ITEM 1. Business
Our Company
ECARD INC (the “Company”) formerly known as the Enviromart Companies, Inc., was incorporated under the laws of the State of Delaware on June 18, 2012. On June 21, 2013, the Company completed an acquisition of intangible assets comprised of intellectual property and trademarks from its former Chief Executive Officer. In conjunction with the acquisition of the intangible assets, the Company commenced operations.
As of January 2, 2015, the Company’s business was operated through its wholly-owned subsidiary, EnviroPack Technologies, Inc. Effective on or about January 15, 2015, the Company changed its name to The Enviromart Companies, Inc. and the Company’s wholly-owned subsidiary, EnviroPack Technologies, Inc., changed its name to Enviromart Industries, Inc. The Company’s other wholly owned subsidiaries are currently inactive.
On October 23, 2017, the Company, with the unanimous approval of its board of directors (the “Board”) by written consent in lieu of a meeting, has changed its name to “ECARD INC.”, effective as of October 23, 2017, pursuant to the filing of another Certificate of Amendment (the “Second Certificate of Amendment”) with the Secretary of State of Delaware.
Sale of Operating Business
On February 16, 2016, The Rushcap Group, Inc. (“Rushcap”), an affiliate of Mark Shefts (then a significant shareholder), notified us that, effective March 31, 2016, it was discontinuing its funding of our wholly owned subsidiary under the Inventory Financing Agreement dated June 19, 2015.
On March 21, 2016, the Company entered into a Stock Purchase and Sale Agreement with Michael R. Rosa, founder and a significant shareholder, and Enviromart Industries, Inc., its sole operating subsidiary, pursuant to which the Company agreed to transfer to Mr. Rosa all the issued and outstanding capital stock of Enviromart Industries, Inc.
On March 17, 2016, our Board approved the sale of our sole operating subsidiary, Enviromart Industries, Inc., to Michael R. Rosa, our founder and a significant shareholder, as contemplated by that certain Agreement between us, Mr. Rosa and Mark Shefts, dated July 14, 2014 (“Break-up Agreement”). The Break-up Agreement was originally disclosed in our Current Report on Form 8-K filed July 18, 2014, which is incorporated herein by this reference.
On March 21, 2016, we entered into a Stock Purchase and Sale Agreement with Michael R. Rosa and Enviromart Industries, Inc., our sole operating subsidiary, pursuant to which we transferred to Mr. Rosa all the issued and outstanding capital stock of Enviromart Industries, Inc.
In consideration for the transfer of the operating subsidiary to Mr. Rosa, he surrendered to us all 13,657,500 shares of the Company’s common stock then owned by him, which shares were returned to the status of authorized and unissued shares. In addition, Mr. Rosa and Enviromart Industries, Inc. agreed to assume and discharge any and all of the Company’s liabilities existing as the closing date, of which there was none, as all of the Company’s operations have been conducted through Enviromart Industries, Inc. (its sole operating subsidiary).
The above described purchase and sale transaction closed on July 21, 2016, effective April 1, 2016, and was approved by a majority of the Company’s shareholders by written consent on May 4, 2016. As a result of the completion of the purchase and sale transaction, the Company’s operating business has been discontinued, and it is focusing on seeking to acquire an operating business with strong growth potential.
On October 5, 2017, the Company entered into a Stock Purchase Agreement (the “Eastone SPA”) with Eastone Equities, LLC, a New York limited liability company (“Eastone Equities”) and certain selling stockholders (the “Sellers”), pursuant to which Eastone Equities acquired 44,566,412 shares of common stock of the Company (the “Shares”) from Sellers for an aggregate purchase price of $295,000. The transaction contemplated in the Eastone SPA closed on October 9, 2017. The Shares represent approximately 90% of issued and outstanding common stocks of the Company. The transaction has resulted in a change in control of the Company.
Accordingly, the Company now has only minimal assets and liabilities. Its operations are focused on seeking to acquire an operating business with strong growth potential. From and after the sale, unless and until the Company completes an acquisition, its expenses are expected to consist solely of legal, accounting and compliance costs, including those related to complying with reporting obligations under the Securities and Exchange act of 1934.
We are now considered a blank check company. The SEC defines those companies as "any development stage company that is issuing a penny stock, within the meaning of Section 3 (a)(51) of the Exchange Act, and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies." Under SEC Rule 12b-2 under the Securities Act of 1933, as amended (the "Securities Act"), we also qualify as a "shell company," because we have no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of "blank check" companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. We intend to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.
Our current business plan is to attempt to identify and negotiate with a business target for the merger of that entity with and into ECARD. In certain instances, a target company may wish to become a subsidiary of Enviromart or may wish to contribute or sell assets to Enviromart rather than to merge. No assurances can be given that Enviromart will be successful in identifying or negotiating with any target company. Enviromart seeks to provide a method for a foreign or domestic private company to become a reporting or public company whose securities are qualified for trading in the United States secondary markets.
A business combination with a target company normally will involve the transfer to the target company of the majority of the issued and outstanding common stock of Enviromart, and the substitution by the target company of its own management and Board. No assurances can be given that Enviromart will be able to enter into a business combination, or, if Enviromart does enter into such a business combination, no assurances can be given as to the terms of a business combination, or as to the nature of the target company.
Employees
The Company’s only employees at the present time are its officers and directors, who will devote as much time as the Board determines is necessary to carry out the affairs of the Company.
Available Information
The public may read and copy any materials we file with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to the foregoing, at the SEC’s Public Reference Room at 100 F St., NE, Washington, DC 20549, on official business days during the hours of 10 AM to 3 PM. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains periodic and current reports, proxy and information statements, and other information regarding the Company and other issuers that file electronically with the SEC.
ITEM 1A.
ITEM 1A. Risk Factors
Smaller reporting companies are not required to provide the information required by this Item 1A.
ITEM 1B.
ITEM 1B. Unresolved Staff Comments
None
ITEM 2.
ITEM 2. Properties
We currently maintain our corporate offices at 160 Summit Avenue, Montvale, New Jersey, 07645.
We do not pay rent for this space because the amount of the space we use at such office is de minimis. We believe that this space will be sufficient until we start generating revenues and need to hire employees.
ITEM 3.
ITEM 3. Legal Proceedings
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company's property is not the subject of any pending legal proceedings.
ITEM 4.
ITEM 4. Mine Safety Disclosures
None
PART II
ITEM 5:
ITEM 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is quoted in the OTC market (OTCPINK) under the symbol “EVRT”. The following table sets forth the high and low sales prices as reported on the OTC Market. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.
Our common stock last opened at $1.00 on April 4, 2018. However, currently, there is no active public trading market for our shares.
The sale of “restricted securities” (common stock) pursuant to Rule 144 of the SEC by members of management or any other person to whom any such securities may be issued in the future may have a substantial adverse impact on any such public market. For information regarding the requirements for re-sales under Rule 144, see the heading “Rule 144” below.
Holders
As of February 20, 2018 we had approximately sixty eight (68) shareholders of record. We believe that additional beneficial owners of our common stock hold shares in street name.
Dividends
We have not declared any cash dividends with respect to our common stock and do not intend to declare dividends in the foreseeable future. Our future dividend policy cannot be ascertained with any certainty, and unless and until we complete any acquisition, reorganization or merger, no such policy will be formulated. There are no material restrictions limiting, or that are likely to limit, our ability to pay dividends on our securities.
Securities Authorized for Issuance under Equity Compensation Plans
None; not applicable.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
Unregistered Sales
On October 5, 2017, the Company entered into the SPA with Eastone Equities and certain selling stockholders, pursuant to which Eastone Equities acquired 44,566,412 shares of common stock of the Company from Sellers for an aggregate purchase price of $295,000. The transaction contemplated in the SPA closed on October 9, 2017. The Shares represent approximately 90% of issued and outstanding common stocks of the Company. The transaction has resulted in a change in control of the Company.
The Company believes that the foregoing transactions were exempt from the registration requirements under Rule 506 of Regulation D promulgated under the Securities Act of 1933, as amended (“the Act”) or Section 4(2) under the Act, based on the following facts: in each case, there was no general solicitation, there was a limited number of investors, each of whom was an “accredited investor” (within the meaning of Regulation D under the “1933 Act”, as amended) and/or was (either alone or with his/her purchaser representative) sophisticated about business and financial matters, each such investor had the opportunity to ask questions of our management and to review our filings with the Securities and Exchange Commission, and all shares issued were subject to restrictions on transfer, so as to take reasonable steps to assure that the purchasers were not underwriters within the meaning of Section 2(11) under the 1933 Act.
Rule 144
The following is a summary of the current requirements of Rule 144:
Affiliate or Person Selling on Behalf of an Affiliate
Non-Affiliate (and has not been an
Affiliate During the Prior Three
Months)
Restricted Securities of Reporting Issuers
During six-month holding period - no resales
under Rule 144 Permitted.
After Six-month holding period - may resell in accordance with all Rule 144 requirements including:
· Current public information,
· Volume limitations,
· Manner of sale requirements, and
· Filing of Form 144.
During six- month holding period - no resales under Rule 144 permitted.
After six-month holding period but before one year - unlimited public resales under Rule 144 except that the current public information requirement still applies.
After one-year holding period - unlimited public resales under Rule 144; need not comply with any other Rule 144 requirements.
Restricted Securities of Non-Reporting Issuers
During one-year holding period - no resales under Rule 144 permitted.
After one-year holding period - may resell in accordance
with all Rule 144 requirements including:
· Current public information,
· Volume limitations,
· Manner of sale requirements, and
· Filing of Form 144.
During one-year holding period - no resales under Rule 144 permitted.
After one-year holding period - unlimited public resales under Rule 144; need not comply with any other Rule 144 requirements.
Shell Companies
The following is an excerpt from Rule 144(i) regarding re-sales of securities of shell companies:
“(i) Unavailability to securities of issuers with no or nominal operations and no or nominal non-cash assets.
(1) This section is not available for the resale of securities initially issued by an issuer defined below:
(i) An issuer, other than a business combination related shell company, as defined in §230.405, or an asset-backed issuer, as defined in Item 1101(b) of Regulation AB (§229.1101(b) of this chapter), that has:
(A) No or nominal operations; and
(B) Either:
(1) No or nominal assets;
(2) Assets consisting solely of cash and cash equivalents; or
(3) Assets consisting of any amount of cash and cash equivalents and nominal other assets; or
(ii) An issuer that has been at any time previously an issuer described in paragraph (i)(1)(i).
(2) Notwithstanding paragraph (i)(1), if the issuer of the securities previously had been an issuer described in paragraph (i)(1)(i) but has ceased to be an issuer described in paragraph (i)(1)(i); is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act; has filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that the issue was required to file such reports and materials), other than Form 8-K reports (§249.308 of this chapter); and has filed current “Form 10 information” with the Commission reflecting its status as an entity that is no longer an issuer described in paragraph (i)(1)(i), then those securities may be sold subject to the requirements of this section after one year has elapsed from the date that the issuer filed “Form 10 information” with the Commission.
(3)The term “Form 10 information” means the information that is required by Form 10 or Form 20-F (§249.220f of this chapter), as applicable to the issuer of the securities, to register under the Exchange Act each class of securities being sold under this rule. The issuer may provide the Form 10 information in any filing of the issuer with the Commission. The Form 10 information is deemed filed when the initial filing is made with the Commission.”
Securities of a shell company cannot be publicly sold under Rule 144 in the absence of compliance with this subparagraph.
Use of Proceeds of Registered Securities
Not applicable.
Purchases of Equity Securities by Us and Affiliated Purchasers
None; not applicable.
ITEM 6:
ITEM 6: Selected Financial Data
Not required for smaller reporting companies.
ITEM 7:
ITEM 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-looking Statements
Statements made in this Annual Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.
Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.
Overview
On June 21, 2013, the Company completed the acquisition of certain assets from Michael R. Rosa, its chief executive officer, and commenced business operations. Since completing the acquisition, the Company has raised capital, hired employees, leased space, engaged consultants and advisors, conducted extensive sales and marketing related activities both domestically and internationally, negotiated vendor relationships and engaged seller’s representatives.
As of January 2, 2015, the Company’s business was operated through its wholly-owned subsidiary, EnviroPack Technologies, Inc. Effective on or about January 15, 2015, the Company changed its name to The Enviromart Companies, Inc. and the Company’s wholly-owned subsidiary, EnviroPack Technologies, Inc., changed its name to Enviromart Industries, Inc.
On October 23, 2017, the Company, with the unanimous approval of its Board by written consent in lieu of a meeting, has changed its name to “ECARD INC.”, effective as of October 23, 2017, pursuant to the filing of the Second Certificate of Amendment with the Secretary of State of Delaware.
Sale of Operating Business
On February 16, 2016, The Rushcap Group, Inc. (“Rushcap”), an affiliate of Mark Shefts (then a significant shareholder), notified us that, effective March 31, 2016, it was discontinuing its funding of our wholly owned subsidiary under the Inventory Financing Agreement dated June 19, 2015. Rushcap reserved the right to discontinue the funding prior to March 31, 2016, if it so determined. The discontinuation of funding will have a material adverse effect on our business, financial condition and results of operation, as we did not believe that we would be able to timely secure funding to replace the discontinued Inventory Financing.
In light of the discontinuation of funding, our Board spent approximately one month assessing the operating company’s current business and funding prospects, including whether to transfer the operating subsidiary to Michael R. Rosa, our founder and a significant shareholder, in accordance with that certain Agreement between the Company, Mr. Rosa and Mr. Shefts, dated July 14, 2014 (“Break-up Agreement”). The Break-up Agreement was disclosed in the Company’s Current Report on Form 8-K filed July 18, 2014, which is incorporated herein by this reference.
Our Board concluded that the discontinuation of funding would have a material adverse effect on our business, financial condition and results of operation, as it did not believe that it would be able to timely secure funding to replace the discontinued Inventory Financing.
On March 17, 2016, our Board approved the sale of our sole operating subsidiary, Enviromart Industries, Inc., to Michael R. Rosa, our founder and a significant shareholder, as contemplated by that certain Agreement between us, Mr. Rosa and Mark Shefts, dated July 14, 2014 (“Break-up Agreement”). The Break-up Agreement was originally disclosed in our Current Report on Form 8-K filed July 18, 2014, which is incorporated herein by this reference.
On March 21, 2016, we entered into a Stock Purchase and Sale Agreement with Michael R. Rosa and Enviromart Industries, Inc., our sole operating subsidiary, pursuant to which we transferred to Mr. Rosa all the issued and outstanding capital stock of Enviromart Industries, Inc.
In consideration for the transfer of the operating subsidiary to Mr. Rosa, he surrendered to us all 13,657,500 shares of the Company’s common stock then owned by him, which shares have been returned to the status of authorized and unissued shares. In addition, Mr. Rosa and Enviromart Industries, Inc. (the Companies former operating subsidiary) agreed to assume and discharge any and all of the Company’s liabilities existing as the closing date, of which there were none, as all of the Company’s operations have been conducted through Enviromart Industries, Inc. (its sole operating subsidiary).
The above described purchase and sale transaction closed on July 21, 2016, effective April 1, 2016, and was approved by a majority of the Company’s shareholders by written consent on May 4, 2016. Upon consummation of the purchase and sale transaction, the Company’s operating business has been discontinued, and it will focus on seeking to acquire an operating business with strong growth potential.
Upon the closing of the purchase and sale transaction, Mr. George Adyns resigned from our Board and all offices held by him.
On October 5, 2017, the Company entered into the SPA with Eastone Equities and certain selling stockholders, pursuant to which Eastone Equities acquired 44,566,412 shares of common stock of the Company from Sellers for an aggregate purchase price of $295,000. The transaction contemplated in the SPA closed on October 9, 2017. The Shares represent approximately 90% of issued and outstanding common stocks of the Company. The transaction has resulted in a change in control of the Company.
All of the disclosures in this Annual Report on Form 10-K must be viewed in light of the disposition of our sole operating subsidiary, as our operating business has been discontinued, and the value of our company is now dependent upon our ability to locate and consummate the acquisition of an operating business with strong growth potential.
Results of Operations
For the year ended December 31, 2017, we had net loss of $79,971 as compared to a net income of $1,081,874 for the year ended December 31, 2016. The decrease in income was due primarily to the $1,328,175 gain on disposition of discontinued operations for the year ended December 31, 2016. This gain on disposition of discontinued operations will not recur in subsequent periods. Unless and until the Company completes the acquisition of an operating business, the Company’s expenses are expected to consist of the legal, accounting and administrative costs of maintaining a public company
General and Administrative Expenses
General and administrative expenses were $79,071 for the year ended December 31, 2017 as compared to $153,673 for the year ended December 31, 2016. General and administrative expenses consist primarily of professional fees.
Loss from Continuing Operations
Loss from continuing operations was $79,071 during the year ended December 31, 2017, as compared to $150,778 during the year ended December 31, 2016. This decrease was primarily attributable to a decrease in professional fees for the year ended December 31, 2017.
Recent Developments
None.
Liquidity and Capital Resources
Currently, we have minimal cash. As discussed elsewhere in this report, we have issued stock in exchange for all services needed to maintain the company as a public company with respect to calendar year 2017.
As disclosed elsewhere in the Report, on March 21, 2016, we entered into a Stock Purchase and Sale Agreement with Michael R. Rosa and Enviromart Industries, Inc., our sole operating subsidiary, pursuant to which we transferred to Mr. Rosa all the issued and outstanding capital stock of Enviromart Industries, Inc.
In consideration for the transfer of the operating subsidiary to Mr. Rosa, he surrendered to us all 13,657,500 shares of the Company’s common stock owned by him, which shares have been returned to the status of authorized and unissued shares. In addition, Mr. Rosa and Enviromart Industries, Inc. agreed to assume and discharge any and all of the Company’s liabilities existing as the closing date, of which there were none, as all of the Company’s operations have been conducted through Enviromart Industries, Inc. (its sole operating subsidiary).
The above described purchase and sale transaction closed on July 21, 2016, effective April 1, 2016, and was approved by a majority of the Company’s shareholders by written consent on May 4, 2016. As a result of the closing of the purchase and sale transaction, the Company’s operating business has been discontinued, and is focusing on seeking to acquire an operating business with strong growth potential.
The value of our company is now dependent upon our ability to locate and consummate the acquisition of an operating business with strong growth potential. As of the date of filing of this Report, we have minimal cash. However, prior to completing an acquisition, our expenses will consist primarily of compliance costs associated with being a public company, and we expect these compliance costs to be substantially less than they have been historically, at least until we complete an acquisition transaction. Also, as noted above, we have issued stock in exchange for office space and all other services needed to maintain the company as a public company with respect to calendar year 2017.
If we need to raise additional funds, we intend to do so through equity and/or debt financing.
Going Concern Consideration
The Company incurred losses from continuing operations of $79,071 and $150,778 for the years ended December 31, 2017 and 2016, respectively, and had working capital deficit of $47,344 at December 31, 2017. In addition, the Company had negative cash flows from operating activities of $100 for the year ended December 31, 2017. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company’s existing stockholders.
ITEM 7A:
ITEM 7A: Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
ITEM 8:
ITEM 8: Financial Statements and Supplementary Data
ECARD INC. (f/k/a/ The Enviromart Companies, Inc.)
FINANCIAL STATEMENTS
December 31, 2017 and 2016
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To:The Board of Directors and Stockholders of
ECARD INC. (f/k/a/ The Enviromart Companies, Inc.)
Opinion on the Financial Statements
We have audited the accompanying balance sheet of ECARD INC. (the Company) as of December 31, 2017, and the related statement of operations, stockholders’ deficit, and cash flows for the year ended December 31, 2017, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017, and the results of its operations and its cash flows for the year ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company had incurred substantial losses during the year, and has a working capital deficit, which raises substantial doubt about its ability to continue as a going concern. Management’s plan in regards to these matters are described in Note 3. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ WWC, P.C.
Certified Public Accountants
San Mateo, CA
April 2, 2018
We have served as the Company’s auditor since November 2, 2017
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
The Enviromart Companies, Inc.
We have audited the accompanying balance sheet of The Enviromart Companies, Inc. (“the Company”) as of December 31, 2016 and the related statements of operations, stockholders’ equity (deficit), and cash flows for the year then ended December 31, 2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Enviromart Companies, Inc. as of December 31, 2016, and the results of its operations and its cash flows for the year ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.
/s/ Sadler, Gibb & Associates, LLC
Salt Lake City, UT
April 14, 2017
ECARD INC.
(fka:The Enviromart Comanies, Inc.)
Balance Sheets
December 31, 2017 and 2016
See accompanying notes to the financial statements
ECARD INC.
(fka:The Enviromart Comanies, Inc.)
Statements of Operations
For the Years ended December 31, 2017 and 2016
See accompanying notes to these financial statements
ECARD INC.
(fka:The Enviromart Comanies, Inc.)
Statements of Stockholders’ Equity (Deficit)
For the Years ended December 31, 2017 and 2016
See accompanying notes to these financial statements
ECARD INC.
(fka:The Enviromart Comanies, Inc.)
Statements of Cash Flows
For the Years ended December 31, 2017 and 2016
See accompanying notes to these financial statements
ECARD INC.
(fka:The Enviromart Comanies, Inc.)
Notes to Financial Statements
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
ECARD INC. (the “Company”), formerly known as The Enviromart Companies, Inc. until October 23, 2017, and formerly known as Environmental Science and Technologies, Inc. until October 19, 2017, was incorporated under the laws of the State of Delaware on June 18, 2012. On June 21, 2013, the Company completed an acquisition of intangible assets comprised of intellectual property and trademarks from its former Chief Executive Officer. In conjunction with the acquisition of the intangible assets, the Company commenced operations.
As of January 2, 2015, the Company’s business was operated through its wholly-owned subsidiary, EnviroPack Technologies, Inc. Effective on or about January 15, 2015, the Company changed its name to The Enviromart Companies, and the Company’s wholly-owned subsidiary, EnviroPack Technologies, Inc., changed its name to Enviromart Industries, Inc. The Company’s other wholly owned subsidiaries are currently inactive.
On February 16, 2016, The Rushcap Group, Inc. (“Rushcap”), an affiliate of Mark Shefts (then a significant shareholder), notified us that, effective March 31, 2016, it was discontinuing its funding of our wholly owned subsidiary under the Inventory Financing Agreement dated June 19, 2015.
On March 21, 2016, the Company entered into a Stock Purchase and Sale Agreement with Michael R. Rosa, founder and a significant shareholder, and Enviromart Industries, Inc., its sole operating subsidiary, pursuant to which the Company agreed to transfer to Mr. Rosa all the issued and outstanding capital stock of Enviromart Industries, Inc.
In consideration for the transfer of the operating subsidiary to Mr. Rosa, he surrendered to us all 13,657,500 shares of the Company’s common stock then owned by him, which shares were returned to the status of authorized and unissued shares. In addition, Mr. Rosa and Enviromart Industries, Inc. agreed to assume and discharge any and all of the Company’s liabilities existing as the closing date, of which there was none, as all of the Company’s operations had been conducted through Enviromart Industries, Inc. (its then sole operating subsidiary). The Company accounted for the transaction as a “split-off” per the guidance of ASC 845-10-30-12.
The above described purchase and sale transaction closed on July 21, 2016, effective April 1, 2016, and was approved by a majority of the Company’s shareholders by written consent on May 4, 2016. As a result of the completion of the purchase and sale transaction, the Company’s operating business has been discontinued.
On October 5, 2017, the Company entered into a Stock Purchase Agreement (the “SPA”) with Eastone Equities, LLC, a New York limited liability company (the “Purchaser”) and certain selling stockholders, pursuant to which the Purchaser acquired 44,566,412 shares of common stock of the Company from Sellers for an aggregate purchase price of $295,000. The transaction contemplated in the SPA closed on October 9, 2017. The Shares represent approximately 90% of issued and outstanding common stocks of the Company. The transaction has resulted in a change in control of the Company.
On October 23, 2017, the Company, with the unanimous approval of its board of directors by written consent in lieu of a meeting, filed another Certificate of Amendment (the “Second Certificate of Amendment”) with the Secretary of State of Delaware. As a result of the Second Certificate of Amendment, the Company changed its name to “ECARD INC.”, effective as of October 23, 2017.
Accordingly, the Company now has only minimal assets and liabilities, did not have any substantial business operations; accordingly, there were no significant revenues or positive cash flows the year ended December 31, 2017. Management’s efforts are focused on seeking out a new and profitable operating business with strong growth potential. From and after the sale, unless and until the Company completes an acquisition, its expenses are expected to consist solely of legal, accounting and compliance costs, including those related to complying with reporting obligations under the Securities and Exchange act of 1934.
ECARD INC.
(fka:The Enviromart Comanies, Inc.)
Notes to Financial Statements
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates and Assumptions
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Enviromart Industries, Inc. (f/k/a EnviroPack Technologies, Inc.), which was consolidated through March 31, 2016 and the results of its operations are shown as discontinued operations. All inter-company accounts and transactions have been eliminated in consolidation.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with original maturities of three months or less when acquired to be cash equivalents.
Concentration of Risk
Deposits made at financial institutions in the United States are subject to federally depository insurance maximum; deposits in excess of the amount are subject to concentrations of credit risk of the financial institution; however, Management believe that financial institutions located in the US are unlikely to become insolvent.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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 income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.
Basic and Diluted Earnings (Loss) Per Share
Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of common shares outstanding and dilutive common stock equivalents. Basic earnings per share is computed by dividing net income/loss available to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Weighted average number of shares used to calculate basic and diluted loss per share is considered the same as the effect of dilutive shares is anti-dilutive for all periods presented. There were no potentially dilutive or anti-dilutive securities during the periods ended December 31, 2017, and 2016.
Revenue Recognition
Revenue is recognized across all segments of the business when there is persuasive evidence of an arrangement, delivery has occurred, price has been fixed or is determinable, and collectability is reasonably assured. Revenue is recognized at the time title passes and risk of loss is transferred to customers. The Company did not earn revenues during the year ended December 31, 2017.
Discontinued Operations
Per the guidance at ASU 2014-10, the Company has presented discontinued operations related to the transfer of the former operating subsidiary (see Note 7) in the period in which either the discontinued operation has been disposed of or classified as held for sale.
ECARD INC.
(fka:The Enviromart Comanies, Inc.)
Notes to Financial Statements
Stock-Based Compensation
The Company expenses all stock-based payments to employees and non-employee directors based on the grant date fair value of the awards over the requisite service period, adjusted for estimated forfeitures.
Recently Issued Financial Accounting Standards
In January 2017, the Financial Accounting Standard Board (“FASB”) issued guidance, which simplifies the accounting for goodwill impairment. The updated guidance eliminates Step 2 of the impairment test, which requires entities to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value.
In August 2017, the FASB issued guidance, which amends the existing accounting standards for derivatives and hedging. The amendment improves the financial reporting of hedging relationships to better represent the economic results of an entity’s risk management activities in its financial statements and made certain targeted improvements to simplify the application of the hedge accounting guidance in current U.S. GAAP.
In January 2017, the FASB issued guidance, which amended the existing accounting standards for business combinations. The amendments clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.
In November 2016, the FASB issued guidance, which addresses the presentation of restricted cash in the statement of cash flows. The guidance requires entities to present the changes in the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows.
In October 2016, the FASB issued guidance, which amends the existing accounting for Intra-Entity Transfers of Assets Other Than Inventory. The guidance requires an entity to recognize the income tax consequences of intra-entity transfers, other than inventory, when the transfer occurs. It also requires modified retrospective transition with a cumulative catch-up adjustment to opening retained earnings in the period of adoption.
In August 2016, the FASB issued guidance, which amends the existing accounting standards for the classification of certain cash receipts and cash payments on the statement of cash flows.
In June 2016, the FASB issued guidance, which requires credit losses on financial assets measured at amortized cost basis to be presented at the net amount expected to be collected, not based on incurred losses. Further, credit losses on available-for-sale debt securities should be recorded through an allowance for credit losses limited to the amount by which fair value is below amortized cost.
In February 2016, the FASB issued guidance, which amends the existing accounting standards for leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification. Under the new guidance, a lessee will be required to recognize assets and liabilities for all leases with lease terms of more than twelve months.
In January 2016, the FASB issued guidance, which amends the existing accounting standards for the recognition and measurement of financial assets and financial liabilities. The guidance primarily addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments.
The Company is currently assessing the financial impact of the above recently issued accounting pronouncements.
NOTE 3. GOING CONCERN
During the year ended December 31, 2017, the Company has been unable to generate cash flows sufficient to support its operations and has been dependent on capital contributions prior controlling shareholders, and related party advances from the current controlling shareholder. In addition, the Company has experienced recurring net losses, and has an accumulated deficit of $1,112,168, and working capital deficit of $47,344 as of December 31, 2017. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
ECARD INC.
(fka:The Enviromart Comanies, Inc.)
Notes to Financial Statements
There can be no assurance that sufficient funds required during the next year or thereafter will be generated from any future operations or that funds will be available from external sources such as debt or equity financings or other potential sources. If the Company is unable to raise capital from external sources when required, there would be a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company’s existing stockholders. Management is now seeking an operating company with which to merge or acquire. In the foreseeable future, the Company will rely on related parties such as its controlling shareholder, to provide advances to funds general corporate purposes and any potential acquisitions of profitable investments. There is no assurance, however, that the Company will achieve its objectives or goals.
NOTE 4. RELATED PARTY TRANSACTIONS
On March 21, 2016, the Company entered into a Stock Purchase and Sale Agreement with Michael R. Rosa, founder and then a significant shareholder, and Enviromart Industries, Inc., its sole operating subsidiary, pursuant to which the Company agreed to transfer to Mr. Rosa all the issued and outstanding capital stock of Enviromart Industries, Inc.
In consideration for the transfer of the operating subsidiary to Mr. Rosa, he surrendered to us all 13,657,500 shares which he controlled, which shares were returned to the status of authorized and unissued shares. In addition, Mr. Rosa and Enviromart Industries, Inc. have assumed and discharged any and all of the Company’s liabilities existing as the closing date, of which there were none, as all of the Company’s operations had been conducted through Enviromart Industries, Inc. (its sole operating subsidiary).
The above described purchase and sale transaction closed on July 21, 2016, effective April 1, 2016, and was approved by a majority of the Company’s shareholders by written consent on May 4, 2016. As a result of the completion of the purchase and sale transaction, the Company’s operating business has been discontinued, and it is focusing on seeking to acquire an operating business with strong growth potential. The Company accounted for this transaction as a “split-off” per the guidance at ASC 845-10-30-12 and recognized a gain of $1,328,175 on the difference between the fair value of the consideration received and the book value of the net assets of the subsidiary.
On July 19, 2016, the Company issued 5,000,000 shares valued at $30,000 to a related party in consideration for his agreement to fund the Company’s audit and accounting fees and to provide office space for the Company.
During the year ended December 31, 2017, the Company’s previous controlling shareholder paid expenses on behalf of the Company in the amount of $32,527. This amount has been credited additional paid-in capital as contribution paid shareholder.
During the year ended December 31, 2017, the Company’s current controlling shareholder paid expenses on behalf of the Company in the amount of $47,344. This amount has been recorded as amount due to related party. The balance is unsecured, non-interest bearing, and due on demand with no specified repayment schedule.
NOTE 5. STOCKHOLDERS’ EQUITY
Private Offering
During January, 2016, the Company issued 2,000,000 shares to accredited investors related to their stock purchase agreements dated December 31, 2015. These shares were sold at $0.0057 per share for proceeds of $11,400 and were originally reported as common stock to be issued at December 31, 2015.
On January 31, 2016, the Company agreed to sell 100,000 units, with each unit consisting of one share of our common stock and a warrant to purchase ½ shares of common stock at a price of $0.25, to an accredited investor for gross proceeds of $10,000 (a per unit price of $.10). As of March 31, 2016, the Company granted this accredited investor 100,000 warrants related to his unit purchase transactions. Under the terms of the Stock Purchase and Sale Agreement, these warrants were terminated.
On June 6, 2016, the Company sold an aggregate of 2,100,000 shares of our common stock to a related party accredited investor for gross proceeds of $12,500 (a per share price of $0.006).
On May 9, 2017, the Company issued 200,000 shares of common stock related to stock purchase agreements dated December 31, 2015 and January 31, 2016.
Stock-Based Compensation
On June 6, 2016, the Company issued 1,000,000 shares to a third party as settlement of liabilities valued at $8,500. There shares were valued at $0.006 per share or $5,605, resulting in a gain on settlement of $2,895.
On July 19, 2016, the Company issued 5,000,000 shares valued at $30,000 to an individual, who became a significant stockholder as a result of this transaction, in consideration for legal services.
On July 19, 2016, the Company issued 5,000,000 shares valued at $30,000 to a related party in consideration for his agreement to fund the Company’s audit and accounting fees and to provide office space for the Company.
Cancellation of Shares
On October 6, 2017, two shareholders submitted three certificates for cancellation. The shares cancelled shares totaled 550,000.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Except as disclosed herein, we are not a party to any pending legal proceeding. To the knowledge of our management, except as disclosed herein, no federal, state or local governmental agency is presently contemplating any proceeding against us.
NOTE 7. DISCONTINUED OPERATIONS
On February 16, 2016, The Rushcap Group, Inc. (“Rushcap”), an affiliate of Mark Shefts (a significant shareholder), notified us that, effective March 31, 2016, it was discontinuing its funding of our wholly owned subsidiary under the Inventory Financing Agreement dated June 19, 2015. Rushcap reserved the right to discontinue the funding prior to March 31, 2016, if it so determined. The discontinuation of funding was expected to have a material adverse effect on our business, financial condition and results of operation, as we did not believe that we would be able to timely secure funding to replace the discontinued Inventory Financing.
In light of the discontinuation of funding, our Board of Directors spent approximately one month assessing the operating company’s current business and funding prospects, including whether to transfer the operating subsidiary to Michael R. Rosa, our founder and a significant shareholder, in accordance with that certain Agreement between the Company, Mr. Rosa and Mr. Shefts, dated July 14, 2014 (“Break-up Agreement”). The Break-up Agreement was disclosed in the Company’s Current Report on Form 8-K filed July 18, 2014, which is incorporated herein by this reference.
Our Board of Directors concluded that the discontinuation of funding would have a material adverse effect on our business, financial condition and results of operation, as it did not believe that it would be able to timely secure funding to replace the discontinued Inventory Financing.
ECARD INC.
(fka:The Enviromart Comanies, Inc.)
Notes to Financial Statements
On March 17, 2016, our Board of Directors approved the sale of our sole operating subsidiary, Enviromart Industries, Inc., to Michael R. Rosa, our founder and a significant shareholder, as contemplated by the Break-up Agreement.
On March 21, 2016, we entered into a Stock Purchase and Sale Agreement with Michael R. Rosa and Enviromart Industries, Inc., our sole operating subsidiary, pursuant to which we transferred to Mr. Rosa all the issued and outstanding capital stock of Enviromart Industries, Inc.
In consideration for the transfer of the operating subsidiary to Mr. Rosa, he surrendered to us all 13,657,500 shares of the Company’s common stock then owned by him, which shares have been returned to the status of authorized and unissued shares. In addition, Mr. Rosa and Enviromart Industries, Inc. agreed to assume and discharge any and all of the Company’s liabilities existing as the closing date, of which there were none, as all of the Company’s operations had been conducted through Enviromart Industries, Inc. (its then sole operating subsidiary).
The above described purchase and sale transaction closed on July 21, 2016, effective April 1, 2016, and was approved by a majority of the Company’s shareholders by written consent on May 4, 2016.
As a result of the completion of the purchase and sale transaction, the Company’s operating business has been discontinued, and it is focusing on seeking to acquire an operating business with strong growth potential.
The loss from discontinued operations presented in the statement of operations for the year December 31, 2016 consisted of the following:
As a result of this transaction, the Company has recorded a gain on disposition of discontinued operations of $1,328,175. The Company considers this transaction to be a tax-free reorganization and accordingly there is no provision for income taxes.
NOTE 8. INCOME TAXES
The Company is subject to U.S. federal and New Jersey income tax laws. The company incurred operating loses in 2017 and 2016. In 2016, the Company had previously recorded deferred tax assets based on net operating losses; however, the Company provided 100% valuation allowance against those assets. In 2017, the Company continued to incur net operating losses; however, at the time of this report, management has not determined when it would generate taxable profits; accordingly, management has not recognized additional deferred tax assets for the year ended December 31, 2017.
The Company recorded and paid annual minimum state franchise tax which has been expensed to its result of operations for the year ended December 31, 2017.
On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Act”) resulting in significant modifications to existing law. The Company has considered the accounting impact of the effects of the Act during the year ended December 31, 2017 including a reduction in the corporate tax rate from 34% to 21% among other changes.
NOTE 9. SUBSEQUENT EVENTS
The Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date.
The Company has evaluated subsequent events through the date the financial statements were issued and up to the time of filing with the Securities and Exchange Commission and has determined that were no material subsequent events that came to management’s attention that required disclosure.
ITEM 9:
ITEM 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
As disclosed in our Current Report on Form 8-K, filed on November 10, 2017, we dismissed Sadler, Gibb & Associates, LLC as our independent registered public accountants and engaged WWC, P.C., effective November 8, 2017, to act as our independent registered public accountants. There were no disagreements with Sadler, Gibb & Associates, LLC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures.
ITEM 9A(T):
ITEM 9A(T): Controls and Procedures
Disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including the president and secretary, to allow timely decisions regarding required disclosures.
Under the supervision and with the participation of our management, including our president and controller, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, our president and treasurer concluded that, as of the end of the period covered by this Annual Report, our disclosure controls and procedures were not effective, based on having insufficient resources to establish an effective control and procedures environment during 2017. Although we do have a subcontracted outside accountant, there is not enough personnel to establish proper controls and procedures with checks and balances at this time
A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. We believe our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our 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 of accounting principles generally accepted in the United States.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
Our President evaluated the effectiveness of our internal control over financial reporting as of December 31, 2017. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework (2013). Based on this evaluation, our President concluded that, as of December 31, 2017, our internal control over financial reporting were not effective, based on having insufficient resources to establish an effective control environment during 2017.
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 rules of the Security and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.
Changes in Internal Control over Financial Reporting
During the year covered by this report, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B:
ITEM 9B: Other Information
On October 23, 2017, Wayne Tsao was appointed as the Company’s Chief Exective Officer, President and Chairman of the Board.
On October 23, 2017 Ms. Charlene Cheng was appointed as the Company’s Chief Financial Officer and as a director of the Board.
PART III
ITEM 10:
ITEM 10: Directors, Executive Officers, and Corporate Governance
Directors and Executive Officers
Name
Position
Wayne Tsao
Director, Chairman, Chief Executive Officer and President
Charlene Cheng
Director, Chief Financial Officer
Mr. Wayne Tsao has extensive experience in the Financial Industry. From 2013 to 2015, he worked in Provider Relation Department of Centerlight Healthcare System. In 2012, Mr. Tsao worked for First Data Corporation, one of the largest credit card processing acquirers in the U.S. In 2015, Mr. Tsao served as the COO of Vergepay, a startup company that he has been worked with since its inception. While served as the COO of Vergepay, Mr. Tsao also worked for Sigue Corporation, a money transfer, remittance, and bill payment services provider. Mr. Tsao obtained his Bachelor of Arts in Psychology from State University of New York at Stony Brook.
Mr. Tsao does not have any family relationship with any director or executive officer of the Company and has not been involved in any transaction with the Company during the past two years that would require disclosure under Item 404(a) of Regulation S-K.
Ms. Charlene Cheng is a veteran in the Financial Industry. She currently serves as the Chief Financial Officer of Eastone Capital LLC, a full service real estate investment company. From 2007 to 2014, she was a senior associate of Deloitte Financial Advisory Services. From 2005 to 2007, she was the Asset Manager of Related Management. Ms. Cheng obtained her Bachelor of Art in Economics from National Tsing Hua University and her Master of Business Administration from Case Western Reserve University.
Ms. Cheng does not have any family relationship with any director or executive officer of the Company and has not been involved in any transaction with the Company during the past two years that would require disclosure under Item 404(a) of Regulation S-K.
Significant Employees
We have no employees who are not executive officers.
Family Relationships
There are no family relationships between our officers and directors.
Involvement in Certain Legal Proceedings
During the past 10 years, to our knowledge, except as described below, none of our present or former directors, executive officers or persons nominated to become directors or executive officers has been the subject of any of the following:
(1) A petition under the federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two (2) years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two (2) years before the time of such filing;
(2) Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities:
(i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
(4) Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than sixty (60) days the right of such person to engage in any activity described in paragraph (3)(i) above, or to be associated with persons engaged in any such activity;
(5) Such person was found by a court of competent jurisdiction in a civil action or by the SEC to have violated any federal or state securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated;
(6) Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
(7) Such person was the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
(i) Any federal or state securities or commodities law or regulation; or
(ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
(iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
(8) Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Except as disclosed herein, we are not a party to any pending legal proceeding. To the knowledge of our management, except as disclosed herein, no federal, state or local governmental agency is presently contemplating any proceeding against us.
On or about August 12, 2014, we received a Notice of Debarment from the US Defense Logistics Agency (“DLA”) (the “Notice”). The Notice (i) prevents us from bidding on new government contracts and (ii) precludes the renewal of any existing contract that is otherwise renewable. The Notice was issued to us because our then CEO (who was also a significant shareholder of our company) is affiliated with a company that is alleged to have sold products to the DLA that did not conform to the applicable contract. The DLA has not alleged any wrongdoing whatsoever with respect to our company or its contracts with the DLA.
On November 3, 2014, the Company filed a letter with DLA opposing the proposed notice of debarment based on the alleged affiliation with the other company.
We have since received notification from the DLA stating that our appeal was reviewed and denied. As a result, we are not able to bid on any new US government contracts that might otherwise be of interest to us.
Compliance with Section 16(a) of the Exchange Act
The common stock of the Company is registered under the Exchange Act, and therefore, the officers, directors and holders of more than 10% of our outstanding shares are subject to the provisions of Section 16(a) which requires them to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and our other equity securities. Officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based solely upon review of the copies of such forms furnished to us during the fiscal year ended December 31, 2016, there were no untimely filings of Section 16(a) reports.
Code of Ethics
As of yet, we have not adopted a corporate code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
Corporate Governance
Nominating Committee
We have not established a Nominating Committee because, given that we presently have only one director and one executive officer, we believe that we are able to effectively manage the issues normally considered by a Nominating Committee.
If we do establish a Nominating Committee, we will disclose this change to our procedures in recommending nominees to our Board.
Audit Committee
We have not established an Audit Committee because, given that we presently have only one director and one executive officer, we believe that we are able to effectively manage the issues normally considered by an Audit Committee.
ITEM 11:
ITEM 11: Executive Compensation
All Compensation
No deferred compensation or long-term incentive plan awards were issued or granted to our management during the years ended December 31, 2017 or 2016. Furthermore, no member of our management has been granted any option or stock appreciation rights; accordingly, no tables relating to such items have been included within this Item. The following table sets forth the aggregate compensation paid by our Company for services rendered during the periods indicated:
SUMMARY COMPENSATION TABLE
(1) George R. Adyns became our CFO on January 2, 2015 and President on April 24, 2015. He resigned as a director on March 23, 2016.
(2) Laurence H. King became Chairman of the Company effective February 16, 2016. Mr. King resigned as Chairman of the Company on October 23, 2017.
(3) Wayne Tsao became CEO of the Company, effective October 13, 2017.
(4) Charlene Cheng became CFO of the Company effective October 23, 2017.
Outstanding Equity Awards at Fiscal Year-End
None, not applicable.
Compensation of Directors
There are no standard arrangements pursuant to which our directors are compensated for any services provided as director, including services for committee participation or for special assignments. Our directors received no compensation for service as directors for the year ended December 31, 2017.
ITEM 12:
ITEM 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Security Ownership of Certain Beneficial Owners
The following table sets forth the ownership by (i) any person known to us to be the beneficial owner of more than five percent (5%) of any of our outstanding voting securities and (ii) members of our management as of December 31, 2017. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. The persons named in the table below have sole voting power and investment power with respect to all shares of common stock shown as beneficially owned by them. The percentage of beneficial ownership is based upon 49,511,775 shares of common stock outstanding at that date.
Beneficial Owners
(1) Held of record by Plaza Associates, of which Ms. Shefts is the sole manager and member.
SEC Rule 13d-3 generally provides that beneficial owners of securities include any person who, directly or indirectly, has or shares voting power and/or investment power with respect to such securities, and any person who has the right to acquire beneficial ownership of such security within 60 days. Any securities not outstanding which are subject to such options, warrants or conversion privileges exercisable within 60 days are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person. Such securities are not treated as outstanding for the purpose of computing the percentage of the class owned by any other person. At the present time there are no outstanding options or warrants.
Changes in Control
On March 21, 2016, we entered into a Stock Purchase and Sale Agreement with Michael R. Rosa and Enviromart Industries, Inc., our sole operating subsidiary, pursuant to which we transferred to Mr. Rosa all the issued and outstanding capital stock of Enviromart Industries, Inc. In consideration for the transfer of the operating subsidiary to Mr. Rosa, he surrendered to us all 13,657,500 shares of the Company’s common stock then owned by him, which shares have been returned to the status of authorized and unissued shares.
On July 19, 2016, the Company issued 5,000,000 shares valued at $30,000 in consideration for legal services. On July 19, 2016, the Company issued 5,000,000 shares valued at $30,000 to a related party in consideration for his agreement to fund the Company’s audit and accounting fees and to provide office space for the Company.
On October 5, 2017, the Company entered into the SPA with Eastone Equities and certain selling stockholders, pursuant to which Eastone Equities acquired 44,566,412 shares of common stock of the Company from Sellers for an aggregate purchase price of $295,000. The transaction contemplated in the SPA closed on October 9, 2017. The Shares represent approximately 90% of issued and outstanding common stocks of the Company. The transaction has resulted in a change in control of the Company.
Securities Authorized for Issuance under Equity Compensation Plans
None, not applicable.
ITEM 13:
ITEM 13: Certain Relationships and Related Party Transactions, and Directors Independence
Transactions with Related Persons
On February 16, 2016, The Rushcap Group, Inc. (“Rushcap”), an affiliate of Mark Shefts (a significant shareholder), notified us that, effective March 31, 2016, it was discontinuing its funding of our wholly owned subsidiary under the Inventory Financing Agreement dated June 19, 2015. Rushcap reserved the right to discontinue the funding prior to March 31, 2016, if it so determined. Thus far, Rushcap has since March 31, continued to provide funding. The discontinuation of funding will have a material adverse effect on our business, financial condition and results of operation, as we do not believe that it will be able to timely secure funding to replace the discontinued Inventory Financing.
In light of the discontinuation of funding, our Board spent approximately one month assessing the operating company’s current business and funding prospects, including whether to transfer the operating subsidiary to Michael R. Rosa, our founder and a significant shareholder, in accordance with that certain Agreement between the Company, Mr. Rosa and Mr. Shefts, dated July 14, 2014 (“Break-up Agreement”). The Break-up Agreement was disclosed in the Company’s Current Report on Form 8-K filed July 18, 2014, which is incorporated herein by this reference.
Our Board concluded that the discontinuation of funding would have a material adverse effect on our business, financial condition and results of operation, as it did not believe that it would be able to timely secure funding to replace the discontinued Inventory Financing.
On March 17, 2016, our Board approved the sale of our sole operating subsidiary, Enviromart Industries, Inc., to Michael R. Rosa, our founder and a significant shareholder, as contemplated by that certain Agreement between us, Mr. Rosa and Mark Shefts, dated July 14, 2014 (“Break-up Agreement”). The Break-up Agreement was originally disclosed in our Current Report on Form 8-K filed July 18, 2014, which is incorporated herein by this reference.
On March 21, 2016, we entered into a Stock Purchase and Sale Agreement with Michael R. Rosa and Enviromart Industries, Inc., our sole operating subsidiary, pursuant to which we transferred to Mr. Rosa all the issued and outstanding capital stock of Enviromart Industries, Inc.
In consideration for the transfer of the operating subsidiary to Mr. Rosa, surrendered to us all of the 13,567,500 shares then owned by him, which shares have been returned to the status of authorized and unissued shares. In addition, Mr. Rosa and Enviromart Industries, Inc. agreed to assume and discharge any and all of our liabilities existing as the closing date, of which there were none, as all of our operations were conducted through Enviromart Industries, Inc. (our sole operating subsidiary).
The above described purchase and sale transaction closed on or about July 20, 2016, effective April 1, 2016, and was approved by a majority of our shareholders by written consent. Upon consummation of the purchase and sale transaction, our operating business was discontinued, and we are now focused on seeking to acquire a profitable operating business with strong growth potential.
On March 23, 2016, Mr. George Adyns resigned from our Board, but remained as President, Secretary and CFO until the closing of the purchase and sale transaction, at which time he resigned from all offices held by him.
On July 19, 2016, the Company issued 5,000,000 shares valued at $30,000 to a related party in consideration for his agreement to fund the Company’s audit and accounting fees and to provide office space for the Company.
During the year ended December 31, 2017, the Company’s current controlling shareholder paid expenses on behalf of the Company in the amount of $47,344. This amount has been recorded as amount due to related party. The balance is unsecured, non-interest bearing, and due on demand with no specified repayment schedule.
Promoters and Certain Control Persons
See the heading “Transactions with Related Persons” above.
Director Independence
Currently, we have no independent directors serving on our Board of Directors.
ITEM 14:
ITEM 14: Principal Accounting Fees and Services
The following is a summary of the fees billed to us by our principal accountants during the fiscal years ended December 31, 2017 and 2016:
Audit Fees - Consists of fees for professional services rendered by our principal accountants for the audit of our annual financial statements and review of the financial statements included in our Forms 10-Q or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.
Audit-related Fees - Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statement
s and are not reported under “Audit fees.”
Tax Fees - Consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.
All Other Fees - Consists of fees for products and services provided by our principal accountants, other than the services reported under “Audit fees,” “Audit-related fees,” and “Tax fees” above.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
We have not established an Audit Committee; therefore, there is no Audit Committee policy in this regard. However, we do require approval in advance of the performance of professional services to be provided to us by our principal accountant. Additionally, all services rendered by our principal accountant are performed pursuant to a written engagement letter between us and the principal accountant.
PART IV
ITEM 15:
ITEM 15: Exhibits, Financial Statement Schedules
(a)(1)(2) Financial Statements. See the audited financial statements for the year ended December 31, 2017 contained in Item 8 above which are incorporated herein by this reference.
ITEM 16. Exhibits
**Furnished, not filed
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.
ECARD, INC.
Date: April 4, 2018
By: /s/ Wayne Tsao
Wayne Tsao
Title: Chairman, President and CEO
Date: April 4, 2018
By: /s/ Charlene Cheng
Charlene Cheng
Title: Chief Financial Officer