UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Year Ended December 31, 2019
OR
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number: 000-55670
MONETIVA INC.
(Name of small business issuer in its charter)
| DELAWARE | 81-3495101 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
5000 Birch Street, West Tower, Suite 3000
Newport Beach, CA 92660
(Address of principal executive offices) (Zip Code)
(949) 260-2085
(Registrant’s telephone number)
Securities registered under section 12(b) of the Exchange Act:
None
Securities registered under section 12 (g) of the Exchange Act:
| (Title of class) | (Name of each exchange on which registered) | |
| Common Stock, $0.0001 par value per share | None |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ 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 ☐ 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. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an 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 ☒ | 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 ☒ No ☐
The aggregate market value of voting stock held by non-affiliates of the Registrant, computed by reference to the price at which the common equity was last sold and issued, was $2,666,000 on June 28, 2019.
The number of shares of Common Stock, $0.0001 par value, of the registrant outstanding at March 25, 2020 was 26,644,598.
DOCUMENTS INCORPORATED BY REFERENCE
None
Monetiva Inc.
Annual Report on Form 10-K
For the Year Ended December 31, 2019
Pursuant to Part IV, Item 16, a summary of Form 10-K content follows, including hyperlinked cross-references (in the EDGAR filing). This allows users to easily locate the corresponding items in Form 10-K, where the disclosure is fully presented. The summary does not include certain Part III information that will be incorporated by reference from the proxy statement, which will be filed after this Form 10-K filing.
i
Monetiva, Inc.
Annual Report on Form 10-K
For the Year Ended December 31, 2019
PART I
History
As used herein and except as otherwise noted, the term “Company”, “it(s)”, “our”, “us”, “we”, and “Monetiva” shall mean Monetiva Inc., a Delaware corporation.
Monetiva Inc. was incorporated in the State of Delaware on July 22, 2016 and was formerly known as Lark Street Acquisition Corporation. In August 2016, Lark Street Acquisition Corporation filed a registration statement with the Securities and Exchange Commission on Form 10 by which it became a public reporting company.
On March 14, 2017, the Company effected a change of control by cancelling an aggregate of 20,000,000 shares of common stock of existing shareholders, accepting the resignations of its then existing officers and directors, electing a new officer and sole director and issuing 8,000,000 shares of common stock to the new shareholder. In connection with the change of control, the sole director of the Company and its board of directors unanimously approved the change of the Company’s name from Lark Street Acquisition Corporation to American Standard Wallet, Inc.
On November 1, 2017, the Company effected a change of control whereby then existing owner Mr. James Koh, the sole shareholder, officer and director of the Company, sold all 8,000,000 of his shares of the Company’s common stock to Mr. Pierre Sawaya. The Company accepted the resignation of Mr. Koh as the existing officer and director, electing a new officer and sole director upon issuance of the shares to Mr. Sawaya. In connection with the change of control, Mr. Sawaya, the sole shareholder and director of the Company unanimously approved the change of the Company’s name from American Standard Wallet, Inc. to Monetiva Inc.
As of March 25, 2020, the Company has a total of 26,644,598 shares of common stock of the Company issued and outstanding. Of all shares issued and outstanding, a total of 20,000,000 common shares have been issued to the Company’s Board of Director and Founder of the Company, representing approximately 75.06% of the total shares issued and outstanding as of the date of this Report.
Our Current Business
Monetiva’s primary objective is to offer prepaid card and money remittance services to under-banked, underserved markets and foreign workers. We are supported by an experienced team with extensive background and qualifications in our core business, including prepaid card issuance, program management, third party processing technology and banking regulatory and compliance. We are a start-up Company in the developmental phase of the business cycle. We are building out a card and technology platform and remittance network and are currently engaged with business partners in the United States and globally.
Our primary services to be offered are centered on the issuance of MasterCard credit and debit cards to qualified consumers in the United States of America. Monetiva’s business rollout is intended to be implemented in phases. Phase I of development includes targeting and establishing relationships with partner companies in U.S., Mexico and India. Business relationships shall be secured to implement domestically issued Prepaid Cards and financial services in each of those markets. The Company aims by this development phase to enable a low cost, efficient solution to both the US accountholders and their respective family and friends in partner countries. Monetiva accounts are designed to enable foreign workers to have their payroll deposited directly into the Mastercard issued by the Company. Card recipients will then be able to pay bills, send money abroad and utilize the Mastercard to access ATMs and make purchases at retail merchants. Services will also be provided to enable card loading of funds through retail merchant locations. The Company also intends to implement value-added programs such as loyalty discounts that shall be provided as part of the card benefits.
1
After successful rollout of Phase I development programs, the Company intends to expand to additional countries and territories as part of its Phase II development plan. The Company shall provide the same services to these new territories. Phase II territories will include Europe, Philippines, United Arab Emirates, Pakistan and China.
Our Strategy
To successfully grow and expand our business, Monetiva intends to deploy the following primary marketing strategies:
| ● | Target those foreign market immigrants in the US by metro area; |
| ● | Establish Ambassadors in high density metro areas – Sales & Marketing Representatives; |
| ● | Setup Internet Infrastructure to enable family\friend Issuance in each market, utilizing digital marketing to drive traffic to the Company’s domain; |
| ● | Utilize retail distribution partners; |
| ● | Utilize accountholder incentives to create a viral referral base to bring in new accountholders; and |
| ● | Add new products and services to existing accountholders to generate increased usage per accountholder. |
Once the Company has deployed these primary strategies in the US, cross marketing to the other countries will be implemented using the same strategy (e.g. US to Philippines and Canada to Mexico).
Metro Area Marketing
The Company has identified several primary metropolitan areas and sub-market areas to focus its US-based marketing into the foreign worker concentrated markets. These areas include Los Angeles, San Francisco, San Diego, Houston, Dallas, New York, Chicago, Washington DC, Atlanta, Miami and the surrounding area sub-markets. The Company intends to secure representatives in each of these markets to setup distribution points with foreign market centric services including organizations related to religion, healthcare, community, and employment. The representatives will include direct employees and bank approved independent agents. Deeper expansion into other metropolitan markets will be evaluated and prioritized once the Company has met its initial primary business objectives.
Internet Access and Marketing
The Monetiva website will be developed to easily enable accountholder registration in the US and provide access to registration in each of the home markets through Monetiva’s issuing partners. This will allow effective communications to the consumers in each market while utilizing the Know Your Customer (“KYC”) verification and compliance process that has already been established through the existing systems.
Social Media and Digital Marketing will be used to target consumers. We also intend to affiliate with websites and brands that focus on the same consumer markets.
Retail Distribution Partners
We are in discussions with several retail chains to offer the Monetiva Card through their retail distribution network. The cards will be available for immediate activation and loading from the local stores. Once KYC is provided and verified, the cards will be converted from non-reloadable to reloadable and available for personalization if requested. Inventory control will be established with each retail partner.
2
Accountholder Incentives
The foreign worker communities generally provide a cohesive network that enables incentive programs for one accountholder to refer friends or family. We intend to provide the referring accountholder with valued incentives to bring others into the Monetiva program.
Value-added Services
We have developed a slew of value-added services to increase the value of the service offering to accountholders including retail discounts, healthcare discounts, usage points, long distance telephone, bill-paying, etc. These services are intended to drive more transaction activity and new accountholder traffic.
Global Remittance Market
We are focused on select remittance corridors to enable Monetiva to specialize in the scope, value and quality of services. According to the migrationdataportal.org the volume of remittances from the US to the target markets in 2019 was projected to be as follows:
| Receiving Country | USD in billions | |||
| Mexico | $ | 38.7 | ||
| India | $ | 82.2 | ||
| China | $ | 70.3 | ||
| Philippines | $ | 35.1 | ||
https://migrationdataportal.org/themes/remittances
Competition
The competitive landscape for traditional prepaid cards and remittance products is sizable with leaders such as NetSpend, Green Dot, Western Union and MoneyGram. However, Monetiva does not compete directly with any of these companies, as Monetiva offers hybrid prepaid card services using a unique approach of customer acquisition and product delivery.
Each of these competitors has established itself with a market position that enables it to meet consumer requirements such as low cost and convenience. The Company’s market position is however intended to provide prepaid services at a price below major competitors such as Western Union, focusing on value-added services to both the senders and receivers, and working within the metropolitan markets and communities to establish our value. The Monetiva business model is further differentiated through our implementation of the domestic card issuance in each of the participating countries. This allows us to expedite the transfers and provide additional payment services to the cardholders in the receiving countries.
Technology
Monetiva is implementing its technical strategy through a combination of utilizing the “best of breed” solutions available in the market and adding new functionality and solutions to meet the requirements within each market. We have established relationships in the partner countries and will be utilizing technology through the platforms that exist today. Each market has specific regulatory requirements that require certain controls and reporting. This approach will allow us to maintain the proper risk and compliance controls as defined within each country. We will utilize PCI compliant technology branded under Monetiva to bring the systems together and provide a consistent solution to the accountholders.
Implementing a global solution requires the company to maintain a secure and flexible approach to meet the regulatory standards across each of its intended markets that can vary across each country. In some markets we can operate a single multi-region solution whereas in other markets we are required to implement a technology platform within the country to meet regulatory requirements.
3
With the global variations in mind we are partnering with companies who have a turnkey solution and experience in certain markets and have established secure operating facilities. As volumes within markets justify, the Company will determine the most efficient approach to migrate toward.
We are building relationships in Mexico with individuals and entities that have been providing Prepaid Card solutions to the Mexican government and many other large establishments and have both issuing and money remittance licenses. Our technology will enable us to interconnect the systems while their technology will enable us to monitor the activity.
We are building relationships in India with individuals and entities that have established a network of over 30 banks utilizing their payment solutions including prepaid cards and Wallets. We will interconnect our systems and again utilize their infrastructure to manage the portfolio.
In US, Monetiva has already contracted with EndlessOne Global, Inc. (“E1G”) to provide the Prepaid Card processing infrastructure. In addition, Monetiva has in-house technical resources working to develop easy-to-use consumer portals, mobile solutions and interfaces to manage consumer information across local markets.
The primary focus is to deliver high quality technical solutions, meeting payment industry data security requirements, regulatory compliance for consumer protection and anti-money laundering and flexible architecture to enable an integrated suite of solutions to think globally while operating locally.
Regulatory and Compliance
As a Program Manager, Monetiva business operations will be subject to various U.S and foreign laws, regulations and policies, including the Bank Secrecy Act (BSA), as amended by the US Patriot Act; Anti-Money Laundering (AML) methods, especially considering BSA; Office of Foreign Assets Control (OFAC) requirements; consumer compliance regulations; and electronic marketing and criminal trends. Failure to comply with such laws, regulations and policies could result in civil and criminal penalties, as well as termination of material business relationships.
Manuals have been developed with regards to complying with required laws, regulations, brand guidelines and bank rules so as to:
| ● | Comply with policies |
| ● | Comply with applicable regulatory requirements |
| ● | Detect and prevent money laundering and terrorist financing |
| ● | Recognize the penalties of noncompliance |
| ● | Identify suspicious activity and transactions |
| ● | Maintain proper records and reporting |
Monetiva is committed to maintaining compliance with all required laws, regulations, brand guidelines and bank rules. Monetiva intends to implement continuing training to ensure such compliance by the Company and its employees.
Subsequent Events
Management has evaluated subsequent events through March 25, 2020, the date the financial statements were available to be issued, noting the following items would impact the accounting for events or transactions in the current period or require additional disclosure.
4
On January 5, 2020, an investor executed a stock subscription agreement to purchase 10,000 shares of common stock of the Company at $2.00 per share. The investor paid $20,000 to the Company in three instalments between January 21, 2020 and February 20, 2020. The Company issued 10,000 shares of common stock to the investor on March 18, 2020.
On January 20, 2020, an investor executed a stock subscription agreement to purchase 3,334 shares of common stock of the Company at $3.00 per share. The investor paid $10,000 to the Company on February 18, 2020. The Company issued 3,334 shares of common stock to the investor on March 18, 2020.
On February 20, 2020, an investor executed a stock subscription agreement to purchase 20,000 shares of common stock of the Company at $2.00 per share. The investor paid $40,000 to the Company on February 20, 2020. The Company issued the 20,000 shares of common stock to the investor on March 18, 2020.
Forward-looking statements are based on certain assumptions and expectations of future events and trends that are subject to risks and uncertainties. Actual future results and trends may differ materially from historical results or those reflected in any such forward-looking statements depending on a variety of factors. Important information as to these factors can be found in this document, including, among others, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” For additional information concerning factors that may cause actual results to vary materially from those stated in the forward-looking statements, see our reports on Form 10-K, 10-Q and 8-K filed with the SEC from time to time. The Company assumes no obligation to update or revise any forward-looking statements.
5
Not Applicable.
Item 1B. Unresolved Staff Comments.
None.
Monetiva executed a month-to-month cancellable operating lease, leasing office space in an executive suite, commencing on January 1, 2019 for $169 per month for the nine months and increasing to $203 per month starting October 1, 2019. This office space is located at 5000 Birch Street, West Tower, Suite 3000, Newport Beach, CA 92660.
On May 24, 2019, Monetiva executed a month-to-month rental agreement to lease furnished premises. This space is located at 25166 Rockridge Road, Laguna Hills, CA 92653. The lease term commenced June 1, 2019 for a one-year term with a monthly rent of $11,500 per month. The landlord required a security deposit of $15,000 on the commencement date of the lease, and an additional $10,000 security deposit on November 1, 2019. On May 30, 2019, the Company paid to the landlord security deposit of $15,000 and prepaid the rent of $69,000 for the six months ended November 30, 2019. On October 1, 2019, pursuant to the terms of the lease agreement, the Company paid to the landlord an additional security deposit of $10,000 and prepaid rent of $69,000 for the six months term starting December 1, 2019 to May 31, 2020.
We believe that our facilities are adequate for our needs for the remainder of the lease term and, in the opinion of the Company’s management; the properties are adequately covered by insurance.
On August 22, 2019, the Company became aware of an Securities and Exchange Commission Order Instituting Administrative Proceedings and Notice of Hearing alleging that the Company is delinquent in certain of its periodic filings with the Commission and indicating that administrative proceedings are intended to be held (i) to determine all delinquent filings and any defenses of the Company for any such delinquent filings, and (ii) to make a decision as whether it may be appropriate to take any action to suspend or revoke the Company’s registration of its securities. The date of the Commission Order was August 14, 2019. The Company filed an answer in response to the assertions made by the Commission.
On September 18, 2019, the Division of Enforcement of the Securities and Exchange Commission (“SEC”) filed with the Office of the Secretary a Motion for Ruling on the Pleadings Against the Company seeking an order to revoke each class of securities of the Company registered with the Commission pursuant to Section 12(j) of the Securities Exchange Act of 1934. The Company has filed all of its delinquent filings and is current with its filings in an effort to possibly avoid such revocation. The Company has not received any further communications from the SEC on this matter as to whether it will continue to seek revocation.
Item 4. Mine Safety Disclosures.
Not Applicable.
6
PART II
Item 5. Market for Registrant’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Unregistered Sales of Common Stock.
There is currently no public market for the Company’s securities.
The Company intends to take action in the future to become quoted on the over-the-counter bulletin board (“OTCBB”).
The OTC Bulletin Board is a dealer-driven quotation service. Unlike the Nasdaq Stock Market, companies cannot directly apply to be quoted on the OTC Bulletin Board, only market makers can initiate quotes, and quoted companies do not have to meet any quantitative financial requirements. Any equity security of a reporting company not listed on the Nasdaq Stock Market or on a national securities exchange is eligible.
It is not possible to predict or guaranty where, if at all, the securities of the Company will be traded in the future.
Since inception through December 31, 2019, the Company had issued shares of its common stock as follows:
| Date | Number of Shares | Consideration | ||||
| July 22, 2016 | 10,000,000 | Services | ||||
| July 22, 2016 | 10,000,000 | Services | ||||
| March 14, 2017 | 8,000,000 | Services | ||||
As of December 31, 2019, the Company had one shareholder with 8,000,000 shares of Company common stock, par value of $0.0001 per share, outstanding. The 20,000,000 shares of common stock issued on July 22, 2016 were cancelled as a result of change in control on March 14, 2017.
During January 1, 2019 to March 25, 2020, the Company has issued shares of its common stock as follows:
| Date of Issuance | Description | Number of shares | Consideration | ||||||||
| 1/14/2019 | Sign-On bonus** | 12,000,000 | $ | 1,200 | |||||||
| 1/14/2019 | Shares sold to business promoters of EndlessOne Global (February 3, 2018 to April 17, 2018) | 1,130,000 | $ | 282,500 | |||||||
| 1/14/2019 | Shares sold to investors (February 26, 2018 - April 22, 2018) | 486,000 | $ | 243,000 | |||||||
| 1/14/2019 | Shares sold to an investor (September 24, 2018) | 1,000,000 | $ | 500,000 | |||||||
| 2/25/2019 | Shares sold to an investor (November 7, 2018) | 30,000 | $ | 15,000 | |||||||
| 2/25/2019 | Shares sold to an investor (November 16, 2018) | 20,000 | $ | 10,000 | |||||||
| 7/24/2019 | Shares sold to an investor (June 18, 2019) | 200,000 | $ | 200,000 | |||||||
| 10/10/2019 | Shares sold to investors (January 1, 2019 – September 30, 2019) | 3,715,264 | $ | 1,111,752 | |||||||
| 10/24/2019 | Shares sold to investors (January 1, 2019 – September 30, 2019) | 30,000 | $ | 60,000 | |||||||
| 3/18/2020 | Shares sold to investors (January 1, 2020 – March 25, 2020) | 33,334 | $ | 70,000 | |||||||
| ** | On November 1, 2017, the Company entered into an employment agreement with the Officer and awarded 12,000,000 shares of the Company’s common stock valued at $1,200 as a sign-on bonus. The common shares were valued at par value and were issued to the Officer on January 14, 2019. |
The shares of common stock were issued and sold pursuant to exemptions from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), contained in Section 4(2) and/or Regulation D thereof.
A total of 26,644,598 shares of common stock of the Company have been issued and outstanding as of March 25, 2020. As of March 25, 2020, the Company has fifty-three holders of its common stock.
Interwest Transfer Company, Inc. is the Company’s transfer agent.
7
Dividends
Monetiva has not paid any cash dividends on its common stock and does not expect to do so in the foreseeable future. We anticipate that any earnings generated from future operations will be used to finance our operations. No restrictions exist upon our ability to pay dividends.
Item 6. Selected Financial Data.
Selected Financial Data is not required to be filed by a smaller reporting company.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes and other financial information included elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.”
Cautionary Note Concerning Factors That May Affect Future Results
This Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company may also make forward-looking statements in other reports filed with the Securities and Exchange Commission, in materials delivered to shareholders and in press releases. In addition, the Company’s representatives may from time to time make oral forward-looking statements.
Forward-looking statements relate to future events and typically address the Company’s expected future business and financial performance. Words such as “plan,” “expect,” “aim,” “believe,” “project,” “target,” “anticipate,” “intend,” “estimate,” “will,” “should,” “could,” “forecast” and other words and terms of similar meaning, typically identify such forward-looking statements. In particular, these include, among others, statements relating to:
| ● | the Company’s strategy for growth, future revenues, earnings, cash flow, uses of cash and other measures of financial performance, and market position, |
| ● | worldwide economic, political, and capital markets conditions, such as interest rates, foreign currency exchange rates, financial conditions of our suppliers and customers, and natural and other disasters or climate change affecting the operations of the Company or our suppliers and customers, |
| ● | new business opportunities, product development, and future performance or results of current or anticipated products, |
| ● | the scope, nature or impact of acquisition, strategic alliance and divestiture activities, |
| ● | the outcome of contingencies, such as legal and regulatory proceedings, |
| ● | future levels of indebtedness, common stock repurchases and capital spending, |
| ● | future availability of and access to credit markets, |
| ● | pension and postretirement obligation assumptions and future contributions, |
| ● | asset impairments, |
| ● | tax liabilities, |
| ● | information technology security, and |
| ● | the effects of changes in tax (including the newly enacted Tax Cuts and Jobs Act), environmental and other laws and regulations in the United States and other countries in which we operate. |
8
We are a development stage enterprise and were incorporated in the State of Delaware on July 22, 2016. From inception through the date of this annual report, we did not generate any revenue and incurred expenses and operating losses, as part of our development stage activities. We have experienced a net loss of $782,831 for the year ended December 31, 2019, have negative cash flows from operating activities of $1,303,291, and an accumulated deficit of $1,372,017 at December 31, 2019.
We anticipate that we will need substantial working capital over the next 12 months to continue as a going concern and to expand our operations to distribute, sell and market products and solutions. Our independent auditors have expressed substantial doubt about the Company’s ability to continue as a going concern. Unless we are able to generate sufficient cash flows from operations and/or obtain additional financing, there is a substantial doubt about the Company’s ability to continue as a going concern. We intend to make an equity offering of our common stock for the acquisition and operation expenses. If we cannot raise the required cash, we will issue additional shares of our common stock in lieu of cash.
Our Current Business
Monetiva’s primary objective is to offer prepaid card and money remittance services to under-banked, underserved markets and foreign workers. We are supported by an experienced management team with extensive background and qualifications in our core business, including prepaid card issuance, program management, third party processing technology and banking regulatory and compliance. We are a start-up Company in the developmental phase of the business cycle. We are building out a card and technology platform and remittance network and are currently engaged with business partners in the United States and globally.
We intend to utilize Endless One Global (“E1G”) prepaid card services to provide prepaid cards to under-banked consumers, primarily targeting foreign workers. The primary services to be offered are centered on the issuance of MasterCard credit and debit cards to qualified consumers in the United States of America. Business rollout is intended to be implemented in phases. Phase I of development includes targeting and establishing relationships with partner companies in both U.S., Mexico and India. Business relationships shall be secured to implement domestically issued Prepaid Cards and financial services in each of those markets. Our aim by this development phase is to enable a low cost, efficient solution to both the US accountholders and their respective family and friends in partner countries. Our accounts are designed to enable foreign workers to have their payroll deposited directly into the Mastercard issued by us. Card recipients will then be able to pay bills, send money abroad and utilize the Mastercard to access ATMs and make purchases at retail merchants. Services will also be provided to enable card loading of funds through retail merchant locations. We also intend to implement value added programs such as loyalty discounts that shall be provided as part of the card benefits.
After successful rollout of Phase I development programs, we intend to expand to additional countries and territories as part of its Phase II development plan. We shall provide the same services to these new territories. Phase II territories are likely to include China, Europe, Pakistan, Philippines and United Arab Emirates.
Our Strategy
To successfully grow and expand our business, we intend to deploy the following primary marketing strategies:
| ● | Target those foreign market Immigrants in the US by metro area; |
| ● | Establish Ambassadors in high density metro areas – Sales & Marketing Representatives; |
| ● | Setup Internet Infrastructure to enable family\friend Issuance in each market, utilizing digital marketing to drive traffic to the Company’s domain; |
| ● | Utilize retail distribution partners; |
| ● | Utilize accountholder incentives to create a viral referral base to bring in new accountholders; and |
| ● | Add new products and services to existing accountholders to generate increased usage per accountholder; |
Once we have deployed these primary strategies in the US, cross marketing to the other countries will be implemented using the same strategy (e.g. US to the Philippines and Canada to Mexico).
9
Metro Area Marketing
We have identified several primary metropolitan areas and sub-market areas to focus its US-based marketing into the foreign worker concentrated markets. These areas include Los Angeles, San Francisco, San Diego, Houston, Dallas, New York, Chicago, Washington DC, Atlanta, Miami and the surrounding area sub-markets. We intend to secure representatives in each of these markets to setup distribution points with foreign market centric services including organizations related to religion, healthcare, community, and employment. The representatives will include direct employees and bank approved independent agents. Deeper expansion into other metropolitan markets will be evaluated and prioritized once we have met our initial primary business objectives.
Internet Access and Marketing
Our website will be developed to easily enable accountholder registration in the US and provide access to registration in each of the home markets through our issuing partners. This will allow effective communications to the consumers in each market while utilizing the KYC verification and compliance process that has already been established through the existing systems.
Social Media and Digital Marketing will be used to target consumers. We also intend to affiliate with websites and brands that focus on the same consumer markets.
Retail Distribution Partners
We are in discussions with several retail chains to offer the Monetiva Card through their retail distribution network. The cards will be available for immediate activation and loading from the local stores. Once KYC is provided and verified the cards will be converted from non-reloadable to reloadable and available for personalization if requested. Inventory control will be established with each retail partner.
Accountholder Incentives
The foreign worker communities generally provide a cohesive network that enables incentive programs for one account holder to refer friends or family. We intend to provide the referring account holder with valued incentives to bring others into the Monetiva program.
Value-added Services
We have developed a suite of value-added services to increase the value of the service offering to accountholders including: retail discounts, healthcare discounts, usage points, long distance telephone, bill-paying, etc. These services are intended to drive more transaction activity and new accountholder traffic.
Global Remittance Market
We are focused on select remittance corridors to enable Monetiva to specialize in the scope, value and quality of services. According to the migrationdataportal.org, the volume of remittances from the US to the target markets in 2019 was projected to be as follows:
| Receiving Country | USD in billions | |||
| Mexico | $ | 38.7 | ||
| India | $ | 82.2 | ||
| China | $ | 70.3 | ||
| Philippines | $ | 35.1 | ||
https://migrationdataportal.org/themes/remittances
Results of Operations
Our results of operations for the years ended December 31, 2019 and 2018 included the operations of the Company. We reported a net loss of $782,831 and $535,274 for the years ended December 31, 2019 and 2018 applicable to the Company’s common stockholders. The losses primarily resulted from recording consulting fees, rent, payroll, travel and other general and administrative expenses as operating expenses.
10
Liquidity and Capital Resources
Cash and cash equivalents were $253,100 and $10,039 at December 31, 2019 and 2018, respectively. As shown in the accompanying financial statements, we recorded a net loss of $782,831 for the year ended December 31, 2019. Our working capital at December 31, 2019 was $926,545, and net cash used in operating activities for the year ended December 31, 2019 was $1,303,291. These factors and our ability to raise additional capital to accomplish our objectives, raise doubt about our ability to continue as a going concern. We expect our expenses will continue to increase during the foreseeable future as a result of increased operational expenses and the development of our current business operations. We anticipate generating only minimal revenues over the next twelve months. Consequently, we are dependent on the proceeds from future debt or equity investments to sustain our operations and implement our business plan. If we are unable to raise sufficient capital, we will be required to delay or forego some portion of our business plan, which would have a material adverse effect on our anticipated results from operations and financial condition. There is no assurance that we will be able to obtain necessary amounts of capital or that our estimates of our capital requirements will prove to be accurate.
From January 1, 2019 to December 31, 2019, we engaged in a private exempt offering in reliance on Section 4(2) of the Securities Act, or Regulation D, Rule 506 thereof, whereby the Company raised a total amount of $1,601,752, which was immediately made available to the Company to cover operating expenses, salaries and other development costs. We presently do not have any significant credit available, bank financing or other external sources of liquidity. Due to our operating losses, our operations have not been a source of liquidity. We will need to acquire other profitable entities or obtain additional capital in order to expand operations and become profitable. In order to obtain capital, we may need to sell additional shares of our common stock or borrow funds from private lenders. There can be no assurance that we will be successful in obtaining additional funding.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If additional funds are raised through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services by issuance of stock in lieu of cash, which may also result in dilution to existing shareholders. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing.
No assurance can be given that sources of financing will be available to us and/or that demand for our equity/debt instruments will be sufficient to meet our capital needs, or that financing will be available on terms favorable to us. If funding is insufficient at any time in the future, we may not be able to take advantage of business opportunities or respond to competitive pressures or may be required to reduce the scope of our planned service development and marketing efforts, any of which could have a negative impact on our business and operating results. In addition, insufficient funding may have a material adverse effect on our financial condition, which could require us to:
| ● | Curtail our operations significantly, or | |
| ● | Seek arrangements with strategic partners or other parties that may require us to relinquish significant rights to technology platform and correlated services, or | |
| ● | Explore other strategic alternatives including a merger or sale of our Company. |
Operating Activities
Net cash used in operating activities for the year ended December 31, 2019 was $1,303,291, primarily attributable to our net loss of $782,831, common stock issued for services valued at $1,200, and a net increase in operating assets over operating liabilities of $521,660. We recorded an increase in prepaid expenses of $666,800 primarily due to prepayments of $609,300 made to E1G for acquisition of BINs and $57,500 for prepaid rent, decrease in accrued liabilities of $60,136, increase in accrued payroll of officer of $213,100, and decrease in deferred rent of $7,960. Net cash used in operating activities for the year ended December 31, 2018 was $735,861 primarily attributable to our net loss of $535,274 and a net increase in operating assets over operating liabilities of $200,587. We recorded an increase in prepaid expenses of $350,480 for payments made to E1G for acquisition of BINs, increase in security deposit of $25,136 for leasing office facility, increase in accrued liabilities of $112,509, increase in officer payroll expense of $54,560, and increase in deferred rent of $7,960.
Investing Activities
Net cash provided by investing activities for the year ended December 31, 2019 and 2018 was $0, respectively.
11
Financing Activities
Net cash provided by financing activities for the year ended December 31, 2019 was $1,546,352 primarily due to the cash proceeds of $1,371,752 received from sale of common stock to investors and business promotors, cash proceeds of $230,000 from common stock subscriptions receivable, cash payments of $55,000 to a stockholder for a short-term unsecured loan for our working capital needs. Net cash provided by financing activities for the year ended December 31, 2018 was $745,900 primarily due to the cash proceeds of $690,500 received from sale of common stock to investors and business promotors, and cash proceeds of $55,000 received from a stockholder as short-term unsecured loan for our working capital needs.
As a result of the above activities, we experienced a net increase in cash of $243,061 for the year ended December 31, 2019. Our ability to continue as a going concern is still dependent on our success in obtaining additional financing from investors or from sale of our common shares.
Critical Accounting Policies
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements which we have prepared in accordance with GAAP. We believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our financial statements.
JOBS Act Accounting Election
We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards, and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
Fair value of Financial Instruments and Fair Value Measurements
ASC 820, “Fair Value Measurements and Disclosures”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Development Stage and Capital Resources
The Company has devoted substantially all of its efforts to business planning since its inception on July 22, 2016. Accordingly, the Company is considered to be in the development stage. The Company has not generated revenues from its operations, and it will not commence generating revenues until sometime during the fourth quarter of 2020.
Off-Balance Sheet Arrangements
We have not engaged in any off-balance sheet arrangements as defined in Item 303(c) of the SEC’s Regulation S-B. We did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special-purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Concentration of Credit Risk
The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through December 31, 2019. The Company’s bank balances has exceeded FDIC insured amounts at times during the years ended December 31, 2019 and 2018, respectively.
Recent Accounting Pronouncements
We have implemented all new accounting pronouncements that are in effect and that may impact our financial statements and do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not required for smaller reporting companies.
12
Item 8. Financial Statements and Supplementary Data.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 2019 AND 2018
INDEX TO FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Monetiva Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Monetiva Inc. (the “Company”) as of December 31, 2019 and 2018, the related statements of operations, stockholders’ equity, and cash flows for the years ended December 31, 2019 and 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the 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.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 1 to the financial statements, the Company has suffered recurring losses from operations, negative cash flows from operating activities, and not generated any revenues since inception that raise substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Change in Accounting Principle
As discussed in Note 2 to the financial statements, the Company changed the manner in which it accounts for leases in 2019.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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 the 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 audit to obtain reasonable assurance about whether the 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 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.
| /s/ KCCW Accountancy Corp. | |
| We have served as the Company’s auditor since 2016. | |
| Los Angeles, California | |
March 25, 2020 |
|
F-2
BALANCE SHEETS
December 31, 2019 | December 31, 2018 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 253,100 | $ | 10,039 | ||||
| Prepaid expenses | 1,017,280 | 350,480 | ||||||
| Rent deposit | 25,000 | 25,136 | ||||||
| Total Current Assets | 1,295,380 | 385,655 | ||||||
| Total Assets | $ | 1,295,380 | $ | 385,655 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accrued liabilities | $ | 77,474 | $ | 137,609 | ||||
| Accrued payroll - officer | 291,360 | 78,260 | ||||||
| Deferred rent | - | 7,960 | ||||||
| Loan payable | - | 55,000 | ||||||
| Payable to officer | - | 400 | ||||||
| Total Current Liabilities | 368,834 | 279,229 | ||||||
| Total Liabilities | 368,834 | 279,229 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred stock, $0.0001 par value, 20,000,000 shares authorized; none issued and outstanding at December 31, 2019 and 2018, respectively | - | - | ||||||
| Common stock, $0.0001 par value, 100,000,000 shares authorized; 26,611,264 shares 8,000,000 shares issued and outstanding at December 31, 2019 and 2018, respectively | 2,661 | 800 | ||||||
| Additional paid-in capital | 2,425,902 | 4,312 | ||||||
| Stock subscriptions received in advance | - | 690,500 | ||||||
| Stock subscriptions receivable | (130,000 | ) | - | |||||
| Accumulated deficit | (1,372,017 | ) | (589,186 | ) | ||||
| Total Stockholders’ Equity | 926,546 | 106,426 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,295,380 | $ | 385,655 | ||||
The accompanying notes are an integral part of these financial statements.
F-3
STATEMENTS OF OPERATIONS
| For the Year Ended | ||||||||
| December 31, 2019 | December 31, 2018 | |||||||
| Revenue | $ | - | $ | - | ||||
| Cost of Revenue | - | - | ||||||
| Gross Profit | - | - | ||||||
| Operating Expenses | ||||||||
| General and administrative | 844,456 | 535,274 | ||||||
| Total Operating Expenses | (844,456 | ) | (535,274 | ) | ||||
| Other Income (Expense) | ||||||||
| Rental income | 61,625 | - | ||||||
| Total Other Income (Expense) | 61,625 | - | ||||||
| Loss before Income Taxes | (782,831 | ) | (535,274 | ) | ||||
| Provision for Income Tax | - | - | ||||||
| Net Loss | $ | (782,831 | ) | $ | (535,274 | ) | ||
| Loss per Share - Basic and Diluted | $ | (0.03 | ) | $ | (0.07 | ) | ||
| Weighted Average Shares Outstanding - Basic and Diluted | 23,025,035 | 8,000,000 | ||||||
The accompanying notes are an integral part of these financial statements.
F-4
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
| Common Stock | Additional Paid-in | Stock Subscriptions Received in | Stock Subscriptions | Accumulated | Total Stockholders’ Equity | |||||||||||||||||||||||
| Shares | Amount | Capital | Advance | Receivable | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance - January 1, 2018 | 8,000,000 | $ | 800 | $ | 4,312 | $ | - | $ | - | $ | (53,912 | ) | $ | (48,800 | ) | |||||||||||||
| Stock subscriptions received in advance | - | - | - | 690,500 | - | - | 690,500 | |||||||||||||||||||||
| Net loss | - | - | - | - | - | (535,274 | ) | (535,274 | ) | |||||||||||||||||||
| Balance - December 31, 2018 | 8,000,000 | 800 | 4,312 | 690,500 | - | (589,186 | ) | 106,426 | ||||||||||||||||||||
| Common stock issued as compensation to officer | 12,000,000 | 1,200 | - | - | - | - | 1,200 | |||||||||||||||||||||
| Common stock issued for stock subscriptions | 5,611,264 | 561 | 1,921,690 | (690,500 | ) | - | - | 1,231,751 | ||||||||||||||||||||
| Common stock subscriptions receivable | 1,000,000 | 100 | 499,900 | - | (130,000 | ) | - | 370,000 | ||||||||||||||||||||
| Net loss | - | - | - | - | - | (782,831 | ) | (782,831 | ) | |||||||||||||||||||
| Balance - December 31, 2019 | 26,611,264 | $ | 2,661 | $ | 2,425,902 | $ | - | $ | (130,000 | ) | $ | (1,372,017 | ) | $ | 926,546 | |||||||||||||
The accompanying notes are an integral part of these financial statements.
F-5
STATEMENTS OF CASH FLOWS
| For the Year Ended | ||||||||
December 31, 2019 | December 31, 2018 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (782,831 | ) | $ | (535,274 | ) | ||
| Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||
| Common stock issued for services | 1,200 | - | ||||||
| Changes in Operating Assets and Liabilities: | ||||||||
| (Increase) in prepaid expense | (666,800 | ) | (350,480 | ) | ||||
| Decrease (increase) in rent deposits | 136 | (25,136 | ) | |||||
| (Decrease) increase in accrued liabilities | (60,136 | ) | 112,509 | |||||
| Increase in accrued payroll of officer | 213,100 | 54,560 | ||||||
| (Decrease) increase in deferred rent | (7,960 | ) | 7,960 | |||||
| Net Cash Used in Operating Activities | (1,303,291 | ) | (735,861 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Net (payments to) proceeds from officer | (400 | ) | 400 | |||||
| (Repayments) proceeds on loan payable | (55,000 | ) | 55,000 | |||||
| Proceeds from stock subscriptions receivable | 230,000 | - | ||||||
| Proceeds from issuance of common stock | 1,371,752 | - | ||||||
| Proceeds from stock subscriptions received in advance | - | 690,500 | ||||||
| Net Cash Provided by Financing Activities | 1,546,352 | 745,900 | ||||||
| Net Increase in Cash | 243,061 | 10,039 | ||||||
| Cash - Beginning of the Period | 10,039 | - | ||||||
| Cash - End of the Period | $ | 253,100 | $ | 10,039 | ||||
| Supplemental Disclosures of Cash Flows | ||||||||
| Cash paid for Interest | $ | - | $ | - | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Supplemental Disclosures of Non-Cash Investing and Financing Activities: | ||||||||
| Common stock issued for stock subscriptions received in advance | $ | 690,500 | $ | - | ||||
| Common stock issued for stock subscriptions receivable | $ | 360,000 | $ | - | ||||
| Accrued compensation of officer | $ | - | $ | 105,800 | ||||
The accompanying notes are an integral part of these financial statements.
F-6
MONETIVA INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 – NATURE OF OPERATIONS, BASIS OF PRESENTATION AND GOING CONCERN
Monetiva Inc. (formerly known as American Standard Wallet, Inc. and Lark Street Acquisition Corporation, or “Monetiva” or the “Company”), a Delaware corporation, was incorporated on July 22, 2016 under the laws of the state of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. The Company has been in the developmental stage since inception and its operations to date have been limited to issuing shares to its original shareholders and investors.
As of March 25, 2020, the Company has a total of 26,644,598 shares of common stock issued and outstanding. Of all shares issued and outstanding, a total of 20,000,000 common shares have been issued to the Company’s Board of Director and Founder of the Company, representing approximately 75.06% of the total shares issued and outstanding as of the date of this Report.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company. The financial statements and accompanying notes are the representations of the Company’s management, who is responsible for their integrity and objectivity. In the opinion of the Company’s management, the financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.
Effective January 1, 2019, the Company adopted the requirements of Accounting Standards Update (“ASU”) ASU, No. 2016-02, Leases, as discussed in NOTE 2 and NOTE 7.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the valuation of accounts payable, accrued liabilities and payable to related party. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
F-7
Going Concern
The Company demonstrates adverse conditions that raise substantial doubt about the Company’s ability to continue as a going concern. The Company has not yet generated any revenue and has suffered operating losses since July 22, 2016 (Inception Date) to date and allow it to continue as a going concern. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary financing to continue operations, and the attainment of profitable operations. The Company incurred a net loss of $782,831 for the year ended December 31, 2019, used net cash flows in operating activities of $1,303,291, and has an accumulated deficit of $1,372,017 as of December 31, 2019. These factors, among others raise a substantial doubt regarding the Company’s ability to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations. The accompanying financial statements do not include any adjustments to reflect the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following summary of significant accounting policies of the Company is presented to assist in the understanding of the Company’s financial statements. These accounting policies conform to GAAP in all material respects and have been consistently applied in preparing the accompanying financial statements.
Except for the accounting policies for leases that were updated, as set forth below, as a result of adopting ASU No. 2016-02, there have been no changes to the Company’s significant accounting policies that have had a material impact on the Company’s financial statements and related notes.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. The Company had a cash balance of $253,100 and $10,039 as of December 31, 2019 and 2018, respectively.
Earnings (Loss) Per Common Share
The Company computes earnings (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible note and preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of December 31, 2019 and 2018, there were no convertible notes, options or warrants available for conversion that if exercised, may dilute future earnings per share.
Leases
The Company has operating leases for its offices. Management determines if an arrangement is a lease at inception of the contract and whether a contract is or contains a lease by determining whether it conveys the right to control the use of the identified asset for a period of time. If the contract provides the Company the right to substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset, the Company consider it to be, or contain, a lease. The Company records a right-of-use asset and a corresponding lease liability based on the present value of the minimum lease payments. The lease term used in the calculation of right-of-use assets and lease liabilities include renewal and termination options that are reasonably certain to be exercised. Leases with an initial term of twelve months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the lease term. Our leases do not provide an implicit borrowing rate, and we estimate the Company’s incremental borrowing rate to discount the lease payments based on information available at lease commencement.
Fair value of Financial Instruments and Fair Value Measurements
ASC 820, “Fair Value Measurements and Disclosures”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
F-8
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Company’s financial instruments consist principally of cash, rent deposits and accrued liabilities. The Company believes that the recorded values of all the financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes”. The asset and liability method provide that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
The Company follows the provisions of ASC 740-10, “Accounting for Uncertain Income Tax Positions.” When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
Concentration of Credit Risk
The Company maintains its cash in bank and financial institution deposits with balance in excess of federally insured limits of $250,000 insured by the Federal Deposit Insurance Corporation (“FDIC”).The Company has not experienced any losses in such accounts. The amount exceeding FDIC insured limits was $3,100 and nil at December 31, 2019 and 2018, respectively.
Recent Accounting Pronouncements
New Accounting Pronouncements Effective January 1, 2019
Leases
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The updated guidance requires lessees to recognize lease assets and lease liabilities for most operating leases. In addition, the updated guidance requires that lessors separate lease and non-lease components in a contract in accordance with the new revenue guidance in ASC 606. The updated guidance is effective for interim and annual periods beginning after December 15, 2018.
The Company adopted the new standard on January 1, 2019 using the modified retrospective approach. The Company has elected to apply the transition method that allows companies to continue applying the guidance under the lease standard in effect at that time in the comparative periods presented in the financial statements and recognize a cumulative-effect adjustment to the opening balance of retained earnings on the date of adoption. The Company also elected the “package of practical expedients”, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs.
Results for reporting periods beginning after January 1, 2019 are presented under the new standard, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. Upon adoption of the new lease standard, on January 1, 2019, the Company capitalized right-of-use (“ROU”) assets of $124,524 and $132,485 of lease liabilities, within the Company’s balance sheets upon adoption. Additionally, the Company reversed its deferred rent liability of $7,960, which upon adoption became a component of the right-of-use asset. The adoption of this standard did not have an impact on the Company’s statement of operations or cash flows and did not result in a cumulative catch-up adjustment to the opening balance of retained earnings.
There were other updates recently issued accounting pronouncement. The Company’s management does not believe that other than disclosed above, accounting pronouncements that recently issued but not yet adopted will have a material impact on its financial position, results of operations or cash flows.
F-9
NOTE 3 – PREPAID EXPENSES
The Company has made prepayments to Endless One Global (“E1G”) with regard to E1G’s service in providing data processing, transaction processing and related services for the prepaid debit accounts created for the Company’s customers. As of December 31, 2019 and 2018, the prepayments to E1G were $959,780 and $350,480 (see NOTE 8 Service Agreement), and prepaid rent was $57,500 and $0, respectively. The Company expects to obtain BINs from the banks by September 30, 2020 and start its business operations within 30 to 45 days thereafter.
NOTE 4 – ACCRUED LIABILITIES
The Company recorded accrued liabilities primarily consisting of consulting and professional fees, rent, payroll taxes and franchise taxes of $77,474 and $137,609 as of December 31, 2019 and 2018, respectively.
NOTE 5 – ACCRUED PAYROLL - OFFICER
The Company has recorded accrued payroll liability to its Chief Executive officer (“Officer”) of $291,360 and $78,260 as of December 31, 2019 and 2018, respectively. During the year ended December 31, 2019, the Officer received 12,000,000 shares of common stock valued at $1,200 as bonus and $3,500 in cash compensation as compared to $0 for the same comparable period in 2018. The Company has recorded $217,800 and $198,000 as payroll expense of the Officer for the years ended December 31, 2019 and 2018, respectively. (See NOTE 8).
NOTE 6 – LOAN PAYABLE
On December 11, 2018, the Company received from a stockholder $55,000 in cash, a short-term loan bearing no interest, unsecured, and payable on demand but no later than February 28, 2019. The Company paid back the loan to the stockholder in two payments of $25,000 and $30,000 on February 4, 2019 and February 20, 2019, respectively. The Company recorded the loan payable of $0 and $55,000 as a current liability in the accompanying financial statements at December 31, 2019 and 2018, respectively.
F-10
NOTE 7 – LEASES
On February 9, 2018, the Company executed a non-cancellable operating lease for its principal office with the lease commencing March 1, 2018 for a period of 21 months maturing on November 30, 2019. The Company paid a security deposit of $25,136 at the inception of the lease. The base rent of the lease was $12,202 for the first twelve months, increasing to $12,568 from the month thirteen to month twenty-one. The lease had a provision for rent abatement for only one month - April 2018. The Company has recorded rent expense of $129,554 and $117,776 for this non-cancellable lease for its principal office for the year ended December 31, 2019 and 2018, respectively.
The Company executed a month-to-month cancellable operating lease, leasing office space in an executive suite, commencing on January 1, 2019 for $169 per month for the nine months and increasing to $203 for the remaining three months ended December 31, 2019. The Company recorded rent expense of $2,130 and $0 for the year ended December 31, 2019 and 2018, respectively.
On May 24, 2019, the Company executed a month-to-month rental agreement to lease furnished premises. The lease term commenced June 1, 2019 for a one-year term with a monthly rent of $11,500 per month from June 1, 2019 to May 31, 2020. The landlord required a security deposit of $15,000 on the commencement date of the lease, and an additional $10,000 security deposit on November 1, 2019. On May 30, 2019, the Company paid to the landlord security deposit of $15,000 and prepaid the rent of $69,000 for the six months ended November 30, 2019. On October 1, 2019, pursuant to the terms of the lease agreement, the Company paid to the landlord an additional security deposit of $10,000 and prepaid rent of $69,000 for the six months term starting December 1, 2019 to May 31, 2020. The Company recorded a rent expense of $80,500 for the year ended December 31, 2019. In addition, the Company recorded a rent deposit of $25,000 and prepaid rent of $57,500 as of December 31, 2019.
The Company has recorded total rent expense of $212,184 and $117,776 for all its leases for the years ended December 31, 2019 and 2018, respectively.
Supplemental Information for Comparative Period
As of December 31, 2018, total future minimum annual lease payments under operating leases were as follows:
| For the year ending December 31, | Amount | |||
| 2019 | $ | 137,514 | ||
| Total | $ | 137,514 | ||
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NOTE 8 – COMMITMENTS AND CONTINGENCIES
Employment Agreement with Officer
On November 1, 2017, the Company entered into an employment agreement with its Officer for a one-year term, which shall be automatically renewed for successive one-year periods unless either party gives ninety (90) calendar days written notice of nonrenewal prior to the expiration of the then-current term. The Company granted 12,000,000 shares of its common stock to the Officer as a sign-on bonus valued at $1,200, and agreed to pay an annual base salary of $180,000 provided that the Officer’s base salary may be reduced to the extent that Officer elects to defer any portion thereof under the terms of any deferred compensation or savings plan maintained by the Company. In addition to the eligibility for consideration of merit-based increases in the discretion of the Board of Directors, Officer’s base salary will be increased effective January 1, of each year during the term commencing January 1, 2018 by ten percent (10%) (See NOTE 5).
Service Agreement
On January 15, 2018, the Company entered into an agreement with E1G whereby, E1G agreed to provide data processing, transaction processing and related services for the prepaid debit accounts created for the Company’s customers for a period of five years. The agreement required a one-time upfront fee of $250,000 for each of the three (3) countries - USA, Mexico and India, for a total fee of $750,000 to initiate the process to establish three (3) Business Identification Numbers (“BINs”). Thereafter, the term will automatically be renewed for one (1) year period unless terminated by either party upon providing a written notice. On or about September 30, 2019, the Company entered into an oral agreement with E1G to provide data processing, transaction processing and related services for the prepaid debit accounts created for the Company’s customers in four additional countries China, Pakistan, Philippines and United Arab Emirates. All other terms and conditions to remain the same as per the January 15, 2018 agreement with E1G. The Company will pay E1G the processing fees as forth in the Agreement, any special fees, new products and technologies introduced by E1G (See NOTE 3).
Legal Costs and Contingencies
In the normal course of business, the Company incurs costs to hire and retain external legal counsel to advise it on regulatory, litigation and other matters. The Company expenses these costs as the related services are received.
If a loss is considered probable and the amount can be reasonable estimated, the Company recognizes an expense for the estimated loss. If the Company has the potential to recover a portion of the estimated loss from a third party, the Company makes a separate assessment of recoverability and reduces the estimated loss if recovery is also deemed probable. The Company was not aware of any loss contingencies as of December 31, 2019 and 2018, respectively.
NOTE 9 – STOCKHOLDERS’ EQUITY
The Company’s capitalization at December 31, 2019 was 100,000,000 authorized common shares with a par value of $0.0001 per share, and 20,000,000 authorized preferred shares with a par value of $0.0001 per share.
Common Stock
On January 14, 2019, the Company issued 12,000,000 shares of its common stock to its Officer as a sign-on bonus.
On January 14, 2019, the Company issued 1,616,000 shares of its common stock to investors and business promotors who had subscribed for the Company’s common stock during the year ended December 31, 2018.
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On January 14, 2019, the Company issued 1,000,000 shares of its common stock to an investor who had subscribed for the Company’s common stock on September 24, 2018 for the purchase price of $0.50 per share. The Company has received from the subscriber $370,000 in cash consideration as of December 31, 2019 and $140,000 as stock subscriptions received in advance as of December 31, 2018. As a result, the Company has recorded $130,000 and $0 as subscriptions receivable as of December 31, 2019 and December 31, 2018, respectively.
On February 25, 2019, the Company issued 50,000 shares of its common stock to two investors who had subscribed for the Company’s common stock in November 2018.
On February 27, 2019, an investor executed a stock subscription agreement to purchase 5,264 shares of common stock of the Company at $1.90 per share. The investor paid $10,002 to the Company on February 27, 2019. On October 10, 2019, the Company issued to the investor 5,264 shares of common stock for the stock subscriptions.
On March 14, 2019, a former stockholder executed a stock subscription agreement to purchase 3,155,000 shares of common stock for $0.25 per share. The Company received a cash consideration of $788,750 from the shareholder between March 14, 2019 and June 17, 2019. On October 10, 2019, the Company issued 2,030,000 shares of common stock to the stockholder and the remaining 1,125,000 shares of common stock were distributed between the seventeen (17) family members pursuant to the stockholder’s instructions.
On March 20, 2019, an investor executed a stock subscription agreement to purchase 50,000 shares of common stock of the Company at $2.00 per share. On March 27, 2019, the subscriber paid $100,000 to the Company for the stock subscriptions. On October 10, 2019, the Company issued to the investor 50,000 shares of common stock for the stock subscriptions.
On April 3, 2019, an investor executed a stock subscription agreement to purchase 8,000 shares of common stock of the Company at $2.00 per share. The investor paid $16,000 to the Company on April 3, 2019. The Company issued the 8,000 shares of common stock to the investor on October 10, 2019.
On April 9, 2019, an investor advanced the Company $4,000 towards the purchase of 16,000 shares of common stock. The Company has recorded $4,000 as stock subscriptions received in advance as of June 30, 2019. On October 10, 2019, the Company issued to the stockholder 16,000 shares of common stock for these stock subscriptions.
On May 16, 2019, an investor executed a stock subscription agreement to purchase 200,000 shares of common stock of the Company at $0.50 per share. The Company received cash consideration of $100,000 from the investor on May 16, 2019. The Company issued the 200,000 shares of common stock to the investor on October 10, 2019.
On June 14, 2019, an investor executed a stock subscription agreement to purchase 5,000 shares of common stock of the Company at $2.00 per share. The Company received the cash consideration of $10,000 from an investor on July 10, 2019. On October 10, 2019, the Company issued to the investor 5,000 shares of its common stock for stock subscriptions.
On June 17, 2019, an investor executed a stock subscription agreement to purchase 240,000 shares of common stock of the Company at $0.25 per share. The subscriber had paid $60,000 to the Company on July 16, 2019 for the purchase of the common stock. The Company issued 240,000 shares of common stock to the investor on October 10, 2019.
On June 18, 2019, an investor executed a stock subscription agreement to purchase 200,000 shares of common stock of the Company at $1.00 per share. The subscriber paid $200,000 to the Company on July 16, 2019 for the purchase of the common stock. The Company issued 200,000 shares of common stock to the investor on July 24, 2019.
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On August 14, 2019, an investor executed a stock subscription agreement to purchase 8,000 shares of the Company’s common stock for $2.00 per share. The Company received a cash consideration of $16,000 from the investor on August 16, 2019. On October 10, 2019, the Company issued to the investor 8,000 shares of its common stock for stock subscriptions.
On September 17, 2019, two investors executed two separate subscription agreements to purchase 17,500 shares of the Company’s common stock at $2.00 per share. The Company received cash consideration of $35,000 from the investors on September 27, 2019. On October 24, 2019, the Company issued to the investors 17,500 shares of its common stock for stock subscriptions.
On September 19, 2019, an investor executed a stock subscription agreement to purchase 28,000 shares of the Company’s common stock at $0.25 per share. The Company received $7,000 for the stock subscriptions from the investor on August 30, 2019. On October 10, 2019, the Company issued to the investor 28,000 shares of common stock for these stock subscriptions.
On September 25, 2019, an investor executed a stock subscription agreement to purchase 12,500 shares of the Company’s common stock at $2.00 per share. The Company received cash consideration of $25,000 from the investor on September 27, 2019. On October 24, 2019, the Company issued to the investor 12,500 shares of its common stock for stock subscriptions.
As a result of all common stock issuances, the total issued and outstanding shares of common stock were 26,611,264 and 8,000,000 shares, at December 31, 2019 and 2018, respectively.
Preferred stock
No preferred stock was issued and outstanding as of December 31, 2019 and 2018, respectively.
NOTE 10 – INCOME TAXES
Income tax expense for the year ended December 31, 2019 and 2018 is summarized as follows.
| December 31, 2019 | December 31, 2018 | |||||||
| Deferred: | ||||||||
| Federal | $ | (128,682 | ) | $ | (87,011 | ) | ||
| State | — | — | ||||||
| Change in valuation allowance | 128,682 | 87,011 | ||||||
| Income tax expense (benefit) | $ | — | $ | — | ||||
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The following is a reconciliation of the provision for income taxes at the U.S. federal income tax rate to the income taxes reflected in the Statement of Operations:
| December 31, 2019 | December 31, 2018 | |||||||
| Tax at statutory tax rate | 21 | % | 21 | % | ||||
| State taxes | — | — | ||||||
| Other permanent items | — | -5 | % | |||||
| Valuation allowance | -21 | % | -16 | % | ||||
| Income tax expense | — | — | ||||||
The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at December 31, 2019 and 2018 are as follows:
| December 31, 2019 | December 31, 2018 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carry forward | $ | 227,015 | $ | 98,333 | ||||
| Total gross deferred tax assets | 227,015 | 98,333 | ||||||
| Less: valuation allowance | (227,015 | ) | (98,333 | ) | ||||
| Net deferred tax assets | $ | — | $ | — | ||||
Deferred income taxes are provided for the tax effects of transactions reported in the financial statements and consist of deferred taxes related primarily to differences between the bases of certain assets and liabilities for financial and tax reporting. The deferred taxes represent the future tax return consequences of those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled.
On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted into law and the new legislation contains several key tax provisions that impact the Company, including a reduction of the corporate income tax rate to 21% effective for tax years beginning after December 31, 2017 and the Transition Tax, among others. The staff of the US Securities and Exchange Commission (SEC) has recognized the complexity of reflecting the impacts of the Tax Reform Act, and issued guidance in Staff Accounting Bulletin 118 (“SAB 118”) in December 2017, which clarifies accounting for income taxes under ASC 740 if information is not yet available or complete and provides for up to a one year period in which to complete the required analyses and accounting (the measurement period). Adjustments to incomplete and unknown amounts will be recorded and disclosed prospectively during the measurement period. The Company has completed the required analysis and accounting for substantially all the effects. Except for the reduction of the income tax rate from 34% to 21%, there were no material impact on the Company’s financial statements.
At December 31, 2019 and 2018, the Company had accumulated net operating losses of approximately $1,073,000 and $460,000, respectively, for U.S. federal and Delaware income tax purposes available to offset future taxable incomes. The net operating losses generated in tax years prior to December 31, 2017, can be carry forward for twenty years, whereas the net operating losses generated after December 31, 2017 can be carry forward indefinitely. Management determined that it was unlikely that the Company’s deferred tax assets would be realized and have provided for a full valuation allowance associated with the net deferred tax assets.
As of December 31, 2019 and 2018, the Company’s deferred income tax assets and valuation allowance were $227,015 and $98,333, respectively.
In the ordinary course of business, the Company’s income tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessment by these taxing authorities. Accordingly, the Company believes that it is more likely than not that it will realize the benefits of tax positions it has taken in its tax returns or for the amount of any tax benefit that exceeds the cumulative probability threshold in accordance with FASB ASC 740. Differences between the estimated and actual amounts determined upon ultimate resolution, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial position. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of December 31, 2019, tax years 2018, 2017 and 2016 remain open for examination by the Internal Revenue Service and the Delaware Division of Revenue. The Company has received no notice of audit from the Internal Revenue Service or the Delaware Division of Revenue for any of the open tax years.
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NOTE 11 – SUBSEQUENT EVENTS
Management has evaluated subsequent events through March 25, 2020, the date the financial statements were available to be issued, noting the following items would impact the accounting for events or transactions in the current period or require additional disclosure.
On January 5, 2020, an investor executed a stock subscription agreement to purchase 10,000 shares of common stock of the Company at $2.00 per share. The investor paid $20,000 to the Company in three instalments between January 21, 2020 and February 20, 2020. The Company issued 10,000 shares of common stock to the investor on March 18, 2020.
On January 20, 2020, an investor executed a stock subscription agreement to purchase 3,334 shares of common stock of the Company at $3.00 per share. The investor paid $10,000 to the Company on February 18, 2020. The Company issued 3,334 shares of common stock to the investor on March 18, 2020.
On February 20, 2020, an investor executed a stock subscription agreement to purchase 20,000 shares of common stock of the Company at $2.00 per share. The investor paid $40,000 to the Company on February 20, 2020. The Company issued the 20,000 shares of common stock to the investor on March 18, 2020.
Service Agreement with E1G
Since December 31, 2019 to March 25, 2020, the Company has paid to E1G an additional cash consideration of $65,000 as the processing fees to initiate and establish BINs in selected countries.
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
Pursuant to Rules adopted by the Securities and Exchange Commission, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rules. This evaluation was done as of the end of the fiscal year by and under the supervision of the Company’s principal executive officer (who is also the principal financial officer and sole director). There have been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of the evaluation. There is only one officer and director of the Company, and as such is solely responsible for evaluating the Company’s disclosure controls and procedures. Based upon that evaluation, the principal executive officer believes that the Company’s disclosure controls and procedures are not effective due to the following material weaknesses. We lacked the ability to have adequate segregation of duties in the financial statement preparation process. Further the Company did not maintain adequate documentation for review and supporting matters impacting financial reporting in gathering, analyzing and disclosing information needed to ensure that the information required to be disclosed by the Company in its periodic reports is recorded, summarized and processed timely. The principal executive officer is directly involved in the day-to-day operations of the Company.
Plan for Remediation of Material Weaknesses
Since these entity level controls have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.
We believe that, since the date that we were made aware of our material weakness, we have improved our internal control over financial reporting by taking certain corrective steps that we believe minimize the likelihood of a recurrence. We have designed a disclosure controls and procedures regime pursuant to which our management has, among other things:
(a) identified the definition, objectives, application and scope of our internal control over financial reporting;
(b) delineated the duties of each member of the group responsible for maintaining the adequacy of our internal control over financial reporting. This group consists of:
(i) our Chief Executive Officer; and
(ii) an independent consultant who was engaged to prepare and assure compliance with both our internal control over financial reporting as well as our disclosure controls and procedures and review our disclosure controls and procedures on a regular basis, subject to our management’s supervision.
We continue to work with our structure in which we have an independent consultant, in order to continue implementation of required key controls, the necessary steps required for procedures to ensure the appropriate communication and review of inputs necessary for the financial statement closing process, as well as for the appropriate presentation of disclosures within the financial statements. The remediation steps taken are subject to the Chief Executive Officer’s oversight. While management believes there have been significant improvements of internal controls over financial reporting during the year ended December 31, 2019, management anticipates that further continuing efforts will be needed to effectively remediate the material deficiencies relating to segregation of duties and maintaining adequate supporting documentation to substantiate the information reported in the financial statements which existed as of December 31, 2019, and to assure that complex transactions are properly recorded as the business continues to grow. Our management has been actively engaged in planning for, designing and implementing the corrective steps described above to enhance the effectiveness of our disclosure controls and procedures as well as our internal control over financial reporting. Our management is committed to achieving and maintaining a strong control environment, high ethical standards, and financial reporting integrity, and will take further steps to ensure that personnel are adequate in terms of sophistication and quantity to adequately assure that the financial reporting process is efficient and operated with the sufficient level of integrity to meet and surpass all regulatory standards.
While management is implementing corrective steps to remediate its internal control deficiencies, we cannot assure you that they will be sufficient enough to be free of a material weakness. If we should in the future conclude that our internal control over financial reporting suffers from a material weakness, we will be required to expend additional resources to improve it. Any additional instances of material deficiencies could require a restatement of our financial statements. If such restatements are required, there could be a material adverse effect on our investors’ confidence that our financial statements fairly present our financial condition and results of operations, which in turn could materially and adversely affect the market price of our common stock.
Changes in Internal Control over Financial Reporting
Other than the remediation activities undertaken by us as disclosed above, there have been no changes in our internal control over financial reporting during the 2019 fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
None.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The Directors and Officers of the Company for the period covered by this Report were:
| Name | Age | Positions and Offices Held | Term | |||
| Pierre Sawaya* | 55 | President, Secretary, Director and Chairman of the Board | November 1, 2017 – Present |
| * | Mr. Sawaya is the sole officer and director of the Company and its majority shareholder. |
There are no agreements or understandings for Mr. Sawaya to resign as either an officer or Director at the request of another person and he is not acting on behalf of nor will act at the direction of any other person.
Set forth below are the names of the directors and officers of the Company, all positions and offices with the Company held, the period during which they have served as such, and the business experience during at least the last five years:
Pierre Sawaya. Mr. Sawaya has served as the President, Secretary, sole Director and Chairman of the Board of the Company since November 1, 2017. From November 2016 until May 2017 Mr. Sawaya served as the CEO of Global CashSpot, which was a start-up company in the prepaid card business. Mr. Sawaya founded EndlessOne Global Inc. in 2011 and served as its CEO until October 2016. EndlessOne Global Inc. provides debit and prepaid cards with comprehensive services and upfront reward packages, and has become a leading international payment card issuer, transaction processor, program manager and financial software technology company. EndlessOne Global is a turnkey provider of financial products and services, focusing on money remittance, prepaid and financial instruments and management tools for those underserved by traditional bank channels.
Code of Ethics.
During the period of this Report, the Company did not have in place an adopted Code of Ethics pursuant to rules described in Regulation S-K. During the period of this Report, the Company has had only one person who was the sole shareholder and who served as the only director and officer. During the period of this report, the Company had minimal operations or business and did not generate any revenues. During the period of this Report, the adoption of an Ethical Code would not serve the primary purpose of such a code to provide a manner of conduct as the development, execution and enforcement of such a code would be by the same persons and only persons to whom such code applied. At such time as the Company commences more significant business operations, the current officers and directors will recommend that such a code be adopted. The Company does not maintain an Internet website on which to post a code of ethics.
Corporate Governance
For reasons similar to those described above, the Company does not have a nominating, compensation committee, or audit committee of the board of directors. During the period of this Report, the Company has had only one person who was the sole shareholder and who served as the only director and officer. During the period of this report, the Company had no operations or business and did not receive any revenues or investment capital. At such time as the Company commences more significant business operations and/or has additional shareholders and a larger board of directors, the Company will propose creating committees of its board of directors, including a nominating, compensation, and an audit committee. Because there has been only one shareholder of the Company, there was no established process by which shareholders to the Company could nominate members to the Company’s board of directors. Similarly, however, at such time as the Company has more shareholders and an expanded board of directors, the Company may review and implement, as necessary, procedures for shareholder nomination of members to the Company’s board of directors.
Beneficial Ownership Reporting Compliance – Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s executive officers and directors, and persons who beneficially own more than 10% of the Company’s stock, to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission. Executive officers, directors and greater than 10% beneficial owners are required by applicable regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely upon a review of the copies of the forms furnished to the Company and information involving securities transactions of which the Company is aware, certain of the Company’s officers, directors and holders of more than 10% of the outstanding common stock of the Company failed to timely file reports required by Section 16(a) of the Exchange Act. To the Company’s knowledge, Mr. Sawaya failed to file a form 4 within the required time frame following the issuance to him of 12,000,000 shares of Company’s common stock in January 2019 as a bonus.
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Item 11. Executive Compensation.
Pierre Sawaya Employment Agreement
The Company entered into an employment agreement with its Chief Executive Officer Mr. Pierre Sawaya on November 1, 2017 as an inducement for Mr. Sawaya’s time and services to be contributed to the Company. The agreement provides for an initial term of one year, which automatically renews for successive one-year periods unless either party provides 90 days prior written notice of non-renewal. The agreement entitled Mr. Sawaya to a sign-on bonus of 12,000,000 shares of the Company’s common stock; which were awarded concurrently with execution of the Contract on November 1, 2017, but which were not issued until January 14, 2019. The agreement provides for (i) an annual salary equal of $180,000, subject to applicable tax withholding and payable in accordance with the Company’s normal payroll practices and provided that payment of amounts of the salary may be deferred at the election of Mr. Sawaya, (ii) four (4) weeks paid vacation, (iii) incentive payments, benefits and long term incentives to the extent the Company maintains such plans.
The Company may terminate the agreement without cause at any time upon ninety (90) days prior written notice or for cause, subject to a thirty (30) day cure period. If the agreement is terminated without cause, then any unvested incentive awards, stock options restricted stock, phantom shares or similar awards held by Mr. Sawaya shall fully vest. If Mr. Sawaya terminates the agreement for good reason or the agreement terminates as a result of death or complete disability, then Mr. Sawaya or his heirs will be entitled to the same treatment as if he was terminated without cause. Mr. Sawaya may terminate the agreement at any time upon ninety (90) days prior written notice.
If following a change of control, the agreement is terminated within twenty-four months thereafter, then Mr. Sawaya will be entitled to (a) a cash lump sum payment equal to four times (4x) his then base salary, (b) accelerated vesting of all outstanding options to purchase common stock of the Company, and continuation of comparable medical benefits for a period of eighteen months.
Except for Mr. Sawaya, during the period covered by this Report, no other officer received any compensation for services rendered to the Company, nor did they receive any such compensation in the past. During the period covered by this Report, no director received any compensation for services rendered to the Company, nor did they receive any such compensation in the past. Additionally, except for Mr. Sawaya, no other officer and/or director has or is accruing any compensation pursuant to any agreement with the Company.
No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company for the benefit of its employees.
Except for Mr. Sawaya, the Company has had no other employment contracts with its executives or employees but may enter into such contracts in the future.
During the period covered by this Report, the Company did not have a compensation committee due to the limited number of directors and that the shareholders were the same persons as the executive officers and directors.
The Company paid cash compensation and granted stock awards to its executives during the years ended December 31, 2018 and 2017 as follows:
| Name and principal position | Year | Salary ($) |
Stock Award ($) |
Nonqualified deferred compensation earnings ($) |
All other compensation | Total Cash Compensation ($) | |||||||||||||||||
| Pierre Sawaya, President, Secretary and |
2019 | 217,800 | (1) | --- | — | — | — | ||||||||||||||||
| Chairman of the Board | 2018 | 198,000 | (1) | 1,200 | (2) | — | — | — | |||||||||||||||
| (1) | All compensation in the form of salary owed pursuant to the employment agreement has been unpaid and is being deferred by Mr. Sawaya. The Company intends to defer payment of executive’s salary compensation until the Company has sufficient amounts to fund both the Company’s operations and executive’s salary. |
| (2) | Mr. Sawaya’s employment agreement entered into on November 1, 2017, awarded him 12,000,000 shares of the Company’s common stock, which was valued at $1,200. The shares were not issued until January 14, 2019. |
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Information with respect to beneficial ownership has been furnished for each director, executive officer or beneficial owner of more than 5% of Monetiva’s common stock. In computing the number of shares beneficially owned by a person listed below and the percentage ownership of such person, shares of common stock underlying options, warrants or convertible securities held by each such person that are exercisable or convertible within 60 days of December 31, 2019 are deemed outstanding for purposes of computing such person’s percentage ownership, but are not deemed outstanding for computing the percentage ownership of any other person. Beneficial ownership including the number and percentage of shares owned is determined in accordance with Rule 13d-3 and 13d-5 under the Securities Exchange Act of 1934 (the “Exchange Act”) and is generally determined by voting power and/or investment power with respect to securities. The percentage of beneficial ownership is based on 26,644,598 shares of common stock of the Company issued and outstanding as of March 25, 2020.
Except as otherwise noted below, and subject to applicable community property laws, the persons named have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Unless otherwise indicated, the address of the following stockholders is c/o Monetiva, Inc., 5000 Birch Street, West Tower, Suite 3000, Newport Beach, CA 92660.
| Name and Address of Beneficial Owners | Amount of Beneficial Ownership | Percent of Outstanding Stock | ||||||
| Pierre Sawaya, CEO, Secretary and Chairman | 20,000,000 | 75.06 | % | |||||
| All Executive Officers and Directors as a Group (1 person) | 20,000,000 | 75.06 | % | |||||
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The Company entered into an employment agreement with its Chief Executive Officer Mr. Pierre Sawaya on November 1, 2017 as an inducement for Mr. Sawaya’s time and services to be contributed to the Company. The agreement provides for an initial term of one year, which automatically renews for successive one-year periods unless either party provides 90 days prior written notice of non-renewal. The agreement entitled Mr. Sawaya to a sign-on bonus of 12,000,000 shares of the Company’s common stock; which were awarded concurrently with execution of the Contract on November 1, 2017, but which were not issued until January 14, 2019. The agreement provides for (i) an annual salary equal of $180,000, subject to applicable tax withholding and payable in accordance with the Company’s normal payroll practices and provided that payment of amounts of the salary may be deferred at the election of Mr. Sawaya, (ii) four (4) weeks paid vacation, (iii) incentive payments, benefits and long term incentives to the extent the Company maintains such plans.
On January 15, 2018, the Company entered into a Processing Service Agreement with E1G, which agreement was modified by oral agreement on September 30, 2019. Pursuant to the agreement, EndlessOne Global is to provide data processing, transaction processing and related services for the prepaid debit accounts created for the Company’s customers for a period of five years. The agreement required a one-time upfront fee of $250,000 for each of the three (3) countries - USA, Mexico and India, for a total fee of $750,000 to initiate the process to establish three (3) Business Identification Numbers (“BINs”). Thereafter, the term will automatically be renewed for one (1) year period unless terminated by either party upon providing a written notice. On or about September 30, 2019, the Company entered into an oral agreement with E1G to provide data processing, transaction processing and related services for the prepaid debit accounts created for the Company’s customers in four additional countries China, Pakistan, Philippines and United Arab Emirates. All other terms and conditions to remain the same as per the January 15, 2018 agreement with E1G. The Company will pay EndlessOne Global the processing fees as forth in the Agreement, as amended, including any special fees, and for any new products and technologies introduced by E1G. E1G is 100% owned by Najwa Karkaji, who is the spouse of Pierre Sawaya, the Company’s CEO and Chairman. The Company believes that the services provided to the Company by E1G are unique, and are being provided at their fair market value.
16
Item 14. Principal Accounting Fees and Services
Audit Fees
The aggregate fees incurred in 2019 and 2018 for professional services rendered by the independent registered public accounting firm for the audits of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-K and Form 10-Q reports and services normally provided in connection with statutory and regulatory filings or engagements were as follows:
| December 31, 2019 | December 31, 2018 | |||||||
| Audit Fees | $ | 15,500 | $ | 9,500 | ||||
| Audit Related Fees | - | - | ||||||
| Tax Fees | - | - | ||||||
| All Other Fees | $ | 15,500 | $ | 9,500 | ||||
The Company does not currently have an audit committee serving and as a result its board of directors performs the duties of an audit committee. The board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. The Company does not rely on pre- approval policies and procedures.
Item 15. Exhibits, Financial Statement Schedules.
(a) (1) Financial Statements. The financial statements filed as part of this report are listed in the index to financial statements at the beginning of this document.
(a) (2) Financial Statement Schedules. Financial statement schedules are omitted because of the absence of the conditions under which they are required or because the required information is included in the Financial Statements or the notes thereto.
(a) (3) Exhibits. The exhibits are either filed with this report or incorporated by reference into this report. Exhibit numbers. See (b) Exhibits, which follow.
(b) Exhibits.
(3) Articles of Incorporation and bylaws
| * | Incorporated by reference to our Form 10-12G, filed on August 9, 2016. |
(10) Material contracts and management compensation plans and arrangements:
Filed herewith, in addition to items, if any, specifically identified above:
| (31.1) | 302 Certification of Pierre Sawaya | |
| (32.1) | 906 Certification of Pierre Sawaya | |
| (101.INS) | XBRL Instance Document. | |
| (101.SCH) | XBRL Taxonomy Extension Schema Document. | |
| (101.CAL) | XBRL Taxonomy Extension Calculation Linkbase Document. | |
| (101.DEF) | XBRL Taxonomy Extension Definition Linkbase Document. | |
| (101.LAB) | XBRL Taxonomy Extension Label Linkbase Document. | |
| (101.PRE) | XBRL Taxonomy Extension Presentation Linkbase Document. |
No Form 10-K summary is being provided as a part of this document.
17
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.
| MONETIVA INC. | ||
| By: | /s/ Pierre Sawaya, | |
| Chief Executive Officer | ||
| Principal Executive Officer | ||
| Principal Financial Officer | ||
Dated: March 25, 2020
Pursuant to 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.
MONETIVA INC.
| NAME | OFFICE | DATE | ||
| /s/ Pierre Sawaya | Director | March 25, 2020 |
18
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302
I, Pierre Sawaya, certify that:
| 1. | I have reviewed this Form 10-K of Monetiva Inc. for the year ended December 31, 2019. |
| 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(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and 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, including its consolidated subsidiaries, 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 evaluations; 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 (the registrant's fourth fiscal quarter in the case of an annual report) that has 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(s) and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control 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. |
| Date: March 25, 2020 | /s/ Pierre Sawaya |
| Chief Executive Officer and | |
| Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO SECTION 906
Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, the undersigned officer of Monetiva Inc. (the “Company”), hereby certify to my knowledge that:
The Report on Form 10-K for the year ended December 31, 2019 of the Company fully complies, in all material respects, with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Report fairly represents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
| Date: March 25, 2020 | /s/ Pierre Sawaya |
| Chief Executive Officer | |
| Chief Financial Officer |