Company Quick10K Filing
Quick10K
Alphapoint Technology
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-08-07 Officers
8-K 2019-06-20 Officers
8-K 2018-11-20 Enter Agreement, Sale of Shares, Regulation FD, Exhibits
8-K 2018-10-18 Regulation FD, Exhibits
8-K 2018-09-27 Amend Bylaw, Exhibits
8-K 2018-09-12 Officers, Regulation FD, Exhibits
8-K 2018-07-25 Officers, Regulation FD, Exhibits
8-K 2018-05-23 Enter Agreement, Sale of Shares, Exhibits
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PANW Palo Alto Networks 22,570
AM Antero Midstream Partners 6,200
LPL LG Display 5,360
FCFS Firstcash 4,150
NGS Natural Gas Services Group 215
RGCO RGC Resources 211
APT Alpha Pro Tech 50
AUTO Autoweb 44
ENTB Entest Group 0
APPO 2019-03-31
Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosure 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
Item 6. Exhibits
EX-31 ex_31-1.htm
EX-32 ex_32-1.htm

Alphapoint Technology Earnings 2019-03-31

APPO 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 form_10-q.htm FORM 10-Q QUARTERLY REPORT FOR 03-31-2019

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2019

 

OR

 

[_]

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 333-173028

 

 

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

(Exact name of registrant as specified in its charter)

 

Delaware
(State or other jurisdiction of incorporation or organization)

26-3748249
(IRS Employer Identification No.)

 

6371 Business Blvd. Suite 200

Sarasota, FL 34240

(Address of principal executive offices) (Zip Code)

 

(941) 907-8822

(Registrant’s telephone number, including area code)

 

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

 

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

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $.01 par value

LVBX

OTCQB

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes   [_] No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). [X] Yes   [_] No

 

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

 

Large accelerated filer [_]

 

Accelerated filer [_]

Non-accelerated filer [X]

 

Smaller reporting company [X]

 

 

Emerging growth company [_]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [_] Yes   [X] No

 

As of May 10, 2019, the Company had 108,926,259 shares of Common Stock outstanding.

 



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

and Subsidiaries


FORM 10-Q


FOR THE QUARTER ENDED MARCH 31, 2019


TABLE OF CONTENTS



 

Page

 

PART I – FINANCIAL INFORMATION

 

 

Item 1.     Unaudited Consolidated Financial Statements

2

 

 

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

11

 

 

Item 3.     Quantitative and Qualitative Disclosure about Market Risk

13

 

 

Item 4.     Controls and Procedures

13

 

 

 

 

PART II – OTHER INFORMATION

 

 

Item 1.     Legal Proceedings

14

 

 

Item 1A.  Risk Factors

14

 

 

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

14

 

 

Item 3.     Defaults Upon Senior Securities

14

 

 

Item 4.     Mine Safety Disclosures

14

 

 

Item 5.     Other Information

14

 

 

Item 6.     Exhibits

14

 

 

Signatures

14


- 1 -



PART I – FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


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

and Subsidiaries

Consolidated Balance Sheets


 

 

March 31, 2019
(Unaudited)

 

December 31, 2018
(Audited)

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

35,750

 

$

146,621

 

Prepaid and other current assets

 

 

33,436

 

 

48,953

 

Total current assets

 

 

69,186

 

 

195,574

 

 

 

 

 

 

 

 

 

Total assets

 

$

69,186

 

$

195,574

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

75,155

 

$

59,755

 

Accrued expenses

 

 

769,316

 

 

705,948

 

Related party payables

 

 

142,551

 

 

173,594

 

Total current liabilities

 

 

987,022

 

 

939,297

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

987,022

 

 

939,297

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Notes 7 and 8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

 

 

 

Common stock, 500,000,000 shares authorized, $0.01 par value, 103,601,259 and 97,243,259 issued and outstanding at March 31, 2019 and December 31, 2018, respectively

 

 

1,036,013

 

 

972,433

 

Additional paid-in capital

 

 

3,750,647

 

 

3,776,727

 

Accumulated deficit

 

 

(5,704,496

)

 

(5,492,883

)

Total stockholders’ deficit

 

 

(917,836

)

 

(743,723

)

Total liabilities and stockholders’ deficit

 

$

69,186

 

$

195,574

 


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


- 2 -



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

and Subsidiaries

Consolidated Statements of Operations

(Unaudited)


 

 

For the Three Months Ended

 

 

 

March 31,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Revenue

 

$

10,000

 

$

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Compensation

 

 

63,368

 

 

63,368

 

Professional fees

 

 

110,471

 

 

14,846

 

General and administrative

 

 

47,774

 

 

6,708

 

Total operating expenses

 

 

221,613

 

 

84,922

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(211,613

)

 

(84,922

)

 

 

 

 

 

 

 

 

Net loss

 

$

(211,613

)

$

(84,922

)

 

 

 

 

 

 

 

 

Earnings (loss) per share - basic and diluted

 

$

(0.00

)

$

(0.00

)

 

 

 

 

 

 

 

 

Weighted average shares outstanding basic and dilutive

 

 

101,509,059

 

 

77,413,259

 


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


- 3 -



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

and Subsidiaries

Consolidated Statement of Stockholders’ Deficit

(Unaudited)


 

 

Common Stock

 

Additional

 

 

 

Total

 

 

 

 

 

Par Value

 

Paid-in

 

Accumulated

 

Stockholders’

 

 

 

Shares

 

$0.01

 

Capital

 

Deficit

 

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2018

 

97,243,259

 

$

972,433

 

$

3,776,727

 

$

(5,492,883

)

$

(743,723

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock and warrants issued (proceeds received in prior year)

 

4,950,000

 

 

49,500

 

 

(49,500

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock and warrants issued in exchange for cash

 

1,408,000

 

 

14,080

 

 

15,920

 

 

 

 

30,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued to officer for services

 

 

 

 

 

7,500

 

 

 

 

7,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

(211,613

)

 

(211,613

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of March 31, 2019

 

103,601,259

 

$

1,036,013

 

$

3,750,647

 

$

(5,704,496

)

$

(917,836

)


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


- 4 -



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

and Subsidiaries

Consolidated Statement of Cash Flows

(Unaudited)


 

 

For the Three Months Ended

 

 

 

March 31,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(211,613

)

$

(84,922

)

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

 

 

 

 

 

 

 

Stock-based expense

 

 

23,017

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

78,768

 

 

40,887

 

Net cash used in operating activities

 

 

(109,828

)

 

(44,035

)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Advances from (repayments to) related parties

 

 

(31,043

)

 

44,243

 

Proceeds from the issuance of common stock and warrants

 

 

30,000

 

 

 

Net cash provided by (used in) financing activities

 

 

(1,043

)

 

44,243

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

(110,871

)

 

208

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

146,621

 

 

1,440

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

35,750

 

$

1,648

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

 

$

 

Cash paid for taxes

 

 

 

 

 


NON CASH FINANCING TRANSACTIONS


During 2018, the Company issued an aggregate total of 9.13 million shares of common stock to several consultants and advisors in exchange for services to be rendered over a period of time. The total value of these services yet to be rendered as of March 31, 2019 is $26,573, and is reflected as a prepaid expense in the accompanying consolidated balance sheets.


On November 20, 2018, the Company received cash totaling $199,955 from two investors in exchange for an aggregate total of 4,950,000 shares of the Company’s common stock and warrants to purchase an aggregate total of 4,500,000 shares of the Company’s common stock.  The shares were issued in January of 2019, and accordingly are included in shares issued and outstanding at March 31, 2019. The resulting impact in equity was a reclassification of the par value of the shares issued from additional paid-in capital to common stock at par.


On April 1, 2019, the Company issued 250,000 shares of common stock to an advisor in exchange for services to be rendered over a period of time.  The service period began on March 1, 2019. The total value of these services yet to be rendered as of March 31, 2019 is $6,863, and is reflected as a prepaid expense in the accompanying consolidated balance sheets.


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


- 5 -



LevelBlox, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)


1. Nature of Operations and Significant Accounting Policies


Nature of Operations


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


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


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


Basis of Presentation


In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation of (a) the consolidated financial position at March 31, 2019 and December 31, 2018 and (b) the consolidated statements of operations, stockholders’ deficit, and cash flows for the three months ended March 31, 2019 and 2018 have been made.


The unaudited consolidated financial statements and notes are presented as permitted by Form 10-Q. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been omitted. The accompanying statements and notes should be read in conjunction with the audited financial statements and notes of the Company for the year ended December 31, 2018.


Application of Critical Accounting Policies and Use of Estimates


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


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


Fair Value Measurements


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


At each balance sheet date, the Company performs an analysis of all instruments subject to fair value measurement.  The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. As of March 31, 2019, and December 31, 2018 the fair values of the Company’s financial instruments approximate their historical carrying amount.


- 6 -



Cash and Cash Equivalents


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


Share-based payments


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


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


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


Revenue recognition


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


Software Development Costs


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


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

 

 

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


At March 31, 2019, no software development costs had been capitalized.


Research and Development


The Company expenses research and development costs when incurred.  Research and development costs include engineering, programmer costs and testing of product and outputs.  Indirect costs related to research and development are allocated based on percentage usage to the research and development.


Income taxes


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


- 7 -



Earnings (loss) per share


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


Risks and concentrations


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


2. Going Concern


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


3. Recent Accounting Pronouncements


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


In February 2016, the FASB issued ASU No. 2016-02, “Leases”.  This standard requires the lessee to recognize virtually all of their leases on the balance sheet, by recording a right-of-use asset and lease liability.  Public business entities will be required to adopt this standard for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  Early adoption is permitted upon issuance of this standard.  The new leasing standard requires modified retrospective transition, which requires application of the new guidance at the beginning of the earliest comparative period presented in the year of adoption.  A lessee may make an accounting policy election to forgo applying the guidance in ASC 842 to short-term leases. A short -term lease has a term of 12 or fewer months at commencement  and does not have a purchase option that the lessee is reasonably certain to exercise. If a lessee makes this accounting policy election, no transition adjustment is required for short-term leases because short-term leases under ASC 842 are accounted for in the same manner as under legacy GAAP. Given that the Company’s only lease is a month-to-month arrangement, the Company has made the accounting policy election to forgo the application of this standard.


In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” that supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the new guidance is that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. Additionally, the guidance requires disaggregated disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized. The amendments were adopted by the Company on January 1, 2018. Transition to the new guidance may be done using either a full or modified retrospective method. The Company had no revenues during 2018, and has had only one customer contract during the first quarter of 2019. Accordingly, there is no impact to be recognized as of the adoption date. In addition, we estimate that the impact of recognizing revenue related to the 2019 customer contract under the provisions of this standard do not yield a materially different result than if we had applied the previous revenue recognition guidance.


Our revenue is currently derived from the development and installation of software and associated software maintenance and consulting services. Revenue is recognized when a contract exists between us and a customer and upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Revenue is recognized net any taxes collected from customers, which are subsequently remitted to governmental authorities.


- 8 -



4. Revenue


The Company executed one contract with a customer in January, 2019 for a fixed consideration amount of $120,000. This contract entails development and installation of software to be delivered as a perpetual license, and associated software maintenance, and consulting services. Determining whether the software license and the development, installation, support and consulting services are distinct from each other, and therefore performance obligations to be accounted for separately, or not distinct from each other, and therefore part of a single performance obligation, requires significant judgment. We have concluded that the development of the license, maintenance, and services are not capable of being distinct and thus represent a single performance obligation.


Furthermore, we recognize revenue over time, given that our performance creates an asset with no alternative use for which we are entitled to payment for performance completed to date. Accordingly, we have not recorded any reserves against potential reversals of revenue.


Standalone selling price is established by maximizing the amount of observable inputs, and includes consideration of factors such as go-to-market model and geography. Where standalone selling price may not be directly observable, we maximize the use of observable inputs by using information that may include reviewing pricing practices, performance obligations with similar customers and selling models.


In the event that customer terminates a contract prior to the completion of the development of the software, the customer has no rights to utilize the software to the extent developed. In addition, the Company retains all fees paid to date. Also, the contract provides a one-year warranty against defects in workmanship and materials, in the case of which, we will promptly remedy such defects at no additional expense to the customer.


At March 31, 2019, there were no contract balances, as all performance to date had been invoiced and paid. Revenue totaled $10,000 under the contract, which represents the value of performance completed to date for which the Company was entitled to payment. The value of the remaining performance obligation at March 31, 2019 was $110,000 which will be recognized over the remaining term ending in January, 2020.


5. Contingencies


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


Litigation


From time to time the Company may become a party to litigation matters involving claims against the Company. Current regulations and reporting requirements require the Company to disclose any legal proceedings that are ongoing and could have a material impact on the financial statements for the quarter ended March 31, 2019. We know of no active or pending legal proceedings against us, nor are we involved as a plaintiff in any active or pending legal proceedings that are material. There are no proceedings in which any of our directors, sole officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.


6. Equity


On November 20, 2018, the Company received cash totaling $199,955 from two investors in exchange for an aggregate total of 4,950,000 shares of the Company’s common stock and warrants to purchase an aggregate total of 4,500,000 shares of the Company’s common stock.  The warrants have a term of 3 years from the date of issuance and an exercise price of $0.07 per share.  The proceeds were allocated among the total number of shares issued and the warrants based on their relative fair values.   The fair value of the shares was determined using the closing price of the Company’s common stock on the transaction date ($0.05 per share).  The fair value of the warrants was determined using the Black Scholes Merton option-pricing model, assuming stock price volatility of 176% and a risk-free interest rate of 2.88%.  Approximately $108,000 and $92,000 was allocated to the shares and the warrants, respectively.  As the warrants are classified as equity instruments, the resulting allocation is deemed a dividend on the shares issued and is reflected in additional paid-in capital in the consolidated balance sheet.  The shares were issued in January of 2019, and accordingly are included in shares issued and outstanding at March 31, 2019.


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On March 4, 2019, the Company entered into a consulting agreement with an Advisory Board Member for services to be rendered in from March 1, 2019 to March 1, 2020 in exchange for 250,000 shares of common stock.  The fair value of these shares was determined based on the closing stock price on that date ($0.03).  The resulting stock-based compensation totaled $7,500, of which $637 was expensed and included in professional fees in the consolidated statement of operations. The remaining balance of $6,863 is reflected in prepaid expenses and other current assets in the consolidated balance sheet and will be expensed over the remaining service period of 11 months.  As the shares were issued on April 1, 2019, they are not reflected as issued and outstanding at March 31, 2019.


On March 22, 2019, the Company received cash totaling $30,000 from one investor in exchange for 1,408,000 shares of the Company’s common stock and warrants to purchase an additional 704,000 shares of the Company’s common stock.  The warrants have a term of 3 years from the date of issuance and an exercise price of $0.07 per share.  The proceeds were allocated among the total number of shares issued (2,112,000) and the warrants based on their relative fair values.   The fair value of the shares was determined using the closing price of the Company’s common stock on the transaction date ($0.05 per share).  The fair value of the warrants was determined using the Black Scholes Merton option-pricing model, assuming stock price volatility of 166.39% and a risk-free interest rate of 2.24%.  Approximately $20,000 and $10,000 was allocated to the shares and the warrants, respectively.  As the warrants are classified as equity instruments, the resulting allocation is deemed a dividend on the shares issued and is reflected in additional paid-in capital in the consolidated balance sheet.


7. Related Party Transactions


Advances from Shareholders


In support of the Company’s efforts and cash requirements, it has historically relied upon advances from related parties. At March 31, 2019 and December 31, 2018, advances from shareholders totaled $142,551 and $173,594, respectively.  These advances are non-interest bearing with no set repayment terms.


Additionally, at March 31, 2019 and December 31, 2018, the Company had accrued compensation payable to the Principal Executive Officer in the amount of $723,350 and $664,700, respectively.


8. Subsequent Events


Management has evaluated subsequent events that occurred through the date of this report that would have a material impact on the consolidated financial statements.  Based on the evaluation, management did not identify any subsequent events that would require adjustment or disclosure in the accompanying consolidated financial statements.


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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Overview


LevelBlox, Inc. (“LevelBlox”) formerly known as AlphaPoint Technology, Inc. (“AlphaPoint”) was incorporated in the State of Delaware on September 27, 2018. The effective date of the Amendment for purposes of Delaware law was September 27, 2018. However, the corporate name change did not take effect at that time, as it required approval by the Financial Industry Regulatory Authority (“FINRA”). On October 18, 2018, FINRA notified the Company that its corporate name change and ticker symbol change would take effect on October 19, 2018.


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


LevelBlox management is currently seeking alternative opportunities in line with their original strategy of acquiring a business in the Blockchain technology sector that is capable of growth and development.


RESULTS OF OPERATIONS


Three months ended March 31, 2019 and 2018


Our consolidated revenues were $10,000 and $0 for the three months ended March 31, 2019 and 2018, respectively.  Revenue recorded during the first quarter of 2019 relates to a new customer contract.


Operating expenses were $221,613 and $84,922 for the three months ended March 31, 2019 and 2018, respectively.  The increase in year over year expenses resulted mainly from the Company’s efforts in business and software development operations.


Net losses incurred in the periods presented have been primarily due to operating costs.  The Company incurred net losses of $211,613 and $84,922 for the three months ended March 31, 2019 and 2018, respectively.


LIQUIDITY AND CAPITAL RESOURCES


As reflected in the consolidated financial statements, at March 31, 2019, we had a deficit in working capital, an accumulated deficit and a net loss.


At March 31, 2019, the Company had current assets of approximately $69,186 and current liabilities of approximately $987,022, resulting in a working capital deficit of approximately $917,836.


We depend on advances from shareholders, to meet any shortfall in meeting our obligations. However, we will require working capital to meet our current shortfall in working capital. If the Company is unable to raise the funds partially through stock offerings, the Company will seek alternative financing through means such as borrowings from institutions or private individuals. There can be no assurance that the Company will be able to raise such funds.


Consequently, there is doubt about the Company’s ability to continue to operate as a going concern. As reflected in the consolidated financial statements we have an accumulated deficit from inception of $5,704,496 as of March 31, 2019 and have a loss from operations of $211,613 and $84,922 for the three months ended March 31, 2019 and March 31, 2018, respectively. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and execution of its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


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


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


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


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


RECENT ACCOUNTING PRONOUNCEMENTS


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


OFF-BALANCE SHEET ARRANGEMENTS


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


MANAGEMENT CONSIDERATION OF ALTERNATIVE BUSINESS STRATEGIES


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


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


INFLATION


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


CRITICAL ACCOUNTING POLICIES AND ESTIMATES


When we prepare our consolidated financial statements and accompanying notes in conformity with U.S. GAAP, we must make estimates and assumptions about future events that affect the amounts we report. Certain of these estimates result from judgments that can be subjective and complex. As a result of that subjectivity and complexity, and because we continuously evaluate these estimates and assumptions based on a variety of factors, actual results could materially differ from our estimates and assumptions if changes in one or more factors require us to make accounting adjustments. During the three months ended March 31, 2019, we reassessed our critical accounting policies and estimates as disclosed in our 2018 Form 10-K; however, we have made no material changes or additions with regard to those policies and estimates.


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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK


Not applicable to a smaller reporting company.


ITEM 4. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


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


Changes in Internal Control Over Financial Reporting


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


Our management assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2019.  The framework used by management in making that assessment was the criteria set forth in the document entitled “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of March 31, 2019, the Company’s internal control over financial reporting was not effective for the purposes for which it is intended, due to material weaknesses stemming from the factors listed below.


The Board of Directors does not currently have an audit committee.

 

 

During 2019, the Company entered into a contract to develop software for a customer. Management did not fully evaluate this contract in order to determine the impact of ASC 606, “Revenue from Contracts with Customers”, which was adopted January 1, 2018.  Given the nature of the accounts affected by this standard and their potentially material impact on the financial statements, we have determined that the lack of timely review is a control deficiency that arises to the level of material weakness.


In response to these material weaknesses, Management intends to give consideration to adopting a more rigorous corporate governance, including the formation of an audit committee in the future. In addition, Management intends to develop a more formal process to evaluate customer contracts as sales of goods and services continue to evolve.


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PART II – OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


None.


ITEM 1A. RISK FACTORS


Not applicable to a smaller reporting company.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


None.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES


None.


ITEM 4. MINE SAFETY DISCLOSURES


Not applicable.


ITEM 5. OTHER INFORMATION


None.


ITEM 6. EXHIBITS


(b) Exhibits:


31.1

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

 

 

32.1

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

 

 

101*

Interactive Data Files of Financial Statements and Notes.


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



SIGNATURE


In accordance with the requirements of the Exchange Act, the Issuer caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 

LevelBlox, Inc.

 

 

 

 

 

 

 

By

/s/ Gary Macleod

 

 

Gary Macleod

 

 

Principal Executive Officer

 

 

 

 

 

DATED: May 20, 2019


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