The accompanying notes are an integral part of these condensed unaudited financial statements.
The accompanying notes are an integral part of these condensed unaudited financial statements.
The accompanying notes are an integral part of these condensed unaudited financial statements.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2018
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
GreenBox POS LLC (“GreenBox” or the “Company”) was originally incorporated on April 10, 2007 under the laws of the State of Nevada as ASAP Expo, Inc. Prior to July 2011, the investment banking services division was the core business of ASAP Expo. ASAP Expo helped small and medium sized businesses raise funds and promote business through capital markets. In July 2011, ASAP Expo transitioned its core business to providing real estate advisory services from investment banking advisory services for Chinese companies and high net worth individuals.
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, a Washington limited liability company, representing 90% of ASAP Expo, Inc.’s issued and outstanding 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, and ceased any and all business operations.
The transaction contemplated in the March 23
rd
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.” The Company currently has no operations.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with accounting 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. Operating results for the three 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”), included in the Company’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 cash equivalents of $0 and $0 as of September 30, 2018 and December 31, 2017, respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company’s financial instruments consist of accrued liabilities, notes receivable and amounts and due 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, and expands disclosures about fair value measurements. The standard 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 for fair value measurements based on the nature of inputs used 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 accounts for convertible promissory notes in accordance with ASC 470-20,
Debt with Conversion and Other Options
. The Company evaluates embedded conversion features within convertible debt to determine whether the embedded conversion feature should be bifurcated from the 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 a 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 amortized to interest expense over the life of the debt.
USE OF ESTIMATES
The preparation of financial statements in conformity with U.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.
GOING CONCERN
As of September 30, 2018, the Company had no cash and a negative working capital of $145,546. As of September 30, 2018, the Company has not yet generated any revenues, and has incurred cumulative net losses of $5,595,142. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
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”) 606,
Revenue from 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 606.
As of September 30, 2018, the Company has not generated any revenues from continuing operations.
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 amendments 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 impact 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 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 – 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 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
|
)
|
Losses from discontinued operations during the three and nine months ended September 30, 2018 are $0 and $5,573,082 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 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 Transaction with Holdings that are disclosed in Statements of Operations for the three and nine months ended September 30, 2018 and 2017.
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
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
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,633,355
|
)
|
|
|
-
|
|
Interest expense
|
|
|
-
|
|
|
|
(7,407
|
)
|
|
|
(3,695
|
)
|
|
|
(26,737
|
)
|
Total other income (expense, net)
|
|
|
-
|
|
|
|
(7,407
|
)
|
|
|
(5,477,202
|
)
|
|
|
(21,460
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
-
|
|
|
|
44,098
|
|
|
|
(5,337,136
|
)
|
|
|
116,803
|
|
Income taxes provision
|
|
|
-
|
|
|
|
21,943
|
|
|
|
235,946
|
|
|
|
60,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) Income from Discontinued Operations
|
|
$
|
-
|
|
|
$
|
22,155
|
|
|
$
|
(5,573,082
|
)
|
|
$
|
55,913
|
|
The following table summarizes the operating and investing cash flows of discontinued operations related to the operations that were removed as a result of the Transaction with Holdings for the nine months ended September 30, 2018 and 2017.
|
|
Nine Months Ended September 30,
|
|
|
|
2018
|
|
|
2017
|
|
Operating Activities:
|
|
|
|
|
|
|
|
|
Net Income (loss) from discontinued operations
|
|
$
|
(5,573,082
|
)
|
|
$
|
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
|
|
|
5,633,355
|
|
|
|
-
|
|
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
|
|
|
$
|
-
|
|
NOTE 3 – FIXED ASSETS
Equipment consists of the following:
|
|
September 30,
|
|
|
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 September 30, 2018 and December 31, 2017, GreenBox was owed $250,000 and $20,881 from affiliated companies in which GreenBox’s officers are also owners and officers.
The Company had a revolving line of credit totaling $1,800,000 with Frank Yuan, CEO and Jerome Yuan, his son. The line of credit bore interest at 6% per annum and was 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 the nine months ended September 30, 2018 and 2017, the Company incurred interest expense totaling $3,333 and $25,964 in connection with the Line. The balance of the credit line as of September 30, 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 was $32,100.
The son of the Company’s officer (“Son”) received salary from the Company for work performed. During nine months ended September 30, 2018 and 2017, the Son received salary of $0 and $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
NOTE 5 – 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, which was purchased in conjunction with the Transaction. As of September 30, 2018, there are no minimum payments or obligations due by the Company under the auto loan.
NOTE 6 – 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 Amount Due” that is displayed on the monthly bill. The Total Amount Due will be the sum of all past due amounts plus the “Current Monthly 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 Rate per 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. The 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 7 – 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 defined, by 65%. This represents a beneficial conversion feature that is not a derivative but must have its value recorded as a discount on the related August 6th Note. The value of the conversion feature was calculated using the intrinsic value method, whereby the amount of the discount was calculated as the difference between the conversion price and the market price of the underlying stock at the date of issuance multiplied by the number of shares issuable. The Company recognized a debt discount of $136,231 on the convertible promissory August 6th Note related to the beneficial conversion feature upon issuance, which is being amortized to interest expense over the one-year term of the August 6th Note.
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. For the three and nine months ended September 30, 2018, approximately $452 and $452 in deferred financing cost was amortized, respectively.
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 recognized $24,791 in interest expense related to the August 6th Note.
NOTE 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.
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 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.
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 9 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date the financial statements were issued.
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.
On October 1, 2018, the Company issued a promissory note convertible into equity, pursuant to the above-referenced Securities Purchase Agreement 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.