Greenpro, Inc. — Form 10-Q summary
Reporting period: Quarter ended July 31, 2014; financial statements cover the nine months ended July 31, 2014 and the period from inception on July 19, 2013. The filing identifies the registrant as Greenpro, Inc., although the request metadata names Greenpro Capital Corp.
Business context
Greenpro was a development-stage company with no customers and no revenue. It planned to offer cloud accounting, record management, and cross-border business and financial consulting services, principally in Hong Kong and Malaysia. The filing says it had not yet begun developing its anticipated services and needed financing to execute its plan.
Financial results and condition
- Revenue and margins: Revenue and cost of services were both zero for the nine-month and inception-to-date periods. Gross profit was zero; operating margins are not meaningful.
- Profit: General and administrative expenses were $10,604 for the nine months and $32,899 since inception. Net losses were the same amounts, respectively; reported loss per share was $0.00, rounded.
- Cash flow: Cash declined by $18,546 during the nine months to $42,659. Operating activities used $18,546 in that period. Since inception, reported operating cash flow was positive $41,659, reflecting the $82,500 related-party loan proceeds in the cash-flow reconciliation; investing cash flow was zero and financing included $1,000 of capital contribution.
- Liquidity: Current assets were $52,451, including $42,659 cash and $9,792 prepaid expenses. Current liabilities were $84,350, including $82,500 in related-party loans and $1,850 accrued expenses. Working capital was negative $31,899; stockholders’ equity was negative $31,899.
- Debt: Two 8% convertible notes issued to the CEO and CFO totaled $82,500 and were convertible at $0.00825 per share at the holders’ election. The filing reports no interest paid.
- Other: No material off-balance-sheet arrangements or legal proceedings were reported. The company disclosed net operating loss carryforwards of $32,899 and a full valuation allowance against the stated $1,128 deferred tax asset.
Changes, outlook, and risks
Compared with October 31, 2013, cash fell from $61,205 to $42,659, prepaid expenses increased from zero to $9,792, and accrued expenses increased from zero to $1,850. Related-party loans remained $82,500. The accumulated deficit increased from $22,295 to $32,899. The filing does not provide a prior-year operating comparison; its inception-to-date figures are not a comparable full-year period.
Management said cash on hand at July 31 was insufficient to launch the full business plan and estimated it would cover basic operations for about three months. Management sought financing, including a registered offering intended to raise up to $500,000, and estimated $228,000 would cover basic needs for 12 months after the offering. The filing does not clearly state how much, if any, had been raised. Management warned that financing might not be available and that the business plan could be reduced or operations hindered. The financial statements include a going-concern warning; shareholder support had funded cash shortfalls during the development stage.
The company reported disclosure controls and internal control over financial reporting effective at a reasonable-assurance level as of July 31, 2014; there was no auditor attestation. No material changes in internal controls were reported. The filing refers investors to risk factors in its September 5, 2014 Form S-1.
Key facts for investors to verify
- The filing reports 10,000,000 shares issued and outstanding on the balance sheet but 20,000,000 common shares outstanding as of September 10, 2014. Verify the share count and any intervening issuance or offering activity.
- Verify the status and proceeds of the planned $500,000 offering, and the company’s actual cash and funding runway after July 31.
- Clarify the convertible notes’ maturity date: the notes disclose an extension to August 12, 2014, while another passage says August 31, 2014; the MD&A also refers to an original January 28, 2014 maturity.
- Assess the company’s ability to obtain financing and execute a business plan when it had no customers, revenue, or completed service system.