Greenpro, Inc. — Form 10-Q Summary
Reporting period: Three months ended January 31, 2015. The filing identifies the registrant as Greenpro, Inc. (development-stage company); the request metadata names Greenpro Capital Corp.
Business context and financial performance
The company provides cloud-system, financial consulting, and corporate accounting services to small and mid-size businesses in Asia, initially focusing on Hong Kong and Malaysia. It reported its first revenue in the comparable periods.
| Metric | Q1 2015 | Q1 2014 |
|---|---|---|
| Revenue | $33,000 | $0 |
| Cost of services / gross profit | $0 / $33,000 | $0 / $0 |
| General and administrative expenses | $113,955 | $4,806 |
| Net loss | $80,955 | $4,806 |
| Basic and diluted loss per share | $0.00, rounded | $0.00, rounded |
| Net cash from (used in) operating activities | $451,385 | ($3,590) |
| Net cash used in investing activities | ($19,211) | $0 |
Reported gross margin was 100% because cost of services was zero; the company nevertheless incurred a net loss. Management attributed higher expenses primarily to $60,000 of directors’ remuneration, $27,770 of rent and related expenses, and $17,464 of staff payroll, following the commencement of operations in September 2014.
Liquidity, assets, and liabilities
- At January 31, 2015, cash was $940,108; current assets were $1,754,100, including $813,992 of prepayments and other receivables; and current liabilities were $1,306,461. Reported working capital was $447,639.
- Total assets were $1,786,068. Shareholders’ equity was $479,607, versus total liabilities of $1,306,461.
- Current liabilities included a $1,300,000 shareholder loan, advanced during the quarter for business development. It bears no interest and is payable on demand. The filing reports no cash proceeds from financing activities, while presenting the loan increase within operating cash flows.
- Cash increased by $432,174 to $940,108. Operating cash flow included the $1.3 million loan increase and a $765,254 increase in prepayments and other receivables. Investing outflow was mainly for office equipment and software development.
- The company had no bank debt reported. It stated that available cash should meet basic operating needs and current obligations for approximately 12 months, but cautioned that additional capital may be needed and may not be available.
Changes, outlook, risks, and unusual items
- Revenue rose from zero to $33,000, while G&A expenses increased from $4,806 to $113,955 and net loss widened from $4,806 to $80,955 as operations began.
- Management expected operating expenses to increase with business activity. The filing provides no quantified revenue or earnings guidance.
- Management warned that current revenue may not fund operations or planned growth; failure to obtain additional equity, debt, or other financing could adversely affect operations and results.
- Disclosure controls and internal control over financial reporting were deemed ineffective. Disclosed material weaknesses included lack of an effective audit committee and independent-board oversight, inadequate segregation of duties, and ineffective period-end reporting controls. Remediation was planned, subject to available funding, with implementation anticipated at least partially by fiscal year-end 2015.
- The company had a two-year office lease through August 31, 2016, with monthly payments of approximately $9,257. It reported no material legal proceedings or significant off-balance-sheet arrangements.
Important facts for investors to verify
- The nature, recoverability, and counterparties for the $813,992 in prepayments and other receivables.
- The terms, documentation, and repayment expectations for the $1.3 million demand loan, and the identities of the two advancing shareholders.
- The cash-flow presentation of the shareholder loan as an operating-activity adjustment despite no financing cash flow being reported.
- The depreciation disclosures: the cash-flow statement reports $1,020 of depreciation for the quarter, while Note 3 states depreciation expense of $1,254 for the three months ended January 31, 2015.
- Progress in remediating the disclosed control weaknesses and the company’s ability to fund operations beyond management’s approximately 12-month estimate.