Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. MONEYFLOW SYSTEMS INTERNATIONAL INC (1159464) 10-Q published on Jun 14, 2012 at 5:00 pm
Reporting Period: Jun 13, 2012
Vault America, Inc. (“Vault”), formerly MoneyFlow Systems International Inc., ("MoneyFlow") was incorporated on April 25, 2001 under the laws of the State of Nevada. Security Bancorp Inc. ("Security Bancorp"), Vault’s wholly owned subsidiary, was organized on August 3, 1992 in Alberta, Canada and was inactive until January 5, 1999 when it changed its name to Security Bancorp Inc. and began operations under the name CA$H STATION(R). In July, 2001, Security Bancorp and MoneyFlow approved a share exchange agreement whereby MoneyFlow issued 14,000,000 shares of its common stock in exchange for 100% of the issued and outstanding shares of Security Bancorp. In connection with this agreement, Security Bancorp became a wholly owned subsidiary of MoneyFlow. On April 1, 2002, MoneyFlow formed a wholly owned Canadian subsidiary, Intercash POS Systems Ltd., ("Intercash") through which MoneyFlow conducted its Point-of-Sale business. Point-of-Sale terminals allow customers to use their debit and credit cards to make purchases and obtain cash on the premises of businesses. On August 31, 2004, MoneyFlow sold the majority of its Point-of-Sale business to BP Financial Corp. for approximately $258,000 in cash pursuant to a purchase and sale agreement, and Intercash is no longer an operating subsidiary of MoneyFlow. The Point-of-Sale terminals that were not part of the sale are being managed by Security Bancorp, and the Company does not plan to sell any new terminals.
Since 2009 and prior to January 1, 2012, the Company entered into convertible bridge loans for working capital purposes with various individuals. Prior to January 1, 2012, the Company had borrowed $925,500, repaying $60,000 of these loans, and converting $815,500 (along with $145,205 of accrued interest) of these loans into 3,791,177 units during the year ended December 31, 2011. The conversions were recorded at $0.25 into units, and all accrued interest on these loans was also converted. These loans are interest bearing at 16% per annum and all were past due when converted. All of the notes except one note for $50,000 was either repaid or converted by December 31, 2011. Interest expense for the years ended December 31, 2011 and 2010 on these loans were $46,209 and $150,802, respectively. At December 31, 2011, $15,890 remained as accrued interest on the $50,000 loan. The $50,000 loan along with accrued interest of $17,885 remains outstanding at March 31, 2012.
GPDB does not have any material commitments for capital expenditures during the next twelve months. It is likely that GPDB will need to raise additional funds in the future, particularly if we are unable to generate positive cash flows from operating activities or require additional capital to expand our operations. Therefore GPDB’s future operations may be dependent on its ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of the Company’s common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if GPDB is able to raise the funds required, it is possible that it could incur unexpected costs and expenses, fail to collect significant amounts owed to it, or experience unexpected cash requirements that would force it to seek alternative financing. Furthermore, if the Company issues additional equity or debt securities, stockholders will experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If GPDB is unable to obtain additional financing, we may have to curtail our marketing and development plans and cease our operations.
On May 24, 2012, the Company entered into a Note Purchase Agreement (the “NPA”) with an accredited investor pursuant to which the Company agreed issue a Convertible Promissory Note bearing an annual interest rate of 8% (the “8% Note”) for an aggregate purchase price of $300,000. The 8% Note has a maturity date of November 24, 2012. In addition, the 8% Note is, at the option of the holder, convertible at any time into shares of Common Stock at a conversion price of $2.70 per share (the “Conversion Price”) and will automatically convert into Common Stock upon maturity at the Conversion Price. Under the terms of the NPA, the Company also agreed to issue to the investor a warrant to purchase 111,111 shares of Common Stock at an exercise price of $4.05 per share of Common Stock. Furthermore, in order to provide incentive for the investor to enter into the NPA, the Company agreed to issue 22,222 shares of Common Stock and to exchange a warrant to purchase 200,000 shares of Common Stock, which warrant was previously purchased by the investor, for a new 5-year warrant to purchase 222,222 shares of Common Stock at an exercise price of $4.05 per share. In connection with the forgoing, the Company relied upon the exemption from securities registration afforded by Section 4(2) of the Securities Act. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors, and transfer was restricted by the Company in accordance with the requirements of the Securities Act of 1933.