0001161697-19-000122.txt : 20190329 0001161697-19-000122.hdr.sgml : 20190329 20190329160907 ACCESSION NUMBER: 0001161697-19-000122 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 36 CONFORMED PERIOD OF REPORT: 20181231 FILED AS OF DATE: 20190329 DATE AS OF CHANGE: 20190329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LevelBlox, Inc. CENTRAL INDEX KEY: 0001473654 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 263748249 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-54502 FILM NUMBER: 19716501 BUSINESS ADDRESS: STREET 1: 6371 BUSINESS BLVD. STREET 2: SUITE 200 CITY: SARASOTA STATE: FL ZIP: 34240 BUSINESS PHONE: 941-907-8822 MAIL ADDRESS: STREET 1: 6371 BUSINESS BLVD. STREET 2: SUITE 200 CITY: SARASOTA STATE: FL ZIP: 34240 FORMER COMPANY: FORMER CONFORMED NAME: AlphaPoint Technology, Inc. DATE OF NAME CHANGE: 20091001 10-K 1 form_10-k.htm FORM 10-K ANNUAL REPORT FOR 12-31-2018

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K


[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 2018

 

[_]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from ______________ to ______________


Commission File  333-173028


 

LevelBlox, Inc.

(Exact name of registrant as specified in its charter)


Delaware

 

26-3748249

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)


6371 Business Blvd. Suite 200
Sarasota, FL

 

34240

(Address of principal executive offices)

 

(Zip Code)


Registrant’s telephone number, including area code   (941) 907-8822


Securities registered pursuant to Section 12(b) of the Act:  None


Securities registered pursuant to section 12(g) of the Act:


Common Stock, par value of $0.01

(Title of class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

[_] Yes   [X] No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

[_] Yes   [X] No

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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.

[X] 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).

[X] Yes   [_] No

 



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

[_]      

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [_]

 

Accelerated filer [_]

Non-accelerated filer [_]

 

Smaller reporting company [X]

(Do not check if 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 Act).

[_] Yes   [X] No

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second quarter, June 30, 2018:  $7,741,325

 

Number of the issuer’s Common Stock outstanding as of March 29, 2019: 97,243,259.

 

Documents incorporated by reference: None.

 



LEVELBLOX, INC.


FORM 10-K


FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018


TABLE OF CONTENTS


 

 

Page

PART I

 

 

 

 

 

Item 1.

Business

1

Item 1A

Risk Factors

3

Item 1B

Unresolved Staff Comments

7

Item 2.

Properties

7

Item 3.

Legal Proceedings

7

Item 4.

Mine Safety Disclosures

7

 

 

 

PART II

 

 

 

 

 

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Securities

7

Item 6.

Selected Financial Data

8

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

8

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

11

Item 8.

Financial Statements and Supplementary Data

12

Item 9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

13

Item 9A.

Controls and Procedures

13

Item 9B.

Other Information

13

 

 

 

PART III

 

 

 

 

 

Item 10.

Directors, Executive Officers and Corporate Governance of the Registrant

14

Item 11.

Executive Compensation

18

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

19

Item 13.

Certain Relationships and Related Transactions and Director Independence

20

Item 14.

Principal Accountant Fees and Services

20

 

 

 

PART IV

 

 

 

 

 

Item 15.

Exhibits and Financial Statement Schedules

21

 

 

 

Signatures

 

22

 

 

 

EX-31.1

Rule 13a-14(a) Certification of Principal Executive Officer

 

 

 

 

EX-32.1

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 




SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS


This Annual Report on Form 10-K, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section in Item 7 of this report, and other materials accompanying this Annual Report on Form 10-K contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “may,” “will,” and similar expressions and the negatives thereof identify forward-looking statements, which generally are not historical in nature. These forward-looking statements include, but are not limited to, statements concerning the following: levels of revenue, changes in and expectations with respect to revenue, revenue growth and gross margins, anticipated growth and growth strategies, the impact of competition, our ability to sell products, future operating expense levels, future operating results, the impact of quarterly fluctuations of revenue and operating results, staffing and expense levels, expected cash and investment balances and the impact of foreign exchange rate fluctuations. As and when made, management believes that these forward-looking statements are reasonable. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made and may be based on assumptions that do not prove to be accurate. LevelBlox, Inc., undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, occurring after the date of this Annual Report on Form 10-K. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our Company’s historical experience and our present expectations or projections. For a detailed discussion of these risks and uncertainties, see the “Business” and “Risk Factors” sections in Items 1 and 1A, respectively, of this Annual Report on Form 10-K.


PART I

 

ITEM 1. BUSINESS


Background Information


LevelBlox, Inc. (“LevelBlox”) formerly known as AlphaPoint Technology, Inc., was incorporated in the State of Delaware on November 13, 2008. LevelBlox, is a developer of Software Asset Management (SAM) applications for the Blockchain. LevelBlox has developed a patent-pending software application called AssetCentral (AC). Through AssetCentral use cases we have identified the growing complexity and scope with the current methodology and tracking of Software Asset Management licenses.


LevelBlox has been selected to join the Oracle Scaleup Ecosystem, and the Oracle Cloud Infrastructure platform, utilizing the global resources, cloud technology, infrastructure and expertise Oracle has to offer, as the company moves into its next phase of growth.


LevelBlox is committed to Blockchain deployments for enterprise markets. It seeks to eliminate intermediaries by increasing efficiency and speed and simplifying operations by reducing cost and time related to Software Asset Management (SAM) reconciliations and disputes.  


Business Operations


LevelBlox, is a developer of Software Asset Management (SAM) applications for the Blockchain. LevelBlox’s SAM Blockchain application will connect software entitlements to their licenses and components with the software decision makers, to drive automation with transparency to reduce SAM content, effort, and cost. LevelBlox’s Blockchain auditing and compliance tool will assist companies with their compliance audits, internal controls, and best business practices.


LevelBlox, Inc’s principal objective is to partner with innovative Blockchain technology focused companies that are interested in pursuing growth through the public markets. We are developing relationships with a portfolio of high-quality businesses and establishing a sustainable business model, to achieve superior and sustainable financial results.


We intend to accomplish these objectives through targeted strategic acquisitions and partnerships. We seek companies that either strategically fit within our existing business portfolio or expand our business into new and attractive target markets. Given the rapid pace of Blockchain developments and the specialized expertise typical of our served markets, acquisitions also provide us essential access to new technologies and domain expertise.


- 1 -



LevelBlox’s business units will typically operate as stand-alone operations, but are supported by a seasoned executive team and a shared technology and administrative infrastructure. While the circumstances of every transaction are unique, we prefer to partner with top caliber executives, and skilled management teams of middle-market businesses and support them with the necessary tools to build each company into a leader in its segment. We believe this philosophy enables us to combine talents and technologies, share services and benefit from a range of centrally managed initiatives while maintaining the uniqueness and brand equity and culture of each unit and a decentralized decision-making structure.


LevelBlox leverages the vast experience that its executive team has amassed in creating the suitable financial architecture. Including its expertise in the public sector, follow-on offerings, private placements, other financial know-how as well as, the organizational frameworks (executive strategy and leadership, key C-level and technical staffing, supply chain development, etc.), that are critical, yet often beyond the means and experience of private companies.


All references to the previously acquired business Operations, Technology, Development, Sales / Marketing, Alliances and Customers, have been removed for this annual report.


Intellectual Property


Our ability to compete successfully depends in part on our ability to develop and maintain the proprietary aspects of our technology and operate without infringing upon the proprietary rights of others. We rely on a combination of trademarks, copyrights, service marks, trade secrets, confidentiality procedures, contractual provisions and other similar measures to protect our proprietary information and intellectual property.


Our customer agreements include restrictions intended to protect and defend our intellectual property rights. We also require our employees, contractors and many others with whom we have business relationships to sign confidentiality agreements.


While our trademarks and copyrights are an important part of our success, our business as a whole is not materially dependent on any one trademark, copyright or on a combination of any or all of our proprietary technology.


Executive Officers


The following table sets forth information about our executive officers as of December 31, 2018:


Name

 

Age

 

Position

 

Executive Officer Since

Gary W. Macleod

 

55

 

 

President, Chief Executive Officer

 

2008

James Whelan

 

47

 

 

Chief Technology Officer

 

2018


Gary Macleod, the Chief Executive Officer and Director of LevelBlox, Inc., has played a key leadership role in translating technical information and new technologies into compelling value propositions to drive customer endorsement and sell-through models for evolving Enterprise Grade software solutions. Mr. Macleod took LevelBlox Technology public in 2011. From August 2005 to January 2008, Mr. Macleod was the Chief Executive Officer and Director of Non-Invasive Monitoring Systems, Inc. He was responsible for filing comprehensive and required publicly-held organization financial reports, raising capital, strengthening stakeholder confidence, shareholder communications, steering product introduction efforts, developing long-term business plans, and restructuring the organization. Mr. Macleod brings M&A, Buyout, and Share Exchange expertise, to his over 25 years of broad-based executive leadership of companies, and over ten years of CEO leadership to U.S. public companies.


James Whelan, Chief Technology Officer of LevelBlox, has three decades of history working in information technology, software, and services industry. He is a dedicated and certified professional in Scrum, DevOps, agile methodologies and project management. Currently Serving the enterprise market to produce value by helping to make effective software products that millions of people use to solve business problems. He has strong information technology and business background with a Master’s degree in Business Administration.


Available Information


Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other periodic reports are available free of charge on our website (www.LevelBlox.com) as soon as reasonably practicable after we have electronically filed or furnished such materials to the Securities and Exchange Commission. They are also available at www.sec.gov.


- 2 -



ITEM 1A. RISK FACTORS


Factors That Could Affect Future Results


You should carefully consider the risks below, as well as other information included or incorporated by reference in this report before making an investment decision. We operate in a dynamic and rapidly changing environment that involves many risks and uncertainties that could cause actual results to differ materially from results contemplated by forward-looking statements in this report.  Because of the factors discussed below, other information included or incorporated by reference in this report and other factors affecting our operating results, past performance should not be considered a reliable indicator of future performance. The risks discussed in this report are not the only risks we face. Risks and uncertainties of which we are not currently aware, or which we currently deem to be immaterial, may also adversely affect our business, financial condition or operating results.


RISKS RELATED TO OUR BUSINESS


Limited Corporate History


We were incorporated on November 13, 2008 and have a limited operating history that can be used to evaluate us, and the likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays that we may encounter because we are a small business. As a result, we may not be profitable and we may not be able to generate sufficient revenue to develop as we have planned. To address these risks the Company must, among other things, continue to attract investment capital, respond to competitive factors, continue to attract, retain and motivate qualified personnel.


We continue to monitor and manage our costs in an effort to optimize our performance for the long-term. However, there is no assurance that we will be successful; unforeseen expenses, difficulties or delays may prevent us from realizing our goals. From time to time, we incur restructuring expenses or expenses related to other cost reduction efforts, but we can offer no assurance that these or other actions will enable us to achieve or sustain profitability in the future. In addition, we cannot be certain that steps we have taken to control our costs will not adversely affect our prospects for long-term revenue growth. If we cannot increase our revenue, improve gross margins and control costs, our future results and financial condition will be negatively affected.


Acquisitions of, and investments in, other businesses present many risks. We may not realize the anticipated financial and strategic benefits of these transactions, and we may not be able to manage our operations with the acquired businesses efficiently or profitably.


As part of our business strategy, we evaluate opportunities to expand and enhance our product and service offerings to meet customer needs, increase our market opportunities and grow revenue through internal development efforts and external acquisitions and partnerships. We may continue to acquire or make investments in other companies, products, services and technologies in the future. Acquisitions and investments may cause disruptions in or add complexity to our operations and involve a number of risks, including the following:


the anticipated benefits, such as an increase in revenue, may not materialize if, for example, a larger number of customers than expected choose not to renew or if we are unable to cross-sell the acquired company’s solutions to our existing customer base;

 

 

we may have difficulty integrating and managing the acquired technologies or products with our existing product lines, and maintaining uniform standards, controls, procedures and policies across locations;

 

 

we may experience challenges in, and have difficulty penetrating, new markets where we have little or no prior experience and where competitors have stronger market positions;

 

 

integrating the financial systems and personnel of the acquired business and retaining key employees may be difficult, and, to the extent we issue shares of stock or other rights to purchase stock to such individuals, existing stockholders may be diluted;

 

 

our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of overseeing geographically and culturally diverse locations;

 

 

we may find that the acquired business or assets do not further our business strategy, or that we overpaid for the business or assets, or that we do not realize the expected operating efficiencies or product integration benefits;


- 3 -



our use of cash consideration for one or more significant acquisitions may require us to use a substantial portion of our available cash or incur substantial debt, and if we incur substantial debt, it could result in material limitations on the conduct of our business;

 

 

we may fail to uncover or realize the significance of, or otherwise become exposed to, liabilities and other issues assumed from an acquired business, such as claims from terminated employees or third-parties and unfavorable revenue recognition or other accounting practices; and

 

 

we may experience customer confusion as a result of product overlap, particularly when we offer, price and support various product lines differently.


These factors could have a material adverse effect on our business, results of operations and financial condition or cash flows. Furthermore, during periods of operational expansion, we often need to increase the size of our staff, our related operations and third party partnerships, and potentially amplify our financial and accounting controls to ensure they remain effective. Such changes may increase our expenses, and there is no assurance that our infrastructure will be sufficiently scalable to efficiently manage any growth that we may experience. If we are unable to leverage our operating cost investments as a percentage of revenue, our ability to generate or increase profits will be adversely impacted. In addition, from time to time, we may enter into negotiations for acquisitions and other investments that are not ultimately consummated, which could result in significant diversion of management time, as well as out-of-pocket expenses.


To keep pace with technological developments, satisfy increasingly sophisticated customer requirements, achieve market acceptance and effectively respond to competition, we must quickly identify emerging trends and requirements, accurately define and design enhancements and improvements for existing solutions, and introduce new solutions that satisfy our customers’ changing demands. Accelerated introductions for new solutions require high levels of expenditures for research and development that could adversely affect our operating results. Further, any new solutions we develop may not be introduced in a timely manner or be available in a distribution model favored by our target markets, and may therefore not achieve the broad market acceptance necessary to generate significant revenue. If we are unable to quickly and successfully develop or acquire and distribute new products and services cost-effectively, or enhance existing solutions, or if we fail to position and price our solutions to meet market demand, our business and operating results will be adversely affected.


If we are unable to maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the trading price of our common stock may be negatively affected.


We are required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls. Effective planning and management processes are necessary to meet these requirements, and we expect that we will need to continue to improve existing, and implement new, operational and financial systems, procedures and controls to manage our business effectively in the future. If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports, the trading price of our common stock could be negatively affected, and we could become subject to investigations by the Securities and Exchange Commission or other regulatory authorities, which could require additional financial and management resources.


If we fail to adequately protect our proprietary rights and intellectual property, we may lose valuable assets, experience reduced revenue and incur costly litigation to protect our rights.


Our success and ability to compete depends on the proprietary technology embedded in our solutions. We rely on a combination of trademarks, copyrights, service marks, trade secrets, contractual provisions and other similar measures to establish and protect our proprietary rights. We cannot protect our intellectual property if we are unable to enforce our rights or if we do not detect its unauthorized use. Despite our precautions, unauthorized third parties may be able to copy or reverse engineer our solutions and use information that we regard as proprietary to create products and services that compete with ours. Provisions in our agreements prohibiting unauthorized use, copying, transfer and disclosure of our licensed programs and services may be unenforceable under the laws of some jurisdictions. Further, the laws of some countries do not protect proprietary rights to the same extent as the laws of the United States. To the extent that we engage in international activities, our exposure to unauthorized copying and use of our products, services and proprietary information increases. We enter into various restrictive agreements with our employees and consultants, as well as with customers and third parties with whom we have strategic relationships. We cannot ensure that these agreements will be effective in controlling access to and distribution of our products, services and proprietary information. Nor do these agreements prevent our competitors from independently developing technologies that are substantially equivalent or superior to our solutions. Litigation may be necessary to enforce our intellectual property rights and protect our trade secrets. Litigation, whether successful or unsuccessful, could result in substantial costs and diversion of management resources, either of which could seriously harm our business.


- 4 -



Risks Related to Our Stock


Our stock price is likely to remain volatile.


The trading price of our common stock has in the past, and may in the future, be subject to wide fluctuations in response to many factors, including those described in this section. The volume of trading in our common stock is limited, which may increase volatility. Investors should consider an investment in our common stock as risky and should purchase our common stock only if they can withstand significant losses. Other factors that affect the volatility of our stock include:


our actual and anticipated operating performance and the performance of other similar companies;

 

 

actual and anticipated fluctuations in our financial results;

 

 

failure of securities analysts to maintain coverage of us;

 

 

ratings changes by any securities analysts who follow us;

 

 

failure to meet our projected results or the published operating estimates or expectations of securities analysts and investors;

 

 

failure to achieve revenue or earnings expectations;

 

 

price and volume fluctuations in the overall stock market, including as a result of trends in the global economy;

 

 

significant sales by existing investors, coupled with limited trading volume for our stock;

 

 

announcements by us or our competitors of significant contracts, results of operations, projections, or new technologies;

 

 

lawsuits threatened or filed against us;

 

 

adverse publicity;

 

 

acquisitions, commercial relationships, joint-ventures or capital commitments;

 

 

changes in our management team or board of directors;

 

 

publication of research reports, particularly those that are inaccurate or unfavorable, about us or our industry by securities analysts; and

 

 

other events or factors, including those resulting from war, incidents or terrorism or responses to these events.


Additionally, some companies with volatile market prices for their securities have been the subject of securities class action lawsuits. Any such suit could have a material adverse effect on our business, results of operations, financial condition and price of our common stock.


Future sales of substantial amounts of our common stock, including securities convertible into or exchangeable for shares of our common stock could cause our stock price to fall.


We may issue additional shares of our common stock, including securities convertible into or exchangeable for, or that represent the right to receive, shares of our common stock. Such issuances will dilute the ownership interest of our stockholders and could adversely affect the market price of our common stock. We cannot predict the effect that future sales of shares of our common stock or other equity-related securities would have on the market price of our common stock. In addition, sales by existing stockholders of a large number of shares of our common stock in the public trading market (or in private transactions), including sales by our executive officers, directors or institutional investors, or the perception that such additional sales could occur, could cause the market price of our common stock to drop. We have stock options and restricted stock units outstanding for shares of our common stock. Our stockholders may incur dilution upon exercise of an outstanding stock option or vesting of outstanding restricted stock units.


- 5 -



We do not intend to pay dividends for the foreseeable future.


We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. Consequently, stockholders must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.


Limited market for our Stock


The Company’s stock is listed and traded on the OTC Bulletin Board. The trading of securities on the OTC Bulletin Board is often sporadic and investors may have difficulty buying and selling our shares or obtaining market quotations for them, which may have a negative effect on the market price of our common stock. You may not be able to sell your shares at their purchase price or any price at all. Accordingly, you may have difficulty reselling any share you purchase from the selling security holders. We cannot guarantee that there will be a future market for our common stock.


Penny Stock risk


Our common stock is currently considered a “penny stock” and may continue in the future to be subject to the “penny stock” rules adopted under Section 15(g) of the Exchange Act.  The penny stock rules generally apply to companies whose common stock is not listed on The NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years.)  These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances.  Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules.  Since our securities are subject to the penny stock rules, investors may find it more difficult to dispose of our securities.


No independent audit committee risk


The Company does not have any committees.


Going concern


The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  The Company has a history of losses, primarily due to its product development stage, resulting in an accumulated deficit.  In view of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to raise additional capital and execute its business plan. The Company intends on financing its future acquisition strategies and development activities needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes until such time that funds provided by operations are sufficient to fund working capital requirements.


The consolidated financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.


Ineffective internal control risks


The Company’s management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error or all fraud.  A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.  Further, the design of the control system must reflect that there are resource constraints and that the benefits must be considered relative to their costs.  Because of the inherent limitation in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, with 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 mistakes.  Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls.  The design of any system of controls is based in part on 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.  Projections of any evaluation of controls effectiveness to future periods are subject to risks.  Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.


- 6 -



Management Risks


Managing a small public company involves a high degree of risk. Few small public companies ever reach market stability and we will be subject to oversight from governing bodies and regulations that will be costly to meet.  Our present officers and directors do have experience in managing a fully reporting public company, but may also obtain outside consultants to assist with our meeting these requirements.  These outside consultants are expensive and can have a direct impact on our ability to be profitable.


While the Company is attempting to disclose all of the potential risks associated with an investment in the Company, there can be no assurance that all of the risks are visible to management.  Events occurring in the future may be additional risks to an investment in the Company.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS


None.

 

ITEM 2. PROPERTIES


The Company does not own any property at this time. We rent our headquarters in Sarasota, Florida and a satellite office in Miami, Florida.

 

ITEM 3. LEGAL PROCEEDINGS


From time to time the Company may become a party to litigation matters involving claims against the Company.  Current regulations and reporting requirements require the Company to disclose any legal proceedings that are ongoing and could have a material impact on the financial statements for the quarter ended September 30, 2018. We know of no active or pending legal proceedings against us, nor are we involved as a plaintiff in any active or pending legal proceedings that are material. There are no proceedings in which any of our directors, sole officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.

 

ITEM 4. MINE SAFETY DISCLOSURES


Not Applicable.


PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDERS’ MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


Price Range of Common Stock


The Company’s common stock is listed on the Over the Counter Bulletin Board (“OTC: QB”) under the symbol “LVBX”.  The Company received its “Notice of Effectiveness” on November 1, 2011.


The following table sets forth the high and low trade information for our common stock for each quarter for the current year. The prices reflect inter-dealer quotations, do not include retail mark-ups, markdowns or commissions and do not necessarily reflect actual transactions.


 

 

High

 

Low

Fiscal Year 2017

 

 

 

 

 

 

First quarter ended March 31, 2017

 

$

0.20

 

$

0.02

Second quarter ended June 30, 2017

 

$

0.20

 

$

0.05

Third quarter ended September 30, 2017

 

$

0.20

 

$

0.06

Fourth quarter ended December 31, 2017

 

$

0.11

 

$

0.02

 

 

 

 

 

 

 

Fiscal Year 2018

 

 

 

 

 

 

First quarter ended March 31, 2018

 

$

0.10

 

$

0.07

Second quarter ended June 30, 2018

 

$

0.13

 

$

0.05

Third quarter ended September 30, 2018

 

$

0.11

 

$

0.01

Fourth quarter ended December 31, 2018

 

$

0.10

 

$

0.02


- 7 -



Approximate Number of Equity Security Holders


On December 31, 2018 the Company’s common stock had a closing price quotation of $0.06. As of December 31, 2018, there were 97,243,259 shares of our common stock outstanding held by approximately 62 certificate holders of record.


Dividends


We have never declared or paid cash dividends on our common shares, and we do not currently anticipate that we will pay any dividends with respect to those securities. Our current business plan is to retain any future earnings to finance the expansion and development of our business.

 

ITEM 6. SELECTED FINANCIAL DATA


We qualify as a smaller reporting company, as defined by Rule 229.10(f)(1), and therefore are not required to provide the information required by this Item.

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Cautionary Notice Regarding Forward Looking Statements


The information contained in Item 7 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.


We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. This filing contains a number of forward-looking statements which reflect management’s current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information, are forward looking statements. In particular, the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.


Readers should not place undue reliance on these forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks to be discussed in our Annual Report on form 10-K and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.


Our consolidated financial statements are stated in United States Dollars (USD or US $) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to “common stock” refer to the common shares in our capital stock.


- 8 -



General Business Overview:


LevelBlox, Inc. (“LevelBlox”) formerly known as AlphaPoint Technology, Inc., was incorporated in the State of Delaware on November 13, 2008. LevelBlox, is a developer of Software Asset Management (SAM) applications for the Blockchain. LevelBlox has developed a patent-pending software application called AssetCentral (AC). Through AssetCentral use cases we have identified the growing complexity and scope with the current methodology and tracking of Software Asset Management licenses. LevelBlox’s SAM Blockchain application will connect software entitlements to their licenses and components with the software decision makers, to drive automation with transparency to reduce SAM content, effort, and cost. LevelBlox’s Blockchain auditing and compliance tool will assist companies with their compliance audits, internal controls, and best business practices.


LevelBlox has been selected to join the Oracle Scaleup Ecosystem, and the Oracle Cloud Infrastructure platform, utilizing the global resources, cloud technology, infrastructure and expertise Oracle has to offer, as the company moves into its next phase of growth.


LevelBlox is committed to Blockchain deployments for enterprise markets. It seeks to eliminate intermediaries by increasing efficiency and speed and simplifying operations by reducing cost and time related to Software Asset Management (SAM) reconciliations and disputes.


Application of Critical Accounting Policies and Use of Estimates


Our discussion and analysis of our financial condition and results of operations that follows is based upon our consolidated financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The application of GAAP requires our management to make assumptions, judgments and estimates that affect our reported amounts of assets, liabilities, revenue and expenses, and the related disclosures regarding these items. We base our assumptions, judgments and estimates on historical experience and on various other factors that we believe to be reasonable under the circumstances. Actual results could differ significantly from these estimates under different assumptions or conditions. To the extent that there are material differences between these estimates and actual results, our future financial condition or results of operations will be affected. On a regular basis, we evaluate our assumptions, judgments and estimates.


We believe that the assumptions, judgments and estimates involved in the accounting for revenue recognition, stock-based compensation, and income taxes have the greatest potential impact on our consolidated financial statements. These areas are key components of our results of operations and are based on complex rules which require us to make judgments and estimates. Historically, our assumptions, judgments and estimates in accordance with our critical accounting policies have not materially differed from actual results. For a more detailed discussion of these accounting policies and our use of estimates, refer to Note 1 of our Notes to Consolidated Financial Statements included in this report.


Software Development Costs


The Company accounts for software development costs in accordance with several accounting pronouncements, including FASB ASC 730, Research and Development and FASB ASC 985-20, Costs of Software to be Sold, Leased, or Marketed.


Costs incurred during the period of planning and design, prior to the period determining technological feasibility, for all software developed for use internal and external, has been charged to operations in the period incurred as research and development costs. Additionally, costs incurred after determination of readiness for market have been expensed as research and development.

 

 

The Company may capitalize costs incurred in the development of our proprietary software (computer software to be sold, leased or licensed) for the period after technological feasibility is determined and prior to our marketing and initial sales.


At December 31, 2018, no software development costs had been capitalized.


- 9 -



Share-based Payments


Share-based payments to employees, including grants of employee stock options or shares of stock are recognized as compensation expense in the consolidated financial statements based on their fair values, in accordance with FASB ASC Topic 718. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). The Company may issue restricted stock to consultants for various services. Cost for these transactions is measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is to be measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty’s performance is complete. The fair value of the Company’s common stock is obtained from the trading prices on or near the date of the transaction.


Results of Operations


For the years ended December 31, 2018 and 2017:


Our consolidated revenues were $0 and $0 for the years ended December 31, 2018 and 2017, respectively.


Operating expenses were $1,410,616, and $378,421 for the years ended December 31, 2018 and 2017, respectively.  The increase in year-over-year expenses resulted mainly from higher professional fees incurred in the Company’s efforts to seek executive talent and business advisors to assist in developing new business strategies as well as research and development costs incurred in the development of the new software to be sold in the future.  In addition, a significant portion of operating expenses during the period consisted of stock-based compensation expense related to issuances of stock in exchange for services.


Net losses incurred in the years presented have been primarily due to operating expenses in the absence of revenues. The Company recognized $108,000 in other income resulting from the sale of the corporate name AlphaPoint Technology, Inc. to an unrelated third party. The Company incurred net losses of $1,302,616 and $378,421 for the years ended December 31, 2018 and 2017, respectively.  The increase in the year over year net loss was due primarily to increase in operating expenses described in the preceding paragraph.


We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a technology business enterprise, including the financial risks associated with the limited capital resources currently available to us for the implementation of our business strategies. (See “Risk Factors”). To become profitable and competitive, we must develop the business and marketing plan and execute the plan. Our management will attempt to secure financing through various means including borrowing and investment from institutions and private individuals.


Liquidity and Capital Resources


As reflected in the consolidated financial statements, at December 31, 2018 and 2017, we have a deficit in working capital, an accumulated deficit and for the years ended December 31, 2018 and 2017, we have a net loss.


At December 31, 2018, the Company had current assets of $195,574 consisting only of cash and prepaid expenses, and current liabilities of $939,297 resulting in a working capital deficit of $743,723.


We will require additional funding to meet our current shortfall in working capital. If the Company is unable to raise the funds partially through stock offerings, the Company will seek alternative financing through means such as borrowings from institutions or private individuals. There can be no assurance that the Company will be able to raise such funds.


Consequently, there is doubt about the Company’s ability to continue to operate as a going concern. As reflected in the financial statements we have an accumulated deficit from inception of $5,492,883 and have a net loss from operations of $1,302,616 and $378,421 for the years ended December 31, 2018 and 2017, respectively. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and execution of its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, the Company may be forced to seek a buyer for our business or another entity with which we could create a joint venture.


Management believes that actions presently being taken to obtain additional funding and execution of its strategic plans provide the opportunity for the Company to continue as a going concern.


- 10 -



Recent Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address board of directors’ independence, audit committee oversight, and the adoption of a code of ethics. Our Board of Directors consists of eight (8) individuals who advise our chief executive officer. Our chief executive officer makes decisions on all significant corporate matters such as the approval of terms of the compensation of our executive officers.


The Company has adopted a Code of Ethics and Business Conduct. The Company is in the process of introducing them. The Company has not adopted corporate governance measures such as an audit or other independent committees of our board of directors. If we expand our board membership in future periods to include additional independent directors, the Company may seek to establish an audit and other committees of our board of directors. It is possible that if our Board of Directors included independent directors and if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.


Recent Accounting Pronouncements


See Note 3 in the consolidated financial statements for a discussion of recent accounting guidance.


Off-Balance Sheet Arrangements


We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.


Management Consideration of Alternative Business Strategies


In order to continue to protect and increase shareholder value, management believes that it may, from time to time, consider alternative management strategies to create value for the company or additional revenues.  Strategies to be reviewed may include acquisitions, roll-ups, strategic alliances, joint ventures on large projects, and/or mergers.


Management will only consider these options where it believes the result would be to increase shareholder value while continuing the viability of the company.


Inflation


The effect of inflation on our revenues and operating results has not been significant.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


We qualify as a smaller reporting company, as defined by Rule 229.10(f)(1), and therefore are not required to provide the information required by this Item.


- 11 -



 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


LEVELBLOX TECHNOLOGIES, INC. AND SUBSIDIARIES


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


 

 

Page

 

 

 

Report of Independent Registered Public Accounting Firm – Gregory, Sharer & Stuart, P.A.

 

F-1

 

 

 

Consolidated Balance Sheets as of December 31, 2018 and 2017

 

F-2

 

 

 

Consolidated Statements of Operations for the Years Ended December 31, 2018 and 2017

 

F-3

 

 

 

Consolidated Statement of Changes in Stockholders’ Deficit for the Years Ended December 31, 2018 and 2017

 

F-4

 

 

 

Consolidated Statements of Cash Flows for the Years Ended December 31, 2018 and 2017

 

F-5

 

 

 

Notes to Consolidated Financial Statements

 

F-6 - 10



- 12 -



Report of Independent Registered Public Accounting Firm

 

 

To the Board of Directors and Stockholders

LevelBlox, Inc. f.k.a. AlphaPoint Technology, Inc. and Subsidiaries

 

Opinion on the Consolidated Financial Statements

 

We have audited the accompanying consolidated balance sheets of LevelBlox, Inc. (f.k.a. AlphaPoint Technology, Inc.) and subsidiaries (the Company) as of December 31, 2018 and 2017; the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended; and the related notes to the consolidated financial statements (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2018 and 2017, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

The Company’s Ability to Continue as a Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the accompanying consolidated financial statements, the Company has suffered recurring losses from operations and its current liabilities exceed its current assets. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding those matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Gregory, Sharer & Stuart, P.A.

 

We have served as the Company’s auditor since 2016.

 

St. Petersburg, Florida

March 29, 2019

 

F-1



LevelBlox, Inc., formerly known as AlphaPoint Technology, Inc.

and Subsidiaries

Consolidated Balance Sheets



 

 

December 31,

 

 

 

2018

 

2017

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

146,621

 

$

1,440

 

Prepaid and other current assets

 

 

48,953

 

 

 

Total current assets

 

 

195,574

 

 

1,440

 

 

 

 

 

 

 

 

 

Total assets

 

$

195,574

 

$

1,440

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

59,755

 

$

57,004

 

Accrued expenses

 

 

705,948

 

 

459,755

 

Related party payables

 

 

173,594

 

 

214,132

 

Total current liabilities

 

 

939,297

 

 

730,891

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

939,297

 

 

730,891

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Notes 7 and 8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

 

 

 

Common stock, 500,000,000 shares authorized, $0.01 par value, 97,243,259 and 77,413,259 issued and outstanding at December 31, 2018 and December 31, 2017, respectively

 

 

972,433

 

 

774,133

 

Additional paid-in capital

 

 

3,776,727

 

 

2,686,683

 

Accumulated deficit

 

 

(5,492,883

)

 

(4,190,267

)

Total stockholders’ deficit

 

 

(743,723

)

 

(729,451

)

Total liabilities and stockholders’ deficit

 

$

195,574

 

$

1,440

 



The accompanying notes are an integral part of these consolidated financial statements.


F-2



LevelBlox, Inc., formerly known as AlphaPoint Technology, Inc.

and Subsidiaries

Consolidated Statements of Operations



 

 

Year Ended December 31,

 

 

 

2018

 

2017

 

 

 

 

 

 

 

 

 

Revenue

 

$

 

$

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Compensation

 

 

248,209

 

 

251,719

 

Research and development

 

 

224,334

 

 

 

General and administrative

 

 

155,694

 

 

57,057

 

Professional fees

 

 

730,990

 

 

69,645

 

Stock compensation

 

 

51,389

 

 

 

Total operating expenses

 

 

1,410,616

 

 

378,421

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(1,410,616

)

 

(378,421

)

 

 

 

 

 

 

 

 

Other income

 

 

108,000

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(1,302,616

)

$

(378,421

)

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted:

 

$

(0.01

)

$

(0.00

)

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic and dilutive

 

 

91,290,185

 

 

77,413,259

 



The accompanying notes are an integral part of these consolidated financial statements.


F-3



LevelBlox, Inc., formerly known as AlphaPoint Technology, Inc.

and Subsidiaries

Consolidated Statements of Stockholders’ Deficit



 

 

Common Stock

 

Additional

 

 

 

Total

 

 

 

 

 

Par Value

 

Paid-in

 

Accumulated

 

Stockholders’

 

 

 

Shares

 

$0.01

 

Capital

 

Deficit

 

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2016

 

77,413,259

 

$

774,133

 

$

2,686,683

 

$

(3,811,846

)

$

(351,030

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

(378,421

)

 

(378,421

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2017

 

77,413,259

 

 

774,133

 

 

2,686,683

 

 

(4,190,267

)

 

(729,451

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued to consultants for services

 

8,130,000

 

 

81,300

 

 

503,700

 

 

 

 

585,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued to officer for services

 

250,000

 

 

2,500

 

 

48,889

 

 

 

 

51,389

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued to directors and advisors for services

 

1,000,000

 

 

10,000

 

 

70,000

 

 

 

 

80,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued to software development firm for services

 

200,000

 

 

2,000

 

 

20,000

 

 

 

 

22,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock and warrants issued in exchange for cash

 

10,250,000

 

 

102,500

 

 

447,455

 

 

 

 

549,955

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

(1,302,616

)

 

(1,302,616

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2018

 

97,243,259

 

$

972,433

 

$

3,776,727

 

$

(5,492,883

)

$

(743,723

)



The accompanying notes are an integral part of these consolidated financial statements.


F-4



LevelBlox, Inc., formerly known as AlphaPoint Technology, Inc.

and Subsidiaries

Consolidated Statement of Cash Flows



 

 

Year Ended

 

 

 

December 31,

 

 

 

2018

 

2017

 

 

 

 

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

Net loss

 

$

(1,302,616

)

$

(378,421

)

Adjustment to reconcile net loss to net cash used in operations:

 

 

 

 

 

 

 

Stock-based expense

 

 

689,436

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

248,944

 

 

212,589

 

Prepaid expenses and other current assets

 

 

 

 

5,489

 

Net Cash Used in Operating Activities

 

$

(364,236

)

$

(160,343

)

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

Net (repayments to) proceeds from related parties

 

 

(40,538

)

 

160,370

 

Proceeds from the issuance of common stock and warrants

 

 

549,955

 

 

 

Net Cash Provided by Financing Activities

 

$

509,417

 

$

160,370

 

 

 

 

 

 

 

 

 

Net change in cash

 

$

145,181

 

$

27

 

 

 

 

 

 

 

 

 

Cash at beginning of year

 

 

1,440

 

 

1,413

 

 

 

 

 

 

 

 

 

Cash at end of year

 

$

146,621

 

$

1,440

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

Cash paid for interest

 

$

 

$

 

Cash paid for income taxes

 

$

 

$

 


NON CASH FINANCING TRANSACTIONS


During 2018, the Company issued an aggregate total of 9.13 million shares of common stock to several consultants and advisors in exchange for services to be rendered over a period of time. The total value of these services yet to be rendered as of December 31, 2018 is $48,953, and is reflected as a prepaid expense in the accompanying consolidated balance sheets.



The accompanying notes are an integral part of these consolidated financial statements


F-5



LevelBlox, Inc. and Subsidiaries

Notes to Consolidated Financial Statements


1.    Nature of Operations and Significant Accounting Policies


Description of Business


LevelBlox, Inc., formerly known as AlphaPoint Technology, Inc., principal objective is to partner with innovative Blockchain technology focused companies that are interested in pursuing growth through the public markets. We are developing relationships with a portfolio of high-quality businesses and establishing a sustainable business model, to achieve superior and sustainable financial results.


LevelBlox, is a developer of Software Asset Management (SAM) applications for the Blockchain. LevelBlox has developed a patent-pending software application called AssetCentral (AC). Through AssetCentral use cases we have identified the growing complexity and scope with the current methodology and tracking of Software Asset Management licenses. LevelBlox’s SAM Blockchain application will connect software entitlements to their licenses and components with the software decision makers, to drive automation with transparency to reduce SAM content, effort, and cost. LevelBlox’s Blockchain auditing and compliance tool will assist companies with their compliance audits, internal controls, and best business practices.


LevelBlox has been selected to join the Oracle Scaleup Ecosystem, and the Oracle Cloud Infrastructure platform, utilizing the global resources, cloud technology, infrastructure and expertise Oracle has to offer, as the company moves into its next phase of growth.


LevelBlox is committed to Blockchain deployments for enterprise markets. It seeks to eliminate intermediaries by increasing efficiency and speed and simplifying operations by reducing cost and time related to Software Asset Management (SAM) reconciliations and disputes.  


Basis of Presentation


In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation of (a) the consolidated financial position at December 31, 2018 and December 31, 2017 and (b) the consolidated statements of operations, and cash flows for the year ended December 31, 2018 and 2017 have been made.


Application of Critical Accounting Policies and Use of Estimates


The consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The application of GAAP requires management to make assumptions, judgments and estimates that affect our reported amounts of assets, liabilities, revenue and expenses, and the related disclosures regarding these items. We base the assumptions, judgments and estimates on historical experience and on various other factors that we believe to be reasonable under the circumstances. Actual results could differ significantly from these estimates under different assumptions or conditions. To the extent that there are material differences between these estimates and actual results, our future financial condition or results of operations will be affected. On a regular basis, we evaluate our assumptions, judgments and estimates.


We believe that the assumptions, judgments and estimates involved in the accounting for stock-based expenses and income taxes have the greatest potential impact on our consolidated financial statements. These areas are key components of our results of operations and are based on complex rules which require us to make judgments and estimates. Historically, our assumptions, judgments and estimates in accordance with our critical accounting policies have not materially differed from actual results.


Fair Value Measurements


The Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 820, which defines fair value, establishes a framework for using fair value to measure assets and liabilities, and expands disclosures about fair value measurements. The statement applies whenever other statements require or permit assets or liabilities to be measured at fair value.


At each balance sheet date, the Company performs an analysis of all instruments subject to fair value measurement.  The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. As of December 31, 2018 and 2017 the fair values of the Company’s financial instruments approximate their historical carrying amount.


F-6



Cash and Cash Equivalents


Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less when purchased which are readily convertible to cash.


Share-based payments


Share-based payments to employees and non-employees, including grants of employee stock options or shares of stock are recognized as expense in the financial statements based on their fair values. That expense is recognized over the period during which services are provided in exchange for the award.


The Company may issue restricted stock to consultants for various services. Cost for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is to be measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty’s performance is complete.


We use the Black-Scholes option pricing model to determine the estimated fair value of warrants issued in connection with stock.


Revenue recognition


The Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.


Software Development Costs


The Company accounts for software development costs in accordance with several accounting pronouncements, including FASB ASC 730, Research and Development and FASB 985-20, Costs of Computer Software to be Sold, Leased, or Marketed.


Costs incurred during the period of planning and design, prior to the period determining technological feasibility, for all software developed for use internal and external, has been charged to operations in the period incurred as research and development costs. Additionally, costs incurred after determination of readiness for market have been expensed as research and development.

 

 

The Company may capitalize costs incurred in the development of our proprietary software (computer software to be sold, leased or licensed) for the period after technological feasibility is determined and prior to our marketing and initial sales.


At December 31, 2018, no software development costs had been capitalized.


Research and Development


The Company expenses research and development costs when incurred.  Research and development costs include engineering, programmer costs and testing of product and outputs.  Indirect costs related to research and development are allocated based on percentage usage to the research and development.  The Company incurred $224,334 and $0 in research and development costs for the years ended December 31, 2018 and 2017, respectively, and are included in the loss from operations.


Income taxes


The Company accounts for income taxes under the liability method.  Deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.  A valuation allowance may be applied against the net deferred tax due to the uncertainty of its ultimate realization.


Deferred tax assets have been fully offset by a valuation allowance, because at this time the Company believes that it is more likely than not that the future tax benefit will not be realized as the Company has a history of net operating losses.


F-7



Earnings (loss) per share


Basic earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares outstanding during the year. Diluted earnings (loss) per share calculations are determined by dividing net income by the weighted average number of shares plus any potentially dilutive shares. The Company does not have any potentially dilutive instruments and, thus, anti-dilution issues are not applicable.


Risks and concentrations


Financial instruments that potentially subject the Company to concentrations of credit risk include cash in banks in excess of federally insured amounts.  The Company manages this risk by maintaining all deposits in high quality financial institutions.


2.    Going Concern


The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has a history of losses resulting in an accumulated deficit. The Company has been dependent on financing from its majority shareholder and related parties to meet its operating obligations. In view of these matters, there is substantial doubt regarding the Company’s ability to continue as a going concern, which is dependent upon the Company’s ability to identify revenue sources and to achieve a level of profitability. The Company intends on financing its future development activities, marketing plan and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes until such time that funds provided by operations are sufficient to fund working capital requirements. The consolidated financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.


3.    Recent Accounting Pronouncements


We have reviewed the FASB issued Accounting Standards Updates (“ASU”) and interpretations thereof that have effectiveness dates during the periods reported and in future periods.


In February 2016, the FASB issued ASU No. 2016-02, “Leases”.  This standard requires the lessee to recognize virtually all of their leases on the balance sheet, by recording a right-of-use asset and lease liability.  Public business entities will be required to adopt this standard for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  Early adoption is permitted upon issuance of this standard.  The Company is currently assessing the impact of the new standard in order to determine the impact on the consolidated financial statements.


In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” that supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the new guidance is that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. Additionally, the guidance requires disaggregated disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized. The amendments were adopted by the Company on January 1, 2018. Transition to the new guidance may be done using either a full or modified retrospective method. As the Company currently has not realized revenues during 2018 or 2017, there is no impact related to the adoption of this standard for the periods presented.


4.    Equity


On April 13, 2018, the Board of Directors approved a Board resolution to issue 250,000 shares of common stock to James Whelan, Chief Technology Officer, which is comprised of a signing bonus and compensation in lieu of salary from the start of his employment with the Company until the time of the equity financing that was completed in May 2018 (see discussion below).  The fair value of these shares was determined based on Mr. Whelan’s annual salary prorated over the service period covered by this non-cash compensation.  The resulting stock-based compensation expense was approximately $51,000.


F-8



On April 14, 2018 the Board of Directors approved a Board resolution to issue an aggregate total of 7,700,000 shares of common stock to American Capital Ventures and Leone Group, LLC (3,850,000 to each party) in exchange for consulting services related to capital raise efforts, legal and compliance guidance, and strategic business planning.  The service period covered in the respective consulting agreements ended in August 2018. The resulting expense of $539,000 is included in professional fees in the consolidated statement of operations.


On May 7, 2018, the Company received cash totaling $100,000 from four investors in exchange for an aggregate total of 4,200,000 shares of the Company’s common stock and warrants to purchase an aggregate total of 4,000,000 shares of the Company’s common stock.  The warrants have a term of 3 years from the date of issuance and an exercise price of $0.10 per share.  The proceeds were allocated among the shares and the warrants based on their relative fair values.   The fair value of the shares was determined using the closing price of the Company’s common stock on the transaction date ($0.07 per share).  The fair value of the warrants was determined using the Black Scholes Merton option-pricing model, assuming stock price volatility of 174% and a risk-free interest rate of 2.67%.   Approximately $55,000 and $45,000 was allocated to the shares and the warrants, respectively.    As the warrants are classified as equity instruments, the resulting allocation is deemed a dividend on the shares issued and is reflected in additional paid-in capital in the consolidated balance sheet.


On May 23, 2018, the Company received cash totaling $250,000 from one investor in exchange for an aggregate total of 4,950,000 shares of the Company’s common stock and warrants to purchase an aggregate total of 9,000,000 shares of the Company’s common stock.  As a condition of the closing, the Company issued an additional 1,100,000 shares of common stock to a non-profit organization named by the investor.  The warrants have a term of 3 years from the date of issuance and an exercise price of $0.10 per share.  The proceeds were allocated among the total number of shares issued (6,050,000) and the warrants based on their relative fair values.   The fair value of the shares was determined using the closing price of the Company’s common stock on the transaction date ($0.06 per share).  The fair value of the warrants was determined using the Black Scholes Merton option-pricing model, assuming stock price volatility of 174% and a risk-free interest rate of 2.67%.   Approximately $111,000 and $139,000 was allocated to the shares and the warrants, respectively.  As the warrants are classified as equity instruments, the resulting allocation is deemed a dividend on the shares issued and is reflected in additional paid-in capital in the consolidated balance sheet.


On June 15, 2018, the Company issued 500,000 shares of common stock to an Advisory Board Member for services to be rendered in the future.  The fair value of these shares was determined based on the closing stock price on that date ($0.11).  The resulting stock-based compensation totaled $55,000, of which $27,500 was expensed and included in professional fees in the consolidated statement of operations. The remaining balance of $27,500 is reflected in prepaid expenses and other current assets in the consolidated balance sheet and will be expensed over the remaining service period of nine months.


On July 5, 2018, the Company issued a total of 180,000 shares of common stock to two executive recruitment firms (90,000 shares to each party) in exchange for services valued at an aggregate amount of $36,000.  This amount is included in general and administrative expenses in the consolidated statement of operations.


On July 24, 2018 the Company issued 200,000 shares of common stock to a vendor as partial consideration for software development services.  The shares were valued at $0.11 per share for a total expense of $22,000, which is included in research and development costs in the consolidated statement of operations.


On July 25, 2018 the Company issued 250,000 shares of common stock to a new member of the Board of Directors.  The shares were valued at $0.06 per share for a total expense of $15,000, of which $6,534 is included in professional fees in the consolidated statement of operations. The remaining balance of $8,466 is included in prepaid expenses and other current assets in the consolidated balance sheet and will be expensed over the remaining service period of approximately seven months.


On August 20, 2018, the Company issued 250,000 shares of common stock to an Advisory Board Member for services to be rendered in the future.  The fair value of these shares was determined based on the closing stock price on that date ($0.04).  The resulting stock-based compensation totaled $10,000, of which $3,671 was expensed and included in professional fees in the consolidated statement of operations. The remaining balance of $6,329 is reflected in prepaid expenses and other current assets in the consolidated balance sheet and will be expensed over the remaining service period of approximately eight months.


On October 18, 2018, the Company issued 250,000 shares of common stock to an Advisory Board Member for services to be rendered in the future.  The fair value of these shares was determined based on the closing stock price on that date ($0.04).  The resulting stock-based compensation totaled $10,000, of which $3,342 was expensed and included in professional fees in the consolidated statement of operations. The remaining balance of $6,658 is reflected in prepaid expenses and other current assets in the consolidated balance sheet and will be expensed over the remaining service period of approximately seven months.


F-9



On November 20, 2018, the Company received cash totaling $199,955 from two investors in exchange for an aggregate total of 4,950,000 shares of the Company’s common stock and warrants to purchase an aggregate total of 4,500,000 shares of the Company’s common stock.  The warrants have a term of 3 years from the date of issuance and an exercise price of $0.07 per share.  The proceeds were allocated among the total number of shares issued and the warrants based on their relative fair values.   The fair value of the shares was determined using the closing price of the Company’s common stock on the transaction date ($0.05 per share).  The fair value of the warrants was determined using the Black Scholes Merton option-pricing model, assuming stock price volatility of 176% and a risk-free interest rate of 2.88%.  Approximately $108,000 and $92,000 was allocated to the shares and the warrants, respectively.  As the warrants are classified as equity instruments, the resulting allocation is deemed a dividend on the shares issued and is reflected in additional paid-in capital in the consolidated balance sheet.  The shares were not issued until January of 2019, and accordingly are not reflected as issued and outstanding at December 31, 2018.


5. Related Party Transactions


Advances from Shareholders


In support of the Company’s efforts and cash requirements, it has historically relied upon advances from related parties. At December 31, 2018 and December 31, 2017, advances from shareholders totaled $173,594 and $214,132, respectively.  These advances are non-interest bearing with no set repayment terms.


Additionally, at December 31, 2018 and December 31, 2017, the Company had accrued compensation payable to the Principal Executive Officer in the amount of $664,700 and $430,100, respectively.


6.    Income Taxes


The Company has not recognized any income tax expense or benefit for the years ended December 31, 2018 and 2017. The Company has a net operating loss (NOL) carryforward of approximately $3.1 million at December 31, 2018 ($2.3 million at December 31, 2017) which has been offset in its entirety by a valuation allowance due to the uncertainty of realization.


In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the carryforward period.


7.    Commitments


The Company entered into a month to month rental agreement for its office facilities in Sarasota Florida. The Company is currently making rent payments on a month-to-month basis. The rental agreement calls for monthly payments of rent of $1,881 plus the costs of utilities and maintenance to the facilities. Rent expense for the years ended December 31, 2018 and 2017 for the facility in Sarasota Florida was $37,000 and $25,000, respectively.


8.    Contingencies


Some of the officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available. They may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.  In addition, officers and certain members of upper management have executed employment agreements with the Company, which include, among other things, bonuses contingent on the achievement of certain performance targets and provisions for severance payments in the event of termination without cause.


Litigation


From time to time the Company may become a party to litigation matters involving claims against the Company.  Current regulations and reporting requirements require the Company to disclose any legal proceedings that are ongoing and could have a material impact on the consolidated financial statements.


9.    Subsequent events


Management has evaluated subsequent events that occurred through the date of this report that would have a material impact on our financial statements.


F-10



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


None.

 

ITEM 9A. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO to allow timely decisions regarding required disclosure.


Management’s Annual Report on Internal Control Over Financial Reporting.


The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.  Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018.  The framework used by management in making that assessment was the criteria set forth in the document entitled ” Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of December 31, 2018, the Company’s internal control over financial reporting was not effective for the purposes for which it is intended, due to a material weakness related to the lack of an audit committee.


Management intends to give consideration to adopting a more rigorous corporate governance, including the formation of an audit committee in the future.


This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

 

ITEM 9B. OTHER INFORMATION


None.


- 13 -



PART III

 

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


Our executive officers and directors and their ages as of March 29, 2019 is as follows:


NAME AND ADDRESS

AGE

POSITION(S)

 

 

 

Gary Macleod

6114 Glen Abbey Lane

Bradenton, FL 34202

55

Co-Founder/Chief Executive Officer and member of the Board of Directors and Director of STR Inc.

 

 

 

Moishe Gubin

5683 North Lincoln Avenue

Chicago, IL 60659

41

Member of the Board of Directors

 

 

 

John Peter Satta

176 Stillwater Road

Hardwick, NJ 07825

60

Co-Founder/Consultant and member of the Board of Directors

 

 

 

Kimberly March-Crew

991 Smithbridge Road

Glen Mills, PA 19342

52

Member of the Board of Directors

 

 

 

Peter Breen

35 Amherst Drive

Basking Ridge, NJ 07920

53

Member of the Board of Directors

 

 

 

Katya Fisher

77 Water Street, 8th Floor

New York, NY 10005

35

Member of the Board of Directors


Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years.


Gary Macleod, Chief Executive Officer and Member of the Board of Directors


Since November 2008, Mr. Gary Macleod, the Chief Executive Officer and director of LevelBlox, Inc., has played a key leadership role in translating technical information and new technologies into compelling value propositions to drive customer endorsement and sell-through models for evolving IT Asset Management software solutions.  From August 2005 to January 2008, Mr. Macleod was the Chief Executive Officer and director of Non-Invasive Monitoring Systems, Inc. He was responsible for raising capital to ensure organizational survival, steering product introduction efforts, navigating FDA approval activities, filing comprehensive and required publicly-held organization financial reports, overseeing entire program lifecycle including 510K submission proceedings, identifying market demographics, developing long-term business plans, establishing a distributor base, strengthening stakeholder confidence, and restructuring the organization.


Gary Macleod has been involved with the software industry for over twenty-five years. Mr. Macleod brings diversified leadership expertise to information technology and the software sector. He has career successes steering start-up and organizational growth initiatives for dynamic enterprises and technologically sophisticated solutions, products, and services. Mr. Macleod has broad-based expertise spanning information technology, revenue expansion, capital funds generation, market share growth, team building, operations, administration, general management, and finance.


- 14 -



John Satta, Co-founder, Consultant, and Member of the Board of Directors


John Satta has been with AlphaPoint Technology since April 2003 and has nearly 30 years’ experience as a design engineer, manager and executive in the defense, electronics and consulting industries. A patent holder in advanced computer architecture, in 1984 Mr. Satta was Co-founder and VP of Engineering of Oryx Corporation, producer of compact high-speed real-time signal processors for military and industrial applications. He started his career designing electronics for various defense contractors. Then he co-founded Oryx Corporation and led a small team that designed and built the then-fastest fully programmable digital signal processing system. Mr. Satta then consulted on system design for several large projects including the USAF F-22 advanced tactical fighter and the USN New Attack Submarine.


John Satta has over twenty-five years’ experience in the enterprise software and hardware sectors. Mr. Satta is a seasoned business analyst / project manager with broad experience in online software development, documentation and marketing. Mr. Satta’s experience also includes requirements elicitation for product development using JAD sessions, case models, static and active wireframes and requirements documents. Mr. Satta is a seasoned veteran of the software development lifecycle using traditional waterfall and Agile methods including Scrum and has experience with UML and RUP.


Kimberly March-Crew, Member of the Board of Directors


Kimberly March-Crew is the President and CEO of Lighthouse Venture Management which she has grown from a one-woman firm, running one business with two clients and a few hundred thousand in billings, to the present multi-company group that enjoys combined annual revenues in excess of 15 million dollars. Lighthouse Venture Management is a conglomerate comprised of a venture capital investment firm (Lighthouse Venture), an information technology support firm (Absolute Computer Support), a professional employee staffing firm (CSS Staffing), and a mobile computing firm (Computer Systems & Solutions).  Since she formed Lighthouse Venture Management in 1990, it has grown.


Ms. Crew has over fifteen years’ experience in the enterprise hardware sector. She is a successful serial entrepreneur developing businesses that achieve outstanding results in crowded verticals. Leveraging her early experiences, Ms. Crew has managed to create a portfolio of companies that continue to grow even in the face of economic headwinds. Her specialty is insightful business assessment with clarification of goals, execution and the resources to implement action plans.


Peter Breen, Member of the Board of Directors


Mr. Breen, General Manager and Business Owner of Broadridge Financial Solutions (NYSE: BR), is responsible for all day-to-day operations, overall management, growth and innovation for the Corporate Issuer Solutions division within Broadridge. Broadridge is a $2.4BN NYSE Company with 6,000 employees worldwide. Prior to his arrival at Broadridge, Mr. Breen served as a Managing Director at The Bank of New York-Mellon (NYSE: BK) and oversaw all business development for BNY Mellon’s Shareowner Services business, and served as a member of the Senior Management Team of that business unit.  Additionally, Mr. Breen also had the distinct pleasure and honor of serving on BNY Mellon’s Revenue Growth Board, a permanent body of 22 officers, reporting directly to the CEO and Executive Committee.  The Board was formed to oversee all revenue related efforts across the entire enterprise.


Mr. Breen studied Economics at Marion Military Institute and The University of Maine.  He received his Commission as an Infantry Officer in the United States Army and earned his Airborne Wings as an Army Paratrooper.


Katya Fisher, Esq. Member of the Board of Directors


Katya Fisher, Esq. focuses on representing international businesses and entrepreneurs with a specific focus on media and technologies such as blockchain, cybersecurity, cryptocurrency and A.I. Katya is a member of the board of directors of Levelblox (OTC:LVBX), a speaker, emcee, and co-organizer of various tech and blockchain events and conferences and is an Ambassador for Women’s Entrepreneurship Day. Katya is a member and former chair of the Young Friends of the Hermitage Museum Foundation.


A graduate of New York University and Benjamin N. Cardozo School of Law, Katya is a former Howard M. Squadron Fellow at the University of Oxford’s Programme in Comparative Media Law and Policy and has been selected to Super Lawyers as a “Rising Star” in Corporate Law in 2014, 2015, 2016, 2017 and 2018. She is licensed in the state of New York and before the U.S. Tax Court.


Katya has represented numerous high profile entrepreneurs and celebrities in U.S. immigration matters and in 2016 won a USCIS appeal, Matter of Y-S, on behalf of her client.


- 15 -



Moishe Gubin Member of the Board of Directors


Moishe Gubin, has served as a Director of Optimum Bank since March 2010. Mr. Gubin is Chief Executive Officer of Strawberry Fields REIT, a real estate holding company, which owns properties in multiple states, and owns many other businesses.


Mr. Gubin graduated from Touro Liberal Arts and Science College, in New York, New York, with a BS in Accounting and Information Systems and a Minor in Jewish Studies. Mr. Gubin is the founder of the Midwest Torah Center Inc., a non-profit spiritual outreach center. He also attended Yeshiva Bais Israel where he received a BA in Talmudic Literature. Mr. Gubin has been a licensed Certified Public Accountant in the State of New York since 2010.


OTHER DIRECTORSHIPS


Mr. Macleod served as a Board Member (Director) of Non-Invasive Monitoring Systems, Inc., a publicly traded Company, from November 2005 to January 2008. Mr. Macleod resigned from the Board in January 2008.


Moishe Gubin, has served as a Director of OptimumBank since March 2010 to present. Mr. Gubin is Chief Executive Officer of Strawberry Fields REIT, a real estate holding company, which owns properties in multiple states, and owns many other businesses.


No other LevelBlox, Inc. Board members have had any Board affiliations or have served as a director of a U.S. publicly traded company.


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE


Under Section 16(a) of the Exchange Act, our directors and certain of our officers, and persons holding more than 10 percent of our common stock are required to file forms reporting their beneficial ownership of our common stock and subsequent changes in that ownership with the United States Securities and Exchange Commission.  Such persons are also required to furnish the Company with copies of all forms so filed.


Based solely upon a review of copies of such forms filed on Forms 3, 4, and 5, and amendments thereto furnished to us, we believe that as of the date of this report all of our executive officers and directors have complied with all Section 16(a) filing requirements.


CODE OF ETHICS


We adopted a code of ethics on March 10, 2011 that applies to our officers, directors, and employees.  Our standards are in writing and are to be posted on our website at a future time.  The following is a summation of the key points of the Code of Ethics we adopted:


Honest and ethical conduct, including ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

 

 

Full, fair, accurate, timely, and understandable disclosure reports and documents that a small business issuer files with, or submits to, the Commission and in other public communications made by our Company;

 

 

Full compliance with applicable government laws, rules and regulations;

 

 

The prompt internal reporting of violations of the code to an appropriate person or persons identified in the Code; and

 

 

Accountability for adherence to the Code


CONFLICTS OF INTEREST


Other than Mr. Gary Macleod, CEO and director, and the Company’s Chief Technology Officer, the management team is comprised of consultants, shareholders and directors that are not obligated to commit their full time and attention to our business and accordingly, they may encounter a conflict of interest in allocating their time between our operations and those of other businesses. In the course of their other business activities they may become aware of investment and business opportunities which may be appropriate for presentation to us as well as other entities to which they owe a fiduciary duty. As a result they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. They may also in the future become affiliated with entities that are engaged in business activities similar to those we intend to conduct.


- 16 -



In general, officers and directors of a corporation are required to present business opportunities to the corporation if:


the corporation could financially undertake the opportunity;

 

 

the opportunity is within the corporation’s line of business; and,

 

 

it would be unfair to the corporation and its stockholders not to bring the opportunity to the attention of the corporation.


COMMITTEES OF THE BOARD OF DIRECTORS


Our directors have not established any committees, including an Audit Committee, a Compensation Committee, a Nominating Committee, or any committee performing a similar function. The functions of those committees are being undertaken by our directors. Because we have four independent directors (Ms. Kimberly March, Ms. Katya Fisher, Mr. Peter Breen and Mr. Moishe Gubin), our directors believe that the establishment of committees of the Board would not provide any benefits to our Company and could be considered more form than substance.


We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor have our directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our directors have not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future.


While there have been no nominations of additional directors proposed, in the event such a proposal is made, our sole officer and director will appoint future nominees.


Our directors are not “audit committee financial experts” within the meaning of Item 401(e) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or Board of Directors who:


understands generally accepted accounting principles and financial statements,

 

 

is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,

 

 

has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,

 

 

understands internal controls over financial reporting, and

 

 

understands audit committee functions.


Our Board of Directors is comprised of Mr. Gary Macleod who is involved in the day to day operations, and Mr. John Satta who were integral to our formation, Moishe Gubin, Katya Fisher, Ms. Kimberly March-Crew and Peter Breen who are Independent. As with most small, early stage companies until such time our Company further develops our business, achieves a stronger revenue base and has sufficient working capital, the Company does not have any immediate prospects to attract additional independent directors. When the Company is able to expand our Board of Directors to include more independent directors, the Company intends to establish an Audit and Compensation Committees of our Board of Directors. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and the Company is not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.


We have four independent directors (Moishe Gubin, Katya Fisher, Ms. Kimberly March-Crew and Mr. Peter Breen) and the company has not voluntarily implemented various corporate governance measures, in the absence of which, stockholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.


- 17 -



ITEM 11. EXECUTIVE COMPENSATION


The table below summarizes all compensation awarded to, earned by, or paid to our named executive officer and financial officer for all services rendered in all capacities to us for the past two years.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonqualified

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Equity

 

Deferred

 

 

 

 

Name and

 

 

 

 

 

 

 

Stock

 

Option

 

Incentive Plan

 

Compensation

 

All Other

 

 

Principal

 

Year

 

Salary

 

Bonus

 

Awards

 

Awards

 

Compensation

 

Earnings

 

Compensation

 

Total

Position

 

 

 

($)

 

($)

 

($)

 

($)

 

($)

 

($)

 

($)

 

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gary Macleod

 

2018

 

$ 234,600

 

 

 

 

 

 

 

$ 234,600

CEO, Director

 

2017

 

$ 234,600

 

 

 

 

 

 

 

$ 234,600


OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END


The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer as of December 31, 2017.


Outstanding Equity Awards at Fiscal Year-End


 

 

OPTION AWARDS

 

STOCK AWARDS

Name

 

Number of Securities Underlying Unexercised Option (#) Exercisable

 

Number of Securities Underlying Unexercised Options (#) Unexercisable

 

Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)

 

Option Exercise Price ($)

 

Option Expiration Date

 

Number of Shares or Units of Stock That Have Not Vested (#)

 

Market Value of Shares or Units of Stock That Have Not Vested ($)

 

Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)

 

Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gary Macleod

 

 

 

 

 

 

 

 

 


There were no grants of stock options since inception to the date of this Annual Report.


We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.


Our directors have not adopted a stock option plan. We have no current plans to adopt a stock option plan, but may choose to do so in the future. If such a plan is adopted, this may be administered by the board or a committee appointed by the board (the “Committee”). The committee would have the power to modify, extend or renew outstanding options and to authorize the grant of new options in substitution therefore, provided that any such action may not impair any rights under any option previously granted. We may develop an incentive based stock option plan for our officers and directors and may reserve up to 10% of our outstanding shares of common stock for that purpose.


OPTIONS GRANTS DURING THE LAST FISCAL YEAR / STOCK OPTION PLANS


We do not currently have a stock option plan in favor of any directors, officer, consultant or employee of our Company. No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to our sole director and officer since our inception; accordingly, no stock options have been granted or exercised by our sole director and officer since we were founded.


AGGREGATED OPTIONS EXERCISES IN LAST FISCAL YEAR


No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to our sole director and officer since our inception; accordingly, no stock options have been granted or exercised by our directors and sole officer since we were founded.


- 18 -



LONG-TERM INCENTIVE PLANS AND AWARDS


We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance. No individual grants or agreements regarding future payouts under non-stock price-based plans have been made to our directors or officers or any employee or consultant since our inception; accordingly, no future payouts under non-stock price-based plans or agreements have been granted or entered into or exercised by our directors and sole officer or employees or consultants since we were founded.


EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL ARRANGEMENTS (All employment agreements were voided at the time of the Unwind.


INDEBTEDNESS OF DIRECTORS, OFFICERS AND OTHER MANAGEMENT


Neither our officers or directors nor any associate or affiliate of our company during the last two fiscal years is or has been indebted to our Company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.


DIRECTOR COMPENSATION


Directors who are also employees receive no compensation for serving on the Board. The Company’s non-employee directors may receive options to purchase shares of common stock at the market price on the date they are granted, and are entitled to reimbursement of expenses incurred consequential to their service.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


The following table sets forth, as of the date of this report, the total number of shares owned beneficially by our Officers and Directors and Consultants, individually and as a group, and the present owners of 5% or more of our total outstanding shares as of December 31, 2018. The stockholders listed below has direct ownership of their shares and possesses sole voting and dispositive power with respect to the shares.


Title of Class [3]

Name and Address of Beneficial Owner [1]

Number

Percent of Class [2]

 

 

 

Directors and Officers: 

 

 

Common Stock

Gary Macleod, CEO, Director

6114 Glen Abbey Lane, Bradenton, FL 34202

17,177,528

17.68%

Common Stock

Moishe Gubin, Director

5683 North Lincoln Avenue Chicago, IL 60659

4,950,000

5.09%

Common Stock

John Satta, Director

176 Stillwater Road, Hardwick, NJ 07825

1,500,000

1.54%

Common Stock

Kimberly March-Crew, Director

991 Smithbridge Road, Glen Mills, PA 19342

250,000

0.25%

Common Stock

Peter Breen, Director

35 Amherst Drive, Basking Ridge, NJ 07920

1,000,000

1.28%

Common Stock

Katya Fisher, Director

250,000

0.25%

 

77 Water Street, 8th Floor, New York, NY 10005

 

 

 

 

 

 

DIRECTORS AND OFFICERS AS A GROUP

25,127,528

26.09%

 

 

 

Greater than 5% Shareholders:

 

 

Common Stock

Marion LaSala

688 Pines Lake Drive, Wayne, NJ 07470

10,557,160

10.85%

Common Stock

Paul Avery

88 Mohican Road, Blairstown, NJ 07808

8,813,750

9.064%

__________

[1]

The person(s) named above may be deemed to be a “parent” and “promoter” of our Company, within the meaning of such terms under the Securities Act of 1933, as amended, by virtue of his direct and indirect stock holdings. Mr. Macleod is the only “promoter” of our Company.

[2]

Based on 97,243,259 shares issued and outstanding as of the date of this Annual Report.


- 19 -



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE.


Advances from Shareholders


We received advances from shareholders in the amount of $5,699 and $160,370 and made repayments of $46,237 and $0 for the years ended December 31, 2018 and 2017, respectively, to fund our operating needs.


The balances due at December 31, 2018 and 2017, respectively, from Gary Macleod, the majority shareholder; and from Marion LaSala, a beneficial shareholder are presented below. These obligations have not been formalized by promissory notes or other writing. Terms have not been defined; however, the Company recognizes the nature of the financing and is accruing interest at the lowest legal interest rate, the Applicable Federal Rate. There are no other relationships or related party transactions.


 

December 31,
2018

 

December 31,
2017

Balance due to:

 

 

 

 

 

Gary Macleod

$

89,333

 

$

135,570

Marion LaSala

 

84,261

 

 

78,562

 

$

173,594

 

$

214,132


Additionally, at December 31, 2018 and 2017, the Company had accrued compensation payable to Gary Macleod in the amount of $664,700 and $430,100, respectively.


DIRECTOR INDEPENDENCE


We currently have four independent directors (Ms. Kimberly Crew, Ms. Katya Fisher, Mr. Peter Breen and Mr. Moishe Gubin) and we do anticipate appointing additional directors in the foreseeable future.  If we engage further directors and officers, however, we plan to develop a definition of independence and scrutinize our Board of Directors with regard to this definition.

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES


Audit Fees


We have been billed $40,300 and $17,000 in fees by our current principal accounting firm, Gregory, Sharer & Stuart, P.A. for audit and review services in connection with the Company’s 10-K and 10-Q filings in 2018 and 2017, respectively.


Audit Related Fees


There were no fees for audit related services for the years ended December 31, 2018 and 2017 paid to our principal accounting firm.


Tax Fees


For the Company’s years ended December 31, 2018 and 2017, we were not billed for professional services rendered by our principal accounting firm for tax compliance, tax advice, and tax planning.


All Other Fees


The Company did not incur any other fees related to services rendered by our principal accountant for the years ended December 31, 2018 and 2017.


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


- 20 -



Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:


approved by our audit committee; or

 

 

entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee’s responsibilities to management.


We do not have an audit committee.  Our entire board of directors pre-approves all services provided by our independent auditors.


The pre-approval process has just been implemented in response to the new rules. Our board of directors does not have records of what percentage of the above fees were pre-approved.  However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.


PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES


(b)   Exhibits:


31.1

Rule 13a-14(a) Certification of Principal Executive Officer

 

 

32.1

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

101*

Interactive Data Files of Financial Statements and Notes.


* In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Annual Report on Form 10-K shall be deemed “furnished” and not “filed”.


- 21 -



SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



LEVELBLOX, INC.


By

/s/ Gary Macleod

Date: March 29, 2019

 

Gary Macleod

 

 

Principle Executive Officer

 



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By

/s/ Gary Macleod

Date: March 29, 2019

 

Gary Macleod

 

 

Director

 

 

 

 

 

 

 

By

/s/ Moishe Gubin

Date: March 29, 2019

 

Moishe Gubin

 

 

Director

 

 

 

 

 

 

 

By

/s/ John Satta

Date: March 29, 2019

 

John Satta

 

 

Director

 

 

 

 

 

 

 

By

/s/ Kimberly Crew

Date: March 29, 2019

 

Kimberly Crew

 

 

Director

 

 

 

 

 

 

 

By

/s/ Peter Breen

Date: March 29, 2019

 

Peter Breen

 

 

Director

 

 

 

 

 

 

 

By

/s/ Katya Fisher

Date: March 29, 2019

 

Katya Fisher

 

 

Director

 


- 22 -


EX-31 2 ex_31-1.htm RULE 13A-14(A) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Exhibit 31.1


LEVELBLOX, INC.

Certification Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002


I, Gary Macleod, Principal Executive Officer, certify that:


1. I have reviewed this annual report on Form 10-K of LevelBlox, Inc.;


2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:


(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that was materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:


(a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


/s/ Gary Macleod

Gary Macleod

Principal Executive Officer


Date: March 29, 2019



EX-32 3 ex_32-1.htm CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT SECTION 906

Exhibit 32.1


LEVELBLOX, INC.

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002


In connection with the Annual Report of LevelBlox, Inc. (the Company) on Form 10-K for the annual period ended December 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the Report), I Gary Macleod, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


 

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

 

 

 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ Gary Macleod

Gary Macleod

Principal Executive Officer


March 29, 2019



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Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net loss (378,421) (378,421)
Balance at end at Dec. 31, 2017 $ 774,133 2,686,683 (4,190,267) $ (729,451)
Balance at end (in shares) at Dec. 31, 2017 77,413,259     77,413,259
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Stock issued to consultants for services $ 81,300 503,700 $ 585,000
Stock issued to consultants for services (in shares) 8,130,000      
Stock issued to officer for services $ 2,500 48,889 51,389
Stock issued to officer for services (in shares) 250,000      
Stock issued to directors and advisors for services $ 10,000 70,000 80,000
Stock issued to directors and advisors for services (in shares) 1,000,000      
Stock issued to software development firm for services $ 2,000 20,000 22,000
Stock issued to software development firm for services (in shares) 200,000      
Stock and warrants issued in exchange for cash $ 102,500 447,455 549,955
Stock and warrants issued in exchange for cash (in shares) 10,250,000      
Net loss (1,302,616) (1,302,616)
Balance at end at Dec. 31, 2018 $ 972,433 $ 3,776,727 $ (5,492,883) $ (743,723)
Balance at end (in shares) at Dec. 31, 2018 97,243,259     97,243,259
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.19.1
Consolidated Statement of Cash Flows - USD ($)
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Cash Flows from Operating Activities:    
Net loss $ (1,302,616) $ (378,421)
Adjustment to reconcile net loss to net cash used in operations:    
Stock-based expense 689,436
Changes in assets and liabilities:    
Accounts payable and accrued expenses 248,944 212,589
Prepaid expenses and other current assets 5,489
Net Cash Used in Operating Activities (364,236) (160,343)
Cash Flows from Financing Activities:    
Net (repayments to) proceeds from related parties (40,538) 160,370
Proceeds from the issuance of common stock and warrants 549,955
Net Cash Provided by Financing Activities 509,417 160,370
Net change in cash 145,181 27
Cash at beginning of year 1,440 1,413
Cash at end of year 146,621 1,440
SUPPLEMENTAL CASH FLOW INFORMATION:    
Cash paid for interest
Cash paid for income taxes
XML 17 R7.htm IDEA: XBRL DOCUMENT v3.19.1
Nature of Operations and Significant Accounting Policies
12 Months Ended
Dec. 31, 2018
Accounting Policies [Abstract]  
Nature of Operations and Significant Accounting Policies

1.    Nature of Operations and Significant Accounting Policies

 

Description of Business

 

LevelBlox, Inc., formerly known as AlphaPoint Technology, Inc., principal objective is to partner with innovative Blockchain technology focused companies that are interested in pursuing growth through the public markets. We are developing relationships with a portfolio of high-quality businesses and establishing a sustainable business model, to achieve superior and sustainable financial results.

 

LevelBlox, is a developer of Software Asset Management (SAM) applications for the Blockchain. LevelBlox has developed a patent-pending software application called AssetCentral (AC). Through AssetCentral use cases we have identified the growing complexity and scope with the current methodology and tracking of Software Asset Management licenses. LevelBlox’s SAM Blockchain application will connect software entitlements to their licenses and components with the software decision makers, to drive automation with transparency to reduce SAM content, effort, and cost. LevelBlox’s Blockchain auditing and compliance tool will assist companies with their compliance audits, internal controls, and best business practices.

 

LevelBlox has been selected to join the Oracle Scaleup Ecosystem, and the Oracle Cloud Infrastructure platform, utilizing the global resources, cloud technology, infrastructure and expertise Oracle has to offer, as the company moves into its next phase of growth.

 

LevelBlox is committed to Blockchain deployments for enterprise markets. It seeks to eliminate intermediaries by increasing efficiency and speed and simplifying operations by reducing cost and time related to Software Asset Management (SAM) reconciliations and disputes.  

 

Basis of Presentation

 

In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation of (a) the consolidated financial position at December 31, 2018 and December 31, 2017 and (b) the consolidated statements of operations, and cash flows for the year ended December 31, 2018 and 2017 have been made.

 

Application of Critical Accounting Policies and Use of Estimates

 

The consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The application of GAAP requires management to make assumptions, judgments and estimates that affect our reported amounts of assets, liabilities, revenue and expenses, and the related disclosures regarding these items. We base the assumptions, judgments and estimates on historical experience and on various other factors that we believe to be reasonable under the circumstances. Actual results could differ significantly from these estimates under different assumptions or conditions. To the extent that there are material differences between these estimates and actual results, our future financial condition or results of operations will be affected. On a regular basis, we evaluate our assumptions, judgments and estimates.

 

We believe that the assumptions, judgments and estimates involved in the accounting for stock-based expenses and income taxes have the greatest potential impact on our consolidated financial statements. These areas are key components of our results of operations and are based on complex rules which require us to make judgments and estimates. Historically, our assumptions, judgments and estimates in accordance with our critical accounting policies have not materially differed from actual results.

 

Fair Value Measurements

 

The Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 820, which defines fair value, establishes a framework for using fair value to measure assets and liabilities, and expands disclosures about fair value measurements. The statement applies whenever other statements require or permit assets or liabilities to be measured at fair value.

 

At each balance sheet date, the Company performs an analysis of all instruments subject to fair value measurement.  The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. As of December 31, 2018 and 2017 the fair values of the Company’s financial instruments approximate their historical carrying amount.

 

Cash and Cash Equivalents

 

Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less when purchased which are readily convertible to cash.

 

Share-based payments

 

Share-based payments to employees and non-employees, including grants of employee stock options or shares of stock are recognized as expense in the financial statements based on their fair values. That expense is recognized over the period during which services are provided in exchange for the award.

 

The Company may issue restricted stock to consultants for various services. Cost for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is to be measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty’s performance is complete.

 

We use the Black-Scholes option pricing model to determine the estimated fair value of warrants issued in connection with stock.

 

Revenue recognition

 

The Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

 

Software Development Costs

 

The Company accounts for software development costs in accordance with several accounting pronouncements, including FASB ASC 730, Research and Development and FASB 985-20, Costs of Computer Software to be Sold, Leased, or Marketed.

 

   
Costs incurred during the period of planning and design, prior to the period determining technological feasibility, for all software developed for use internal and external, has been charged to operations in the period incurred as research and development costs. Additionally, costs incurred after determination of readiness for market have been expensed as research and development.
 
The Company may capitalize costs incurred in the development of our proprietary software (computer software to be sold, leased or licensed) for the period after technological feasibility is determined and prior to our marketing and initial sales.

 

At December 31, 2018, no software development costs had been capitalized.

 

Research and Development

 

The Company expenses research and development costs when incurred.  Research and development costs include engineering, programmer costs and testing of product and outputs.  Indirect costs related to research and development are allocated based on percentage usage to the research and development.  The Company incurred $224,334 and $0 in research and development costs for the years ended December 31, 2018 and 2017, respectively, and are included in the loss from operations.

 

Income taxes

 

The Company accounts for income taxes under the liability method.  Deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.  A valuation allowance may be applied against the net deferred tax due to the uncertainty of its ultimate realization.

 

Deferred tax assets have been fully offset by a valuation allowance, because at this time the Company believes that it is more likely than not that the future tax benefit will not be realized as the Company has a history of net operating losses.

 

Earnings (loss) per share

 

Basic earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares outstanding during the year. Diluted earnings (loss) per share calculations are determined by dividing net income by the weighted average number of shares plus any potentially dilutive shares. The Company does not have any potentially dilutive instruments and, thus, anti-dilution issues are not applicable.

 

Risks and concentrations

 

Financial instruments that potentially subject the Company to concentrations of credit risk include cash in banks in excess of federally insured amounts.  The Company manages this risk by maintaining all deposits in high quality financial institutions.

XML 18 R8.htm IDEA: XBRL DOCUMENT v3.19.1
Going Concern
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Going Concern

2.    Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has a history of losses resulting in an accumulated deficit. The Company has been dependent on financing from its majority shareholder and related parties to meet its operating obligations. In view of these matters, there is substantial doubt regarding the Company’s ability to continue as a going concern, which is dependent upon the Company’s ability to identify revenue sources and to achieve a level of profitability. The Company intends on financing its future development activities, marketing plan and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes until such time that funds provided by operations are sufficient to fund working capital requirements. The consolidated financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

XML 19 R9.htm IDEA: XBRL DOCUMENT v3.19.1
Recent Accounting Pronouncements
12 Months Ended
Dec. 31, 2018
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]  
Recent Accounting Pronouncements

3.    Recent Accounting Pronouncements

 

We have reviewed the FASB issued Accounting Standards Updates (“ASU”) and interpretations thereof that have effectiveness dates during the periods reported and in future periods.

 

In February 2016, the FASB issued ASU No. 2016-02, “Leases”.  This standard requires the lessee to recognize virtually all of their leases on the balance sheet, by recording a right-of-use asset and lease liability.  Public business entities will be required to adopt this standard for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  Early adoption is permitted upon issuance of this standard.  The Company is currently assessing the impact of the new standard in order to determine the impact on the consolidated financial statements.

 

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” that supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the new guidance is that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. Additionally, the guidance requires disaggregated disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized. The amendments were adopted by the Company on January 1, 2018. Transition to the new guidance may be done using either a full or modified retrospective method. As the Company currently has not realized revenues during 2018 or 2017, there is no impact related to the adoption of this standard for the periods presented.

XML 20 R10.htm IDEA: XBRL DOCUMENT v3.19.1
Equity
12 Months Ended
Dec. 31, 2018
Equity [Abstract]  
Equity

4.    Equity

 

On April 13, 2018, the Board of Directors approved a Board resolution to issue 250,000 shares of common stock to James Whelan, Chief Technology Officer, which is comprised of a signing bonus and compensation in lieu of salary from the start of his employment with the Company until the time of the equity financing that was completed in May 2018 (see discussion below).  The fair value of these shares was determined based on Mr. Whelan’s annual salary prorated over the service period covered by this non-cash compensation.  The resulting stock-based compensation expense was approximately $51,000.

 

On April 14, 2018 the Board of Directors approved a Board resolution to issue an aggregate total of 7,700,000 shares of common stock to American Capital Ventures and Leone Group, LLC (3,850,000 to each party) in exchange for consulting services related to capital raise efforts, legal and compliance guidance, and strategic business planning.  The service period covered in the respective consulting agreements ended in August 2018. The resulting expense of $539,000 is included in professional fees in the consolidated statement of operations.

 

On May 7, 2018, the Company received cash totaling $100,000 from four investors in exchange for an aggregate total of 4,200,000 shares of the Company’s common stock and warrants to purchase an aggregate total of 4,000,000 shares of the Company’s common stock.  The warrants have a term of 3 years from the date of issuance and an exercise price of $0.10 per share.  The proceeds were allocated among the shares and the warrants based on their relative fair values.   The fair value of the shares was determined using the closing price of the Company’s common stock on the transaction date ($0.07 per share).  The fair value of the warrants was determined using the Black Scholes Merton option-pricing model, assuming stock price volatility of 174% and a risk-free interest rate of 2.67%.   Approximately $55,000 and $45,000 was allocated to the shares and the warrants, respectively.    As the warrants are classified as equity instruments, the resulting allocation is deemed a dividend on the shares issued and is reflected in additional paid-in capital in the consolidated balance sheet.

 

On May 23, 2018, the Company received cash totaling $250,000 from one investor in exchange for an aggregate total of 4,950,000 shares of the Company’s common stock and warrants to purchase an aggregate total of 9,000,000 shares of the Company’s common stock.  As a condition of the closing, the Company issued an additional 1,100,000 shares of common stock to a non-profit organization named by the investor.  The warrants have a term of 3 years from the date of issuance and an exercise price of $0.10 per share.  The proceeds were allocated among the total number of shares issued (6,050,000) and the warrants based on their relative fair values.   The fair value of the shares was determined using the closing price of the Company’s common stock on the transaction date ($0.06 per share).  The fair value of the warrants was determined using the Black Scholes Merton option-pricing model, assuming stock price volatility of 174% and a risk-free interest rate of 2.67%.   Approximately $111,000 and $139,000 was allocated to the shares and the warrants, respectively.  As the warrants are classified as equity instruments, the resulting allocation is deemed a dividend on the shares issued and is reflected in additional paid-in capital in the consolidated balance sheet.

 

On June 15, 2018, the Company issued 500,000 shares of common stock to an Advisory Board Member for services to be rendered in the future.  The fair value of these shares was determined based on the closing stock price on that date ($0.11).  The resulting stock-based compensation totaled $55,000, of which $27,500 was expensed and included in professional fees in the consolidated statement of operations. The remaining balance of $27,500 is reflected in prepaid expenses and other current assets in the consolidated balance sheet and will be expensed over the remaining service period of nine months.

 

On July 5, 2018, the Company issued a total of 180,000 shares of common stock to two executive recruitment firms (90,000 shares to each party) in exchange for services valued at an aggregate amount of $36,000.  This amount is included in general and administrative expenses in the consolidated statement of operations.

 

On July 24, 2018 the Company issued 200,000 shares of common stock to a vendor as partial consideration for software development services.  The shares were valued at $0.11 per share for a total expense of $22,000, which is included in research and development costs in the consolidated statement of operations.

 

On July 25, 2018 the Company issued 250,000 shares of common stock to a new member of the Board of Directors.  The shares were valued at $0.06 per share for a total expense of $15,000, of which $6,534 is included in professional fees in the consolidated statement of operations. The remaining balance of $8,466 is included in prepaid expenses and other current assets in the consolidated balance sheet and will be expensed over the remaining service period of approximately seven months.

 

On August 20, 2018, the Company issued 250,000 shares of common stock to an Advisory Board Member for services to be rendered in the future.  The fair value of these shares was determined based on the closing stock price on that date ($0.04).  The resulting stock-based compensation totaled $10,000, of which $3,671 was expensed and included in professional fees in the consolidated statement of operations. The remaining balance of $6,329 is reflected in prepaid expenses and other current assets in the consolidated balance sheet and will be expensed over the remaining service period of approximately eight months.

 

On October 18, 2018, the Company issued 250,000 shares of common stock to an Advisory Board Member for services to be rendered in the future.  The fair value of these shares was determined based on the closing stock price on that date ($0.04).  The resulting stock-based compensation totaled $10,000, of which $3,342 was expensed and included in professional fees in the consolidated statement of operations. The remaining balance of $6,658 is reflected in prepaid expenses and other current assets in the consolidated balance sheet and will be expensed over the remaining service period of approximately seven months.

 

On November 20, 2018, the Company received cash totaling $199,955 from two investors in exchange for an aggregate total of 4,950,000 shares of the Company’s common stock and warrants to purchase an aggregate total of 4,500,000 shares of the Company’s common stock.  The warrants have a term of 3 years from the date of issuance and an exercise price of $0.07 per share.  The proceeds were allocated among the total number of shares issued and the warrants based on their relative fair values.   The fair value of the shares was determined using the closing price of the Company’s common stock on the transaction date ($0.05 per share).  The fair value of the warrants was determined using the Black Scholes Merton option-pricing model, assuming stock price volatility of 176% and a risk-free interest rate of 2.88%.  Approximately $108,000 and $92,000 was allocated to the shares and the warrants, respectively.  As the warrants are classified as equity instruments, the resulting allocation is deemed a dividend on the shares issued and is reflected in additional paid-in capital in the consolidated balance sheet.  The shares were not issued until January of 2019, and accordingly are not reflected as issued and outstanding at December 31, 2018.

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.19.1
Related Party Transactions
12 Months Ended
Dec. 31, 2018
Related Party Transactions [Abstract]  
Related Party Transactions

5. Related Party Transactions

 

Advances from Shareholders

 

In support of the Company’s efforts and cash requirements, it has historically relied upon advances from related parties. At December 31, 2018 and December 31, 2017, advances from shareholders totaled $173,594 and $214,132, respectively.  These advances are non-interest bearing with no set repayment terms.

 

Additionally, at December 31, 2018 and December 31, 2017, the Company had accrued compensation payable to the Principal Executive Officer in the amount of $664,700 and $430,100, respectively.

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.19.1
Income Taxes
12 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes

6.    Income Taxes

 

The Company has not recognized any income tax expense or benefit for the years ended December 31, 2018 and 2017. The Company has a net operating loss (NOL) carryforward of approximately $3.1 million at December 31, 2018 ($2.3 million at December 31, 2017) which has been offset in its entirety by a valuation allowance due to the uncertainty of realization.

 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the carryforward period.

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.19.1
Commitments
12 Months Ended
Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments

7.    Commitments

 

The Company entered into a month to month rental agreement for its office facilities in Sarasota Florida. The Company is currently making rent payments on a month-to-month basis. The rental agreement calls for monthly payments of rent of $1,881 plus the costs of utilities and maintenance to the facilities. Rent expense for the years ended December 31, 2018 and 2017 for the facility in Sarasota Florida was $37,000 and $25,000, respectively.

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.19.1
Contingencies
12 Months Ended
Dec. 31, 2018
Loss Contingency [Abstract]  
Contingencies

8.    Contingencies

 

Some of the officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available. They may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.  In addition, officers and certain members of upper management have executed employment agreements with the Company, which include, among other things, bonuses contingent on the achievement of certain performance targets and provisions for severance payments in the event of termination without cause.

 

Litigation

 

From time to time the Company may become a party to litigation matters involving claims against the Company.  Current regulations and reporting requirements require the Company to disclose any legal proceedings that are ongoing and could have a material impact on the consolidated financial statements.

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.19.1
Subsequent events
12 Months Ended
Dec. 31, 2018
Subsequent Events [Abstract]  
Subsequent events

9.    Subsequent events

 

Management has evaluated subsequent events that occurred through the date of this report that would have a material impact on our financial statements.

XML 26 R16.htm IDEA: XBRL DOCUMENT v3.19.1
Nature of Operations and Significant Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2018
Accounting Policies [Abstract]  
Description of Business

Description of Business

 

LevelBlox, Inc., formerly known as AlphaPoint Technology, Inc., principal objective is to partner with innovative Blockchain technology focused companies that are interested in pursuing growth through the public markets. We are developing relationships with a portfolio of high-quality businesses and establishing a sustainable business model, to achieve superior and sustainable financial results.

 

LevelBlox, is a developer of Software Asset Management (SAM) applications for the Blockchain. LevelBlox has developed a patent-pending software application called AssetCentral (AC). Through AssetCentral use cases we have identified the growing complexity and scope with the current methodology and tracking of Software Asset Management licenses. LevelBlox’s SAM Blockchain application will connect software entitlements to their licenses and components with the software decision makers, to drive automation with transparency to reduce SAM content, effort, and cost. LevelBlox’s Blockchain auditing and compliance tool will assist companies with their compliance audits, internal controls, and best business practices.

 

LevelBlox has been selected to join the Oracle Scaleup Ecosystem, and the Oracle Cloud Infrastructure platform, utilizing the global resources, cloud technology, infrastructure and expertise Oracle has to offer, as the company moves into its next phase of growth.

 

LevelBlox is committed to Blockchain deployments for enterprise markets. It seeks to eliminate intermediaries by increasing efficiency and speed and simplifying operations by reducing cost and time related to Software Asset Management (SAM) reconciliations and disputes.  

Basis of Presentation

Basis of Presentation

 

In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation of (a) the consolidated financial position at December 31, 2018 and December 31, 2017 and (b) the consolidated statements of operations, and cash flows for the year ended December 31, 2018 and 2017 have been made.

Application of Critical Accounting Policies and Use of Estimates

Application of Critical Accounting Policies and Use of Estimates

 

The consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The application of GAAP requires management to make assumptions, judgments and estimates that affect our reported amounts of assets, liabilities, revenue and expenses, and the related disclosures regarding these items. We base the assumptions, judgments and estimates on historical experience and on various other factors that we believe to be reasonable under the circumstances. Actual results could differ significantly from these estimates under different assumptions or conditions. To the extent that there are material differences between these estimates and actual results, our future financial condition or results of operations will be affected. On a regular basis, we evaluate our assumptions, judgments and estimates.

 

We believe that the assumptions, judgments and estimates involved in the accounting for stock-based expenses and income taxes have the greatest potential impact on our consolidated financial statements. These areas are key components of our results of operations and are based on complex rules which require us to make judgments and estimates. Historically, our assumptions, judgments and estimates in accordance with our critical accounting policies have not materially differed from actual results.

Fair Value Measurements

Fair Value Measurements

 

The Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 820, which defines fair value, establishes a framework for using fair value to measure assets and liabilities, and expands disclosures about fair value measurements. The statement applies whenever other statements require or permit assets or liabilities to be measured at fair value.

 

At each balance sheet date, the Company performs an analysis of all instruments subject to fair value measurement.  The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. As of December 31, 2018 and 2017 the fair values of the Company’s financial instruments approximate their historical carrying amount.

Cash and Cash Equivalents

Cash and Cash Equivalents

 

Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less when purchased which are readily convertible to cash.

Share-based payments

Share-based payments

 

Share-based payments to employees and non-employees, including grants of employee stock options or shares of stock are recognized as expense in the financial statements based on their fair values. That expense is recognized over the period during which services are provided in exchange for the award.

 

The Company may issue restricted stock to consultants for various services. Cost for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is to be measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty’s performance is complete.

 

We use the Black-Scholes option pricing model to determine the estimated fair value of warrants issued in connection with stock.

Revenue recognition

Revenue recognition

 

The Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

Software Development Costs

Software Development Costs

 

The Company accounts for software development costs in accordance with several accounting pronouncements, including FASB ASC 730, Research and Development and FASB 985-20, Costs of Computer Software to be Sold, Leased, or Marketed.

 

   
Costs incurred during the period of planning and design, prior to the period determining technological feasibility, for all software developed for use internal and external, has been charged to operations in the period incurred as research and development costs. Additionally, costs incurred after determination of readiness for market have been expensed as research and development.
 
The Company may capitalize costs incurred in the development of our proprietary software (computer software to be sold, leased or licensed) for the period after technological feasibility is determined and prior to our marketing and initial sales.

 

At December 31, 2018, no software development costs had been capitalized.

Research and Development

Research and Development

 

The Company expenses research and development costs when incurred.  Research and development costs include engineering, programmer costs and testing of product and outputs.  Indirect costs related to research and development are allocated based on percentage usage to the research and development.  The Company incurred $224,334 and $0 in research and development costs for the years ended December 31, 2018 and 2017, respectively, and are included in the loss from operations.

Income taxes

Income taxes

 

The Company accounts for income taxes under the liability method.  Deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.  A valuation allowance may be applied against the net deferred tax due to the uncertainty of its ultimate realization.

 

Deferred tax assets have been fully offset by a valuation allowance, because at this time the Company believes that it is more likely than not that the future tax benefit will not be realized as the Company has a history of net operating losses.

Earnings (loss) per share

Earnings (loss) per share

 

Basic earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares outstanding during the year. Diluted earnings (loss) per share calculations are determined by dividing net income by the weighted average number of shares plus any potentially dilutive shares. The Company does not have any potentially dilutive instruments and, thus, anti-dilution issues are not applicable.

Risks and concentrations

Risks and concentrations

 

Financial instruments that potentially subject the Company to concentrations of credit risk include cash in banks in excess of federally insured amounts.  The Company manages this risk by maintaining all deposits in high quality financial institutions.

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.19.1
Nature of Operations and Significant Accounting Policies (Details Narrative) - USD ($)
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Nature Of Operations And Significant Accounting Policies    
Research and development costs $ 224,334
XML 28 R18.htm IDEA: XBRL DOCUMENT v3.19.1
Equity (Details Narrative)
9 Months Ended 12 Months Ended
Nov. 20, 2018
USD ($)
$ / shares
shares
Oct. 18, 2018
USD ($)
$ / shares
Aug. 20, 2018
USD ($)
$ / shares
Jul. 25, 2018
USD ($)
$ / shares
shares
Jul. 24, 2018
USD ($)
$ / shares
shares
Jul. 05, 2018
USD ($)
shares
Jun. 15, 2018
USD ($)
$ / shares
shares
May 23, 2018
USD ($)
$ / shares
shares
May 07, 2018
USD ($)
$ / shares
shares
Apr. 14, 2018
shares
Apr. 13, 2018
shares
Sep. 30, 2018
USD ($)
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Stock-based compensation expense                         $ 689,436
Prepaid expenses and other current assets                         48,953
Professional fees                         730,990 69,645
Issued for services                         585,000  
Research and development costs                         224,334
American Capital Ventures and Leone Group, LLC [Member]                            
Number of shares issued | shares                   7,700,000        
Stock-based compensation expense                       $ 539,000    
Vendor [Member]                            
Number of shares issued | shares         200,000                  
Share price (in dollars per share) | $ / shares         $ 0.11                  
Research and development costs         $ 22,000                  
Advisory Board Member [Member]                            
Number of shares issued | shares             500,000              
Stock-based compensation expense             $ 55,000              
Prepaid expenses and other current assets             27,500              
Professional fees             $ 27,500              
Share price (in dollars per share) | $ / shares             $ 0.11              
Write-off terms             9 months              
Mr. James Whelan [Member]                            
Number of shares issued | shares                     250,000      
Stock-based compensation expense                         $ 51,000  
Each Party [Member] | American Capital Ventures and Leone Group, LLC [Member]                            
Number of shares issued | shares                   3,850,000        
Four Investor [Member]                            
Number of shares issued | shares                 4,200,000          
Cash received for shares issued                 $ 100,000          
Proceeds from warrant exercises                 $ 55,000          
Four Investor [Member] | Warrant [Member]                            
Number of shares issued | shares                 4,000,000          
Warrants term                 3 years          
Exercise price (in dollars per share) | $ / shares                 $ 0.10          
Share price (in dollars per share) | $ / shares                 $ 0.07          
Proceeds from warrant exercises                 $ 45,000          
Four Investor [Member] | Warrant [Member] | Stock Price Volatility [Member]                            
Measurement input                 1.74          
Four Investor [Member] | Warrant [Member] | Risk Free Interest Rate [Member]                            
Measurement input                 0.0267          
One Investor [Member]                            
Number of shares issued | shares               4,950,000            
Cash received for shares issued               $ 250,000            
Proceeds from warrant exercises               $ 111,000            
Additional shares issued | shares               6,050,000            
One Investor [Member] | Warrant [Member]                            
Number of shares issued | shares               9,000,000            
Warrants term               3 years            
Exercise price (in dollars per share) | $ / shares               $ 0.10            
Share price (in dollars per share) | $ / shares               $ 0.06            
Proceeds from warrant exercises               $ 139,000            
One Investor [Member] | Warrant [Member] | Stock Price Volatility [Member]                            
Measurement input               1.74            
One Investor [Member] | Warrant [Member] | Risk Free Interest Rate [Member]                            
Measurement input               0.0267            
One Investor [Member] | Non Profit Organization [Member]                            
Number of shares issued | shares               1,100,000            
Two Investor [Member]                            
Number of shares issued | shares 4,950,000                          
Cash received for shares issued $ 199,955                          
Share price (in dollars per share) | $ / shares $ 0.05                          
Proceeds from warrant exercises $ 108,000                          
Two Investor [Member] | Stock Price Volatility [Member]                            
Measurement input 1.76                          
Two Investor [Member] | Risk Free Interest Rate [Member]                            
Measurement input 0.0288                          
Two Investor [Member] | Warrant [Member]                            
Number of shares issued | shares 4,500,000                          
Warrants term 3 years                          
Exercise price (in dollars per share) | $ / shares $ 0.07                          
Proceeds from warrant exercises $ 92,000                          
Second Executive Recruitment [Member]                            
Number of shares issued | shares           90,000                
First Executive Recruitment [Member]                            
Number of shares issued | shares           90,000                
Two Executive Recruitment [Member]                            
Number of shares issued | shares           180,000                
Issued for services           $ 36,000                
Board New Member [Member]                            
Number of shares issued | shares       250,000                    
Stock-based compensation expense       $ 15,000                    
Prepaid expenses and other current assets       8,466                    
Professional fees       $ 6,534                    
Share price (in dollars per share) | $ / shares       $ 0.06                    
Write-off terms       7 years                    
Advisory Board Member [Member]                            
Stock-based compensation expense   $ 10,000 $ 10,000                      
Prepaid expenses and other current assets   6,658 6,329                      
Professional fees   $ 3,342 $ 3,671                      
Share price (in dollars per share) | $ / shares   $ 0.04 $ 0.04                      
Issued for services   $ 250,000 $ 250,000                      
Write-off terms   7 months 8 months                      
XML 29 R19.htm IDEA: XBRL DOCUMENT v3.19.1
Related Party Transactions (Details Narrative) - USD ($)
Dec. 31, 2018
Dec. 31, 2017
Advances from shareholders $ 173,594 $ 214,132
Advances From Shareholders [Member]    
Advances from shareholders 173,594 214,132
Principal Executive Officer [Member]    
Accrued compensation payable $ 664,700 $ 430,100
XML 30 R20.htm IDEA: XBRL DOCUMENT v3.19.1
Income Taxes (Details Narrative) - USD ($)
Dec. 31, 2018
Dec. 31, 2017
Income Tax Disclosure [Abstract]    
Operating loss carryforwards $ 3,100,000 $ 2,300,000
XML 31 R21.htm IDEA: XBRL DOCUMENT v3.19.1
Commitments (Details Narrative) - Rental Agreement [Member] - USD ($)
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Minimum monthly rent payments $ 1,881  
Rent expense $ 37,000 $ 25,000
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