|8-K||2018-11-07||Amend Bylaw, Exhibits|
|8-K||2018-08-29||Control, Officers, Exhibits|
|DBV||Invesco DB G10 Currency Harvest Fund||24|
|C130||Ministry Partners Investment Company||0|
|ATK||Simply Good Foods||0|
|SIRE||Southwest Iowa Renewable Energy||0|
|Part I. Financial Information|
|Item 1 - Interim Financial Statements (Unaudited)|
|Note 1 - Organization and Basis of Presentation|
|Note 2 - Summary of Significant Accounting Policies|
|Note 3 - Going Concern|
|Note 4 - Share Capital|
|Note 5 - Loans - Related Party|
|Note 6 - Loans - Nonrelated Parties|
|Note 7 - Debt Forgiveness and Gain on Sale of Assets|
|Note 8 - Income Taxes|
|Note 9 - Subsequent Events|
|Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations|
|Item 3. - Quantitative and Qualitative Disclosures About Market Risk|
|Item 4. - Controls and Procedures|
|Part Ii: Other Information|
|Item 1 - Legal Proceedings|
|Item 1A - Risk Factors|
|Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds|
|Item 3 - Defaults Upon Senior Securities|
|Item 4 - Mine Safety Disclosures|
|Item 5 - Other Information|
|Balance Sheet||Income Statement||Cash Flow|
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended June 30, 2019
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from ___________ to__________
Commission file number 333-214549
NETPAY INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
2 HAMANOFIM STREET, HERZLIYA PITUACH, ISRAEL
(Address of principal executive offices)
Registrant’s telephone number, including area code: 972-3-612-6966
(Former name, former address and former fiscal year, if changed since last report)
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 [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
[ ] (Do not check if a smaller reporting company)
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 7(a)(2)(B) of the Securities Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The number of shares of the registrant’s common stock outstanding as of July 18, 2019 was 8,025,000 shares.
NETPAY INTERNATIONAL, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
PART I. FINANCIAL INFORMATION
Interim Financial Statements (unaudited)
Consolidated Balance Sheets of NetPay International, Inc. at June 30, 2019 (unaudited) and March 31, 2019 (Audited)
Consolidated Statement of Operations of NetPay International, Inc. for the Three Months Ended June 30, 2019 and 2018 (unaudited)
Consolidated Statement of Stockholders Equity (Deficit) of NetPay International, Inc. for the Three Months Ended June 30, 2019 and 2018 (unaudited)
Consolidated Statement of Cash Flows of NetPay International, Inc. for the Three Months Ended June 30, 2019 and 2018 (unaudited)
Notes To The Consolidated Financial Statements (unaudited)
Management’s Discussion and Analysis
Quantitative and Qualitative Disclosures about Market Risk
Controls and Procedures
PART II. OTHER INFORMATION
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults upon Senior Securities
Mine Safety Disclosures
Part I. Financial Information
Item 1 - Interim Financial Statements (Unaudited)
NETPAY INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
Total Current Assets
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Loans – non-related parties
Loan – related party
STOCKHOLDERS’ EQUITY (DEFICIT):
Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued and outstanding
Common stock, $0.001 par value; 100,000,000 shares authorized; 8,025,000 shares issued and outstanding as of June 30, 2019 and March 31, 2019
Additional paid in capital
Total NetPay International, Inc. stockholders’ equity (deficit)
Non-controlling interest in subsidiary
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
See notes to the consolidated financial statements.
NETPAY INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
For the three
June 30, 2019
For the three
June 30, 2018
Product development costs
Consulting and other administrative costs
Income/(loss) before provision for income taxes
Provision for income tax
Basic and diluted income/(loss) per share
Weighted average common shares outstanding - basic and diluted
See notes to the consolidated financial statements.
NETPAY INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED JUNE 30, 2018 AND THE THREE MONTHS ENDED JUNE 30, 2019
Balance - March 31, 2018 (audited)
Net income/(loss) for the three months
ended June 30, 2018 (unaudited)
Balance – June 30, 2018 (unaudited)
Balance - March 31, 2019 (audited)
Net income/(loss) for the three months
ended June 30, 2019 (unaudited)
Balance – June 30, 2019 (unaudited)
See notes to the consolidated financial statements.
NETPAY INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the three
June 30, 2019
For the three
June 30, 2018
CASH FLOW FROM OPERATING ACTIVITIES:
Depreciation and amortization expense
Adjustments to reconcile net loss to cash (used in) operating activities:
Change in prepaid expense
Change in accounts payable
Change in accrued expense
Net Cash Provided by (Used in) Operating Activities
CASH FLOW FROM INVESTING ACTIVITIES
CASH FLOW FROM FINANCING ACTIVITIES:
Loan proceeds from related party
Loan proceeds from nonrelated parties
Net Cash Provided by (Used In) Financing Activities
CHANGE IN CASH
CASH AT BEGINNING OF PERIOD
CASH AT END OF PERIOD
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:
See notes to the consolidated financial statements.
NETPAY INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2019
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
Organization - NetPay International, Inc. (formerly known as Allegro Beauty Products, Inc.) (the “Company”) was incorporated under the laws of the State of Nevada on March 31, 2016. The Company issued 5,500,000 shares of its common stock to its founder at inception in exchange for organizational services. The Company purchased a business plan, product/inventory, and proprietary formulas at no charge from its founder.
On August 29, 2018, the Company experienced a change in control (“Change in Control”). With the Change in Control certain liabilities of the Company were forgiven and/or paid for by our founder and former president and chief executive officer. Total liabilities at the time approximated $225,000. The board of directors nominated Mr. Alon Elbaz to the board on August 29, 2018. Concurrently our founder and former president and chief executive officer resigned from the board of directors and from all executive positions within the Company.
On August 29, 2018, Mr. Elbaz was appointed as Chief Executive Officer to the Company, and Ms. Limor Mamon was appointed as Chief Financial Officer to the Company. Both Mr. Elbaz and Ms. Mamon serve in the same capacity for the Company’s majority shareholder, Compunet Holdings AA Ltd., an international Israeli-based business. On September 17, 2018, the board of directors and a majority of our shareholders approved the name change from Allegro Beauty Products, Inc. to NetPay International, Inc. The effective date of the name change was November 7, 2018.
On December 5, 2018, the Company launched its Delaware subsidiary, NetPay (USA), Inc., to act as an independent sales organization (ISO) to seek opportunities related to the provision to merchants of merchant's credit card acquiring clearing, and other value-added services. The services provided by NetPay (USA), Inc. will be different than the payment facilitation business, which will be the core business of the Company. The Company owns ninety percent (90%) of NetPay (USA), with the remaining ten percent (10%) owned by two experienced executives in the credit card services arena.
Basis of Presentation – The financial statements are prepared using the accrual method of accounting. The Company elected a March 31st, year-end. The consolidated financial statements include the accounts of the Company and its majority-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) set forth in Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year.
The accompanying unaudited consolidated financial statements include the accounts of NetPay International, Inc. and its majority-owned subsidiary, after elimination of intercompany accounts and transactions. The Company consolidates its majority-owned subsidiary and investments in entities in which the Company has a controlling interest. For the consolidated majority-owned subsidiary in which the Company owns less than 100%, the Company recognizes a non-controlling interest for the ownership of the non-controlling owners. Non-controlling interests are immaterial for all of the periods presented, and are included in interest and other, net in the consolidated statement of operations, of which there are none for the periods presented.
The Company in the future may have certain non-majority-owned equity investments in non-publicly traded companies that are generally accounted for using the equity method of accounting. The equity method of accounting generally will be used when the Company has the ability to significantly influence the operating decisions of the business entity, or if the Company has a voting percentage of the corporation equal to or generally greater than 20% but less than 50%, and for non-majority-owned investments in partnerships where ownership is generally greater than 5%. The equity in earnings (losses) of equity method investees which are considered immaterial for periods presented, will be included in interest and other, net in the consolidated statements of operations of which there are none for the periods presented.
NETPAY INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2019
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
These financial statements should be read along with the Annual Report filed on Form 10-K of the Company for the period ended March 31, 2019 and notes thereto contained.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Cash Equivalents - For purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
b.Stock-based Compensation - The Company follows ASC 718-10, Stock Compensation, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company has not adopted a stock option plan and has not granted any stock options.
c.Use of Estimates and Assumptions - Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The Company adopted the provisions of ASC 260.
d. Earnings (Loss) per Share - The basic earnings (loss) per share is calculated by dividing the Company’s net income available to common shareholders by the weighted average number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company.
e.Property and Equipment Capitalization Policies - Property and equipment is stated at cost and depreciated over estimated useful life of the asset using the straight-line method. Amortization of leasehold improvements is computed on the straight-line method over the shorter of the lease term or estimated useful life of the asset. Maintenance and repairs are charged to operations as incurred. When assets are sold, or otherwise disposed of, cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations.
f.Income Taxes - Income taxes are provided in accordance with ASC 740, Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. No provision was made for Federal income tax.
g.Revenue Recognition - The Company will recognize revenue when products are fully delivered or services have been provided and collection is reasonably assured.
h.Impairment of Long-Lived Assets - The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.
NETPAY INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2019
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
i.Advertising - Advertising will be expensed in the period in which it is incurred. There has been no advertising expense in the reporting period presented.
j.Intangible Assets - Intangible assets with finite lives are amortized over their estimated useful life. The Company monitors conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization period. The Company tests its intangible assets with finite lives for potential impairment whenever management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable. The original estimate of an asset's useful life and the impact of an event or circumstance on either an asset's useful life or carrying value involve significant judgment.
k.Recently Issued Accounting Pronouncements - The Company reviewed recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial statements.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As reflected in the accompanying financial statements, the Company had negative working capital of $64,083 and an accumulated deficit of $95,309 at June 30, 2019. As of June 30, 2019, we have not generated any revenue and have no committed sources of capital or financing. These conditions raise substantial doubt about the Company's ability to continue as a going concern.
Management believes the actions presently being taken by the Company to implement a revised business plan and to generate revenues will provide the opportunity to continue as a going concern. While the Company believes in its revised business strategy, the Company will need to realize revenues and/or raise additional funds to continue as a going concern. There can be no assurance that the Company will be successful in either. The Company historically relied upon loans to finance its operations and growth. The Company believes that with the financial support and the backing of its majority shareholder, sufficient financing will be available to it. Nevertheless, failure to obtain additional financing could have a material and adverse effect upon the Company and its shareholders.
The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 - SHARE CAPITAL
The Company has 100,000,000 shares of common stock authorized; par value $0.001 per share. The Company has 10,000,000 shares of blank check preferred stock authorized; par value $0.001 per share. The blank check preferred stock may be designated into one or more series, from time to time, by the Company's Board of Directors by filing a certificate pursuant to NRS Chapter 78.
The Company issued 5,500,000 shares of its common stock to its founder for organizational services, which were valued at $5,500. The Company filed a registration statement that was declared effective by the Securities and Exchange Commission on June 27, 2017. The Company solicited investors for an investment of $55,000. The Company sold 2,750,000 shares of its common stock to 30 investors who paid $0.02 per share. 225,000 shares were returned to treasury by certain shareholders for no consideration during March 2018. The Company recognized a reduction in common stock of $225 and an increase of $225 to additional paid in capital.
With the Change in Control (see Note 1 – Organization and Basis of Presentation) our founder and former officer and director, settled certain outstanding debts of the Company resulting in forgiveness of that debt; the Company recognized a one-time increase to additional paid in capital of $1,200 for this related party transaction. This occurred on or about August 29, 2018.
At June 30, 2019, there are 8,025,000 shares of common stock issued and outstanding. There are no shares of blank check preferred stock issued or outstanding.
NETPAY INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2019
NOTE 5 - LOANS - RELATED PARTY
Through the three months ended June 30, 2019, the Company received approximately $18,000 from its majority shareholder to pay for operating expenses. The short-term funding is unsecured and bears no interest or repayment term.
With the Change in Control (see Note 1 – Organization and Basis of Presentation) our founder settled certain outstanding debts of the Company resulting in forgiveness of that debt; the Company recognized a one-time increase to additional paid in capital of $1,200 for this related party transaction. This transaction completed during the 2nd quarter of fiscal year ending March 31, 2019.
NOTE 6 - LOANS - NONRELATED PARTIES
Prior to the fiscal year ending March 31, 2019 the Company had loans from non-related parties of which none were outstanding as of March 31, 2019 or as of June 30, 2019. The loans were unsecured and carried no interest rate or specific repayment terms.
With the Change in Control (see Note 1 – Organization and Basis of Presentation) our founder guaranteed the settlement of certain outstanding debts resulting in forgiveness of that debt; the Company recognized debt forgiveness of $63,300 related to the non-related party loans. This occurred on or about August 29, 2018. These transactions completed during the 2nd quarter of fiscal year ending March 31, 2019.
NOTE 7 – DEBT FORGIVENESS AND GAIN ON SALE OF ASSETS
With the Change in Control (see Note 1 – Organization and Basis of Presentation), our founder guaranteed the settlement of certain outstanding debts resulting in forgiveness of that debt; the Company recognized total debt forgiveness of $211,100. This occurred on or about August 29, 2018. In total we recognized a reduction in vendor accounts payable of $147,800 and non-related party loans of $63,300. No consideration was paid by the Company for this debt forgiveness.
In connection with the Change in Control (see Note 1 – Organization and Basis of Presentation) our founder guaranteed the settlement of certain debts resulting in the sale of certain assets in exchange for an account payable of $10,000. This resulted in the Company recognizing a gain on sale of assets of $9,700. These assets consisted of certain intellectual property of the Company and fixed assets that had been fully depreciated on the date of sale. These transactions completed during the 2nd quarter of fiscal year ending March 31, 2019.
NOTE 8 - INCOME TAXES
As of June 30, 2019 and March 31, 2019, the Company had a net operating loss (“NOL”) carry-forward of $95,309 and $59,850, respectively. The NOL carryforwards may be available to reduce future years’ taxable income.
As of June 30, 2019
As of March 31, 2019
Deferred tax assets:
Net operating tax carryforwards
Gross deferred tax assets
Net deferred tax assets
NETPAY INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2019
NOTE 8 - INCOME TAXES (CONTINUED)
Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a valuation allowance equal to the deferred tax asset.
Reconciliation between statutory rate and effective tax rate for both periods presented and as of June 30, 2019 was:
Federal statutory rate
State taxes, net of federal benefit
Change in valuation allowance
Effective tax rate
Effective income tax rate and the new tax law - Our effective income tax rate was (0.0%) for the periods presented. The effective income tax rate for the periods were based upon the estimated rate applicable for the fiscal year adjusted to reflect any significant items related specifically to an interim period. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted, which, among other changes, reduced the federal statutory corporate tax rate from 35% to 21%. Based on the provisions of the Act, we re-measured our deferred tax liabilities and adjusted our estimated annual federal income tax rate to incorporate the lower corporate tax rate into our tax provision for the current quarter as any change represents a discrete item for purposes of income tax accounting. The re-measurement of deferred tax liabilities at the lower corporate tax rate resulted in no difference in income tax expense.
NOTE 9 - SUBSEQUENT EVENTS
In accordance with ASC 855, Subsequent Events, the Company evaluated subsequent events occurring after June 30, 2019 through the date that these financial statements were issued. The following events were determined to be reportable.
The Company during the month of July received $80,000 in working capital funds for its business operations through a loan with its majority shareholder, a related party. The funds were borrowed on the same terms and conditions as the previous loan(s).
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward looking statements: Statements about our future expectations are “forward-looking statements” and are not guarantees of future performance. When used herein, the words “may,” “will,” “should,” “anticipate,” “believe,” “appear,” “intend,” “plan,” “expect,” “estimate,” “approximate,” and similar expressions are intended to identify such forward-looking statements. These statements involve risks and uncertainties inherent in our business, including those set forth under the caption “Risk Factors,” in this Report, and are subject to change at any time. Our actual results could differ materially from these forward-looking statements. This Quarterly Report on Form 10-Q does not have any statutory safe harbor for this forward looking statement. We undertake no obligation to update publicly any forward-looking statements.
Management’s Discussion and Analysis should be read in conjunction with the financial statements included in this Quarterly Report on Form 10-Q (the “Financial Statements”). The financial statements have been prepared in accordance with generally accepted accounting policies in the United States (“GAAP”). Except as otherwise disclosed, all dollar figures included therein and in the following management discussion and analysis are quoted in United States dollars.
The following discussion of the Company’s financial condition and the results of operations should be read in conjunction with the Financial Statements and footnotes thereto appearing elsewhere in this Report.
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that in addition to the description of historical facts contained herein, this report contains certain forward-looking statements that involve risks and uncertainties as detailed herein and from time to time in the Company’s other filings with the Securities and Exchange Commission and elsewhere. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those, described in the forward-looking statements. These factors include, among others: (a) the Company’s fluctuations in sales and operating results; (b) risks associated with international operations; (c) regulatory, competitive and contractual risks; (d) development risks; (e) the ability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth across the business segments through a combination of enhanced sales force, new products, and customer service; and (f) pending litigation.
NetPay International, Inc. (the “Company” or "NetPay") was incorporated under the laws of the State of Nevada on March 31, 2016. The Company issued 5,500,000 shares of its common stock to its founder in exchange for organizational services incurred upon incorporation. Upon incorporation, the Company acquired the hair-care formula that its business had been based upon. The Company had been engaged in the business of developing, manufacturing, marketing and selling of an all-natural organic products collection. The Company sold the rights to certain intellectual property that was the main ingredient in the Company’s hair care collection to a vendor.
On August 29, 2018, the Company experienced a change in control (“Change in Control”). With the Change in Control certain liabilities of the Company were forgiven and/or paid for on behalf of the Company by our founder. Total liabilities at the time approximated $225,000. The board of directors nominated Mr. Alon Elbaz to the board on August 29, 2018.
On August 29, 2018, Mr. Elbaz was appointed as Chief Executive Officer, and Ms. Limor Mamon was appointed as Chief Financial Officer. Both Mr. Elbaz and Ms. Mamon serve in the same capacity for the Company’s majority shareholder, Compunet Holdings AA Ltd. It is the intent of Compunet Holdings to expand its operations to the United States and the North American continent with the Company as its primary operational entity.
On September 17, 2018, the board of directors and a majority of the shareholders of record approved the name change from Allegro Beauty Products, Inc. to NetPay International, Inc. On or about October 16, 2018, the Company mailed an Information Statement to its shareholders. The holders of a majority of the outstanding shares of the Company’s common stock executed a written consent in lieu of a special meeting approving the amendment to the Articles of Incorporation to change the name to NetPay International, Inc. The effective date of the name change was November 7, 2018. The Company is rebranding itself as NetPay.
Plan of Operations
As of July 18, 2019, we have two employees, our President and Chief Executive Officer, Mr. Alon Elbaz, and our Chief Financial Officer, Ms. Limor Mamon. NetPay is a development stage company and has little to no financial resources besides shareholder loans. We have not established or attempted to establish a source of equity or debt financing. Our independent registered public accounting firm has included an explanatory paragraph in their report emphasizing the uncertainty of our ability to remain as a going concern.
As of June 30, 2019, we had limited assets which consist of cash ($5,564) and prepaid expenses ($4,251). Subject to our obtaining financing, we expect to increase our overall assets over the next few months as we further develop our payment processing business with significant capital investment as well as fixed assets such as computers and sophisticated management information systems to improve and secure our services. In order to fund our business activities over the next 12 months, we will attempt to secure sufficient and satisfactory funding from our majority shareholder, Compunet Holdings AA Ltd., an international Israeli-based company, from Mr. Elbaz, and from others. There can be no assurance that we will be able to obtain any funds or that such funds will be offered on terms acceptable to us.
Netpay EUR Limited (“Netpay Europe”) is a premier payment service provider owned by Compunet Holdings AA Ltd. and managed by Mr. Elbaz. Founded in 1998, Netpay Europe has built a successful credit card clearing service based on state-of-the-art technologies. Netpay Europe has evolved over the years to better satisfy and understand the needs of e-commerce and the payment services industry. Netpay Europe acts as a one-stop-shop for e-commerce merchant’s payments needs by providing secure and innovative payment solutions and enhanced payment services. Netpay Europe’s goal is to support and protect the interests of its customers by providing industry leading technology combined with premier-quality service. Netpay Europe has been providing secure and safe credit card clearing (payment) services for years. These services are easy to use and include innovative and strategic payment solutions. Based on Netpay Europe’s technology, transactions are completed speedily and simply, with stringent data-security standards. Netpay Europe’s tech-team has been working for more than twenty years to improve systems for merchant payment and servicing needs, with a key focus on risk management. Netpay Europe offers businesses a complete turn-key solution, and acts as a one-stop-shop for all merchants’ payment servicing needs.
In order to achieve Netpay Europe’s global business goals, Compunet Holdings AA Ltd., a company controlled by Mr. Alon Elbaz (Netpay Europe’s founder and Chief Executive Officer), acquired Allegro Beauty Products, Inc., a public traded and reporting company in the United States of America. Under the guidance of Mr. Elbaz and Netpay Europe, the Company believes that it will be able to establish and acquire a payment facilitator license (or PayFac). This will allow the Company to become a sub-merchant account for a merchant service provider in order to provide payment processing services to merchant clients, particularly in the e-commerce marketplace. A payment facilitator license will allow the Company to offer merchant services on a sub-merchant platform. Allowing sub-merchants to be on-boarded under the master of the Company, which will be sponsored by a bank or financial institution.
Put simply, the Company has set out to build a payment facilitator model for streamlining merchant services within the U.S. as well as partnering with Netpay Europe’s well-established international business. As a payment facilitator, the Company will eliminate the need for individual merchants to establish a traditional merchant account. In the payment facilitator model, a software provider registers with an acquirer to provide payment services to sub-merchants that utilize its software. By registering as a payment facilitator with an acquirer, the software provider acts as a “master” merchant account provider, including the onboarding of sub-merchants under its own account in order to facilitate payment transactions for the sub-merchants.
In this model there are three main parties involved: The acquirer, the payment facilitator (the Company), and the sub-merchant. The acquirer provides overall structure for operations while the Company acts as the go-between with the acquirer and the sub-merchants. The sub-merchants will operate underneath the Company. The acquirer works with the Company to get these sub-merchants running and servicing their payment needs. This includes application administration and the underwriting process, working out pricing agreements and facilitating payment technology integration. The acquirer is responsible for monitoring the Company’s compliance with operating regulations and ensuring due diligence when the Company on-boards (signs-on) sub-merchants. The Company will undergo a comprehensive process in order to register with an acquirer, including integrating the payment technology and infrastructure needed. The Company will assume all risk and liability for its sub-merchants. Industry standards are that sub-merchants sign up with payment facilitators in order to be able to accept payments from their customers.
The greatest benefit of the Company’s payment facilitator model will be the ability to simplify and streamline the merchant account enrollment and onboarding process by offering a complete, white-label payment processing solution. This is expected to lead to more control over the processing experience, higher merchant conversion rates, and the opportunity to earn more revenue from credit card processing for the sub-merchant. This process has been implemented by Netpay Europe and its management in Europe, and Netpay Europe intends on providing that knowledge and service to the US market through the Company.
The greatest challenge to the Company’s payment facilitator model will be the level of responsibility the Company as a payment facilitator will be required to assume with the acquirer. This includes greater liability for fraud, chargebacks, and data breaches; the resources to build or purchase payments technology; and the ability to meet compliance mandates and ever-changing regulatory rules.
On December 5, 2018, we launched a new Delaware subsidiary, NetPay (USA), Inc., to act as an independent sales organization (ISO) to seek opportunities related to the provision of merchant's credit card acquiring clearing service, and other value-added services. These services to be provided by NetPay (USA), Inc. will be different than the payment facilitation business, which is our core business. To date, Netpay (USA), Inc. has entered into a binding agreement with eData Financial Group LLC, located in Florida, for the resale of merchant's credit card acquiring and processing services, and a memorandum of understanding with Blue Parasol Group LLC for the provision of similar services to that of eData Financial Group and NetPay (USA). We currently own ninety percent (90%) of NetPay (USA), with the remaining ten percent (10%) owned by two highly qualified experienced executives in the credit card payment services industry. We believe that with their expertise and guidance NetPay (USA) will be well-positioned to become an industry leader within the North American market and worldwide. A brief description of the services to be provided by NetPay (USA) is set forth below:
NetPay (USA) will act as an independent sales organization (ISO).
NetPay (USA) will seek merchants that will obtain services primarily from us, such as - clearing, providing credit, and other value added services.
Managing and monitoring merchant activity, and irregularity resolution.
Margin sharing between the Company and NetPay (USA).
Onboard interface with merchants, e-commerce support, and high-risk merchant assessment.
We anticipate that our new business will begin to generate sales of core services during 2019, although no assurances can be given that we will achieve this goal. The launch of our new business will depend on our ability to obtain sufficient financing.
In order to further our plan of operations, we will need to secure additional financing of approximately $3,000,000. If we are not successful in securing this capital, we will not be able to proceed with our business plan as contemplated. Our plan of operations will require us to establish additional sources of capital to fulfill our operational requirements if we do not obtain sufficient financing from our majority shareholder. These funds will go towards building out the US operations to ultimately generate sales.
Alongside the development of our business activities, we will continue to pursue additional sources of financing and attempt to establish a public market for our common stock, which may then allow us to seek financing from sources that would not be available to us if we were private. Accordingly, we believe that we may be able to negotiate from increased strength in pursuing financing or agreements with vendors, manufacturers, and capital sources. We cannot predict the likelihood or timing of any success from our intended actions.
Our goal as stated above is for us to become a leading payment/service facilitator in the United States. We believe that our key alliance with Netpay Europe will assist us in achieving that goal. We currently have no other sources of or commitment for financing beyond a verbal commitment from our majority shareholder and its management personnel. There are no assurances we will obtain sufficient financing or resources from others or enter into beneficial agreements with others in our industry. We believe that we must raise additional capital or debt financing in order to fully execute and implement our business strategy and develop our proposed services.
Necessity of Additional Financing
Management believes that if it is successful in raising the necessary funds, of which there can be no assurances, we may generate revenue within the next 12 months. While we hope that we will be successful in these efforts, additional equity or debt financing may not be available to us on acceptable terms or at all, and thus we would fail to satisfy our future cash requirements. As of the date of this report we have received more than $57,000 in loans from our majority shareholder. We expect that that amount will increase substantially over the next few months as our plan of operations is rolled out.
Securing additional financing is critical to implementation of our timeline. If and when we obtain the required additional financing, we should be able to take our business plan through the necessary steps. In the event we are unable to raise any additional funds we will not be able to pursue our business plan, and we may fail entirely. We currently have no committed sources of financing besides the verbal commitment from our majority shareholder to provide us with financing in the short term until we are able to obtain reliable sources of financing.
As a corporate policy, we do not intend to incur obligations that we cannot satisfy with known resources. We do not intend to incur any obligation that needs to be satisfied with cash payments in the short-term unless we have a secure funding source to pay. We believe the perception that many people have of a public company makes it more likely that they will accept restricted securities as consideration for indebtedness owed to them than they would from a private company. We have not performed any studies of this matter. Our belief is based solely on the advice and informal consultation with professionals whom we know have public company experience. Being a public company may afford the business (management and its shareholders) with a higher degree of recognition than would be typically attained as a small private (or non-public) company and may increase its ability and/or options to obtain financing for growth.
In addition, we believe being a public company increases our opportunities to raise funds and to pay vendors by issuing restricted stock rather than cash. There can be no assurances that we will be successful in any of these efforts. Additionally, issuance of restricted stock would dilute the percentage of ownership for all of our stockholders.
Result of Operations for the Three Months ended June 30, 2019 and for the Three Months ended June 30, 2018
Expenses for the Three Months ended June 30, 2019 and for the Three Months ended June 30, 2018 was $35,459 and $14,653, respectively. Product development costs for the Three Months ended June 30, 2019 and for the Three Months ended June 30, 2018 were none and $6,643, respectively. The Company for the Three Months ended June 30, 2019 and for the Three Months ended June 30, 2018 incurred $35,459 and $7,993, respectively, in consulting, administrative and other costs associated with its operations. The Company for the Three Months ended June 30, 2019 and for the Three Months ended June 30, 2018 incurred none and $17 in depreciation expense, respectively.
Income/(loss) before provision for income taxes
Income/(loss) before provision for incomes taxes for the Three Months ended June 30, 2019 and for the Three Months ended June 30, 2018 was $(35,459) and $(14,653), respectively. The Company did not record a provision for either period presented. We did not generate revenues from our hair-care products business (prior to August 2018) nor have we generated any revenues from our credit card clearing services business (post August 2018).
Basic and diluted income/(loss) per share
Basic and diluted income/(loss) per share for the Three Months ended June 30, 2019 and for the Three Months ended June 30, 2018 was $(0.00) and $(0.00) per share, respectively. Basic and diluted number of shares outstanding was 8,025,000 and 8,025,000, respectively, for the periods presented.
Our current cash position (approximately $5,600) was provided through a loan from our majority shareholder to cover working expenditures.
Prior to August 2018, most of our resources and efforts had been devoted to planning our business, implementing systems and controls for growth, and completing our public offering. Post August 2018 we have been working on our new business operations here in the United States. We currently owe our majority shareholder approximately $57,400 as payment for expenses incurred subsequent to our Change in Control transaction. We expect this to increase substantially over the next 12 to 18 months.
Although there can be no assurances whatsoever that we will obtain this funding, we believe that if we do, we may be able to successfully commence the launch of our new business for 2019/2020. Obstacles may prevent us from launching our new business despite the availability of funding and our efforts. If we are unable to raise additional funds, significant funding amounts may have to be provided by our majority shareholder to the extent that it is capable and willing to provide such loans. We do not have any oral or written agreements in place with our majority shareholder or any third parties for such funds and cannot provide any assurances that we will be able to obtain such funds.
Private capital, if sought, will most likely be sought from business associates of our executive officers or a network of private investors referred to us by those same associates. To date, we have not sought any significant funding source, other than from sources that have provided loans to us already, and we have not authorized any persons or entities to seek funding on our behalf. If a market for our common stock develops, of which there can be no assurances, we may use our restricted shares to compensate others whenever possible. We cannot predict the likelihood of a source of capital or that funds needed to complete our planned business objectives will be obtained or identified.
We embarked upon an effort to become a public company and, by doing so, incurred significant expenses for legal, accounting and related services. As a public entity, we are subject to the reporting requirements of the Exchange Act, certain ongoing expenses will be incurred. These consist of various professional services along with a host of other expenses that surround the preparation of annual and quarterly reports as well as proxy statements required to be distributed to our stockholders. We estimate these costs can be more than $50,000 per year and may be higher if business volume and activity increases.
There are no current plans to seek private investment. We do not have any current plans to raise funds through the sale of securities. We intend to seek additional financing from our current lender in order to further fund our working capital needs, especially in instances where we cannot defer payment of services.
Going Concern Consideration
There is substantial doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosures with respect to this matter.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements. The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Critical Accounting Policies
The preparation of financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.
An accounting policy is considered to be critical: (a) if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made; and (b) if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.
Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. There are no critical policies or decisions that rely on judgments that are based on assumptions about matters that are highly uncertain at the time the estimate is made. Note 2 to the financial statements, included elsewhere in this prospectus, includes a summary of the significant accounting policies and methods used in the preparation of our financial statements.
We have not generated any revenues so we have no direct experience with seasonality for our business. We do not expect that our planned business operations as currently outlined will be affected by seasonality.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, obligations under any guarantee contracts or contingent obligations. We also have no other commitments other than the costs of being a public company that will increase our operating costs or cash requirements in the future.
Item 3. - Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information necessary under this item.
Item 4. - Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e). The Company's disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching the Company's desired disclosure control objectives. In designing periods specified in the SEC's rules and forms, and that such information is accumulated and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company's certifying officers, its Principal Executive Officer, its Principal Financial Officer and Principal Accounting Officer, has concluded that the Company's disclosure controls and procedures are effective in reaching that level of assurance.
Our Chief Executive Officer, Alon Elbaz, and our Principal Financial Officer, Limor Mamon, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on the evaluation, Mr. Elbaz and Ms. Mamon concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us required to be included in our periodic SEC filings. The Company hired a financial expert with the experience in creating and managing internal control systems as well as to continue to improve the effectiveness of our internal controls and financial disclosure controls.
Limitations on the Effectiveness of Controls
Management has confidence in its internal controls and procedures. The Company’s management believes that a control system, no matter how well designed and operated can provide only reasonable assurance and cannot provide absolute assurance that the objectives of the internal control system are met, and no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitation in all internal control systems, no evaluation of controls can provide absolute assurance that all control issuers and instances of fraud, if any, within the Company have been detected.
Changes in Internal Controls
There were no changes in the Company’s internal controls over financial reporting that occurred during the quarter ended June 30, 2019 that have materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
Internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.
Item 1 - Legal Proceedings
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interests.
Item 1a – Risk Factors
The following risk factors should be considered in connection with an evaluation of our business as described in Plan of Operations:
In addition to other information in this Report, the following risk factors should be carefully considered in evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial condition. As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements. Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business, result of operations, liquidity and financial condition. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, if and when a trading market for our securities is established, the trading price of our securities could decline, and you may lose all or part of your investment.
THE SECURITIES ISSUED BY THE COMPANY INVOLVE A HIGH DEGREE OF RISK AND, THEREFORE, SHOULD BE CONSIDERED EXTREMELY SPECULATIVE. THEY SHOULD NOT BE PURCHASED BY PERSONS WHO CANNOT AFFORD THE POSSIBILITY OF THE LOSS OF THE ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD READ ALL OF THE COMPANY’S FILINGS, INCLUDING ALL EXHIBITS, AND CAREFULLY CONSIDER, AMONG OTHER FACTORS THE FOLLOWING RISK FACTORS.
Risks Related to the Business
1. NetPay has virtually no financial resources. Our independent registered auditors’ report includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.
NetPay is an early stage company and has virtually no financial resources. As of June 30, 2019 and March 31, 2019 we had a negative working capital balance of $64,083 and $28,624, respectively, and stockholders’ deficit of $64,083 and $28,624, respectively. Our independent registered auditors included an explanatory paragraph in their opinion on our financial statements as of and for the year ended March 31, 2019; the Company losses from operations raise substantial doubt about our ability to continue as a going concern. No assurances can be given that we will generate sufficient revenue or obtain necessary financing to continue as a going concern.
2. NetPay is and will continue to be completely dependent on the services of our executive officers, Mr. Elbaz and Ms. Mamon; the loss of their services may cause our business operations to cease.
Our operations and business strategy are completely dependent upon the knowledge and business connections of Mr. Elbaz and Ms. Mamon. They are under no contractual obligation to remain employed by us. If they should choose to leave us for any reason or if they become ill and are unable to work for an extended period of time before we have hired additional personnel or a replacement, our operations may likely fail. Even if we are able to find additional personnel or a replacement, it is uncertain whether that person(s) could continue to develop our business along the lines described in this report. The interruption of services of Mr. Elbaz and Ms. Mamon will have a material adverse effect on the Company's future operations, potential profits and development, if suitable replacements are not promptly obtained. We most likely will fail without the services of Mr. Elbaz and Ms. Mamon or an appropriate replacement(s).
3. No assurance can be given that NetPay will be able to attract and retain qualified employees and consultants.
The Company's success depends, in part, upon its ability to attract and retain talented personnel to work with Mr. Elbaz and Ms. Mamon and grow the business. No assurance can be given that the Company will be able to 1) retain our employees that we currently have; and 2) attract and retain such personnel necessary for the development and success of the Company’s business. Correspondingly, no assurance can be given that any key personnel would accept compensation other than cash for their services in the future.
4. We face a high risk of business failure.
Despite the Change in Control and plan of operations laid out, as of June 30, 2019, we had no operating revenues. Therefore, we face a high risk of business failure.
5. We operate in a highly competitive market and therefore face a high risk of business failure or at the very least a competitive disadvantage.
We are aware of many competitors to our planned business operations. Our success in this industry will be largely dependent on our ability to distinguish and establish a need for our services. Our ability to compete effectively in this industry also depends on our ability to be competitive in pricing, customer service, and results.
6. Because we will be dependent on advertising and marketing firms, we will be at a competitive disadvantage to companies having greater resources to pay larger fees or to companies with dedicated in-house departments for these purposes.
We will need to be strategic in placing quality advertisements that will reach the maximum number of target customers, all while staying within our limited budget. We do not know if we will be able to obtain optimal advertising placement within our projected budget, which will likely be limited, or even find advertising placement for that matter. We may be pushed out of advertising opportunities typically reserved for companies with larger budgets and greater financial resources.
There is no guarantee that we will have adequate financial resources to retain advertising or marketing firms. As a result, we may be left with attempting to market our services ourselves or using advertising and marketing firms with less experience but who charge less than those firms with more valuable connections and resources. Even if we are able to retain advertising or marketing firms, the ability to obtain advertising slots in various forms of media (online, print, radio, television, etc.) will be entirely reliant upon the expertise and capabilities of the advertising and/or marketing firms that we hire, as well as our available budget to initiate such marketing campaigns, which again may be limited.
7. We have had no sales to date, and can give no assurance that there will ever be any sales in the future.
The Company has yet to launch its new business, and accordingly we have not generated any revenues. There is no guarantee that we will ever develop commercially viable products and services. To become profitable, we will have to successfully develop, market and sell our products and services. There can be no assurance that our business development efforts will be completed or successful, that we will be able to market and sell our products and services at an acceptable cost and acceptable quality, that our products and services can be successfully marketed, or that there will be a market with customers willing to purchases our products and services. We currently do not expect to receive revenues from the sale of products and services until sometime in 2019, if ever.
8. There is no guarantee that we will obtain a payment facilitator license or that our services will gain sufficient acceptance by customers and users in the e-commerce marketplace.
We have not yet obtained a license to operate in the United States as a payment facilitator and have not yet commercially launched the offering of our services. There can be no assurance that we will obtain a payment facilitator license or that our services will gain broad acceptance among prospective customers or users.
Unless we can achieve a sufficient following of customers and merchants who will purchase and use our services, we will not operate profitably and may have to cease our operations. No assurance can be given that our services will achieve sufficient acceptance in the e-commerce marketplace.
We believe that our business is subject to material regulation under the laws of the United States and the states in which we plan to market our services. Laws and regulations often differ materially between states, and within individual states, and such laws and regulations are subject to amendment and reinterpretation by the agencies charged with their enforcement. If we become subject to any licensing or regulatory requirements, the failure to comply with any such requirements could lead to a revocation, suspension or loss of licensing status, termination of contracts and legal and administrative enforcement actions. We cannot be sure that a review of our current and proposed operations will not result in a determination that could materially and adversely affect our business, results of operations and financial condition. Moreover, regulatory requirements are subject to change from time to time and may in the future become more restrictive, thereby making compliance more difficult or expensive or otherwise affecting or restricting our ability to conduct our business as now conducted or proposed to be conducted.
10. We became subject to the periodic reporting requirements of the Exchange Act. This requires us to incur audit fees and legal fees in connection with the preparation of such periodic reports. These additional costs could reduce or eliminate our ability to earn a profit.
We are required to file periodic reports with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder. In order to comply with these requirements, our independent registered public accounting firm will perform a review of our quarterly (or interim) financial statements and perform an audit of our annual financial statements. Our legal counsel will need to review and assist our management in the preparation of these periodic reports. The costs charged by professionals for such services cannot be accurately predicted because factors such as the number and types of financial transactions that we engage in and the complexity of our financial reports cannot be determined at this time. These factors will determine the amount of time to be spent by our auditors and attorney performing these functions. We currently estimate annual maintenance and compliance costs of the periodic reporting to be upwards of $50,000 per year. Such costs will obviously be an additional expense to our operations and thus will have a negative effect on our ability to meet overhead requirements and ultimately earn a profit.
We may be exposed to increased costs and potential risks resulting from new requirements related to the periodic reporting. If we fail to provide reliable financial reports or prevent the occurrence of fraud, our business and operating results could be significantly harmed, investors would lose confidence in our reported financial information, and certainly the trading price of our common stock, if a market ever develops, could drop significantly. However, for as long as we remain an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, we may be able to take advantage of certain exemptions from some reporting requirements that are applicable to other public companies that are not “emerging growth companies”. These included, but are not limited to, not being required to comply with auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure regarding executive compensation in periodic reports and proxy statements, and exemption from the requirement of holding annual nonbinding advisory votes on executive compensation and the seeking of nonbinding stockholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting exemptions under the JOBS Act until we are no longer an “emerging growth company.”
We intend to remain an “emerging growth company” for up to five years (the maximum amount of time in which we can be an “emerging growth company”), although we may lose our status as an “emerging growth company” if: (a) we have more than $1.0 billion in annual revenue; (b) more than $700 million in market value of our common stock is held by non-affiliates; or (c) we issue more than $1.0 billion of non-convertible debt during a three-year period.
11. Our internal controls may become inadequate as we grow, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officers and put into effect by the board of directors, management and other personnel, 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 and includes those policies and procedures that:
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
With growth or an unmanageable increase in our business objectives, our internal control over financial reporting may become inadequate or ineffective, which could cause our financial reports to be unreliable and lead to financial misinformation being disseminated to the public. Investors relying on this misinformation may make an uninformed investment decisions with regards to an investment in our common stock. As a result, if investors are harmed from relying on the misleading financial information, we may be subject to significant legal liability. Failure to achieve and maintain an effective internal control environment could cause us to face regulatory action and also cause investors to lose confidence in our reported financial information, either of which could have a material adverse effect on the Company’s business, financial condition, results of operations and future business prospects.
In order to mitigate the risks associated with maintaining internal controls, if and when the Company grows, we will rely on the use of outside professionals to assist us in maintaining these internal controls. We will seek to engage qualified professionals on an independent contractor basis to assist in reviewing and recording transactions. When and if finances permit, we will hire an experienced financial professional to oversee our reporting and control functions.
12. The costs of being a public company could result in the inability to continue as a going concern.
As a public company, we will have to comply with numerous financial reporting and legal requirements, including those pertaining to audits and internal control system over our financial reporting. The costs of complying with being a public company could be significant and may preclude us from seeking financing or equity investment on acceptable terms. We estimate these costs to be $50,000 per year and may be even higher if our business volume and financial activity increases. Our estimate of costs does not include the necessary compliance, documentation and reporting requirements for Section 404 of the Sarbanes-Oxley Act of 2002 as we will not be subject to the full reporting requirements of Section 404 until we exceed $75 million in market capitalization. Our costs also stand to increase once we lose our “emerging growth company” status as defined in the JOBS Act, which allows us to take advantage of exemptions that should result in decreased compliance costs. If revenues are insufficient or non-existent, and/or we cannot support the additional costs associated with being a public company, we may be unable to satisfy these costs in the normal course of business which would result in our inability to continue as a going concern.
13. Having only one director limits our ability to establish effective independent corporate governance procedures and gives our CEO unbridled control.
We have only one director who also serves as our Chief Executive Officer. Accordingly, we cannot establish board committees comprised of independent members to oversee functions like compensation or audit issues. In addition, a vote of the board members is decided in favor of our chairman (our sole director), which gives her significant control over all corporate issues and business decisions.
Until we have a larger board of directors that would include independent members, if ever, there will be limited oversight of our CEO’s decisions and activities and little ability for minority shareholders to challenge or reverse those activities and decisions, even if they are not in the best interests of our minority shareholders.
Risks Related to Our Common Stock
14. We are an “emerging growth company” and we cannot be certain whether the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding an annual non-binding advisory vote on executive compensation and nonbinding stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we are able to rely on these exemptions. If some investors find our common stock less attractive because of this, there may be a less active trading market for our common stock causing our stock price to be more volatile.
Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we chose to “opt out” of such extended transition period, and as a result, we comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
15. We may not be able to raise sufficient financing or resources to develop, manufacture and market our services.
We currently have no firm commitments for any funds. If we are unable to raise sufficient additional financing or other financial resources to develop, and market our services, our business will fail and investors will lose their entire investment.
16. The Company sold its shares without an underwriter. A small number of persons purchased our shares and they may risk losing their investment without a market to develop for our shares.
No broker-dealer was retained as an underwriter and no broker-dealer was under any obligation to purchase any common shares. The sale of a small number of shares (2,750,000 to be exact) increases the likelihood of no market ever developing for our shares.
Since there was a limited number of shareholders that purchased our shares (30) we may be unable to create a public market for our shares. Without a public market for our shares, the limited number of shares sold and their investors may find the market highly illiquid or unable to be sold. In such an event, it is highly likely that our shareholder’s entire investment in our common stock would be lost.
17. Shareholders may be diluted significantly through our efforts to obtain financing and satisfy obligations through issuance of additional shares of our common stock.
We have no committed source of financing. Wherever possible, our board of directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock. Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized (100,000,000) but unissued (91,750,000) shares. In addition, if a significant and active trading market develops for our common stock, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market and again without action or vote of the shareholders. These actions will certainly result in dilution of the ownership interests of existing shareholders and further dilute common stock book value; this dilution may be material.
18. Shareholder interests may be undercut because we can issue shares of our common stock to individuals or entities that support existing management thereby enhancing existing management’s ability to maintain control of NetPay.
Our board of directors, has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued common shares. Such issuances may be issued to parties or entities committed to supporting existing management and the interests of existing management may not be the same as the interests of other shareholders. Our ability to issue shares without shareholder approval serves to enhance existing management’s ability to maintain control of the Company.
19. Our Articles of Incorporation provide for indemnification of officers and directors at our expense and limit their liability, which may result in a major cost to us and hurt shareholder interests because corporate resources may be expended for the benefit of officers and/or directors.
Our Articles of Incorporation in Article XI provide for indemnification as follows: “No director or officer of the Corporation shall be personally liable to the Corporation or any of its stockholders for damages for breach of fiduciary duty as a director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer: (i) for acts or omissions which involve intentional misconduct, fraud or knowing violation of law; or (ii) the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of an Article by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation of the personal liability of a director or officer of the Corporation for acts or omissions prior to such repeal or modification.”
We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with our activities, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question of whether indemnification by us is against public policy as expressed in the Securities Act and we will abide by the final adjudication of such issue. The legal process relating to this issue if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares, if such a market ever develops.
20. Currently, there is no established public market for our securities, and there can be no assurances that any established public market will ever develop or that our common stock will be quoted for trading and, even if quoted, it is likely to be subject to significant price fluctuations.
Prior to the date of this report, there has not been any established trading market for our common stock, and there is currently no established public market whatsoever for our securities. A market maker filed an application with FINRA on our behalf and was approved to quote the shares of our common stock on the OTC market. While the market maker’s application has been accepted by FINRA there can be no assurance as to whether
(i)any market for our shares will develop;
(ii)the prices at which our common stock will trade; or
(iii)the extent to which investor interest in us will lead to the development of an active, liquid trading market. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors.
While we are able to have our shares quoted on the OTC-Pink market (formerly the Pink Sheets), we plan to attempt to have our shares quoted on the OTCQB (the share price quotation service owned by OTC Markets, Inc.). We applied through a broker-dealer and its’ clearing firm to become eligible with the Depository Trust Company (“DTC”) to permit our shares to trade electronically. It is commonly believed if an issuer is not “DTC-eligible,” then its shares cannot be electronically transferred between brokerage accounts, which, based on the realities of the marketplace as it exists today (especially the OTC market and the OTCQB), means that shares of a company will not be traded (technically the shares can be traded manually between accounts, but this takes days and is not a realistic option for companies relying on broker dealers for stock transactions - like all companies on the OTC market and the OTCQB). While we have achieved DTC-eligibility, this is not a requirement in order to trade on the OTC market or the OTCQB. We believe, however, that DTC-eligibility is a necessity to process trades on the OTC market and the OTCQB if we are going to trade with any volume.
In addition to the foregoing, our common stock is unlikely to be followed by market analysts, and there may be few institutions acting as market makers for our common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock. Until our common stock is fully distributed and an orderly market develops in our common stock, if ever, the price at which it trades is likely to fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for shares of our common stock, developments affecting our business, including the impact of the factors referred to elsewhere, investor perception of the Company’s common stock and operations as well as general economic and market conditions. No assurances can be given that an orderly or liquid market will ever develop.
Because of the anticipated low price of the securities, many brokerage firms may not be willing to effect transactions in these securities. Purchasers of our securities should be aware that any market that develops in our stock will be subject to the penny stock restrictions.
21. Any market that develops in shares of our common stock will be subject to the penny stock regulations and restrictions pertaining to low priced stocks that will create a lack of liquidity and make trading difficult or impossible.
The trading of our securities, if any, will be in the over-the-counter market which is commonly referred to as the OTC market or the OTCQB as maintained by FINRA and OTC Market Groups, respectively. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of, our securities.
Rule 3a51-1 of the Exchange Act establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. It is likely that our shares will be considered to be penny stocks for the immediately foreseeable future. This classification severely and adversely affects any market liquidity for our common stock.
For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:
the basis on which the broker or dealer made the suitability determination, and
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Additionally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if and when our securities become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding decrease in the price of our securities. Our shares, in all probability, will be subject to such penny stock rules for the foreseeable future and our shareholders will, in all likelihood, find it difficult to sell their securities.
22. The market for penny stocks has experienced numerous frauds and abuses that could adversely impact our investors.
Our management believes that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:
Control of the market for a security by one or a few broker-dealers that are often related to the promoter or issuer;
Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
“Boiler room” practices involving high pressure sales tactics and unrealistic price projections by sales persons;
Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and
Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.
23. Any trading market that may develop may be restricted by virtue of state securities “Blue Sky” laws that prohibit trading absent compliance with individual state laws. These restrictions may make it difficult or impossible to sell shares in those states.
There is currently no established market for our common stock, and there can be no assurance that any established market will develop. Transfer of our common stock may be restricted under the securities or securities regulations laws promulgated by various states and foreign jurisdictions, commonly referred to as “Blue Sky” laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, such shareholders and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue sky law restrictions on the ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions prohibit the secondary trading of our common stock. We currently do not intend to and may not be able to qualify securities for resale in at least 17 states which do not offer manual exemptions (or may offer manual exemptions but may not offer one to us if we are considered to be a shell company at the time of application) and require shares to be qualified before they can be resold by our shareholders. Accordingly, investors should consider the secondary market for our securities to be a limited one.
24. Our board of directors (consisting of one person, who is our President and Chief Executive Officer) has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stockholders and with the ability to affect adversely stockholder voting power and perpetuate their control over us.
Our Articles of Incorporation allows the board of directors to issue shares of preferred stock without any vote or further action by other stockholders. Our board of directors has the authority: (a) to fix and determine the relative rights and preferences of preferred stock; and (b) to issue preferred stock without further stockholder approval, including large blocks of preferred stock. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to common stockholders and the right to redeem the shares, together with a premium, before the redemption of any common stock.
25. The ability of our CEO to control our business may limit or eliminate minority shareholders’ ability to influence corporate affairs.
Our CEO, Mr. Elbaz, beneficially owns approximately 75% of our outstanding common stock. Because of his beneficial stock ownership, our CEO continues in the position to elect our board of directors, decide all matters requiring stockholder approval and determine our policies. The interests of our CEO may differ from the interests of other shareholders with respect to the issuance of shares, business transactions with or sales to other companies, selection of officers and directors and other business decisions. Minority shareholders would have no way of overriding decisions made by our CEO. This level of control may also have an adverse impact on the market value of our shares because our CEO may institute or undertake transactions, policies or programs that may result in losses, may not take any steps to increase our visibility in the financial community and/or may sell sufficient numbers of shares to significantly decrease our price per share.
26. Most of our presently issued and outstanding common shares are restricted under Rule 144 of the Securities Act, as amended. When the restriction on any or all of these shares is lifted, and the shares are sold in the open market, the price of our common stock could be adversely affected.
All of the shares of common stock (5,577,082 shares) owned by our majority shareholder are “restricted securities” as defined under Rule 144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. Rule 144 provides in essence that a person who is not an affiliate and has held restricted securities for a prescribed period of at least six (6) months if purchased from a reporting issuer or twelve (12) months (as is the case herein) if purchased from a non-reporting company, may, under certain conditions, sell all or any of their shares without volume limitation, in brokerage transactions. Affiliates, however, may not sell shares in excess of 1% of the Company’s outstanding common stock each three months. There is no limit on the amount of restricted securities that may be sold by a non-affiliate (i.e., a stockholder who has not been an officer, director or control person for at least 90 consecutive days) after the restricted securities have been held by the owner for the aforementioned prescribed period of time. A sale under amended Rule 144 or under any other exemption from the Act, if available, or pursuant to registration of common stock shares of present stockholders, may have a depressive effect on the price of the common stock in any market that may develop.
27. We do not expect to pay cash dividends in the foreseeable future.
We have never paid cash dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our board of directors will consider. Since we do not anticipate paying cash dividends on our common stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.
28. Because we are not subject to rules requiring the adoption of certain corporate governance measures, our stockholders have limited protection against interested director transactions, conflicts of interest and similar matters.
The Sarbanes-Oxley Act of 2002, as well as amendments proposed and enacted by the SEC, the New York Stock Exchange and the Nasdaq Stock Market, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.
None of our directors (currently one person) are independent directors and therefore we do not currently have independent audit or compensation committees. As a result, these directors have the ability, among other things, to determine their own level of compensation. Until we comply with prescribed corporate governance measures, regardless of whether such compliance is required, the absence of corporate governance standards may leave our stockholders without protection against interested director transactions, conflicts of interest, if any, and similar matters. As such, investors may be reluctant to provide us with the funds necessary to expand our operations.
We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management. The enactment of the Sarbanes-Oxley Act of 2002 resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk may make it more costly or deter qualified individuals from accepting these roles. Some of these corporate governance measures have been metered by the JOBS Act of 2012.
29. You may have limited access to information regarding our business because our obligations to file periodic reports with the SEC has been automatically suspended.
As of the effective date of our registration statement, we became subject to certain informational requirements of the Exchange Act, as amended, and were required to file periodic reports (i.e., annual, quarterly and material events) with the SEC which will be immediately available to the public for inspection and copying. However, since the Company has not filed a Form 8-A, our reporting obligations were automatically suspended under Section 15(d) of the Exchange Act. Therefore, we are no longer obligated to file periodic reports with the SEC and your access to our business information may be restricted. In addition, since we are not a reporting issuer, we are not required to furnish proxy statements to security holders, and our directors, officers and principal beneficial owners will not be required to report their beneficial ownership of securities to the SEC pursuant to Section 16 of the Exchange Act.
For all of the foregoing reasons and others set forth herein, an investment in our securities in any market that may develop in the future involves a high degree of risk.
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
None for the period ending June 30, 2019
Item 3 - Defaults upon Senior Securities
Item 5 - Other Information
NetPay International, Inc. includes by reference the following exhibits:
Articles of Incorporation
Certificate of Amendment to Articles of Incorporation
Code of Ethics
Certification of Chief Executive Officer
Certification of Chief Financial Officer
Certifications of Chief Executive Officer
Certifications of Chief Financial Officer
XBRL Instance Document#
XBRL Taxonomy Extension Schema #
XBRL Taxonomy Extension Calculation Linkbase#
XBRL Taxonomy Extension Definition Linkbase#
XBRL Taxonomy Extension Labels Linkbase#
XBRL Taxonomy Extension Presentation Linkbase#
* - Filed with our Form S-1 Registration Statement dated November 10, 2016.
** - Filed with our Pre-effective Amendment #1 Form S-1 Registration Statement dated March 9, 2017.
*** - Filed with our Form 8-K dated November 7, 2018.
# The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
Pursuant to the requirements 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.
NETPAY INTERNATIONAL, INC.
Date: July 18, 2019
/s/ Limor Mamon
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this Quarterly Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Alon Elbaz
Director and Chief Executive Officer (Principal Executive Officer)
July 18, 2019