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GREENPRO, INC. - 10-Q - MANAGEMENT'S DISCUSSIONAND ANALYSIS OFFINANCIAL CONDITION ANDRESULTS OF OPERATIONS(Edgar Glimpses Via Acquire Media NewsEdge) Theinformation contained inthis Form10-Q isintended toupdate the informationcontained inour Prospectus datedSeptember 8, 2014and presumes thatreaders have accessto, and willhave read, the"Management's Discussionand Analysis ofFinancial Conditionand Resultsof Operations"and other informationcontained inthe Prospectus.The followingdiscussion and analysisalso shouldbe readtogether withour financial statementsand the notes to thefinancial statements included elsewherein this Form 10-Q. Thefollowing discussioncontains certain statementsthat may bedeemed "forward-looking statements".Such statements appearin a numberof placesin thisReport, including,without limitation, "Management'sDiscussion and Analysisof FinancialCondition and Resultsof Operations." Thesestatements arenot guarantees offuture performanceand involve risks, uncertaintiesand requirements thatare difficult topredict or are beyond our control. Forward-looking statements speak onlyas of the date ofthis quarterly report. You shouldnot put undue reliance onany forward-looking statements. We stronglyencourage investors to carefully read the factors described in our Prospectus dated September 8, 2014in thesection entitled "Risk Factors"for a description of certainrisks that could, amongother things, cause actual resultsto differ from these forward-looking statements. We assumeno responsibility to update the forward-looking statements contained in this quarterly report on Form 10-Q. The following should also be read inconjunction with the unaudited Financial Statements and notes thereto that appear elsewhere in this report. CompanyOverview Greenpro Inc, a development-stage company, incorporated in the State of Nevada on July 19, 2013, as a for-profit company with a fiscal year end of October 31. Our business and registered office is located at 9/F., Kam Chung Commercial Building, 19-21 Hennessy Road, Wanchai, Hong Kong. Our telephone number is (852) 3111-7718, fax number (852) 3111-7720, E-mail: [email protected]. Our website is: http://greenpro-inc.com/. Currently, the Company does not have any subsidiaries or entities that the Company controls. Currently, the Company does not have any customers. We have not generated any revenues to date and our activities have been limited to developing our business plan and developing our system and website. We will not have the necessary capital to develop or execute our business plan until we are able to secure financing. There can be no assurance that such financing will be available on suitable terms. Greenpro intends to provide a range of services as a package solution (the "Package Solution") to our future clients. It is our intention to develop a "Package Solution," which will build a cloud solution into traditional accounting services. By using a Package Solution, we believe that our potential clients can reduce their business costs and improve their revenues. Cloud Accounting Solution Greenpro intends to develop a cloud accounting system, which can assist small business clients to manage their books and financial records. The cloud accounting system we intend to develop is a device related to book-keeping and accounting through an Internet based platform. It is a program for organizational finance, which we anticipate will allow users to perform accounting-related functions such as making records of money received by a company, billing a company's clients, managing the inventory, and recording the financials through the cloud platform. Aside from recording a company's financial data, the cloud accounting system we expect to establish will be able to assist clients to create financial statements such as balance sheets, income statements and statements of cash flow. It is our belief that the cloud based system will enable potential clients to keep track of their income and expense, create invoices, manage bank accounts, and prepare monthly accounts for management's review. The designed functions of this system will include reminding future clients to properly record assets or revenues for their businesses therefore assisting them to more effectively and economically prepare financial statements and monitor the financials of their businesses. We expect that potential clients could scale at the speed of their businesses, and expand their businesses into larger markets with the assistance of cloud accounting system. Record Management Services We intend to set up a cloud record management system to store our future clients' business information so that the clients can have access to such information in a convenient way. It is important to establish a records management solution across the enterprises and we plan to offer general bookkeeping services to businesses. We intend to use a well-developed accounting software that is developed in accordance with the accounting principles in Hong Kong and compliant with tax legislation to deal with day-to-day accounts so that all bookkeeping records of a business are clear and accurate. In addition, we plan to provide a general ledger to a client as well as spreadsheet income statements, cash flow statements, and balance sheets. We anticipate that by using our record management solutions, our clients will be able to share and make decision quickly and effectively without wasting valuable resources and becoming more competitive. -9- Cross-Border Business Solution Greenpro intends to provide a full range of cross-border services to potential clients, at a fixed monthly fee, to enable small to mid-sized businesses to conduct their business effectively. The service is called "Cross-Border Business Solution" as we intend to provide full packaged services to international entrepreneurs and other local clients. With growing competition and increasing economic sophistication, we believe more companies need strategies for cross-border mergers, restructurings, and other corporate matters. Our plan is to bundle the Cross Border Business Solution services with the cloud accounting solution. The services we intend to provide will cover the following: ? Advising clients for company formation of in Hong Kong, U.S., British Virgin Island and other overseas jurisdictions ? Setting up bank accounts with banks in Hong Kong to facilitate clients' banking operations ? Bank loan referrals ? Company secretarial services ? Applying business registration certificate with the Inland Revenue Department of Hong Kong ? Providing corporate finance consulting services ? Providing due diligence investigations and valuation of companies ? Advising clients regarding debt and company restructuring ? Providing liquidation, insolvency, bankruptcy and individual voluntary arrangement advice and assistance ? Designing marketing strategy and promote the company's business, products and services ? Providing financial and liquidity analysis ? Setting up cloud invoicing system for clients ? Liaising with capital funds for raising capitals ? Setting up cloud inventory system to assist clients to record, maintain and control their inventories and knowing their inventory levels; ? Setting up cloud accounting system to enable clients to keep track of their financials ? Assisting client's payroll matters operated in our cloud payroll system ? Assisting clients in tax planning and arrangement for auditing on company's financial statements, preparing the tax computation and compiling with the filing of profits tax with the Inland Revenue Department of Hong Kong Plan of Operation We anticipate that the $500,000 we intend to raise pursuant to the offering pursuant to our Registration Statement on Form S-1 which was declared effective on September 5, 2014, ('the Offering") will be sufficient to design, develop, produce and deploy our business accounting system, cloud record management system, hire sales persons, IT personnel and professional accountants, and develop our client base. Efforts will be proportional to funds raised to achieve these results. Raising less than the $500,000 will decrease funds for software equipment and system development. Our business plan and allocation of proceeds will vary to accommodate the amount of proceeds raised by the sale of securities and other financing efforts. The Use of Proceeds table shows an increase in funds allocated to each category under our business plan somewhat in proportion to the percentage of shares sold (whether 10%, 25%, 50% or 100%). Initially, we intend to interview system design/hosting service firms to assist in developing asystem and provide hosting services, but would not engage these service providers unless and until sufficient funds were raised. We intend to interview marketing and advertising agencies to assist in developing the marketing and advertising/promotional plans, but again would not engage these service providers unless and until sufficient funds were raised and the terms of the engagement would be dependent upon the amount of capital available. Initially, our officers will provide their office computer and office equipment at no cost, but as computer hardware and software needs increase (and funds are available), new equipment to meet the system design/hosting requirements will be acquired. However, we estimate that we will require as much as $500,000 in order to establish operations of a sufficient size and quality to ensure the competitiveness of our business and to generate significant revenues to support an office outside the directors' existing office. Nevertheless, if our potential to raise capital appears exhausted, our management may decide to modify our business plan on a reduced scale and quality. A decision by management to implement our business plan on a reduced scale and quality may occur at any juncture during the early stages of our business development, whether we have raised 10%, 25%, 50% or 100% of the proceeds that we will be seeking to raise through the Offering. During the 12 months following the completion of the Offering, we intend to implement our business and marketing plan. We estimate that a total of $228,000 will satisfy our basic, subsistence level cash requirements for 12 months after the Offering is completed. However, we will require as much as $500,000 in order to establish operations of a sufficient size and quality to ensure the competitiveness of our business and fully implement our business plan to develop the cloud accounting system. We may raise additional funds to pay for expenses associated with our development over the next 12 months. -10- During the next 12 months, we intend to establish our business accounting system and record management system. The system intends to be developed to provide an online cloud environment to our potential customers who intend to do cross border business from Malaysia and Hong Kong. The Company anticipates employing consultants to create these products from strategy, design, branding, content and software development. We anticipate that our potential customers will be loyal, use our system monthly, refer others and provide feedback and testimonials about how the cloud accounting system helps to monitor these potential clients' information for their decision making purposes. As of July 31, 2014, we had cash on hand of $42,659 and we have incurred a net loss of approximately $32,899 since inception. We believe that it will cost approximately $500,000 to develop the cloud accounting system and record management system. These costs will include, rent, the purchase of equipment and system development cost. We also expect to obtain liability insurance once we begin the operation of our cloud accounting system. This will be part of the money allocated to working capital. There can be no assurance that will be able to secure financing, and if we are are unable to secure financing we will not be able to develop the cloud accounting system and record management system. Over the next 12 months, we intend to pursue capital through public or private financing in order to finance our businesses activities. We cannot guarantee that additional funding will be available on favorable terms, if at all. If adequate funds are not available, then our ability to continue our operations may be significantly hindered. The following table estimates our costs to develop cloud accounting system and record management system: Use of Proceeds Est. Budget System Development Cost $ 289,000 Software Tools and Equipment 77,000 Product Commercialize 45,000 Office Rental 32,000 Legal Counsel Fees for Public Company Reporting Requirements 20,000 Audit Fee 4,000 Brochures, Marketing and Promotion 25,000 Administration Fee 8,000 Total 12 Month Requirement $ 500,000 Until we execute our business plan and begin to generate revenue we will have no source of revenue. We have not yet begun the development of any of our anticipated service and even if we do secure adequate financing, there can be no assurance that our service will be accepted by the marketplace and that we will be able to generate revenues. Our management does not plan to hire any employees at this time. Our officers will be responsible for business plan development. Results ofOperation As of July 31, 2014, we had no revenue. Expenses for the period from inception through July 31, 2014 total $32,899, including legal fees, auditing fees and other administrative costs resulting in a net loss. Since inception and though July 31, 2014, we have sold 10,000,000 shares of common stock to our officers and directors for net proceeds of $1,000. We have issued two 8% Convertible Promissory Notes for an aggregate proceeds of $82,500. The maturity date for the Notes is January 28, 2014 at 8% interest rate per annum. The Notes may be convertible to shares of the Company's Common Stock at the holders' election, at a conversion price of $.00825 per share. On May 6, 2014, Mr. Lee and the Company signed a Letter of Amendment to extend the maturity date of his Note to August 12, 2014. Also on May 6, 2014, Mr. Loke and the Company signed a Letter of Amendment to extend the maturity date of his Note to August 12, 2014. -11- Capital Resources and Liquidity As of July 31, 2014 we had $42,659 in cash. The following table summarizes total current assets, liabilities and working capital as of July 31, 2014 As of July 31, 2014 Current Assets $ 52,451 Current Liabilities $ 84,350 Working Capital Deficit $ (31,899 ) As of July 31, 2014, we had total current assets of $52,451, consisting $42,659 of cash. We had current liabilities of $84,350. Accordingly, we had a working capital deficit of $31,899 as of July 31, 2014. The Company has yet to commence significant commercialization of its products, and recorded $0 of gross revenue as of July 31, 2014. As of July 31, 2014, our current cash on hand is $42,659 which will be used to meet our current obligations. The sale of the securities in the Offering will provide for vetting of the business plan to support pursuing investment capital. As of the date of this Form 10Q, we had cash on hand of $46,697 and we estimate that the Company can maintain its basic operating requirements for approximately 3 months with the current cash assets. Currently available cash is not sufficient to allow us to commence full execution of our business plan. Our business expansion and development may require significant capital resources that may be funded through the issuance of common stock or of notes payable or other debt arrangements that may affect our debt structure. However, there can be no assurance that we will be able to raise money in this fashion and have not entered into any agreements that would obligate a third party to provide us with capital. Recent Accounting Pronouncements The Company has elected to use the extended transition period for complying with new or revised financial accounting standards available under Section 102(b)(2)(B) of the 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. Critical Accounting Policies Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. We have identified below the critical accounting policies which are assumptions made by management about matters that are highly uncertain and that are of critical importance and have a material impact on our financial statements. Management believes that the critical accounting policies and estimates discussed below involve the most complex management judgments due to the sensitivity of the methods and assumptions necessary in determining the related asset, liability, revenue and expense amounts. Specific risks associated with these critical accounting policies are discussed throughout this MD&A, where such policies have a material effect on reported and expected financial results. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Estimates are based on historical experience, management expectations for future performance, and other assumptions as appropriate flows. We re-evaluate estimates on an ongoing basis; therefore, actual results may vary from those estimates. -12- FINANCIAL INSTRUMENTS The Company's balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization. Off-balance Sheet Arrangements We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders. Going Concern As reflected in the accompanying financial statements, the Company has a net loss and net cash used in operations of $32,899 as of July 31, 2014. The ability of the Company to continue its operations is dependent on Management's plans, which include the raising of capital through debt and/or equity markets with some additional funding from other traditional financing sources, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur additional liabilities with certain related parties to sustain the Company's existence. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern. In response to the above, management will: ? seek additional third party debt and/or equity financing; ? continue with the implementation of the business plan; ? increase revenue commercialization of the technology. As of the date of this 10Q, we only have sufficient funds to proceed with basic company operations only. We may not have sufficient funds to fully implement our business plan and we may need to raise additional funding, of which there is no guarantee. -13- Item3 Quantitative andQualitative DisclosuresAbout Market Risk. Asa "smaller reporting company"as defined by Item10 of Regulation S-K, theCompany is not requiredto provide information required by thisItem Item4 Controls andProcedures. Evaluationof DisclosureControls andProcedures :We conductedan evaluationunder the supervisionand with theparticipation ofour management, includingour ChiefExecutive Officerand ChiefFinancial Officer,of the effectivenessof thedesign andoperation of ourdisclosure controls andprocedures. The term "disclosurecontrols and procedures", asdefined in Rules 13a-15(e)and 15d-15(e) underthe Securities andExchange Act of 1934, as amended ("Exchange Act"), means controls and other procedures ofa company that are designed to ensure that informationrequired to be disclosed by thecompany in the reports itfiles or submits underthe Exchange Act isrecorded, processed, summarized and reported, within the time periods specified in the Securities andExchange Commission's rules and forms. Disclosure controls and procedures also include,without limitation, controls and procedures designed to ensurethat information required to be disclosed by a company in the reports that it filesor submits under the Exchange Act is accumulatedand communicated tothe company's management, includingits principalexecutive andprincipal financial officers,or persons performingsimilar functions,as appropriate, toallow timely decisions regarding required disclosure.Based on this evaluation, our Chief Executive Officer and ChiefFinancial Officer concluded as of July 31, 2014, that our disclosure controls and procedures are effective to a reasonableassurance level of achieving such objectives. However, it should be noted thatthe design of any system of controls is based in part upon certainassumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achievingits stated goals under allpotential future conditions, regardless of how remote. Management'sReport onInternal Control OverFinancial Reporting: Our managementis responsiblefor establishing andmaintaining adequate internalcontrol over financialreporting as definedin Rules 13a-15(f)and 15d-15(f) underthe Exchange Act.Our internal controlover financialreporting isdesigned toprovide reasonableassurance regarding thereliability offinancial reportingand thepreparation offinancial statementsfor external purposes in accordance with generallyaccepted accounting principles. The internalcontrols for the Company are provided by executive management's review and approval ofall transactions.Our internal control overfinancial reporting also includesthose policies and procedures that: 1. pertain to the maintenance of records that in reasonable detail accuratelyand fairly reflect thetransactions and dispositions of ourassets; 2. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management; and 3. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Becauseof itsinherent limitations,internal controlover financial reportingmay notprevent or detectmisstatements. Also,projections ofany evaluation of effectivenessto future periods are subjectto the risk thatcontrols may becomeinadequate because ofchanges inconditions, orthat the degreeof compliancewith thepolicies orprocedures may deteriorate. Managementassessed the effectivenessof theCompany's internal controlover financialreporting asof July 31,2014. In makingthis assessment,management used thecriteria setforth bythe Committee ofSponsoring Organizations ofthe TreadwayCommission inInternal Control-Integrated Framework.Management's assessment includedan evaluation of the designof our internal control overfinancial reporting and testing of the operational effectivenessof these controls. Basedon thisassessment, managementhas concludedthat as ofJuly 31,2014, our internalcontrol over financialreporting was effectiveto providereasonable assurance regardingthe reliabilityof financialreporting and thepreparation of financialstatements forexternal purposes inaccordance withU.S. generallyaccepted accounting principles. Thisquarterly report doesnot includean attestationreport ofthe Company'sregistered publicaccounting firmregarding internalcontrol over financialreporting. Management's reportwas not subjectto attestationby the Company'sregistered publicaccounting firm pursuantto temporaryrules of the Securitiesand Exchange Commission that permitthe Company to provide only management'sreport in this annual report. Changesin InternalControl over FinancialReporting: There wereno changes inour internalcontrol over financialreporting during thequarter ending July31, 2014, thathave materiallyaffected, orare reasonably likelyto materiallyaffect, our internalcontrol over financialreporting. -14- |