Item 1.01 Entry into a Material Definitive Agreement.
On January 4, 2020 (the "Agreement Date"), GreenBox POS, a Nevada corporation
(the "Company"), entered into an Asset Purchase Agreement (the "Agreement") with
GreenBox POS LLC, a Washington limited liability company ("PrivCo"), in an
effort to clarify and memorialize a verbal agreement (the "Verbal Agreement")
previously entered into on April 12, 2018, by and between the Company and
PrivCo.
On March 23, 2018, the then controlling shareholder and then sole officer and
sole director of the Company, Frank Yuan, along with his wife, Vicky PMW Yuan,
entered into a Purchase Agreement with PrivCo (the "SPA"), whereby the Yuans
agreed to sell 144,445,000 restricted shares of the Company's common stock, par
value $0.001 per share (the "Common Stock"), to PrivCo for a consideration of
$500,000: $250,000 in cash, paid at closing, and $250,000 in restricted shares
of Common Stock (the "Shares Due").
On or about March 29, 2018, Frank Yuan converted a portion of a Line of Credit
that Frank Yuan had previously issued to the Company, in exchange for
144,445,000 restricted shares of Common Stock, representing approximately 90% of
the Company's issued and outstanding shares of Common Stock (the "Control
Block").
Pursuant to the SPA, on April 12, 2018, Frank Yuan caused the Control Block to
be transferred to PrivCo.
On April 12, 2018, all business being conducted at that time by the Company (the
"ASAP Business") was transferred from the Company to ASAP Property Holdings
Inc., a company owned and operated by Mr. Yuan ("Holdings"). In consideration
for the ASAP Business, Holdings assumed all liabilities related to the ASAP
Business. On April 12, 2018, following the SPA being entered into and the ASAP
Business being transferred to Holdings, Mr. Ben Errez and Mr. Fredi Nisan were
the sole acting officers and sole acting directors of the Company. On May 3,
2018, Frank Yuan formally resigned, and Messrs. Errez and Nisan were formally
appointed the sole officers and sole directors of the Company.
On April 12, 2018, the control person of PrivCo was Mr. Nisan.
On April 12, 2018, pursuant to the Verbal Agreement, the Company acquired
PrivCo's blockchain gateway and payment system business, point of sale system
business, delivery business and kiosk business, and bank and merchant accounts,
as well as all intellectual property related thereto (the "GreenBox Business").
As consideration for the GreenBox Business, on April 12, 2018, the Company
assumed PrivCo's liabilities that had been incurred in the normal course of the
GreenBox Business (collectively, the "GreenBox Acquisition").
On or about June 8, 2018, PrivCo paid the Shares Due, by transferring 609,756
restricted shares of Common Stock to Frank Yuan's designees, Frank Yuan and his
son, Jerome Yuan.
By virtue of the Verbal Agreement and the Agreement, the Company became a party
to the Subscription and Stock Purchase Agreement (the "RB Cap SPA") with RB
Capital Partners ("RB Cap") and PrivCo is no longer a party to the RB Cap SPA.
RB Cap and PrivCo subsequently disputed the terms of the RB Cap SPA. Pursuant to
the Agreement, the Company and PrivCo agreed that the Company shall pay all
litigation expenses that may result from this dispute or any other disputes with
RB Cap and that the Company shall not seek reimbursement of litigation expenses
related to disputes with RB Cap that the Company has paid on behalf of PrivCo
through the date of the Agreement.
By virtue of the Agreement, the Company is now the borrower pursuant to the
$300,000 convertible promissory note issued by PrivCo to RB Cap, with an
interest rate of 12% per annum (the "RB Cap 300K Note"). The principal balance
assumed by the Company is $115,000. PrivCo is no longer a party to the RB Cap
300K Note.
An Asset Purchase Agreement was executed on September 20, 2018 by the Company
and PrivCo (the "September 2018 APA"), however, the transactions agreed to in
September 2018 APA were never consummated and the Company and PrivCo agreed in
the Agreement that the September 2018 APA is null and void.
Pursuant to the Agreement, the Company agreed to pay all litigation expenses
that may result from certain disputes involving parties that entered into
transactions with PrivCo and that the Company shall not seek reimbursement of
litigation expenses related to these disputes that the Company has paid on
behalf of PrivCo through the date of the Agreement.
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Pursuant to the Agreement, the Company agreed to pay all expenses related to the
audit of PrivCo and related to the preparation of the 2018 tax returns of PrivCo
and that the Company shall not seek reimbursement of expenses related to the
audit and the 2018 tax returns that the Company has paid on behalf of PrivCo
through the date of the Agreement.
During November and December 2019, PrivCo and the Company jointly entered into
three transactions related to receivables: a Purchase Agreement signed November
12, 2019, a Secured Merchant Agreement signed December 5, 2019, and an Agreement
for the Purchase and Sale of Future Receivables (collectively, the "Receivables
Purchase Agreements"). Under the terms of the Receivables Purchase Agreements,
PrivCo and the Company agreed to sell financial buyers $1,202,600 of future
incoming cashflow from the GreenBox Business for $860,000, from which $47,035 in
fees was deducted, providing the Company with net cash of $812,965. Pursuant to
the Receivables Purchase Agreements, the amount of $860,000 along with interest
of $342,600 is to be repaid in daily or weekly installments through April 2020.
Pursuant to the Agreement, the Company agreed that the Company shall assume all
liabilities related to the Receivables Purchase Agreements. Both Messrs. Nisan
and Errez, as individuals, signed personal guarantees for each of the
Receivables Purchase Agreements. These personal guarantees remain as stated
within the Receivables Purchase Agreements.
Item 1.01 of this Current Report on Form 8-K contains only a brief description
of the material terms of the Agreement and does not purport to be a complete
description of the rights and obligations of the parties thereunder. Such
description is qualified in its entirety by reference to the full text of the
Agreement which is attached as Exhibit 10.1 to this Current Report on Form 8-K
and is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
The applicable information set forth in Item 1.01 of this Current Report on Form
8-K is incorporated by reference into this Item 2.01.
Item 2.03 Creation of Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The applicable information set forth in Item 1.01 of this Current Report on Form
8-K is incorporated by reference in this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
In connection with the Agreement, the audited financial statements of GreenBox
POS LLC as of December 31, 2017 are attached as Exhibit 99.1 to this Current
Report on Form 8-K.
(d) Exhibits.
Exhibit No. Description
10.1 Asset Purchase Agreement, dated January 4, 2020, by and between
GreenBox POS and GreenBox POS LLC
99.1 Financial Statements of GreenBox POS, LLC
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