable and accrued expenses | 28,991 | 75,366 | ||||||
Income tax payable | 234,983 | 60,090 | ||||||
Net cash provided by (used in) operating activities | 2,182 | 194,177 | ||||||
Investing Activities: | ||||||||
Cash disbursed in conjunction with asset purchase agreement | (77,492 | ) | - | |||||
Acquisitions of furniture and equipment | - | (7,240 | ) | |||||
Payment from affiliated company | - | 9,333 | ||||||
Net cash used in investing activities | (77,492 | ) | 2,093 | |||||
Financing Activities: | ||||||||
Payments on auto loan | (1,324 | ) | (2,766 | ) | ||||
Bank overdraft | - | |||||||
Proceeds from borrowings on note payable from officers | - | 324,508 | ||||||
Repayments of borrowings on note payable form officers | (13,648 | ) | (513,191 | ) | ||||
Net cash provided by (used in) financing activities | (14,972 | ) | (191,449 | ) | ||||
Net increase (decrease) in cash | (90,282 | ) | 4,821 | |||||
Cash, beginning of period | 90,282 | 32,761 | ||||||
Cash, end of period | $ | - | $ | 37,582 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period | ||||||||
Interest | $ | - | $ | 751 | ||||
Income taxes | $ | - | $ | 800 | ||||
Non-cash investing and financing activities | ||||||||
Vehicle purchased through auto loan | $ | - | $ | 22,789 | ||||
Conversion of Line of credit, officers to shares of common stock | $ | 144,445 | $ | - | ||||
Equipment consists of the following:
| March 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| Furniture & Fixtures | $ | 35,812 | $ | 35,812 | ||||
| Office Equipment | 10,510 | 10,510 | ||||||
| Automobile | 27,657 | 27,657 | ||||||
| Leasehold Improvements | 24,527 | 24,527 | ||||||
| 98,506 | 98,506 | |||||||
| Less: Accumulated depreciation | (22,746 | ) | (19,743 | ) | ||||
| $ | 75,760 | $ | 78,763 | |||||
September 30, | December 31, | |||||||
2018 | 2017 | |||||||
Fixed assets of discontinued operations, net | $ | - | $ | 78,763 | ||||
| - | 78,763 | |||||||
Less: Accumulated Depreciation | - | - | ||||||
| $ | - | 78,763 | ||||||
NOTE 35 - RELATED PARTY TRANSACTIONS
At March 31,September 30, 2018 and December 31, 2017, ASAP ExpoGreenBox was owed $106,990$250,000 and $20,881 from affiliated companies in which ASAP Expo’sGreenBox's officers are also owners and officers. The advance has no written note, is non-interest bearing and payable on demand to the Company and expected to be paid within one year.
The Company hashad a revolving line of credit totaling $1,800,000 with Frank Yuan, CEO and Jerome Yuan, his 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 the threenine months ended March 31,September 30, 2018 and 2017, the Company incurred interest expense totaling $2,941$3,333 and $9,088$25,964 in connection with the Line. The balance of the credit line as of March 31,September 30, 2018 was $198,492$0 and the accrued interest on the line of credit was $35,041.$0. The balance of the credit line as of December 31, 2017 was $212,140 and the accrued interest was $32,100.
The son of the Company’sCompany's officer (“Son”("Son") receivesreceived salary from the Company for work performed. During threenine months ended March 31,September 30, 2018 and 2017, Thethe Son received salary of $60,000$0 and $0,$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 entirety of its liabilities.
On August 7, 2018, in anticipation of a merger, the Company entered into a Promissory Note with GreenBox POS, LLC, a Washington Limited Liability Company (the "Washington LLC"), whereby the Washington LLC received $250,000 to be used to facilitate business operations in anticipation of transferring such operations from the Washington LLC to the Company and promised to pay the Company $250,000 plus interest at maturity (the "Note Receivable"). The Washington LLC is an affiliated company. The Note Receivable bears interest at a rate of 7.25% per annum and matures on February 28, 2019. As of September 30, 2018, the balance of the Note Receivable was $250,000 and the balance of interest receivable was $2,731. This is a related party loan from the Company to the Washington LLC in anticipation of the merger between the two entities.
On September 20, 2018, the Company and the Washington LLC entered into a Definitive Material Agreement pursuant to which the Company will be assigned any and all assets related to the Washington LLC'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 the Seller 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.
NOTE 46 - AUTO LOAN
In April 2017, the Company traded-in its old vehicle for a new vehicle with a financing agreement of $4,868 down and 2.39% interest. Futureinterest, which was purchased in conjunction with the Transaction. As of September 30, 2018, there are no minimum payments andor obligations due by the obligations dueCompany under the auto loan are as follows:
| For the Year Ended December 31: | ||||
| 2018 | $ | 2,674 | ||
| 2019 | 4,091 | |||
| 2020 | 4,190 | |||
| 2021 | 4,292 | |||
| 2022 | 4,025 | |||
| Less Current Portion | (4,027 | ) | ||
| Long Term Portion | $ | 15,245 | ||
NOTE 57 - EQUIPMENT LOAN
In September 2015, the Company installed a solar system on its leased office for $17,570 with a 30-year loan at 5.49% interest. Each payment date, the Company will pay at least the “Total"Total Amount Due”Due" that is displayed on the monthly bill. The Total Amount Due will be the sum of all past due amounts plus the “Current"Current Monthly Payment”Payment" that will be displayed on the monthly bill. Current Monthly Payments will be calculated as follows: the amount of kWh produced for the preceding month by the system; multiplied by the applicable agreed Equivalent Rate per kWh. The “Equivalent"Equivalent Rate per kWh”kWh" is based upon 5 factors: 1) the loan balance (which includes any accrued interest); 2) the Loan Term; 3) the applicable APR; 4) the expected production of the system; and 5) 2.50 % kWh annual rate escalator. The expected production of the system is an estimate, the actual payments could be higher or lower depending on the actual production from the system. If there is a remaining balance at the end of the loan term, the outstanding balance can be refinanced for an additional 12 months or for a term that is required by law. EstimatedThe equipment loan was acquired by Holdings in the Transaction. As of September 30, 2018, there are no estimated future Current Monthly Payments owed by the Company.
NOTE 8 - CONVERTIBLE NOTES PAYABLE
On August 6, 2018, the Company issued a convertible preferred note for $253,000 (the "August 6th Note"). The August 6th Note incurs interest at 10% per year and the outstanding principal and accrued interest are due on August 6, 2019, the maturity date. The August 6th Note includes a conversion 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 is allowed to prepay the August 6th Note and all accrued interest in full by paying an increasing prepayment percentage, which starts at 110% of the 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 August 6th Note and the conversion feature becomes active. The conversion price is determined by multiplying the market value of the Company's common stock, as follows:
| For the Year Ended December 31: | ||||
| 2018 | $ | 690 | ||
| 2019 | 704 | |||
| 2020 | 717 | |||
| 2021 | 732 | |||
| 2022 | 746 | |||
| 2023 | 761 | |||
| Thereafter | 22,358 | |||
The Company paid $3,000 as loan origination fees on August 6, - INCOME TAXES
As of September 30, 2018, the principal balance of the August 6th Note was $253,000, the unamortized debt discount was $115,704, the unamortized deferred financing costs were $2,548 and accrued interest on the August 6th Note was $3,812. During the period ended September 30, 2018, the Company had no unrecognized tax benefits andrecognized $24,791 in interest expense related interest and penalties expenses. The Company’s 2014, 2015, 2016 and 2017 tax years remain subject to examination by the U.S. tax authorities.
NOTE 79 - SHAREHOLDERS’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”"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 were retroactively presented on balance sheets.
On April 12, 2018, Frank Yuan converted $144,445 of the line of credit to 144,445,000 shares then sold and transferred hisof the Company's common stock at a price of $0.001 per share. The total fair value of the conversion feature was originally valued at $5,777,800, based on common shares equivalent of 144,445,000 shares representing 90%of common stock at the then trading price. This resulted in a loss on the settlement of debt in the amount of $5,633,355. The loss was recognized immediately and was first reflected in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, which was filed on September 6, 2018.
It came to the management’s attention that the initial valuation approach was not appropriate. The Company was thinly traded with minimal trading activities, and Frank Yuan was the sole shareholder of the Company on the conversion date. ASC 820 defined fair value as, “The price that would be received to GreenBox POS, LLC,sell an asset or paid to transfer a San Diego based High-Tech company.
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.
At September 30, 2018 and December 31, 2017, the Company had 158,890,363 and 14,445,363 common shares, respectively, issued and outstanding at par value $0.001 per share. At September 30, 2018 and December 31, 2017, the Company had 158,890,363 and 14,445,363 common shares, respectively, issued and outstanding at par value $0.001 per share.
NOTE 10 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date the financial statements were issued.
On October 1, 2018, the Company issued a promissory note convertible into equity, pursuant to the above-referenced August 6th Note with gross proceeds of $53,000. The note bears 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 following discussion of the financial condition and results of operations of the Company should be read in conjunction with the audited financial statements and the related notes thereto included elsewhere in thisthe annual report for the period ended December 31, 2017. ThisThe annual report for the period ended December 31, 2017 contains certain forward-looking statements and the Company’sCompany's future operating results could differ materially from those discussed herein. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.
OVERVIEW
GreenBox POS LLC (" GreenBox" or “The Company”"The Company" or “Our”"Our" or “We”"We") efforts prior to April 12, 2018 were focused on our mission is to be the bridge between China and the Western world. ASAPGreenBox is a holding company that assistsassisted Chinese institutional and high net worth individuals with acquisition advisory and asset management of U.S. hotels.
Our investors includeincluded AVIC International USA, Junson Capital, Urban Commons, Sky Harbor Management, Shenzhen New World, American Curvet, and USA Heritage.
From August 2010 until now,April 12,2018, our group has provided consulting services regarding purchasing 20 hotels primarily in California, Florida, Colorado, Connecticut, Georgia and Michigan. Hotel brands include Marriott, Hilton, Westin, Doubletree by Hilton, Four Points by Sheraton, and Holiday Inn. We are one
As shown in the accompanying financial statements and as discussed in Note 3, all assets and liabilities of the most active hotel buyersCompany were acquired on April 12, 2018 by person who was previously a related party to the Company. As a result, the previous operations of the Company have been removed.
On March 23, 2018, Frank Yuan, the controlling shareholder of the Company, entered into a stock purchase agreement whereby it sold 144,445,000 shares of the Company’s common stock to GreenBox POS LLC, representing 90% of the Company’s issued and outstanding shares of common stock. Pursuant to this transaction, 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. in consideration of assumption of the entirety of its liabilities.
The transaction contemplated in the market.
Since April 12, 2018, the Company’s operations have consisted of providing management and business development services.
On August 7, 2018, in anticipation of a merger, the Company entered into a Promissory Note with GreenBox POS, LLC, a Washington Limited Liability Company (the “Washington LLC”), whereby the Washington LLC received $250,000 to be used to facilitate business operations in anticipation of transferring such operations from the Washington LLC to the Company and promised to pay the Company $250,000 plus interest at maturity (the "Note Receivable"). The Washington LLC is an affiliated company. The Note Receivable bears interest at a rate of 7.25% per annum and matures on February 28, 2019. As of September 30, 2018, the balance of the Note Receivable was $250,000 and the balance of interest receivable was $2,731. This is a related party loan from the Company to the Washington LLC in anticipation of the merger between the two entities.
On September 20, 2018, the Company and the Washington LLC entered into a definitive material agreement pursuant to which the Company will continue this growth forbe assigned any and all assets related to the next coupleWashington LLC's blockchain gateway and payment system business, point of years, taking advantagesale system business, delivery business, kiosk business (collectively, the "Business"), and all intellectual property thereto owned by the Seller in consideration of current below replacement cost assets with reasonable cap ratesassuming any and value-add opportunitiesall liabilities incident to the operation of the Business that have been incurred in the current U.S. hotel market.
RESULTS OF OPERATIONS
Net Income
The Company has established strong relationships with our clients. Our business and client relationships, and our culture and philosophy are firmly centered on putting the clients’ interests first. We have been building strong reputations in the hospitality industry which is bringing several new potential clients. We expect to have steady revenue stream from our 3 major clients while building new client baserecorded a net loss of $22,060 for future revenue growth. We believe that our product offerings, asset management services, client diversification, expertise in a property types and national platform have the potential to create a sustainable revenue stream within the U.S. commercial real estate sector.
The Company recorded a net incomeloss of $125,473$26,614 for the threenine months ended March 31,September 30, 2018 as compared to a net lossincome of $9,797$55,913 for the same period last year. The increasedecrease in net income was mainly due to a loss on settlement of debt and the higher gross profit and lower consulting expense, offset by higher G&A expenses and higher income taxes provision.cessation of the previous operations of the Company after consummation of the Transaction on April 12, 2018.
LIQUIDITY AND CAPITAL RESOURCES
After the next twelve months, ASAP Expo will focus on its real estate transactions to generate additional revenue. Withconsummation of the net revenue from its services, and continuing support from its major shareholders to provide a note payable, management believes ASAP Expotransaction embodied in the definitive material agreement dated September 20, 2018, the Company will have enough net working capital to sustain its business for another 12 months.
Liquidity and has an accumulated stockholders’ deficit, which raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Our working capital for the periods presented is summarized as follows:
As of March 31, 2018 ($) | As of December 31, 2017 ($) | |||||||
| Current assets | $ | 343,740 | $ | 111,163 | ||||
| Current liabilities | 790,868 | 685,751 | ||||||
| Working capital | $ | (447,128 | ) | $ | (574,588 | ) | ||
As of September 30, 2018 | As of December 31, 2017 | |||||||
Current assets | $ | 252,731 | $ | - | ||||
Current liabilities | 421,943 | - | ||||||
Working capital | $ | (169,212 | ) | $ | - | |||
The following table shows cash flows for the periods presented:
Three Months Ended | ||||||||
| 2018 | 2017 | |||||||
| Net cash provided by (used in) operating activities | $ | 91,108 | $ | (107,263 | ) | |||
| Net cash provided by (used in) investing activities | - | - | ||||||
| Net cash provided by (used in) financing activities | 55,360 | 74,702 | ||||||
| Net increase (decrease) in cash | $ | 146,468 | $ | (32,561 | ) | |||
Nine Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
Net cash provided by (used in) operating activities | $ | 92,464 | $ | 194,177 | ||||
Net cash provided by (used in) investing activities | (327,492 | ) | 2,093 | |||||
Net cash provided by (used in) financing activities | 235,028 | (191,449 | ) | |||||
Net increase (decrease) in cash | $ | - | $ | 4,821 | ||||
Operating Activities
For the threenine months ended March 31,September 30, 2018, net cash provided by operating activities was $91,108.$92,464, which was primarily due to a net loss of $22,060 from continuing operations, adjusted by non-cash related expenses of amortization of the discount on the Company's convertible note payable of $20,527, amortization of debt issuance costs of $452, increases in accrued interest expense of $3,812 and discontinued operations of $92,464, offset by an increase in accrued interest receivable from an affiliated company of $2,731.
For the nine months ended September 30, 2017, net cash provided by operating activities of discontinued operations was $194,177. This was primarily due to a net income of $125,473,discontinued operations of $55,913, adjusted by non-cash related expenses of depreciation of $3,003,discontinued operations of $8,085 and non-cash capital gain of discontinued operations of $5,277, then decreasedincreased by unfavorablefavorable changes in working capital of $37,368.discontinued operations of $135,457. The unfavorablefavorable changes in working capital resulted from an increase in due from affiliated companies of $86,109 and a decrease in accounts payable and accrued expenses of $17,608, offset by an increase in accrued expenses-officerdiscontinued operations of $10,500$75,366 and an increase in income tax payable of $55,849.
Investing activities
For the threenine months ended March 31, 2017,September 30, 2018, net cash used in operatinginvesting activities was $107,263.$327,492, resulting from a payment for note receivable in anticipation of merger for $250,000 and discontinued operations of $77,492.
For the nine months ended September 30, 2017, net cash provided by investing activities was $2,093. This was primarily due to a net loss of $9,797, adjusted by non-cash related expenses of depreciation of $2,741, then decreased by unfavorable changes in working capital of $100,207. The unfavorable changes in working capital mainly resulted from a deposit of $50,000 for office building, an increase in duepayment from affiliated companiescompany of $41,648 and a decrease in accounts payable and accrued expenses of $19,859,9,333, offset by an increase in accrued expenses-officeracquisitions of $10,500property and an increase in income tax payableequipment of $800.
Financing activities
For the threenine months ended March 31,September 30, 2018, net cash provided by financing activities was $55,360$235,028, which resulted from the issuance of a convertible note payable $253,000, offset by payments for loan origination fees of $3,000, and cash flows related to discontinued operations of $14,972.
For the nine months ended September 30, 2017, net cash used in financing activities was $191,449 which was mainly due to an advance from affiliated company of $70,000, offset by net repayment to linenote payable from officers of credit from officer of $13,648$188,683 and payments on auto loan of $992.$2,766.
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. 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”("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’sCompany'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.
Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer,Executive Vice President, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are not effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’sCommission's rules and forms, and (ii) is accumulated and communicated to our management, as appropriate, to allow timely decisions regarding required disclosure. Our disclosure controls and procedures include components of our internal control over financial reporting and, as such, are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Management’sManagement's assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance that the control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system’ssystem's objectives will be met (see the section below in this Item 3 entitledLimitations on the Effectiveness of Internal Controls).
Changes in Internal Controls Over Financial Reporting
There have been no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) that occurred during the period covered by this Report, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Internal Controls
Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial OfficerExecutive Vice President concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
PART II - OTHER INFORMATION
Management currently is not aware of any legal matters or pending litigation that would have a significant effect on the Company’sCompany's financial statements as of March 31,September 30, 2018.
On August 6, 2018, the Company entered into a Securities Purchase Agreement with Power Up Lending Group Ltd. ("Power Up") with respect to the issuance of a promissory note convertible into equity issued on the same date with gross proceeds of $253,000 (the "August 6th Note"). The August 6th 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. Power Up may elect to convert the August 6th 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. The August 6th Note carries a pre-payment penalty if such note is paid off in 30, 60, 90, 120, 150, or 180 days following the issue date. The pre-payment penalty is based on the then outstanding principal at the time of pay off plus accrued and unpaid interest multiplied by 110%, 115%, 120%, 125%, 130%, 135% respectively.
Pursuant to the Securities Purchase Agreement, Power Up was granted an option to invest up to $1,500,000 (inclusive of the amount provided pursuant to the August 6th Note) for 12 months from the date of the Securities Purchase Agreement under the terms and conditions of the Securities Purchase Agreement.
The issuance of the Note, and the issuance of the shares of the Company's Common Stock upon conversion of the Note in connection with the financing are exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Act"), in reliance upon exemptions from the registration requirements of the Act in transactions not involving a public offering, including, but not limited to the exemption provided pursuant to Rule 506(b) of Regulation D, as promulgated by the Securities and Exchange Commission under the Act for offers and sales of restricted securities in a private, non-public transaction to accredited investors, as defined in Rule 501 of Regulation D
None.
None.
None.
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley | |
XBRL Instance Document* | ||
XBRL Taxonomy Extension Schema Document* | ||
XBRL Taxonomy Extension Calculation Linkbase Document* | ||
XBRL Taxonomy Extension Definition Linkbase Document* | ||
XBRL Taxonomy Extension Label Linkbase Document* | ||
XBRL Taxonomy Extension Presentation Linkbase Document* | ||
* Furnished electronicallyFiled herewith.
+ In accordance with this filing
SIGNATURESSIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GREENBOX POS LLC (Registrant) | |||
Date: March 13, 2019 | By: | /s/ Fredi Nisan | |
Fredi Nisan | |||
Chief Executive Officer (Principal Executive Officer) | |||
By: | /s/ Ben Errez | ||
Ben Errez | |||
Executive Vice President (Principal Financial Officer) | |||