Greenpro Capital Corp. — Form 10-Q summary
Reporting period: Fiscal quarter and six months ended April 30, 2015; fiscal year ends October 31. The company provides cloud-system, financial consulting and corporate accounting services to small and midsize businesses in Asia, initially focused on Hong Kong and Malaysia. It changed its name from Greenpro, Inc. to Greenpro Capital Corp. on May 6, 2015, after the quarter ended.
Financial results and position
| Metric | Three months ended Apr. 30, 2015 | Six months ended Apr. 30, 2015 | Prior-year comparable period |
|---|---|---|---|
| Revenue | $29,496 | $62,496 | $0 in both 2014 periods |
| Gross profit | $27,171 | $60,171 | $0 |
| Gross margin | About 92.1% | About 96.3% | Not meaningful; no revenue |
| General and administrative expenses | $194,476 | $308,431 | $4,799 and $5,805, respectively |
| Net loss | $167,305 | $248,260 | $4,799 and $5,805, respectively |
| Basic and diluted loss per share | $0.01 | $0.01 | $0.00, as reported |
At April 30, 2015, total assets were $1,627,527, liabilities $1,315,225, and stockholders’ equity $312,302. Current assets of $1,595,988 less current liabilities of $1,315,225 yielded working capital of $280,763. Cash was $339,408, down from $507,934 at October 31, 2014. Prepayments and other receivables were $1,256,580, including $1,234,810 in interest-free, payable-on-demand escrow deposits placed with a related company controlled by a director. Current liabilities included a $1,300,000 interest-free, payable-on-demand loan from shareholders; the filing reports no other debt balance.
For the six months, operating cash use was $1,448,076, investing cash use was $20,450, and financing cash provided was $1,300,000, all from shareholder advances. Cash decreased by $168,526 to $339,408. No interest or income taxes were paid. No dividend or operating cash-flow guidance was provided.
Changes, outlook and risks
- Revenue began during the comparable 2015 periods and comprised management-fee and corporate-advisory income. Management attributed the much higher expenses and net loss to commencement and development of operations, including rent and staff costs; the company expected expenses to rise as business activity grew.
- Management said cash on hand was expected to cover basic operating requirements and current obligations for approximately 12 months, but also warned that revenue alone might not fund operations or planned growth and that additional capital would likely be required. Financing may not be available when needed or at all.
- The filing reports an office lease through August 31, 2016, with monthly payments of approximately $9,257; six-month lease expense was $50,013.
- The company had four employees as of the report date. Management reported disclosure controls and internal control over financial reporting effective at a reasonable-assurance level; there was no auditor attestation. No material legal proceedings, defaults on senior securities, or material off-balance-sheet arrangements were reported.
- The filing identifies the director-controlled escrow deposit and shareholder loan as related-party transactions. It reports no subsequent events requiring disclosure.
Important facts for investors to verify
- Purpose, status, recoverability and use of the $1,234,810 escrow deposit, including the related-party arrangements and any milestones or protections.
- Terms, source, repayment expectations and ongoing availability of the $1,300,000 shareholder loan, which is due on demand.
- Cash runway and the assumptions underlying management’s approximately 12-month estimate, given substantial operating cash use and the stated likelihood of needing additional financing.
- Whether new revenue can scale sufficiently to cover operating costs; six-month revenue of $62,496 remained well below general and administrative expenses of $308,431.
- Share-count and per-share comparability: 22,422,800 shares were outstanding at April 30, 2015, versus 10,000,000 weighted-average shares in the 2014 periods.