ITEM 1. BUSINESS.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements. The Securities and Exchange Commission (the “SEC”) encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as “project”, “believe”, “anticipate”, “plan”, “expect”, “estimate”, “intend”, “should”, “would”, “could”, or “may”, or other such words, verbs in the future tense and words and phrases that convey similar meaning and uncertainty of future events or outcomes to identify these forward-looking statements. There are a number of important factors beyond our control that could cause actual results to differ materially from the results anticipated by these forward-looking statements. While we make these forward-looking statements based on various factors and using numerous assumptions, you have no assurance the factors and assumptions will prove to be materially accurate when the events they anticipate actually occur in the future. Factors that could cause our actual results of operations and financial condition to differ materially are discussed in greater detail under Item 1A, “Risk Factors” of this annual report on Form 10-K.
The forward-looking statements are based upon our beliefs and assumptions using information available at the time we make these statements. We caution you not to place undue reliance on our forward-looking statements as (i) these statements are neither predictions nor guaranties of future events or circumstances, and (ii) the assumptions, beliefs, expectations, forecasts and projections about future events may differ materially from actual results. We undertake no obligation to publicly update any forward-looking statement to reflect developments occurring after the date of this report.
GENERAL
Implications of Being an Emerging Growth Company
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2013, or the JOBS Act. As such, we are eligible to 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 of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
We could remain an “emerging growth company” for up to five years, or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (c) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.
We are also considered a "smaller reporting company," If we are still considered a "smaller reporting company" at such time as we cease to be an "emerging growth company," we will be subject to increased disclosure requirements. However, the disclosure requirements will still be less than they would be if we were not considered either an "emerging growth company" or a "smaller reporting company."
For more information, please see our Risk Factor entitled “As an “emerging growth company” under the Jumpstart our Business Startups Act (JOBS Act), we are permitted to rely on exemptions from certain disclosure requirements.”
Corporate Overview
Lockbox Link was incorporated in Nevada on April 10, 2014, as Lockbox Link, Inc. Our principal executive offices are located at 123 W. Nye Lane, Suite 129, Carson City, NV 89706. Our phone number is 858-353-9199. We are a development stage company that intends to specialize in providing real estate agents in the United States the opportunity to increase customer satisfaction, improve productivity, and ensure business continuity by offering the agents' clients a simplified, secure, and predictable home buying process. The company’s intended product is a cloud based software solution (SaaS) that is being developed to provide guidance and security to all the parties who participate in the home buying/selling process via limited control access and innovative user interface. Our proposed solution "Lockbox Link", will be designed to take advantage of the structured flow and repeatability of existing real estate transaction processes. The Company has been doing business since April 10, 2014, when it was formed in the State of Nevada.
We intend to provide a customizable virtual Data Room specifically designed to simplify and automate real estate transactions. We expect our software will offer its users modifiable transaction templates, allowing seamless integration into brokerages’ workflow. This service will be designed to be made available through a cloud-based software-based platform we have named “Lockbox Link”. We expect Lockbox Link to have a subscription fee of $10/month. Our initial focus will be on servicing the California market. As and when the business grows, we intend to broaden our market area to other States and eventually the entire United States. However there can be no assurance that Lockbox Link will be successfully developed, or even if developed, that the Company will be successful in marketing it.
As of the date of this annual report, we have commenced only limited operations with no revenues. Management estimates that the Company has sufficient funds to cover the cost of operating our business for the next 12 months.
We may raise additional capital, by selling shares of our common stock or borrowing funds. We have no commitments from any source to provide additional funding. There can be no assurance that we will be able to raise any or all of the capital required. These factors indicate that we may be unable to continue as a going concern, particularly in the event that we cannot generate sufficient cash flow or raise sufficient capital to conduct our operations. Our financial statements do not include any adjustments to the value of our assets or the classification of our liabilities that might result if we would be unable to continue as a going concern.
Recent Developments
On October 12, 2017, (i) the Company sold 4,500,000 shares of its common stock to Natalie Moores for $25,200; (ii) the sole member board of directors, Iryna Clark, elected Natalie Moores as a director and the Chief Executive Officer, President, and Secretary of the Company; (iii) Iryna Clark resigned as a director and officer of the Company; and (iv) Iryna Clark contributed 4,500,000 shares of common stock to the Company. Ms. Moores is now the sole officer and director and the holder of the majority of issued and outstanding common shares of the Company.
On September 25, 2017, the Company established a $500,000 Secured Line of Credit Agreement with Natalie Moores (the "Line of Credit"). The terms of the Line of Credit provide for interest at 12% per annum on all outstanding balances and is payable in accordance with promissory notes issued in connection with each advance made pursuant to the Line of Credit. Any and all advances are secured by all of the assets of the Company. The availability of funds for draw down from the Line of Credit is subject to the discretion of Ms. Moores.
On October 12, 2017, we received $25,000 from the Line of Credit pursuant to a Promissory Note (the “Note”). The principal and accrued interest on the Note is payable on October 12, 2018.
Lockbox Link also qualifies as a “smaller reporting company” under Rule 12b-2 of the Securities Exchange Act of 1934, as amended, which is defined as a company with a public equity float of less than $75 million. To the extent that we remain a smaller reporting company at such time as we are no longer an emerging growth company, we will still have reduced disclosure requirements for our public filings some of which are similar to those of an emerging growth company including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
Customers
As of the date of this 10-K, we have commenced only limited operations with no revenues. At this time, as we have not yet developed a fully functioning product, we have yet to acquire or establish customers for the product.
Operations/Product Overview
Lockbox Link will be designed to take advantage of the structured flow and repeatability of existing real estate processes. To this end, the software will offer to its users modifiable transaction templates, allowing seamless integration into brokerages’ workflow.
Once developed, the product will consist of brokerage-branded virtual ‘rooms’, with each ‘room’ corresponding to a listed property. Each of the room pages will have a list of documentation pertaining to the specific property, transaction-specific templates (pre-listing, pre-offer, offer, etc.) and a user-specific dashboard that indicates status of the transaction.
The agent will provide their client with a password-protected link upon login. With this password the client will have access to the complete list of documents pertaining to their real estate transaction. For example, our software is proposed to allow a buyer to be able to download the completed Offer form, Counter-Offer, Closing Documents, copies of the title, inspections, and other pertinent documents uploaded by the agent as the transaction progresses. Our proposed virtual data room will provide a centralized and flexible location to store and access all transaction documents, avoiding the typical problems of returned emails, files too large to email, and old versions being printed and sent - currently experienced by the agents and their customers.
A typical use scenario will start with a listing agent signing into his/her LockboxLink account and creating a new ‘room’ during the pre-listing stage. The agent will invite sellers to upload all the documentation needed to list the house for sale; the sellers will be able to have confidence that agent(s) reviewed the submission via “renewed at [date] by [agent name]” time stamp.
Once the listing is active on listing sites, the agent will have an option to include the link to the ‘room’. The listing agent will invite qualified buyers into the room, where they will be able to select viewing times and enter their communication preferences. As the transaction progresses, the listing agent will continue to distribute a pre-determined controlled access to various documents to transaction participants.
Our proposed ‘dashboards’ will provide parties with a simple visualization of relevant information. For example, a listing agent will be able to see the transaction status on all her listed properties (including top offers, most active buyers, etc.), a list of items that need her attention, and a calendar. A brokerage owner will be able to monitor the status of all properties and all agents that are associated with his/her brokerage, thus being able to support or step into any transaction at any point. The buyers will be able to see how their offer compares to competitors in the area, as well as the transaction status of any offer made and get information regarding the next step.
The history of recent acquisition in the real estate industry demonstrated that acquirers continue to focus on short-term agents-targeting transactions by upgrading features offered on their advertising platforms (Examples: Zillow’s acquisition of DotLoop for $108, CBRE acquisition of Floored, etc). At the same time, transaction-focused innovations, such as SkySlope, are still focused on reducing the cost of compliance and signing rather than on improving customer service.
While our core focus remains to be on residential real estate industry, we are working on new products model that will be able to use existing developed software infrastructure, such as Salesforce, extending it into real estate vertical. At this point of development, all the operations conducted in-house, and no outside contractors are being engaged for the purpose of development, operations, or advertising.
Future Revenue Generation
We intend to provide a customizable virtual Data Room specifically designed to simplify and automate real estate transactions. We expect our software will offer its users modifiable transaction templates, allowing seamless integration into brokerages’ workflow. This service will be designed to be made available through a cloud-based software-based platform we have named “Lockbox Link". We expect Lockbox Link to have a subscription fee of $10/month. Our initial focus will be on servicing the California market. As and when the business grows, we intend to broaden our market area to other States and eventually the entire United States. However there can be no assurance that Lockbox Link will be successfully developed, or even if developed, that the Company will be successful in marketing it.
Competition
The market for cloud-based virtual data rooms to ease the complexity of the real estate transaction process is split between a number of direct and indirect competitors: (1) diversified, (2) focused, and (3) social-based. Diversified competitors are those that expanded their mergers and acquisitions cloud-based virtual data room business to include Real Estate. The ‘focused’ competition, such as Real Workspaces, focuses largely on delivering virtual data room to the commercial real estate market. The ‘social-based’ competitors, such as Dot Loop, focus primarily on adding secure file sharing to internal social networks instead of real estate transactions.
Most of these businesses have longer operating histories and significantly greater financial, technical, marketing and managerial resources than we do. We expect that we will continue to face additional competition from new entrants into the market.
Status of Any Publicly Announced New Product or Service.
We have not developed any new or unique products or services that would make us stand above our competition. While the Internet will provide a new tool for advertising and customer interface, there has been no significant change in the services we intend to provide. We will be utilizing the Internet as a mainstay of our future advertising and support. Additionally our product development efforts will be focused on how our competitors are utilizing advanced technology and changes in building methods. We do not currently have a sales force other than our officer and director. However, we will hire additional internal sales personnel or seek independent contractors, as may be needed to market our products.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts
At the present time we do not own or have any patents, trademarks, licenses franchises, concessions, royalty agreements or labor contracts. We do own the rights to the domain name lockboxlink.com, which was developed internally by our CEO. However, in the future, as we may utilize the services of contract developers and/or third party licensed platforms, our success may depend in part upon our ability to preserve our trade secrets, obtain and maintain patent protection for our technologies, products and processes, and operate without infringing upon the proprietary right of other parties. However, we may rely on certain proprietary technologies, trade secrets, and know-how that are not patentable. Although we may take action to protect our unpatented trade secrets and our proprietary information, in part, by the use of confidentiality agreements with our employees, consultants and certain of our contractors, we cannot guarantee that:
(a) these agreements will not be breached;
(b) we would have adequate remedies for any breach; or
(c) our proprietary trade secrets and know-how will not otherwise become known or be independently developed or discovered by competitors.
We cannot guarantee that our actions will be sufficient to prevent imitation or duplication of either our products or services by others or prevent others from claiming violations of their trade secrets and proprietary rights.
Government Regulation
We are subject to a limited variety of local, state, and federal regulations. While we believe that our operations are in compliance with all applicable regulations, there can be no assurances that from time to time unintentional violations of such regulations will not occur. We are subject to federal, state and local laws and regulation applied to businesses, such as payroll taxes on the state and federal levels. Our current business requires that we comply with state corporate filings, city or county business license and the necessary business liability insurance. The requirements of these regulations are minimal and do not cause any undue burden.
Internet access and online services are not subject to direct regulation in the United States. Changes in the laws and regulations relating to the telecommunications and media industry, however, could impact our business. For example, the Federal Communications Commission could begin to regulate the Internet and online service industry, which could result in increased costs for us. The laws and regulations applicable to the Internet and to our services are evolving and unclear and could damage our business. There are currently few laws or regulations directly applicable to access to, or commerce on, the Internet. Due to the increasing popularity and use of the Internet, it is possible that laws and regulations may be adopted, covering issues such as user privacy, defamation, pricing, taxation, content regulation, quality of products and services, and intellectual property ownership and infringement. Such legislation could expose us to substantial liability as well as dampen the growth in use of the Internet, decrease the acceptance of the Internet as a communications and commercial medium, or require us to incur significant expenses in complying with any new regulations.
Our Employees
Our President and sole director, Natalie Moores currently is in charge of our operations. Ms. Moores does not receive any compensation for her services. We have no other employees.
Description of Property
We do not own any real property. Our business presently uses office space at no charge belonging to our President.
Capital Requirements
Management estimates that the Company will require $40,000 to cover the cost of operating our business until December 31, 2018. Other than the Line of Credit from Ms. Moores, we have no commitments from any source to provide additional funding.
We may raise additional capital, by selling shares of our common stock or borrowing funds. There can be no assurance that we will be able to raise any or all of the capital required. These factors indicate that we may be unable to continue as a going concern, particularly in the event that we cannot generate sufficient cash flow or raise sufficient capital to conduct our operations. Our financial statements do not include any adjustments to the value of our assets or the classification of our liabilities that might result if we would be unable to continue as a going concern.
On September 25, 2017, the Company established a $500,000 Secured Line of Credit Agreement with Natalie Moores (the "Line of Credit"). The terms of the Line of Credit provide for interest at 12% per annum on all outstanding balances and is payable in accordance with promissory notes issued in connection with each advance made pursuant to the Line of Credit. Any and all advances are secured by all of the assets of the Company. The availability of funds for draw down from the Line of Credit is subject to the discretion of Ms. Moores.
ITEM 1A.
ITEM 1A. RISK FACTORS
RISKS ASSOCIATED TO OUR STATUS AS A SHELL
BECAUSE WE ARE CONSIDERED TO BE A "SHELL COMPANY" UNDER APPLICABLE SECURITIES RULES, INVESTORS MAY NOT BE ABLE TO RELY ON THE RESALE EXEMPTION PROVIDED BY RULE 144 OF THE SECURITIES ACT. AS A RESULT, INVESTORS MAY NOT BE ABLE TO RE-SELL OUR SHARES AND COULD LOSE THEIR ENTIRE INVESTMENT.
We are considered to be a "shell company" under Rule 405 of Regulation C of the Securities Act. A "shell company" is a company with either no or nominal operations or assets, or assets consisting solely of cash and cash equivalents. As a result, our investors are not allowed to rely on Rule 144 of the Securities Act for a period of one year from the date that we cease to be a shell company. Because investors may not be able to rely on an exemption for the resale of their shares other than Rule 144, and there is no guarantee that we will cease to be a shell company, they may not be able to re-sell our shares in the future and could lose their entire investment as a result.
Further, as a shell company we are ineligible to use a Form-8 registration statement until sixty (60) days after we cease being a shell company and have filed required information with the SEC. Form S-8 is a filing with the Securities and Exchange Commission that is used by a publicly traded company to register securities that will be offered to its employees via a benefit or incentive plan.
Risks Related To the Company
Our Auditor Has Expressed Substantial Doubt About Our Ability To Continue As A Going Concern.
These financial statements included with this registration statement have been prepared on a going concern basis. We have a negative working capital of ($818) and an accumulated deficit of ($115,418) as of December 31, 2017. We may not be able to generate profitable operations in the future and/or obtain the necessary financing to meet our obligations and repay liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time. These factors raise substantial doubt that we will be able to continue as a going concern. The Company as of December 31, 2017, has funded its initial operations through the issuance of shares of capital stock and borrowings from a line of credit from our President and majority shareholder. Management plans to continue to provide for its capital needs by the issuance of common stock. Our financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.
We Have a Limited Operating History.
We have a limited operating history and cannot predict if we will be successful in pursuing our business. We commenced operations as Lockbox Link, Inc. on April 10, 2014. We have not yet generated any revenue from our business and may not be able to ever generate revenues and even if we do generate revenues, there can be no assurance that we will attain profitable operations.
No assurance can be given that we will be able to develop the Lockbox Link product, or even if developed, that a market will develop, or that customers and advertisers will be willing to pay for the Company’s products or services.
Lockbox Link is a new and unproven business model. The success of our business model depends upon;
our ability to develop a working online website,
our ability to obtain a critical mass of paying subscribers and advertisers to pay for our products and services,
our ability to develop and provide working and efficient products and services
our ability to sell our product and services , advertising space and other future marketing programs.
We have not as yet developed our product and there can be no assurance that we will develop a product that is marketable. Failure to develop and execute on any or all of the above activities would adversely affect the results of our operations
If real estate agents, brokers, mortgage professionals or other advertisers do not include us in their advertising spending and we are unable to attract other advertisers, our business would be harmed
Our current financial model depends partially on advertising revenues generated almost entirely through sales to real estate agents, brokerages, mortgage lenders, and advertisers in categories relevant to real estate. Our ability to attract and retain advertisers, and ultimately to generate advertising revenue depends on a number of factors, including:
Increasing the number of consumers of our products and services;
Competing effectively for advertising dollars with other online media companies;
Continuing to develop our advertising products and services;
Keeping pace with changes in technology and with our competitors; and
Offering an attractive return on investment to our advertisers for their advertising spending with us.
While real estate agents, brokers, and home buyers/sellers participating in our subscription-based software generally commit to contract terms of 12 months, we do not anticipate long-term contracts with advertisers. Those advertisers could choose to modify or discontinue their relationships with us with little or no advance notice. In addition, as subscriptions for our software expire, we may not be successful in renewing these subscriptions, securing new subscriptions or increasing the amount of revenue we earn for a given subscription over time. We may not succeed in capturing a greater share of our advertisers’ spending if we are unable to convince advertisers of the effectiveness or superiority of our products as compared to alternatives, including traditional offline advertising media such as television and newspapers. If current advertisers reduce or end their advertising spending with us and we are unable to attract new advertisers, our advertising revenues and business, results of operations and financial condition would be harmed.
If we do not innovate and provide products and services that are attractive to our users and to our advertisers, our business could be harmed.
Our business will depend on our continued innovation to provide products and services that make our website and mobile applications useful for consumers and real estate and mortgage professionals and attractive to our advertisers. As a result, we anticipate having to continually invest significant resources in research and development in order to improve the attractiveness and comprehensiveness of our products and services and effectively incorporate new Internet and mobile technologies into them. If we are unable to provide products and services that users, including real estate professionals, want to use, then users may become dissatisfied and use competitors’ websites and mobile applications. If we are unable to continue offering innovative products and services, we may be unable to attract additional users and advertisers or retain users and advertisers which elect to use our service, which could harm our business, results of operations and financial condition.
We may be unable to increase awareness of the Lockbox link brand cost effectively, which could harm our business.
We will rely heavily on the Lockbox Link brand, which we believe is a key asset of our company. Awareness and perceived quality and differentiation of the Lockbox Link brand are important aspects of our efforts to attract and expand the number of consumers who use our website and mobile applications. Should the competition for awareness and brand preference increase among real estate cloud based software providers, we may not be able to successfully maintain or enhance the strength of our brand. If in the future we choose to engage in a paid advertising campaign to further promote the Lockbox Link brand, such efforts may not be successful. If we are unable to maintain or enhance user and advertiser awareness of our brand cost-effectively, our business, results of operation and financial condition could be harmed.
We are dependent on the real estate industry, and changes to that industry, or declines in the real estate market or increases in mortgage interest rates, could reduce the demand for our products and services.
Our financial prospects are significantly dependent on real estate shoppers using our services. Real estate shopping patterns depend on the overall health of the real estate market, which has been volatile in the recent years. Changes to the regulation of the real estate industry, including mortgage lending, may negatively impact the prevalence of home ownership. Changes to the real estate industry, declines in the real estate market or increases in mortgage interest rates could reduce demand for our services. Real estate markets may also be negatively impacted by a significant natural disaster, such as earthquake, fire, flood, or other disruption.
We may be unable to maintain or establish relationships with real estate brokerages, real estate listing aggregators, multiple listing services, apartment management companies, home builders and other third party listing providers, which could limit the information we are able to provide to our users.
Our ability to attract new users to our website depends to some degree on acquiring and retaining a robust number of real estate brokerages, listing agents, home buyers/sellers, and other third parties. To acquire such users, we must maintain relationships with real estate brokerages, listing agents, real estate listing aggregators, home buyers/sellers, home builders, and other third-party listing providers to utilize our services. Our agreements with real estate listing providers and home buyers/sellers are short term agreements that may be terminated with limited notice. The loss of some of our relationships with these personnel, whether due to termination of agreements or otherwise, or an inability to continue to add new clients, could harm our business, results of operations and financial condition.
We face competition to attract consumers to our website and mobile applications, which could impair our ability to continue to grow the number of users who use our website and mobile applications, which would harm our business, result of operations and financial condition.
Our success depends on our ability to continue to attract additional consumers to our website and mobile applications. Our existing and potential competitors include companies that operate, or could develop, national and local real estate and mortgage websites. These companies could devote greater technical and other resources than we have available, have a more accelerated time frame for deployment and leverage their existing user bases and proprietary technologies to provide products and services that consumers might view as superior to our offerings. Any of our future or existing competitors may introduce different solutions that attract consumers or provide solutions similar to our own but with better branding or marketing solutions. If we are unable to continue to grow the number of consumers who use our website and mobile applications, our business, results of operations and financial condition would be harmed.
We may be unable to compete successfully against our existing or future competitors in attracting advertisers, which could harm our business, results of operations and financial condition.
We compete to attract advertisers with media sites, including websites dedicated to providing real estate and mortgage information and services to real estate professionals and consumers, and major Internet portals, general search engines and social media sites, as well as other online companies. We also compete for a share of advertisers’ overall marketing budgets with traditional media such as television, magazines, newspapers and home/apartment guide publications, particularly with respect to advertising dollars spent at the local level by real estate professionals to advertise their qualifications and listings. Large companies with significant brand recognition have large numbers of direct sales personnel and substantial proprietary advertising inventory and web traffic, which may provide a competitive advantage. To compete successfully for advertisers against future and existing competitors, we must continue to invest resources in developing our advertising platform and proving the effectiveness and relevance of our advertising products and services. Pressure from competitors seeking to acquire a greater share our advertisers’ overall marketing budget could adversely affect our pricing and margins, lower our revenue, and increase our research and development and marketing expenses. If we are unable to compete successfully against our existing or future competitors, our business, financial condition or results of operations would be harmed.
If we fail to manage our growth effectively, our brand, results of operations and business could be harmed.
As we continue to grow, we must effectively integrate, develop and motivate a large number of new employees, while maintaining the beneficial aspects of our company culture. In particular, we intend to pursue strategic opportunities and make substantial investments in our technology and development and sales and marketing organizations. If we do not manage the growth of our business and operations effectively, the quality of our services and efficiency of our operations could suffer, which could harm our brand, results of operations and overall business.
Any significant disruption in service on our website or in our network could damage our reputation and result in a loss of users of our products and services and of advertisers, which could harm our business, results of operations and financial condition.
Our brand, reputation and ability to attract users and advertisers depend on the reliable performance of our network infrastructure and content delivery processes. Interruptions in these systems, whether due to system failures, computer viruses or physical or electronic break-ins, could affect the security or availability of our products and services on our website and mobile applications and prevent or inhibit the ability of users to access our services. Problems with the reliability or security of our systems could harm our reputation, result in a loss of users of our products and services and of advertisers and result in additional costs, any of which could harm our business, results of operations and financial condition.
Substantially all of the communications, network and computer hardware used to operate our website are located at facilities in the area. We do not own or control the operation of these facilities. Our systems and operations are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, terrorist attacks, acts of war, electronic and physical break-ins, computer viruses, earthquakes and similar events. The occurrence of any of the foregoing events could result in damage to our systems and hardware or could cause them to fail completely, and our insurance may not cover such events or may be insufficient to compensate us for losses that may occur.
A failure of our systems at one site could result in reduced functionality for our users, and a total failure of our systems could cause our website or mobile applications to be inaccessible. Problems faced by our third-party web hosting providers with the telecommunications network providers with which they contract or with the systems by which they allocate capacity among their customers, including us, could adversely affect the experience of our users. Our third-party web hosting providers could decide to close their facilities without adequate notice. Any financial difficulties, such as bankruptcy reorganization, faced by our third-party web hosting providers or any of the service providers with whom they contract may have negative effects on our business, the nature and extent of which are difficult to predict. If our third-party web hosting providers are unable to keep up with our growing needs for capacity, this could harm our business.
We Are Dependent On The Services Of A Certain Key Officer And The Loss Of Her Services Could Harm Our Business.
Our success largely depends on the continuing services of our Chairman and Chief Executive Officer, Natalie Moores. Successful operations will depend on our ability to attract and retain qualified personnel. We believe that Ms. Moores possesses valuable industry knowledge, experience and leadership abilities that would be difficult in the short term to replicate. The loss of her as a key employee could harm our operations, business plans and cash flows.
Because Our Sole Officer Has Other Outside Business Activities, She Will Have Limited Time To Spend On Our Business, Our Operations May Be Sporadic, Which May Result In Periodic Interruptions Or Suspensions Of Operations.
Because our sole officer and director has other outside business activities and will only be devoting approximately 20% of her time to our operations, our operations may be sporadic and occur at times which are inconvenient to her In the event she is unable to fulfill any aspect of her duties to the Company, we may experience a complete lack of sales resulting in little or no revenues and eventual closure of the business.
Our Business Plan Requires Additional Capital, Which May Not Be Available.
In order to execute our business plan, we anticipate that we will need to obtain additional financing as we expand our operations. These funds may be obtained through additional public or private debt or equity financings, bank borrowings or from strategic alliances or joint ventures. We may not be successful in obtaining additional funds in a timely manner or favorable terms or at all. If we do not have access to additional capital, we may be required to delay, scale back or abandon some or all of our growth strategies or reduce capital expenditures and the size of our operations and as a result may experience a material adverse effect on our business, results of operations and cash flows.
Risk Factors Related to the JOBS Act
We are an ‘Emerging Growth Company” and we intend to take advantage of reduced disclosure and governance requirements applicable to Emerging Growth Companies, which could result in our stock being less attractive to investors.
We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, which we refer to as the JOBS Act, and we intend to 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 a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We expect to take advantage of these reporting exemptions until we are no longer an emerging growth company, which in certain circumstances could be for up to five years.
The Company’s election to take advantage of the jobs act’s extended accounting transition period may not make its financial statements easily comparable to other companies.
Pursuant to the JOBS Act of 2012, as an emerging growth company the Company can elect to take advantage of the extended transition period for any new or revised accounting standards that may be issued by the Public Company Accounting Oversight Board ("PCAOB") or the Securities & Exchange Commission ("SEC"). The Company has elected take advantage of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the standard on the private company timeframe. This may make comparison of the Company's financial statements with any other public company which is not either an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible as possible different or revised standards may be used.
The Jobs Act will also allow the Company to postpone the date by which it must comply with certain laws and regulations intended to protect investors and reduce the amount of information provided in reports filed with the
The JOBS Act is intended to reduce the regulatory burden on “emerging growth companies. The Company meets the definition of an emerging growth company and so long as it qualifies as an “emerging growth company,” it will, among other things:
be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting.
be exempt from the “say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Act and certain disclosure requirements of the Dodd-Frank Act relating to compensation of its chief executive officer;
be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Securities Exchange Act of 1934 and instead provide a reduced level of disclosure concerning executive compensation; and
be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements
The Company currently intends to take advantage of some or all of the reduced regulatory and reporting requirements that will be available to it so long as it qualifies as an “emerging growth company”.
As long as the Company qualifies as an Emerging Growth Company, the Company’s independent registered public accounting firm will not be required to attest to the effectiveness of the company’s internal control over financial reporting.
Because the Company has elected to take advantage of the extended time periods for compliance with new or revised accounting standards provided for under Section 102(b) of the JOBS Act, among other things, this means that the Company's independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of the Company's internal control over financial reporting so long as it qualifies as an emerging growth company, which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as it qualifies as an emerging growth company, the Company may elect not to provide certain information, including certain financial information and certain information regarding compensation of executive officers that would otherwise have been required to provide in filings with the SEC, which may make it more difficult for investors and securities analysts to evaluate the Company. As a result, investor confidence in the Company and the market price of its common stock may be adversely affected.
The Company may lose its status as an Emerging Growth Company.
Under Section 2(a)(19) of the Securities Act of 1933 and Section 3(a)(80) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), an Emerging Growth Company ("EGC") will lose its EGC status upon the earliest of:
the last day of the first fiscal year in which the company's annual gross revenues exceed $1 billion;
the date on which the company is deemed to be a large accelerated filer (as defined in Rule 12b-2 under the Exchange Act);
the date on which the company has, during the previous three-year period, issued more than $1 billion in non-convertible debt; and
the last day of the fiscal year in which the fifth anniversary of the company's first sale of equity securities pursuant to an effective registration statement occurs.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2.
ITEM 2. PROPERTIES.
We do not own any real estate or other properties. We utilize office space owned by our President at no cost. We will not seek independent office space until we pursue a viable business opportunity and recognize income.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
We know of no legal proceedings to which we are a party or to which any of our property is the subject which are pending, threatened or contemplated or any unsatisfied judgments against us.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5.
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
There has been no public market for our securities. We cannot assure you that there will be a market in the future for our common stock.
The Company intends to seek to have its shares listed on the OTC Markets. OTC Markets securities are not listed or traded on the floor of an organized national or regional stock exchange. OTC Markets issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange. As of the date of this filing, we do not have a valid trading symbol and our shares of common stock are not being traded on the public markets.
Number of Holders
As of December 31, 2017, the 5,444,500 issued and outstanding shares of common stock were held by a total of 24 shareholders of record.
Dividends
No cash dividends were paid on our shares of common stock during the fiscal years ended December 31, 2017 and December 31, 2016. We have not paid any cash dividends since our inception and do not foresee declaring any cash dividends on our common stock in the foreseeable future.
Recent Sales of Unregistered Securities Purchase of our Equity Securities by Officers and Directors
On October 12, 2017, Iryna Clark resigned as our sole director and officer of the Company, and delivered 4,500,000 of Ms. Clark’s common stock to the Company. Also on October 12, 2017, Natalie Moores paid $25,200 for 4,500,000 shares of our common stock, was appointed as the sole director and Chief Executive Officer and President of the Company.
Other Stockholder Matters
None.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs if we proceed with our current business plan. Our actual results could differ materially from those discussed in the forward looking statements. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Working Capital
December 31,
$
December 31,
$
Current Assets
47,725
4,004
Current Liabilities
(48,543)
(10,285)
Working Capital (Deficit)
(818)
(6,281)
Cash Flows
Year ended
December 31,
$
Year ended
December 31,
$
Cash Flows used in Operating Activities
(34,954)
(11,647)
Cash Flows provided by Investing Activities
-
-
Cash Flows provided by Financing Activities
30,950
-
Net Increase in Cash During Period (loss)
(4,004)
(11,647)
Operating Revenues
During the years ended December 31, 2017 and 2016, the Company did not generate any revenues.
Operating Expenses and Net Loss
During the year ended December 31, 2017, the Company incurred operating expenses of $19,033 and a net loss of $19,737 compared with $19,102 during the year ended December 31, 2016. The increase in operating expenses and net loss is due to accrued interest on operating loans made over the year ended December 31, 2017. The Company has limited its expenditure of resources on items that are not critical to the development of the basic core product.
For the year ended December 31, 2017, the Company sustained a net loss of $19,737 or less than $0.01 loss per share compared to a net loss of $19.102 or less than $0.01 per share for the year ended December 31, 2016.
Liquidity and Capital Resources
As of December 31, 2017, the Company had cash of $-0- and total assets of $47,725 compared to $4,004 and $4,004 at December 31, 2016. The increase in cash and total assets were due to the sales of stock and the issuance of the first tranche of funding in accordance with the Line of Credit of October 2017. The Company did not raise any new funding from financing or investing activities in 2016.
At December 31, 2017, the Company had total liabilities of $48,543 consisting of $1,889 in accounts payable and accrued liabilities, $21,654 including $704 in accrued interest in loans payable-related party, and $25,000 in Notes payable, in accordance with the Line of Credit agreement of October 2017, compared to liabilities of $10,285 as at December 31, 2016. The decrease in liabilities and subsequent increase in loans payable and accrued interest was due to loans received from a related party for continued operations and the Letter of Credit. We had no Notes payable at December 31, 2016.
During the year ended December 31, 2017, the Company received 4,500,000 shares of common stock from our prior Director Iryna Clark and sold 4,500,000 shares of common stock to Natalie Moores for $25,200. During the year ended December 31, 2016, the Company did not have any equity transactions.
Cashflow from Operating Activities
During the year ended December 31, 2076, the Company used cash of $34,954 for operating activities compared to $11,647 during the year ended December 31, 2015. The increase in the use of cash for operating activities was due to increase in prepaid expenses and settlement of payables.
Cashflow from Investing Activities
During the years ended December 31, 2017 and 2016, the Company did not have any investing activities.
Cashflow from Financing Activities
During the year ended December 31, 2017, the Company sold 4,500,000 shares of common stock for $25,200. The Company also received a funding commitment for $25,000 tranche loan. During the year ended December 31, 2016, the Company did not have any financing activities.
Going Concern
The Company has not attained profitable operations and is dependent upon obtaining financing to conduct and continue day-to-day activities. For these reasons, the Company’s auditors stated in their report on the Company’s audited financial statements, as and for the years ended December 31, 2017 and 2016, that they have substantial doubt that the Company will be able to continue as a going concern without further financing.
Off-Balance Sheet Arrangements
The Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
Company management regularly evaluates the accounting policies and estimates used to prepare our financial statements. A complete summary of these policies is included in the notes to the financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Plan of Operation and Funding
The Company is developing a minimum viable product to test it with key customer segments in order to prepare for a deployment of this product in selected markets in 2018. The Company is conducting primary market research to identify and engage a core community of Beta testers, developing user interface and user experience maps as an internal effort, and may use an external developer to develop the initial prototype. Our internal team has significant experience in market research, software planning, testing and prototyping capabilities.
During the product development stage, management will be actively collecting leads, including those for Product Testers, future end-users and industry facilitators. The Company’s pre-launch leads generation program consists of proactive Interest List opt-in on our website, Lockboxlink.com, attendees from the industry and networking events, and referrals. In addition, the management team will be reaching out to industry experts and opinion leaders in order to develop relationships that will facilitate future sales.
The Company’s current burn rate is approximately $16,500 per year. Management does not believe that its current cash on hand will cover the current estimated burn rate and our operating activities for the next 12 months.
Management believes that working capital requirements will continue to be funded through a combination of loans from the principal shareholders, as to which there can be no assurance, and further issuances of securities, also as to which there can also be no assurance. The Company’s working capital requirements are expected to increase, if and when the Company acquires assets or a business.
The Company does not have any bank financing arrangements. Additional issuances of equity or convertible debt securities, if any, will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to the Company’s common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of any new prospective new business endeavors or opportunities, which could significantly and materially restrict its business operations.
Material Commitments
As of December 31, 2017, and as of the date of filing this Annual Report on Form 10-K, the Company has commitments of $25,000 to repay a Note from our primary shareholder for operations. As of December 31, 2016, the Company did not have any material commitments.
Purchase of Significant Equipment
Management does not intend to purchase any significant equipment unless and until the Company acquires assets or obtains significant revenue producing contracts.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to smaller reporting companies.
ITEM 8.
ITEM 8. FINANCIAL AND SUPPLEMENTARY DATA.
LOCKBOX LINK INC.
Financial Statements
For the Years Ended December 31, 2017 and 2016
Report of Independent Registered Public Accounting Firm
Balance Sheets
Statements of Operations
Statement of Stockholders’ Equity (Deficit)
Statements of Cash Flows
Notes to the Financial Statements
LOCKBOX LINK, INC.
BALANCE SHEET
For the years ended December 31, 2017 and 2016
ASSETS
(audited)
(audited)
Current assets
Cash in bank
$
-
$
4,004
Other receivables
40,200
-
Prepaid legal fees
7,525
-
Total assets
$
47,725
$
4,004
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities
$
1,889
$
10,285
Loans payable - related party (including interest of $704)
21,654
-
Notes payable - related party
25,000
-
Total Current liabilities
48,543
10,285
Commitments and contingencies
-
-
Shareholders' deficit
Preferred stock, 10,000,000 shares authorized,
0 issued and outstanding as of December 31, 2017 and 2016
-
-
Common stock, 100,000,000 shares, par value $0.001,
authorized, 5,444,500 issued and outstanding
as of December 31, 2017 and 2016
5,445
5,445
Additional paid in capital
109,155
83,955
Accumulated deficit
(115,418)
(95,681)
Total shareholders' deficit
(818)
(6,281)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT
$
47,725
$
4,004
The accompanying notes are an integral part of these financial statements.
LOCKBOX LINK, INC.
STATEMENTS OF OPERATIONS
For the years ended December 31, 2017 and 2016
Revenue
$
-
$
-
General expenses
Consulting fees
2,000
Professional fees
18,082
15,160
Operating expenses
1,942
Total general expenses
$
19,033
$
19,102
Net loss from operations
(19,033)
(19,102)
Interest expense
-
Net loss
$
(19,737)
$
(19,102)
Loss per common share
$
0.00
*
$
0.00
*
Weighted average of shares outstanding
5,445,000
5,445,000
* Less that $0.01 per share
The accompanying notes are an integral part of these financial statements.
LOCKBOX LINK, INC.
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
For the years ended December 31, 2017 and 2016
The accompanying notes are an integral part of these financial statements.
LOCKBOX LINK, INC.
STATEMENTS OF CASH FLOWS
For the years ended December 31, 2017 and 2016
Cash flows from operating activities:
Net income (loss)
$
(19,737)
$
(19,102)
Adjustment to reconcile net to net cash used in operating activities
Increase in Prepaid legal fees
(7,525)
-
Increase in accounts payable and accrued expenses
(8,396)
7,455
(Decrease) Increase in interest payable - related party
-
Net cash used in operating activities
(34,954)
(11,647)
Cash flows from investing activities:
-
-
Net cash realized from investing activities
-
-
Cash flows realized from financing activities:
Sale of common stock
10,000
-
Notes payable - related party
20,950
-
Net cash provided by financing activities
30,950
-
Increase in cash and cash equivalents
(4,004)
(11,647)
Cash and cash equivalents at the beginning of period
4,004
15,651
Cash and cash equivalents at end of period
$
-
$
4,004
Non-cash financing activities:
Sale of common stock
15,200
-
Notes payable - related party
25,000
-
Net cash provided by financing activities
40,200
-
The accompanying notes are an integral part of these financial statements.
LOCKBOX LINK, INC.
FOOTNOTES TO FINANCIAL STATEMENTS
Note 1 - Organization and Nature of Operations
LockBox Link, Inc. (“the Company”) is engaged in developing, producing, marketing and selling internet software applications to better facilitate transactions for the real estate industry. The Company was incorporated in the State of Nevada on April 10, 2014 with a principal office in Carson City. The Company is in the development stage and is presently undertaking research and development in what will become its core line of products.
Note 2 - Summary of Significant Accounting Policies
Election to be treated as an emerging growth company - In 2014, the Company elected to use the extended transition period now available for complying with new or revised accounting standards under Section 102(b) (1). This election permits the Company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, these financial statements may not be comparable to companies that comply with public company effective dates.
Going Concern - The financial statements have been prepared assuming the Company will continue as a going concern. In this its first year, the Company has incurred a net loss and negative operating cash flow. To the extent the Company may have negative cash flows in the future; it will continue to require additional capital to fund operations. The Company obtained additional capital investments under various debt and common stock issues. Although management continues to pursue its financing plans, there is no assurance that the Company will be successful in obtaining sufficient revenues to generate positive cash flow. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents - For purposes of the Statement of Cash Flows, the Company considers highly liquid investments with an original maturity of three months or less to be cash equivalents. At December 31, 2017 and 2016, the Company did not have any cash equivalents.
Accounts Receivable - The Company evaluates credit loss reserves for accounts receivable on an individual receivable basis. A specific impairment allowance reserve is established based on expected future cash flows and the financial condition of the debtor. Management will charge off customer balances in part or in full when it is more likely than not that we will not collect that amount of the balance due. There are no Accounts receivables at December 31, 2017 or 2016.
Revenue Recognition - The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards and Codification for revenue recognition. The Company recognizes revenue when services are realized or realizable and earned less estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met:
(1)Pervasive evidence of an arrangement exists;
(2)The services have been rendered and all required milestones achieved;
(3)The sales price is fixed or determinable; and
(4)Collectability is reasonably assured.
Deferred Taxes. The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
Note 2 - Summary of Significant Accounting Policies- Continued
ASC 740, Income Taxes, requires a company to first determine whether it is more likely than not (which is defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more likely than not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority.
The Federal and state income tax returns of the Company for 2014, 2015 and 2016 are subject to examination by the internal Revenue Service and state taxing authorities for three (3) years from the date filed
Fair value of financial instruments. The Company measures its financial and non-financial assets and liabilities, as well as makes related disclosures, in accordance with FASB Accounting Standards Codification No. 820, Fair Value Measurement (“ASC 820”), which provides guidance with respect to valuation techniques to be utilized in the determination of fair value of assets and liabilities. Approaches include, (i) the market approach (comparable market prices), (ii) the income approach (present value of future income or cash flow), and (iii) the cost approach (cost to replace the service capacity of an asset or replacement cost). ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one more significant inputs or significant value drivers are unobservable.
Our financial instruments include cash, accounts payable and accrued expenses, other receivables, and loans and notes payable.
Risk and Uncertainties. The Company is subject to risks common to companies in the service industry, including, but not limited to, litigation, development of new technological innovations and dependence on key personnel.
Recent Accounting Pronouncements. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which requires lessees to recognize most lease liabilities on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The update states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The update is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The impact of this guidance will result in the recognition of assets and liabilities for leases that the Company enters into in the future.
The FASB issued ASC 606 as guidance on the recognition of revenue from contracts with customers in May 2014 with amendments in 2015 and 2016. Revenue recognition will 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 guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The company will adopt the guidance on January 1, 2018 and apply the cumulative catchup transition method. The transition adjustment to be recorded to stockholders’ equity upon adoption of the new standard is not expected to be material
The Company reviewed all recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC and they did not or are not believed by management to have a material impact on the Company’s present or future financial statements.
Note 3 - Going Concern
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As of December 31, 2017, the Company has earned no revenue and has a retained deficit of ($115,418). Management believes that the Company’s capital requirements will depend on many factors including the success of the Company’s development efforts and its efforts to raise capital. Management also believes the Company needs to raise additional capital for working capital purposes. There can be no assurance that the Company will be able to obtain the additional capital resources necessary to implement its business plan or that any assumptions relating to its business plan will prove accurate.
These factors raise substantial doubt about our ability to continue as a going concern. 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.
Note 4 - Cash on hand
As of December 31, 2017, the Company has $-0- funds available.
Note 5 - Other receivables
On October 12, 2017, Natalie Moores purchased 4,500,000 shares of our common stock for $25,200. From that amount, a retainer of $10,000 was paid on our behalf to our legal counsel. Because we did not have a new bank account available, the money remains as a receivable.
As of December 31, 2017, the Company has a $40,200 receivable balance outstanding, including $25,000 from Notes payable (See Note 7).
Note 6 - Accounts payable and accrued liabilities
As of December 31, 2017 and 2016, the Company has outstanding $1,889 and $10,285 outstanding in accounts payable and accrued expenses directly relating to operational expenses, legal fees, and compliance fees, respectively.
Note 7 - Loans and Notes payable - related party
As of December 31, 2017 and 2016, the Company has outstanding $21,654 including $704 in accrued interest and $-0- in loans outstanding, 8% interest rate, maturing April 2018, directly relating to operational expenses, legal fees, and compliance fees, respectively.
On September 25, 2017, the Company established a $500,000 Secured Line of Credit Agreement with Natalie Moores (the "Line of Credit"). The terms of the Line of Credit provide for interest at 12% per annum on all outstanding balances and is payable in accordance with promissory notes issued in connection with each advance made pursuant to the Line of Credit. Any and all advances are secured by all of the assets of the Company. The availability of funds for draw down from the Line of Credit is subject to the discretion of Ms. Moores. In October 2017, the Company received $25,000 pursuant to the terms of the Line of Credit.
As of December 31, 2017 and 2016, the Company has outstanding $25,000 and $-0- in Notes payable - related party.
Note 8 - Stockholders’ Equity (Deficit)
Capital Stock. The Company is currently authorized to issue 100,000,000 shares of common stock, par value of $0.001 per share.
During the period from inception (April 10, 2014) to December 31, 2014, the Company issued 5,000,000 shares of common stock to its founder and 444,500 shares of common stock to unrelated parties for $89,400. On October 12, 2017, Natalie Moores purchased 4,500,000 shares of our common stock for $25,200 and assumed President and Director roles, and Iryna Clark resigned and returned 4,500,000 shares of our common stock to be reissued. The Company issued no new shares of stock as of December 31, 2016. As of December 2017, the Company has 5,444,500 shares of common stock issued and outstanding.
Preferred Stock. The Company is currently authorized to issue 10,000,000 shares of preferred stock.
As of December 31, 2017 and 2016, the Company has -0- shares of preferred stock issued and outstanding.
Note 9 - Related Party Transactions
The Company retained the services of Iryna Clarke as a consultant in 2014. As of December 31, 2017 and 2016, the Company paid $623 and $2,000 for her consulting services, respectively. On October 12, 2017, Ms. Clarke returned 4,500,000 shares of our common stock, to be reissued, and resigned.
On October 12, 2017, Natalie Moores purchased 4,500,000 shares of our common stock for $25,200 and assumed President and Director positions.
On September 25, 2017, the Company established a $500,000 Secured Line of Credit Agreement with Natalie Moores (the "Line of Credit"). The terms of the Line of Credit provide for interest at 12% per annum on all outstanding balances and is payable in accordance with promissory notes issued in connection with each advance made pursuant to the Line of Credit. Any and all advances are secured by all of the assets of the Company. The availability of funds for draw down from the Line of Credit is subject to the discretion of Ms. Moores. In October 2017, the Company has a receivable of $25,000 pursuant to the terms of the Line of Credit.
Note 10- Net Loss Per Share
Loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of the Company, subject to anti-dilution limitations. At December 31, 2017 and 2016, the Company has no outstanding common stock equivalents. Basic and diluted loss per share were the same amounts for the year ended December 31, 2017 and 2016.
Note 11- Income Taxes
Deferred income tax assets and liabilities are computed annually for differences between financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.
The effective tax rate on the net loss before income taxes differs from the U.S. statutory rate as follows:
The significant components of deferred tax assets and liabilities are as follows:
The change in the valuation allowance was approximately $6,900 and $6,700 for the years ended December 31, 2017 and 2016, respectively.
Utilization of the Company's net operating losses may be subject to substantial limitations if the Company experiences a 50% change in ownership, as provided by the Internal Revenue Code and similar state provisions.
Note 12- Subsequent Events
Establishment of Bank Account
On February 9, 2018, the Company opened a new bank account and deposited net cash in the amount of $36,556.25.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Termination of Scrudato & Co., P.A.
Effective April 5, 2017, the Company terminated Scrudato & Co., P.A. (“SCO”), as the Company’s independent registered public accounting firm. The decision to terminate Scrudato & Co., P.A. was approved by the sole director of Lockbox (the “Board”) on April 5, 2017, as filed in our 8-K on April 10, 2017 with the Securities and Exchange Commission.
For the year ended December 31, 2016 and for the interim period through the time of their termination, SCO’s report did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to audit scope or accounting principles, except that the report contained an explanatory paragraph stating that there was substantial doubt about the registrant’s ability to continue as a going concern.
During the period from August 12, 2015 (the date SCO was engaged by the Company) and through the date of this report (a) there have been no disagreements with SCO, whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure; (b) no such disagreement was discussed with the Board or any committee of the Board; and (c) there have been no “reportable events” as described in Item 304(a)(1)(v) of Regulation S-K.
Engagement of Soles, Heyn & Company LLP.
Effective April 5, 2017, Lockbox engaged Soles, Heyn & Company LLP (“SHC”) as our independent public registered accounting firm. The engagement of SHC was approved by the Company’s board of directors on April 5, 2017, as filed in our 8-K on April 10, 2017 with the Securities and Exchange Commission.
In connection with the Company’s engagement of SHC as our independent registered public accounting firm, the Company has not consulted SHC on any matter relating to the application of accounting principles to a specific transaction, either completed or contemplated, or to the type of audit opinion which might be rendered on the Company’s financial statements. Moreover, during the years ended December 31, 2015 and 2016 and the subsequent period through the date of engagement, the Company did not consult SHC regarding any of the matters outlined in Item 304(a)(2) of Regulation S-K.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
Management’s Report on Disclosure Controls and Procedures
The term “disclosure controls and procedures” (defined in SEC Rule 13a-15(e)) refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within required time periods. “Disclosure controls and procedures” include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
The Company’s Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this annual report (the “Evaluation Date”). Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer noted the deficiencies in internal controls identified in this Item 9A. Accordingly, the Company’s Chief Executive Officer and Chief Financial Officer has concluded that, as of the Evaluation Date, such controls and procedures were not effective at ensuring that the material information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported as required in the application of SEC rules and forms.
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. 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. Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2016 using the criteria established in “ Internal Control - Integrated Framework ” issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2016, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.
1.We do not have an Audit Committee - While not being legally obligated to have an audit committee, it is management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the single-member Board of Directors acts in the capacity of the Audit Committee, and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities.
2.We did not maintain appropriate cash controls - As of December 31, 2016, the Company has not maintained sufficient internal controls over financial reporting for the cash process, including failure to segregate cash handling and accounting functions, and did not require dual signature on the Company’s bank accounts. Alternatively, the effects of poor cash controls were mitigated by the fact that the Company had limited transactions in their bank accounts.
3.We did not implement appropriate information technology controls - As at December 31, 2016, the Company retains copies of all financial data and material agreements; however there is no formal procedure or evidence of normal backup of the Company’s data or off-site storage of data in the event of theft, misplacement, or loss due to unmitigated factors.
4.Insufficient Resources - We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.
5.Inadequate Segregation of Duties - We have an inadequate number of personnel to properly implement control procedures.
Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the Company’s internal controls.
As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2017 based on criteria established in Internal Control - Integrated Framework issued by COSO.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of December 31, 2017, that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
DIRECTORS AND EXECUTIVE OFFICERS
The name, address and position of our present officers and directors are set forth below:
Name and Address of Executive
Officer and/or Director
Age
Position
NATALIE MOORES
123 W. Nye Lane, Suite 129
Carson City, NV 89706
Sole director, President, Chief Executive Officer, Secretary, Chief Financial Officer and Chief Accounting Officer
Biographical Information and Background of officer and director
Natalie Moores has extensive experience with business to business (B2B) marketing, specifically in the arena of mergers and acquisitions, taking companies public, and small cap funding. She is a Principal at World Ventures, Inc. (2008-present), a small cap advisory company specializing in fundraising, mergers and acquisitions, and taking companies public. Her expertise helps clients to find investors, make acquisitions of going concerns, and monetize their assets. Ms. Moores is fluent in English, Russian and Ukrainian.
Involvement in Certain Legal Proceedings
No director, executive officer, significant employee or control person of the Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.
Corporate Governance
Our Board has not established any committees, including an audit committee, a compensation committee or a nominating committee, or any committee performing a similar function. The functions of those committees are being undertaken by our Board. Because we do not have any independent directors, our Board believes that the establishment of committees of our Board would not provide any benefits to our Company and could be considered more form than substance.
We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor have our officers and directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our officers and directors have not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors.
Given our relative size and lack of directors’ and officers’ insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all current members of our Board will participate in the consideration of director nominees.
As with most small, early stage companies until such time as our Company further develops our business, achieves a revenue base and has sufficient working capital to purchase directors’ and officers’ insurance, we do not have any immediate prospects to attract independent directors. When we are able to expand our Board to include one or more independent directors, we intend to establish an audit committee of our Board of Directors. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an audit committee or other committee of our Board.
We do not have an audit committee financial expert. While not being legally obligated to have an audit committee, it is management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the single-member Board of Directors acts in the capacity of the Audit Committee, and does not include a member that is considered to be independent of management to provide the necessary oversight over management’ s activities.
SIGNIFICANT EMPLOYEES
We have no employees other than our prior officer and director, Iryna Clark, who devoted time as needed to the Company, and was paid monthly compensation of $2,000.00 per month. We intend to hire employees on an as needed basis, if and when we can afford to pay employees.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
The Summary Compensation Table shows certain compensation information for services rendered in all capacities for the fiscal periods ended December 31, 2016, and 2015. Other than as set forth herein, no executive officer's salary and bonus exceeded $100,000 in any of the applicable years. The following information includes the dollar value of base salaries, bonus awards, the number of stock options granted and certain other compensation, if any, whether paid or deferred.
SUMMARY COMPENSATION TABLE
(1) Our sole officer received $623 in consulting fees to assist in officer transition for 2017, which was paid during 2017.
(2) Our sole officer had $2,000 in consulting fees for 2016, which was paid during 2016.
(3) Our sole officer had $24,000 in consulting fees for 2015, which was paid during 2015.
(4) We have no agreement with our current President/Director for compensation. No compensation was paid during 2017.
The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officer. There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our officers and directors other than as described herein.
Compensation of Directors
There are no agreements to compensate any of the directors for their services.
Our officers and directors are reimbursed for expenses incurred on our behalf. Our officers and directors will not receive any fee as a result of their efforts to implement the business plan outlined herein. However, our officers and directors anticipate receiving benefits as beneficial shareholders of our common stock.
We have not adopted any retirement, pension, profit sharing, stock option or insurance programs or other similar programs for the benefit of our employees.
Termination of Employment and Change of Control Arrangement
On October 12, 2017, Iryna Clark, returned 4,500,000 shares of our common stock and resigned. On October 12, 2017, Natalie Moores paid $25,200 to purchase 4,500,000 shares of our common stock and assumed Officer and Director roles.
There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any former employees, officers or directors which would in any way result in payments to any such person because of his or her resignation, retirement or other termination of such person’s employment with the Company or its subsidiaries, or any change in control of the Company, or a change in the person’s responsibilities following a change in control of the Company.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth information known to the Company with respect to the beneficial ownership (as such term is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of the outstanding common stock of the Company as of March 31, 2017 by: (1) each person known by the Company to beneficially own 5% or more of the Company’s outstanding common stock; (2) each of the named executive officers as defined in Item 402(m)(2); (3) each of the Company’s directors; and (4) all of the Company’s executive officers and directors as a group. The number of shares beneficially owned is determined under rules promulgated by the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Including those shares in the tables does not, however, constitute an admission that the named stockholder is a direct or indirect beneficial owner of those shares.
Title of Class
Name and Address
of Beneficial Owner
Amount and Nature of
Beneficial Ownership
Percentage
Common Stock,
$.001 p.v.
Natalie Moores
123 W. Nye Lane,
Suite 129
Carson City, NV
*4,500,000 shares of
common stock
82.65%
The percent of class is based on 5,444,500 shares of common stock issued and outstanding as of the date of this Form 10-K Annual Report.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
On September 25, 2017, the Company established a $500,000 Secured Line of Credit Agreement with Natalie Moores (the "Line of Credit"). The terms of the Line of Credit provide for interest at 12% per annum on all outstanding balances and is payable in accordance with promissory notes issued in connection with each advance made pursuant to the Line of Credit. Any and all advances are secured by all of the assets of the Company. The availability of funds for draw down from the Line of Credit is subject to the discretion of Ms. Moores.
On October 12, 2017, we received $25,000 from the Line of Credit pursuant to a Promissory Note (the “Note”). The principal and accrued interest on the Note is payable on October 12, 2018.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Audit Fee
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant, Soles, Heyn & Company (2017) and Scrudato & Co, P.A. (2016)., for the audit of Lockbox Link, Inc. annual financial statement and review of financial statements included in Lockbox Link’s 10-Q reports and services normally provided by the accountant in connection with statutory and regulatory filings or engagements were $10,490 for the fiscal year ended 2017 and $4,400 for fiscal year ended 2016.
Audit-Related Fees
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of Lockbox Link’s financial statements that are not reported above were $0 for fiscal years ended 2017 and 2016.
Tax Fees
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were $0 for fiscal years ended 2017 and 2016.
All Other Fees
The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above were $0 for fiscal year ended 2017 and 2016.
We do not have an audit committee currently serving and as a result our board of directors performs the duties of an audit committee. Our board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. We do not rely on pre-approval policies and procedures.
The following table includes all fees billed for auditing and any other services provided to us by Soles, Heyn & Company, LLP for the fiscal years ended December 31 2017 and 2016:
Audit Fees- Soles, Heyn
Audit fees - Scrudato & Co, P.A.,
$
10,490
$
4,400
Audit-Related Fees
-
-
Tax Fees
-
-
All Other Fees
-
-
Total
$
10,490
$
4,400
PART IV
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed as part of this Annual Report.
Exhibits:
31.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act
32.1 Certification of Chief Executive Officer and Chief Financial Officer Under Section 1350 as Adopted Pursuant Section 906 of the Sarbanes-Oxley Act
101 Interactive data files pursuant to Rule 405 of Regulation S-T.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
LOCKBOX LINK INC.
Dated: February 23, 2018
By:
Natalie Moores
Natalie Moores,
President and Chief Executive Officer
and Chief Financial Officer