Appsoft Technologies, Inc. - Annual Report: 2017 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended: December 31, 2017

For the transition period from ________ to ________

Commission file number: 000-52901

APPSOFT TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code:   (516) 224-7717                

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, par value $0.0001 per share

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. ¨ Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ¨ Yes x No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 17(a)(2)(B) of the Securities Act. ¨ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

The aggregate market value of voting and non-voting common equity held by non-affiliates as of June 30, 2017 was approximately $-0-.

At April 16, 2018 there were 4,032,500 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

TABLE OF CONTENTS

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

This report on Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. We have based our forward-looking statements on our current expectations and projections about future events. Our forward-looking statements include information about possible or assumed future results of operations. All statements, other than statements of historical facts, included or incorporated by reference in this report that address activities, events or developments that we expect or anticipate may occur in the future, including such things as the growth of our business and operations, our business strategy, competitive strengths, goals, plans, future capital expenditures and references to future successes may be considered forward-looking statements. Also, when we use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “probably,” or similar expressions, we are making forward-looking statements.

Numerous risks and uncertainties may impact the matters addressed by our forward-looking statements, any of which could negatively and materially affect our future financial results and performance.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and, therefore, the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements that are included in this report, our inclusion of this information is not a representation by us or any other person that our objectives and plans will be achieved. In light of these risks, uncertainties and assumptions, any forward-looking event discussed in this report may not occur.  Our forward-looking statements speak only as of the date made, and we undertake no obligation to update or review any forward-looking statement, whether as a result of new information, future events or other developments, unless the securities laws require us to do so.

PART I

ITEM 1. BUSINESS

General

AppSoft Technologies, Inc. (“we,” “us,” or the “Company”) develops, publishes and markets mobile software applications for smartphones and tablet devices (“Apps”). We currently generate revenue from sales, or downloads, of our Apps and from advertisements published on our ad supported game titles. We currently own a portfolio comprising over 400 Apps titles including games designed to appeal to a broad cross section of consumers and legal-related Apps that provide compilations of federal and state laws and regulations across a variety of legal disciplines and digests of court decisions rendered by federal courts. We offer some of our game titles in both a free advertisement-supported version and a paid version that does not display ads. We believe that the ad supported versions allow for wider dissemination of our titles to consumers who might not otherwise spend money for an App without first playing the game.

We may purchase App titles directly from developers or enter into agreements with third-party developers to sell us titles under development or to create new Apps for us. Consumers download our Apps through direct-to-consumer digital storefronts, such as the Apple App Store and Google Play Store.

History

We were organized in the State of Nevada in March 2015. In April 2015, we concluded a transaction in which we issued 2,000,000 shares of our Series A Preferred Stock in exchange for the sum of $50,000 and a portfolio comprising over 400 Apps titles.

On March 31, 2016, we closed our initial public offering of common stock, which we refer to throughout this report as our IPO. In our IPO, we registered 1,000,000 shares of common stock for sale at a price of $0.50 per share and sold 252,500 shares of common stock to the public for an aggregate offering price of $126,250.

Our App Portfolio

Our Apps are divided among game titles and Apps that provide compilations of federal and state laws and regulations across a variety of legal disciplines and digests of court decisions rendered by federal courts.

Some of our most popular titles include:

Our game titles are designed to appeal to a variety of age groups ranging from younger teens to adults. We offer some of our games in both a free advertisement-supported version and a paid version that does not display ads. We believe that by offering free ad supported versions we can build a significantly larger customer base more quickly than we could if we charged users an up-front fee to download our games since they may be reluctant to purchasing a game without first playing it. If a consumer enjoys a title, they may purchase the game and play without interruption from pop-up ads.

Our legal titles are easy to use and navigate. We maintain our legal titles so that they are current through a recent period.

Product Development

We are constantly seeking to develop and acquire new Apps to supplement our portfolio. Our primary focus will be to release new game titles. We are developing a pipeline of independent game designers, developers and programmers who provide us with new ideas and titles to publish. We typically enter into services or consulting agreements with our independent developers. Agreements with third-party developers generally give us exclusive publishing and marketing rights and require us to make development payments, pay royalties based on product sales and to satisfy other conditions. Our agreements with third-party developers generally provide us with the right to monitor development efforts and to cease making development payments if specified development milestones are not satisfied.

We also solicit new games and concepts that we may acquire from third parties. When we receive an idea for a new App, we research the commercial viability of the concept and undertake an analysis of the cost to develop the App against its potential economic return. If we determine that the App is commercially viable, we may fund the cost of development, publication and marketing. Upon completion of development we will own the App title.

We are developing and publishing free-to-play games. Free-to-play games are games that a player can download and play for free, but which allow players to access a variety of additional content and features for a fee, through “in-app purchases” utilizing virtual currency they may be purchased through digital storefronts, and to engage with various advertisements and offers that generate revenues for us. Several large game publishers are successfully employing this business model. In order for us to achieve success using this model, we must develop and publish games that are widely accepted and commercially successful, which will provide us with the largest base from which to monetize our in-App sales. In addition to building strong core gameplay, successful monetization will require that we continually create new content within games and otherwise find ways to retain players and incentivize them to make in-app purchases. As these games gain wider acceptance and mature in the market, we may seek to improve monetization and increase awareness of our games by building social media communities around these titles and by delivering additional features, such as tournaments, live events and more frequent content updates.

We may seek to acquire franchises around which we develop games. Franchises may include movies, television programs, toys and other cultural phenomena that lend themselves to gamification. We will have to obtain a license from the owner of the franchise for each App we publish that is based on a third-party franchise and we likely will be required to pay ongoing royalties to the franchise owner.

As of the date of this report, we have retained the services of eight professionals who render coding, design, management, and marketing services to assist with the development of new Apps. Presently, we have four Apps/games under development, including an eSports tournament platform, Packzombie, WTFiT and GoDex. We expect to launch one or more of these Apps this year. Set forth below is a brief description of the new and existing Apps under development:

During 2016, we purchased an eSports tournament platform and the related software, trademarks and trade names; and other intellectual property. When we took control of these assets, they still required development and other pre-launch work. Since the acquisition date, we have been coordinating a technical transition as well as continued coding on features and functions development. eSports (also known as electronic sports, competitive (video) gaming, professional (video) gaming, or pro gaming) are a form of competition that is facilitated by electronic systems, particularly video games; the input of players and teams as well as the output of the eSports system are mediated by human-computer interfaces. Most commonly, eSports take the form of organized, multiplayer video game competitions, particularly between professional players. The most common video game genres associated with eSports are real-time strategy, fighting, first-person shooter (FPS), and multiplayer online battle arena. Tournaments such as The International, the League of Legends World Championship, the Battle.net World Championship Series, the Evolution Championship Series, and the Intel Extreme Masters provide live broadcasts of the competition, and prize money and salaries to competitors.

eSports have become popular worldwide, not only with participants but also with fans who watch them online and in public spaces, including arenas. Statista, an online statistics gathering and dissemination portal, estimates that during 2017 over $1.1 billion was spent on eSports related events and merchandise. Statista predicts that the entire eSports market is expected to grow over the coming years, with worldwide revenues projected to reach nearly $1.5 billion in 2020. In 2015, there were 162 million frequent viewers and 161 million occasional viewers of eSports worldwide. During 2014, “Newzoo Esports” reported that eSports revenue, which comprises media rights, merchandise, tickets, advertising, sponsorship and game publisher fees, was $194 million, which climbed to $325 million in 2015 and which Newzoo estimates could grow to and over $1.1 billion in 2019, which would represent a compound annual growth rate of 42.2% from 2014 through 2019.

Our App will provide eSports players with an easy-to-use platform that provides fair, transparent, and prompt payouts for prize tournaments. We will differentiate our product from competing platforms by focusing on casual games and mobile games. We also expect to focus on direct integrations with existing game publishers enabling them to offer prize tournaments to their existing player base.

During 2016, we acquired a suite of concepts, artwork, story lines and related computer software in connection with a computer game titled “CryptoGene,” for mobile application. CryptoGene represents a potential franchise that we can develop and roll out over multiple platforms, including as an App and video game version, graphic novels and other print and audio-visual media. This is a long-term project that will require significant financial and personnel resources.

Also during 2016, we acquired a product, which we call “GoDex”, that is a Pokémon Go companion app for iOS and Android. The App uses sophisticated image recognition that will enable users to take screenshots of their Pokémon and have GoDex calculate its statistic, IV percentage, combat power calculations, and other statistics that players deem relevant to the Pokémon experience. The App also will allow users to send and receive in-App messages to and from team mates within a 10-kilometer radius. As GoDex develops, we expect that it will become a “one-stop-shop” for all Pokémon Go related tools.

Statista estimates that as of February 2016, there had been over 650 million downloads of Pokémon GO has enjoyed 500 million downloads with 20 million daily active users and that revenues are estimated to be $2 million per day. During 2016, Pokémon Go generated an estimated $950 million in revenues according to a report by market researcher App Annie. Our App will seek to take advantage of this active market.

We currently have substantially completed development of PackZombie, a strategy/ survival genre video game that is built as a multiplatform game. Consumers will be able to play it on both Apple and Android mobile devices- smartphones and tablets, as well as on Game Consoles like Xbox and Playstaion, and on Laptop and Desktop computers. The game follows a post zombie apocalypse storyline where players level up and build up their home base and their characters, known as ’survivors’, so that they can fight off the Zombie onslaught. There game comprises two main segments: the home base/character screens and the 3D puzzle maze. In the home base, players build, grow, level up and strengthen their characters by collecting resources, or ’supplies’, and allocating them among the different characters and base options. To collect supplies, the characters must leave the base and select a supply run from an options tree which advances in difficulty as they complete levels, Supply run options include Grocery Store, Forest, Hospital, or Warehouse. Each of these options opens a 3D puzzle maze where the chosen character begins a supply run by avoiding or killing zombies, while collecting randomly deposited crates of supplies. The puzzle maze is completed, once they collect 3 keys and find the exit. This game is a free to play app monetized through IAP (in app purchases) such as, a $4.99 crate upgrade or a $2.99 speed upgrade.

WTFiT is an App we’ve been developing for almost two years. This App allows users to take a picture of something with their phone and quickly get an answer suggesting what the picture might be. Using high quality image recognition software, the user will be told what the image is, and if the software is wrong they can challenge the system and then ask their friends and post their own answers on their friends’ pictures. We will use these answers to make our results better. We believe that the social component and the crowdsourcing component will make our App extremely addictive, viral, and self-learning. The steps are simple:

The more interactivity by a user with the App, the more points they earn. Similar to Yelp and Google contributions, points equal status and badges. This will also lead to high growth of users and usage. During the App’s natural usage, we will integrate video ads and targeted sponsored ads, i.e., if a user submits a picture of an article of clothing, we present an ad for a similar article of clothing.

In August 2013, our officers organized and they currently are the principals of Primo Media, Inc., a Latin focused, multi-channel network that connects brands with millions of Hispanic Millennials through integrated digital and mobile advertising opportunities across the network. We expect to use the knowledge and experience gained by our officers to market our games to the Latino population. As a long-term project, we may seek to publish Spanish language versions of our games and develop games and Apps that are geared specifically toward the Spanish speaking market segment.

The markets for our products are characterized by rapid technological change, particularly in the technical capabilities of mobile phones and tablets, and changing end-user preferences. Therefore, we will be required to continuously invest capital to innovate and publish new games, regularly update our games, and modify existing games for distribution on evolving platforms. We cannot assure that we will have the capital to develop new and update existing game, that we will be successful in selecting new games to bring to market or that our updates to successful games will allow us to retain market share.

Sales, Marketing and Distribution

We market, sell and distribute our games Apps exclusively through Apple’s App Store and our legal titles through the Google Play Store, the largest direct-to-consumer digital storefronts. We expect that a majority of our revenues will be derived from sales on the Apple App Store.

We currently generate revenue from downloads of our paid Apps and from advertisements published on our ad supported game titles. We have entered into agreements with each of Apple and Google that govern our relationship as developers / distributors on their respective storefronts. We are party to two agreements with Apple, one that relates to App sales and one that covers net revenues generated from in-App advertising, for which we pay Apple a fee equal to 30% of net advertising revenues, which are defined as gross advertising revenue recognized through the delivery of ads by Apple less: a) any allowances actually made or taken for returns, credits, cash discounts and promotional allowances; and, b) agency and agent fees, discounts, commissions and referral fees and (c) certain adjustments and allocations specified in the agreement. Under our agreement with Google, we have agreed to pay Google a fee equal to 30% of net revenue generated from sales of our Apps on its storefront. These agreements provide that we will continue to own all rights to our Apps, subject to a license we grant to each party to market and promote our products and further define permissible and prohibited activities of the parties.

We may partner with other App publishers to develop and market new titles. These types of arrangements will allow us to defray development and marketing costs among a wider range of titles and increase our chances of publishing a successful title.

We employ advanced analytics, a means of analyzing data we collect about users of our Apps, to develop and publish more appealing titles and features in our games.

Our ability to market our Apps successfully on direct-to-consumer digital storefronts will depend on a number of factors, including our ability to build relationships with storefront owners and educate them about our title roadmap so that they feature or otherwise prominently place them within the storefront. If we are able to achieve these ends, we believe that consumers are more likely to find our Apps, which may result in greater downloads and more revenue. We believe that a number of factors may influence the featuring or placement of an App, including:

We also expect to undertake a number of marketing initiatives designed to attract consumers to download our Apps, including:

Competition

Developing, distributing and selling Apps is a highly competitive business, characterized by frequent product introductions and rapidly emerging new platforms, technologies and storefronts. With respect to competing for consumers of our game related Apps, we will compete primarily on the basis of game quality, brand and customer reviews. We will compete for promotional and digital storefront placement based on these factors, as well as our relationship with the storefront owner, historical performance, perception of sales potential and relationships with licensors of brands, properties and other content. With respect to our legal Apps, we will compete on the basis of providing the most up to date content, the App’s ease of use (navigation and readability) and its price as compared to similar product offerings. We also will compete for experienced and talented employees and independent contractors.

We believe that our small size will allow provide us a competitive edge for the time being and allow us to make quick decisions as to product development to take advantage of consumer preferences at a particular point in time.

With respect to our game Apps, we compete with a continually increasing number of companies, including industry leaders such as Activision, DeNA, Disney, Electronic Arts (EA Mobile), Gameloft, GREE, GungHo Online Entertainment, King Digital Entertainment, Nexon, Warner Brothers and Zynga and many well-funded private companies, including Kabam, Machine Zone, Rovio, Storm 8/Team Lava and Supercell. We could also face increased competition if large companies with significant online presences such as Apple, Google, Amazon, Facebook or Yahoo, choose to enter or expand in the games space or develop competing games.

In addition, given the open nature of the development and distribution for smartphones and tablets, we also compete or will compete with a vast number of small companies and individuals in all of our segments who are able to create and launch Apps and other content for these devices using relatively limited resources and with relatively limited start-up time or expertise. As an example of the competition that we face, as of January 2017, Statista estimated that 2.2 million mobile Apps were available to download from the Apple App Store for various iOS devices. The proliferation of titles in these open developer channels makes it difficult for us to differentiate ourselves from other developers and to compete for players and users who purchase content for their devices without substantially increasing marketing or development costs.

With respect to our legal-related Apps, we compete with a number of well established companies that offer similar Apps, including LexisNexis, WestLaw, CCH, BNA and Bloomberg Law Reports. We may face increased competition from established or newly organized entities and from the governmental offices and agencies that promulgate the laws and regulations that are the subject of our Apps, should they decide to make versions of such laws and regulations available to consumers.

Most of our competitors and our potential competitors have one or more advantages over us, including:

Intellectual Property

Our intellectual property is an essential element of our business. We currently use a combination of trade secret and other intellectual property laws, confidentiality agreements and license agreements to protect our intellectual property. We may seek to file copyrights with respect to one or more of our titles in the future. Our employees and independent contractors are required to sign agreements acknowledging that all inventions, trade secrets, works of authorship, developments and other processes generated by them on our behalf are our property, and assigning to us any ownership that they may claim in those works. Despite our precautions, it may be possible for third parties to obtain and use without our consent intellectual property that we own or license. Unauthorized use of our intellectual property by third parties, including piracy, and the expenses incurred in protecting our intellectual property rights, may adversely affect our business.

From time to time, we may encounter disputes over rights and obligations concerning intellectual property. If we do not prevail in these disputes, we may lose some or all of our intellectual property protection, be enjoined from further sales of our Apps or other applications determined to infringe the rights of others, and/or be forced to pay substantial royalties to a third party, any of which would have a material adverse effect on our business, financial condition and results of operations.

Government Regulation

We are subject to various federal, state and international laws and regulations that affect our business, including those relating to the privacy and security of customer and employee personal information and those relating to the Internet, behavioral tracking, mobile applications, advertising and marketing activities, and sweepstakes and contests. Additional laws in all of these areas are likely to be passed in the future, which could result in significant limitations on or changes to the ways in which we can collect, use, host, store or transmit the personal information and data of our customers or employees, communicate with our customers, and deliver products and services, or may significantly increase our compliance costs. As our business expands to include new uses or collection of data that are subject to privacy or security regulations, our compliance requirements and costs will increase and we may be subject to increased regulatory scrutiny.

Employees

As of the date of this report, we had one employee, who is our president and chief executive officers, who has other business interests and who is not obligated to devote any specific number of hours to our affairs. Our officer’s attention to his other business commitments may detract from his ability to devote time to our business and this may result in conflicts of interest that could harm our business.

We rely on independent game designers, developers, programmers and other IT specialists to develop new titles and update and maintain existing ones and from time to time we may have several contractors rendering services to us. As of the date of this report, we have engaged six third party developers to assist with App development efforts.

Our employee is not represented by a collective bargaining agreement. We consider our relations with our employee to be very good.

Emerging Growth Company and Smaller Reporting Company Status

Emerging Growth Company

We are an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We intend to take advantage of all of these exemptions.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, and delay compliance with new or revised accounting standards until those standards are applicable to private companies. We have elected to take advantage of the benefits of this extended transition period.

We could be an emerging growth company until the last day of the first fiscal year following the fifth anniversary of our first common equity offering, although circumstances could cause us to lose that status earlier if our annual revenues exceed $1.0 billion, if we issue more than $1.0 billion in non-convertible debt in any three-year period or if we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act.

Smaller Reporting Company

We also qualify as a “smaller reporting company” under Rule 12b-2 of the Exchange Act, which is defined as a company with a public equity float of less than $75 million. To the extent that we remain a smaller reporting company at such time as we are no longer an emerging growth company, we will still have reduced disclosure requirements for our public filings, some of which are similar to those of an emerging growth company, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

ITEM 1A. RISK FACTORS

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We currently maintain a virtual office at 1225 Franklin Avenue, Suite 325, Garden City, New York at a cost of $149 per month. We believe that this space is adequate for our current and foreseeable requirements but that we could establish a permanent presence on acceptable terms, if necessary.

ITEM 3. LEGAL PROCEEDINGS

We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us that may materially affect us.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES

Market Information

Our common stock was admitted to quotation on the over-the-counter market in June 2017 and is quoted under the symbol “ASFT.” Since admitted to quotation, the volume of trading in our stock has been limited and we cannot assure investors that an active trading market will develop or be maintained for our stock.

The following table provides the high and low bid information for our common stock during the periods indicated. This bid information reflects inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

On April 16, 2018, the closing bid price of our common stock as reported by the OTCQB was $1.40 per share.

Holders

As of April 16, 2018, we had 50 record holders and 4,032,500 shares of common stock issued and outstanding.

Dividends

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.

Recent Sales of Unregistered Securities

All sales of unregistered securities by the Company during fiscal 2017 have been previously reported in our reports on Forms 8-K and 10-Q filed with the SEC.

Securities Authorized for Issuance under Equity Compensation Plans

The Company does not have any equity compensation plans or any individual compensation arrangements with respect to its common stock or preferred stock. The issuance of any of our common or preferred stock is within the discretion of our Board of Directors, which has the power to issue any or all of our authorized but unissued shares without stockholder approval.

ITEM 6. SELECTED FINANCIAL DATA

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We develop, publish and market Apps for smartphones and tablet devices. We currently derive our revenue from sales, or downloads, of our Apps and from advertisements published on our ad-supported game titles. Over the course of 2018, we expect to generate revenue from the sale of software titles that we are developing for own account, from titles that were developed by third-parties which we acquired and from titles that have been developed for our benefit. Operating margins are dependent in part upon our ability to release new, commercially successful software products and to manage effectively their development costs.

Our Apps titles include games designed to appeal to a broad cross section of consumers and legal-related Apps that provide compilations of federal and state laws and regulations across a variety of legal disciplines and digests of court decisions rendered by federal courts that are directed to legal professionals. We offer all of our game titles in both a free advertisement-supported version and a paid version that does not display ads. We believe that the ad supported versions allow for wider dissemination of our titles to consumers who might not otherwise spend money for an App without first playing the game.

We market, sell and distribute our games through direct-to-consumer digital storefronts, such as Apple’s App Store and the Google Play Store. We currently expect to advertise our Apps through the digital storefronts, our own website, social media, such as Facebook and LinkedIn, through mobile ad networks and search engine optimization, or SEO, tools.

We are developing and acquiring new Apps to expand our existing product offerings. We rely on third party designers, developers and programs to develop new Apps. We also solicit ideas for new titles from unrelated parties. We evaluate prospects based on a variety of factors. If we conclude that a particular prospect is worth pursuing, we may fund the development of the App through launch and beyond. We expect to release several new Apps throughout 2018.

Over the last several years, mobile devices, including smartphone and tablets, have proliferated extensively around the world across a wide range of demographic groups. The mobile Apps industry has experienced corresponding growth in the number of downloads, the number and types of Apps published. We believe that there will continue to be an increase in the number of smartphones and tablets sold. In addition, technological advances to these devices, including more powerful smartphones and tablets with larger screens provide a platform for more diverse Apps and make games more fun and visually appealing. We believe that technological developments will continue to drive growth in our industry for the foreseeable future.

Growth Strategies and Outlook

Our principal growth strategy entails developing and acquiring new Apps to supplement our existing Apps portfolio. Our primary focus will be to release new game titles. We are developing a pipeline of independent game designers, developers and programmers who provide us with new ideas and titles to publish. We also are soliciting new games and concepts that we may acquire from third parties. We also will seek to develop and publish free-to-play games. Free-to-play games are games that a player can download and play for free, but which allow players to access a variety of additional content and features for a fee, through “in-app purchases” utilizing virtual currency that may be purchased through digital storefronts, and to engage with various advertisements and offers that generate revenues for us. We may seek to acquire franchises around which we develop games, including movies, television programs, toys and other cultural phenomena that lend themselves to gamification, such as our “Crypto Gene” collection which we acquired in June 2016.

Our ability to pursue and achieve our objectives is predicated on our receipt of meaningful revenue from sales of our existing Apps and those we may release in the future and from our ability to raise capital from outside sources.

Our revenues will depend significantly on growth in the mobile games market and our ability to develop or acquire and publish Apps that are well-received by consumers. In addition, because our products are purchased with disposable income, our success is dependent on the overall strength of the economy in the United States. We expect to invest resources in research and development, analytics and marketing to introduce new Apps and continue to update our existing Apps, and to the extent that Apps into which we have invested significant capital are not successful, our business and financial condition could be harmed. We operate in an environment that is extremely competitive for users against a continually increasing number of developers, many of which are significantly larger than us and have other competitive advantages. We expect to allocate a material portion of our operating revenue and capital that we receive to sales and marketing initiatives in connection with the launch and promotion of our games in an effort to drive sales.

Our revenues also will depend on maintaining our continued good relationship with the digital storefront operators, primarily Apple and Google, each of which could unilaterally alter their terms of service in ways that could harm our business.

Our ability to achieve and sustain profitability will depend not only on our ability to grow our revenues, but also on our ability to manage our operating expenses. Currently, we have one full-time employee, who receives compensation when and as determined by the board of directors. For the foreseeable further, we expect to utilize the services of independent contractors and consultants, who we believe are readily available for our purposes, in order to manage our personnel costs. We also will continue to maintain a virtual office as long as our operations permit to contain our office space overhead.

We acquired our Apps portfolio in April 2015. Thus far, we have initiated new marketing and sales strategies with respect to our exiting titles and have seen an increase in sales of our game related Apps. We also completed the process of bringing up to date our legal related titles that had not been updated in several years and have experienced increased sales and decreased returns by consumers of these titles. Management believes that it brings considerable industry experience to the marketing of our Apps and that positive sales results, in small increments, at first, will be evident in the near term and pick up as time progresses. Moreover, as management supplements our Apps portfolio with new games and launches free-to-play games with multiple potential revenue streams, it expects revenues to grow rapidly. Management will seek to leverage to our benefit its strong industry contacts built over many years across a range of Internet related sales and marketing ventures.

We require additional capital to fund the development of Apps in process that we have developed internally or acquired from third parties during the last year. We also require capital to fund marketing initiatives for our existing products and the launch and marketing of Apps in development. We cannot be sure that the additional capital we require will be available on acceptable terms or at all. If adequate funds are not available on acceptable terms or at all, we may be unable to develop or enhance our services and products, take advantage of future opportunities, repay debt obligations as they become due, or respond to competitive pressures, any of which would have a material adverse effect on our business, prospects, financial condition, and results of operations.

Results of Operations for the Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016 (audited)

The following table presents our results of operations for the year ended December 31, 2017 and 2016:

Revenues

We recorded revenue during the year ended December 31, 2017 of $951 comprising revenues generated from downloads of our Apps and in-App advertising revenues, compared to revenue of $2,037 for the year ended December 31, 2016.

Expenses

Selling, General and Administrative, or SGA, expenses consist of expenses relating to, among other things, web hosting and email hosting costs, rent for our virtual office, and other general and administrative expenses. During the year ended December 31, 2017, our SGA expenses were $69,106, as compared to SGA expenses of $66,870 for the year ended December 31, 2016. The decrease in SGA expenses is attributable to increased activity in connection with trade shows, industry research, internal meetings, and project work.

Depreciation Expense for the year ended December 31, 2017, which is related to depreciation of certain computer equipment purchased in July 2016, was $416, compared with $208 in depreciation expense recorded for the year ended December 31, 2016.

Amortization Expense comprises the quarterly portion of the amortization of our Apps, which we amortize over a ten-year period. During the year ended December 31, 2017, we recorded amortization expenses of $22,000, as compared to amortization expenses of $13,000 for the year ended December 31, 2016.

Interest Expense is attributable to interest accrued on promissory notes issued in the aggregate principal amount of $100,209. During the year ended December 31, 2017, interest expenses were $1,013, as compared to the year ended December 31, 2016 in which we recorded interest expenses of $799.

Outside Services represents the amount we paid to third party developers and software designers in connection with the Company’s Apps. During the year ended December 31, 2017, we paid our third-party developers and software designers $144,040, of which $123,500 is attributable to the stock issued for services, as compared to payments to these parties of $154,851, of which $42,400 is attributable to the warrant valuation for the year ended December 31, 2016.

Professional Fees consist of amounts paid to our third-party professionals for services rendered during the year. During the year ended December 31, 2017, we recorded expenses for professional fees of $25,844, as compared to $44,689 for the year ended December 31, 2016.

Net Loss

During the year ended December 31, 2017, we had a net loss of $261,468, which represents the difference between our total expenses of $262,419 partially offset by our revenue of $951, as compared to a net loss of $278,380 for the year ended December 31, 2016, in which our total expenses were $280,417 which were offset by our revenues of $2,037.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate cash to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity include funds generated by operations, the availability of credit facilities, levels of accounts receivable and accounts payable and capital expenditures.

As of December 31, 2017, we had no cash on hand and total liabilities of $147,024, of which $102,065 is attributable to the principal and interest due under promissory notes we issued during 2017 and 2016. Comparably, as of December 31, 2016, we had no cash on hand and total liabilities of $63,321, of which $42,270 is attributable to the principal and interest due under promissory notes issued during 2016. As of December 31, 2017, we had a working capital deficit of $78,069 and a working capital of $28,050 as of December 31, 2016.

Cash Flows:

The following table presents summary cash flow information for the periods indicated.

Operating Activities

Cash used in operations was $91,412 and $200,924 for the years ended December 31, 2017 and 2016, respectively. In 2017 and 2016 cash was mainly used to fund payments to third-party developers and programmers, for SGA expenses and the cost of our outside professionals.

Investing Activities

Cash used in investing was $0 and $22,079 for the years ended December 31, 2017 and 2016, respectively. In 2016, the investment pertains to the acquisition of an intellectual property and computer equipment.

Financing Activities

Cash flow from financing activities was $91,412 and $216,679, for the years ended December 31, 2017 and 2016, respectively. For 2017, these amounts were mainly driven by stock sales and stocks issued for services. For 2016, these amounts were mainly driven by the proceeds received from the sale of shares in of our initial public offering, the sale of units in a private offering and from the issuance of demand promissory notes evidencing loans to the Company.

Off-Balance Sheet and Other Arrangements

As of the date of this prospectus, the Company has not had any off-balance sheet or similar arrangements since its inception.

Going Concern

The report of our independent auditor and Note B to the financial statements filed with this annual report on Form 10-K indicate that the Company’s minimal operations to date and lack of fully established sources of revenue raise substantial doubt about the Company’s ability to continue as a going concern. For these reasons, our financial statements have been prepared assuming the Company will continue as a going concern, which assumes we will realize our assets and discharge our liabilities in the normal course of business. If we are unable to achieve these ends, we cannot assure you that we will be able to generate revenue to support our operations and continue operations

Inflation

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we might not be able to fully offset these higher costs through price increases. Our inability or failure to do so could harm our business, operating results and financial condition.

Critical Accounting Policies and Use of Estimates

The preparation of our financial statements in accordance with United States Generally Accepted Accounting Principles, of GAAP, requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenue, and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under current circumstances in making judgments about the carrying value of assets and liabilities that are not readily available from other sources. We evaluate our estimates on an on-going basis. Actual results may differ from these estimates under different assumptions or conditions.

Accounting policies are an integral part of our financial statements. A thorough understanding of these accounting policies is essential when reviewing our reported results of operations and our financial position. Management believes that the critical accounting policies and estimates discussed below involve the most difficult management judgments, due to the sensitivity of the methods and assumptions used. Our significant accounting policies are described in Note 1 to our financial statements included elsewhere in this report.  

We believe the following accounting policies and estimates are the most critical. Some of them involve significant judgments and uncertainties and could potentially result in materially different results under different assumptions and conditions.

Revenue Recognition - The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned less estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met:

Recent Accounting Pronouncements

Emerging Growth Company Critical Accounting Policy Disclosure: We qualify as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.

There are no recent accounting pronouncements published after December 31, 2017 that have a material effect on the financial statements presented herein.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to Financial Statements and Financial Statement Schedules appearing on the ensuing page.

802 N Washington

Spokane, WA 99201

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Ironclad Encryption Corporation

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Appsoft Technologies, Inc. as of December 31, 2017 and 2016 and the related statements of operations, stockholders’ equity, and cash flows for the years then ended, 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 Appsoft Technologies, Inc. as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the two years then ended, in conformity with accounting principles generally accepted in the United States of America.

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 we 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 audits 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.

Consideration of the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note B to the financial statements, the Company has incurred cumulative operating losses since inception and uses substantial cash in its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note B of the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Fruci & Associates II, PLLC

We have served as the Company’s auditor since 2015.

Spokane, Washington
April 17, 2018

AppSoft Technologies, Inc.

Balance Sheets

The accompanying notes are an integral part of these financial statements.

AppSoft Technologies, Inc.

Statements of Operations

The accompanying notes are an integral part of these financial statements.

AppSoft Technologies, Inc.

Statement of Stockholders’ Equity

The accompanying notes are an integral part of these financial statements.

AppSoft Technologies, Inc.

Statements of Cash Flows

The accompanying notes are an integral part of these financial statements.

NOTE A—BUSINESS ACTIVITY

AppSoft Technologies (the “Company”) was organized under the laws of the State of Nevada March 24, 2015.  The Company’s fiscal year end is December 31^st. The Company develops, publishes and markets mobile software applications for smartphones and tablet devices (“Apps”). We currently own a portfolio comprising over 400 Apps titles including games designed to appeal to a broad cross section of consumers and legal-related Apps that provide compilations of federal and state laws and regulations across a variety of legal disciplines and digests of court decisions rendered by federal courts. Consumers download our Apps through direct-to-consumer digital storefronts, such as the Apple App Store and Google Play Store.

We currently generate revenue from sales, or downloads, of our Apps and from advertisements published on our ad supported game titles.

NOTE B—GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business.  As reflected in the accompanying financial statements, the Company has a deficit accumulated of $595,476 and cash used in operations of $91,412 at December 31, 2017. 

The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.   These circumstances raise substantial doubt about the Company’s ability to continue as a going concern for the 12 months from the date when these financial statements were issued. The accompanying financial statements do not include any adjustments that might arise because of this uncertainty.

NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation- The financial statements included herein were prepared under Generally Accepted Accounting Principles (GAAP).

All adjustments have been made which in the opinion of management are necessary, normal, and recurring in nature for presentation.

Interim filings should be read in conjunction with the Company’s annual report as of December 31, 2017.

Cash and Cash Equivalents- For purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be cash equivalents.

Management’s Use of Estimates- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The financial statements above reflect all of the costs of doing business.

Revenue Recognition- The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company recognizes revenue when it is realized or realizable and earned less estimated future doubtful accounts.  The Company considers revenue realized or realizable and earned when all the following criteria are met:

Comprehensive Income (Loss) - The Company reports Comprehensive income and its components following guidance set forth by section 220-10 of the FASB Accounting Standards Codification which establishes standards for the reporting and display of comprehensive income and its components in the financial statements. There were no items of comprehensive income (loss) applicable to the Company during the period covered in the financial statements.

NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONT’D

Net Income per Common Share- Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.  Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.  Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There was a total of 19,459,000 upon conversion of preferred stock and 20,000 upon conversion for an outstanding note payable as of December 31, 2017.

Deferred Taxes- The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification.  Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.

Fair Value of Financial Instruments- The carrying amounts reported in the balance sheet for cash, accounts receivable and payable approximate fair value based on the short-term maturity of these instruments.

Accounts Receivable- Accounts deemed uncollectible are written off in the year they become uncollectible. As of December 31, 2017, and December 31, 2016 the balance in Accounts Receivable was $0.

Impairment of Long-Lived Assets- The Company evaluates the recoverability of its fixed assets and other assets in accordance with section 360-10-15 of the FASB Accounting Standards Codification for disclosures about Impairment or Disposal of Long-Lived Assets.  Disclosure requires recognition of impairment of long-lived assets in the event the net book value of such assets exceeds its expected cash flows. If so, it is impaired and is written down to fair value, which is determined based on either discounted future cash flows or appraised values. The Company adopted the statement on inception. No impairments of these types of assets were recognized during the periods ended December 31, 2017 or December 31, 2016.

Stock-Based Compensation- The Company accounts for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.

Fair Value for Financial Assets and Financial Liabilities- The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments.  Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  The three levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONT’D

The carrying amounts of the Company’s financial assets and liabilities, such as cash and accrued expenses, approximate their fair values because of the short maturity of these instruments. The Company’s note payable approximates the fair value of such instrument based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangement at December 31, 2017 or December 31, 2016.

The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at April 30, 2015, nor gains or losses are reported in the statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the periods ended December 31, 2017 or December 31, 2016.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases, amending the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new standard requires a modified retrospective transition approach for all leases existing at, or entered after, the date of initial application, with an option to use certain transition relief. The guidance will be effective in the first quarter of 2019 and allows for early adoption. The Company does not expect there to be a material impact from adopting this new guidance.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for annual and interim periods beginning after December 15, 2018. The Company does not expect there to be a material impact from adopting this new guidance.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force), that clarifies how certain cash receipts and cash payments should be classified on the statement of cash flows. This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The guidance is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The Company does not expect there to be a material impact from adopting this new guidance.

In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business, which revises the definition of a business and assists in the evaluation of when a set of transferred assets and activities is a business. ASU 2017-01 is effective for interim and annual reporting periods beginning after December 15, 2017 and should be applied prospectively. Early adoption is permitted under certain circumstances. The Company does not expect the adoption of this guidance will have a material impact on its financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates step two of the goodwill impairment test and specifies that goodwill impairment should be measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets should be disclosed. ASU 2017-04 is effective for annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019; early adoption is permitted. We currently anticipate that the adoption of ASU 2017-04 will not have a material impact on our financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment awarded require an entity to apply modification accounting. ASU 2017-09 is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. The amendments in ASU 2017-09 are to be applied prospectively to an award modified on or after the adoption date; consequently, the impact will be dependent on whether we modify any share-based payment awards and the nature of such modifications. The adoption of this standard is not expected to have a material impact on our financial statements.

NOTE D—SEGMENT REPORTING

The Company follows the guidance set forth by section 280-10 of the FASB Accounting Standards Codification for reporting and disclosure on operating segments of the Company. It also requires segment disclosures about products and services, geographic areas, and major customers. The Company determined that it did not have any separately reportable operating segments as of December 31, 2017 and December 31, 2016.

NOTE E—CAPITAL STOCK

The Company is authorized to issue 1,000,000,000 Common Shares at $.0001 par value per share.

In March 2016, the Company issued the following shares:

181,600 shares were purchased under a public offering for $.50 per share for a total of $90,800.

In April 2016, the Company issued the following shares:

70,900 shares were purchased under the public offering for $.50 per share for a total of $35,450.

In June 2016, the Company issued the following shares:

80,000 shares valued at $.50 per share (total value is $40,000) as a part of the acquisition of Guuf gaming platform. Total platform purchase price was $60,000.

1,600,000 shares were cancelled as a part of the resignation of the Chief Operating Officer and Treasurer, Seth Ingram. The shares were originally issued at par.

165,000 shares were issued to 3 different consultants at par for a total of $16.

In July and August 2016, the Company issued the following shares:

55,000 shares issued to 2 different consultants at par for a total of $5.50.

106,000 shares purchased at $.50 per share for a total of $53,000 in a private offering. Each security consists of one share of common stock and two common stock purchase warrants, one of which entitles the holder to purchase one share of common stock at an exercise price of $0.25 per share and one of which entitles the holder to purchase one share of common stock at an exercise price of $0.50 per share, in each case at any time until the expiration of three years from the date of issuance. The stock purchase warrants (warrants) have been valued using the Black Scholes Model. The “warrants” with an exercise price of $.25 have been valued at $.27 per share for total of $28,620 and the “warrants” with an exercise price of $.50 have been valued at $.13 per share for a total of $13,780. The total value of the warrants issued is $42,400. The Black Scholes valuation was based on the following assumptions: a 3-year term, 40% volatility, and 3-year Treasury bill interest rate of .99%.

In October 2016, the Company issued the following shares:

15,000 shares issued to 2 different consultants at par for a total of $1.50.

In May 2017, the Company issued the following shares:

61,000 shares were purchased at $.50 per share for a total of $30,500.

100,000 shares were issued to 2 different consultants with a fair value per share of $.50. The total value of the services is $50,000.

In June 2017, the Company issued the following shares:

5,000 shares of common stock were issued to a consultant for services with a fair value per share of $.50. The total value of the services is $2,500.

NOTE E—CAPITAL STOCK—CONT’D

In July 2017, the Company issued the following shares:

40,000 shares of common stock were issued to a consultant for services with a fair value per share of $.50. The total value of the services is $20,000.

In August 2017, the Company issued the following shares:

42,000 shares of common stock were issued to a consultant for services with a fair value per share of $.50. The total value of the services is $21,000.

40,000 shares of common stock were issued to a consultant for services with a fair value per share of $.50. The total value of the services is $20,000.

20,000 shares of common stock were issued to a consultant for services with a fair value per share of $.50. The total value of the services is $10,000.

During the 3^rd quarter ended September 30, 2017, Ventureo, LLC converted 54,100 Preferred Shares of stock into 541,000 common shares.

Total issued and outstanding shares of common stock as of December 31, 2017 were 4,032,500 and as of December 31, 2016 were 3,183,500.

Total issued and outstanding shares of preferred stock as of December 31, 2017 were 1,945,900 and as of December 31, 2016 were 2,000,000.

The Company is authorized to issue 10,000,000 Series A Cumulative, Convertible Preferred Shares (Preferred Stock) at $.0001 par value per share.  During the period from inception (March 24, 2015) through September 30, 2016, the Company issued 2,000,000 shares of preferred stock at $.05 per share to Ventureo, LLC in exchange for $50,000 in cash and Phone Apps with a fair market value of $50,000 for a total of $100,000. The shares of “Preferred Stock” are convertible, at the option of the holder, into shares of common stock at a conversion price of $0.005 per share. The holder of the “Preferred Stock” may not convert any portion of the “Preferred Stock” if, after giving effect to such conversion, the holder would beneficially own in excess of 4.99%, except that the holder may, by written notice to the Company, increase or decrease this percentage up to a maximum of 9.99%, provided that any such increase will not be effective until the 61^st day after such notice is delivered to the Company. Upon a liquidation event, the Company shall first pay to the holders of the “Preferred Stock” an amount per share equal to the Original Issue Price (i.e., $0.05 per share of Series A Preferred Stock), plus all accrued and unpaid dividends on each share of Series A Preferred Stock (the “Series A Preference Amount”). After full payment of the liquidation preference amount to the holders of the “Preferred Stock”, the Company will then distribute the remaining assets to holders of common stock, other junior preferred shares (if any) and the “Preferred Stock” on an as-if-converted-basis. The Series A Preferred Stock ranks senior to the Company’s common stock and senior to any other shares of preferred stock the Company may issue in the future.

Ventureo. LLC also paid $408 in expense incurred on behalf of the Company and this amount is considered an additional capital contribution.

Capital Contributions

Brian Kupchik, President and CEO made a capital contribution of $1,350 in cash in October and November 2017.

NOTE F—RELATED PARTY TRANSACTIONS

The Company has paid $18,740 and $15,000 in management fees during 2017 and 2016, respectively (included in the Outside Services Expense line item on the Statement of Operations) to Brian Kupchik, President and CEO.

NOTE G—OTHER ASSET/PHONE APPS AND GAMING PLATFORM

Phone Apps

As a part of the Preferred Stock transaction (refer to Note E above), the Company acquired Phone Apps valued at $50,000. These Phone Apps are generating Sales Revenue. The Company will amortize the Phone Apps over 5 years. Management has determined that 5 years is a relatively short period. Monthly amortization is $833.34. Accumulated Amortization as of December 31, 2017 is $27,500.

NOTE G—OTHER ASSET/PHONE APPS AND GAMING PLATFORM—CONT’D

eSports Tournament Platform Assets

In June 2016, AppSoft Technologies, Inc. (the “Company”) acquired certain assets comprising an eSports tournament platform for competitive gamers from Guuf LLC (“Guuf”). The Company acquired the assets for a total purchase price of $60,000 (refer to Note J below). On October 1, 2016, the Company began amortizing the Phone Apps over 5 years. Management has determined that 5 years is a relatively short period. Monthly amortization is $1,000. Accumulated Amortization as of December 31, 2017 is $15,000.

NOTE H—INCOME TAX

The Company provides for income taxes under (now included under Accounting Standards Codification (ASC), 740), Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.

ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all the deferred tax assets will not be realized. For Federal income tax purposes, the Company has net operating loss carry forwards that expire through 2030. The net operating loss carryforward as of December 31, 2017 is approximately $595,000 and as of December 31, 2016 is $334,000 approximately. The total deferred tax asset is approximately $124,000 and $70,000 for the periods December 31, 2017 and December 31, 2016, respectively.

No tax benefit has been reported in the financial statements because after evaluating our own potential tax uncertainties, the Company has determined that there are no material uncertain tax positions that have a greater than 50% likelihood of reversal if the Company were to be audited. The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 21% to the net loss before provision for income taxes for the following reasons:

The Company is not obligated to pay State Income Taxes because it is a Nevada corporation. The Company does not currently have any tax returns open for examination.

NOTE I—NOTES PAYABLE

The following demand Notes Payable were issued in 2016, from an unrelated party and bear 2% interest per year:

NOTE I—NOTES PAYABLE—CONT’D

The following demand Notes Payable were issued during the 1^st quarter 2017, from an unrelated party and bear 2% interest per year:

The following demand Notes Payable were issued during the 2^nd quarter 2017, from an unrelated party and bear 2% interest per year:

The following demand Notes Payable were issued during the 3^rd quarter 2017, from an unrelated party and bear 2% interest per year:

The following demand Note was issued during the 4^th quarter 2017, from an unrelated party and bear 2% interest per year:

Total Notes Payable outstanding was $90,209 as of December 31, 2017. Total accrued interest was $1,856 as of December 31, 2017.

NOTE J—CONVERTIBLE NOTE PAYABLE

The Company issued an 8% Convertible Note Payable to a non-related party on May 5, 2017 in the amount of $10,000. This demand notes bears interest at 8% per year. The Holder of the Note Payable has may elect to convert the Note Payable into 20,000 shares of stock at $.50 per share in full payment of the $10,000 Note Payable amount outstanding.

NOTE K—ASSET ACQUISITIONS

Acquisition of eSports Tournament Platform Assets

On September 10, 2016, the Company acquired certain assets comprising an eSports tournament platform for competitive gamers from Guuf LLC (“Guuf”). The Company acquired the assets for a total purchase price of $60,000 consisting of (i) $15,000 in cash, which has been paid, (ii) 80,000 shares of common stock valued at $0.50 per share (the price at which the Company sold shares to its initial public offering completed in March 2016); (iii) $5,000 in cash payable due which is included in the Company’s Accounts Payable; and (iv) the grant of a royalty equal to 5% of the first calendar year’s profits generated by the Company from the assets, a royalty equal to 4% of year two profits and royalty equal to 3% of year three profits. As additional consideration for the assets, the Company entered into consulting agreement with Nathan Cavanaugh, the sole member of Guuf, as described below.

NOTE K—ASSET ACQUISITIONS—CONT’D

The assets consist of the following:

Acquisition of Mobile App Assets

On June 10, 2016, the Company acquired by assignment from Marc Seal certain concepts, artwork, story lines and related computer software in connection with a computer game titled “CryptoGene,” for mobile application (the “Assigned Property”), including:

The assignment includes all of Mr. Seal’s right and interest in and to the intellectual property, including any right to use or disseminate CryptoGene as a mobile application or in any other medium (including all other audio-visual rights, print and allied and incidental rights), all advertising, publication, and promotion rights with respect to any part of CryptoGene or any adaptation or version thereof, and all merchandising, commercial tie-in, publishing, and exploitation rights.

NOTE K—FIXED ASSETS

In July 2016, the Company purchased computer equipment for $2,079. The computer equipment will be depreciated over its estimated useful life of 5 years. Annual depreciation is $415. Depreciation expense was $416 and $208 for the years ended December 31, 2017 and December 31, 2016, respectively.

NOTE L—MATERIAL EVENTS

Departure of Directors or Certain Officers; Election of Directors:

On June 10, 2016, Seth Ingram resigned as a member of the board of directors. Mr. Ingram’s resignation was for personal reasons and not a result of a disagreement with the Company on any matter relating to the Company’s operations, policies, or practices. Upon his resignation, Mr. Ingram returned to the Company for cancellation 1.6 million of the 2 million shares of common stock registered in his name.

FINRA

During June 2017, the Company’s common stock was admitted to quotation in the OTC Bulletin Board Market (“OTCBB”), an interdealer quotation service for over-the-counter, or OTC, equity securities operated the Financial Regulatory Authority (“FINRA”), which permits to be eligible for quotation on OTCBB any OTC equity security that is current in certain required regulatory filings.

NOTE L—MATERIAL EVENTS—CONT’D

Consulting Agreement Amendments

During the 3^rd Quarter 2017, the Company entered into the following agreements:

Amendment to Consulting Agreement between the Company and Joseph Cheng dated August 3, 2017, whereby the parties amended the original consulting agreement to increase the scope of product analysis services to be rendered by Mr. Cheng in consideration of the issuance of 40,000 shares of common stock.

NOTE M—SUBSEQUENT EVENTS

Since the close of the period covered by the financial statements of which these notes form a part, the following material transactions have occurred:

The Company borrowed an aggregate of $7,182.50 which borrowings are evidenced by promissory notes in the amounts of $7,182.50. The promissory note bears interest at the rate of 8% per annum and is payable on December 1, 2018.

Brian Kupchik, President and CEO made a capital contribution of $100 in cash in January 2018.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management conducted an evaluation, with the participation of our Chief Executive Officer, who is our principal executive officer and our principal financial and accounting officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this annual report on Form 10-K. Based upon that evaluation, our Chief Executive Officer concluded that as a result of the material weakness in our internal control over financial reporting described below, our disclosure controls and procedures were not effective as of December 31, 2017.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for the preparation of our financial statements and related information. Management uses its best judgment to ensure that the financial statements present fairly, in material respects, our financial position and results of operations in conformity with generally accepted accounting principles.

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in the Exchange Act. These internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable. There are inherent limitations in the effectiveness of any system of internal controls including the possibility of human error and overriding of controls. Consequently, an ineffective internal control system can only provide reasonable, not absolute, assurance with respect to reporting financial information.

Our internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that, in reasonable detail, accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles and that the receipts and expenditures of company assets are made in accordance with our management and directors authorization; and (iii) provide reasonable assurance regarding the prevention of or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

Under the supervision of our Chief Executive Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework Internal Control—Integrated Framework (2013) as outlined by the Committee of Sponsoring Organizations of the Treadway Commission and guidance prepared by the Commission specifically for smaller public companies. Based on that evaluation, our management concluded that our internal control over financial reporting was not effective as of December 31, 2017. We have identified the following material weakness as of December 31, 2017:

Remediation of Material Weakness in Internal Control

Presently, it will be difficult to mitigate or eliminate the material weaknesses in our internal controls. We do not currently possess sufficient financial resources to engage the additional personnel required to alleviate the weaknesses that stem from the lack of segregation of duties in the handling of cash, cash receipts and cash disbursements was not formalized. Moreover, it is difficult for small public companies such as ours to attract qualified independent directors given the obligations and risks attendant to such serving in such capacity; hence we will continue to operate with a single board member thereby failing mitigate the weaknesses stemming from the lack of an independent board:

In the interim, management has internally formalized the procedures for segregation of duties and monitoring handling of cash, cash receipts and cash disbursements. We also are establishing a formal documented system of internal controls surrounding cash and plan to implement such systems.

Our management does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.

This annual report on Form 10-K does not include an attestation report of our 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 SEC that permit us to provide only management’s report in this annual report on Form 10-K.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Members of our Board of Directors are elected by the stockholders to a term of one year and serve until their successors are elected and qualified. Our officers are appointed by our Board to a term of one year and serve until their successors are duly appointed and qualified, or until the officer is removed from office. Our Board has no nominating, audit or compensation committees.

Brian Kupchik currently is our only officer and director. Set forth below is certain information regarding Mr. Kupchik.

Background Information about our Officers and Directors

Brian Kupchik has been our President, Secretary and a member of our board of directors since the Company’s inception. In January 2015, he co-founded Primo Media Inc. with Mr. Ingram, our Treasurer and a director, a business development concern based in Yorktown Heights, New York, for which he serves as the chief operating officer. Primo is a Latin-focused multi-channel network that connects brands with millions of Hispanic Millennials through integrated digital and mobile advertising opportunities across its network. Since January 2012, Mr. Kupchik has been a partner in 47 Media, an outsourced business development and consulting firm, where he is responsible for acquiring new business, negotiating contracts, establishing project plans and consulting regarding strategy, business development, management and other outsourced digital media services. From October 2011 to May 2012, he was a portfolio manager at Black Ocean, digital platform that has created a new generation business model that combines entrepreneurship, incubation, venture capital and investment banking practices. From October 2009 to August 2011, Mr. Kupchik was vice president of business development at MediaBrix/Smartclip, a social media focus company offering a foundation of social products including, Pulse for Facebook, Guaranteed Video View, Social Apps / Games, and Mobile, where he participated in sales, strategy, product development with a heavy focus on mobile. Mr. Kupchik is a member of OMMA, a digital media marketing organization, and the Interactive Advertising Bureau. Mr. Kupchik is involved with several children’s charitable organizations. Mr. Kupchik has been selected as a director of our Company because of his experience and background in business development in Internet based businesses.

Involvement in Certain Legal Proceedings

Our sole director, executive officer and control person has not been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.

Corporate Governance

Our Board has not established any committees, including an audit committee, a compensation committee or a nominating committee, or any committee performing similar functions. The functions of those committees are being undertaken by our Board. Because we do not have any independent directors, our Board believes that the establishment of committees of our Board would not provide any benefits to our Company and could be considered more form than substance.

We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor have our officers and directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our officers and directors have not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors.

Given our relative size and lack of directors’ and officers’ insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all current members of our Board will participate in the consideration of director nominees.

As with most small, early stage companies until such time as our Company further develops our business, achieves a stronger revenue base and has sufficient working capital to purchase directors’ and officers’ insurance, we do not have any immediate prospects to attract independent directors. When we are able to expand our Board to include one or more independent directors, we intend to establish an audit committee of our Board of Directors. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an audit committee or other committees of our Board.

Code of Ethics

We have adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. The code of business conduct and ethics is available on our website at www.OrbisCorporation.co.uk. We intend to post any amendments to the code, or any waivers of its requirements, on our website. The contents of our website are not incorporated by reference into this annual report on Form 10-K.

Committees of our Board of Directors

Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committees of our Board of Directors.

Our Board does not have standing audit, compensation or nominating committees. Our Board does not believe these committees are necessary based on the size of our company, the current levels of compensation to corporate officers and voting control lies with our current board of directors. Our Board will consider establishing audit, compensation and nominating committees at the appropriate time.

The entire Board of Directors participates in the consideration of compensation issues and of director nominees. Candidates for director nominees will be reviewed in the context of the current composition of the Board and our operating requirements and the long-term interests of our stockholders. In conducting this assessment, the Board of Directors will consider professional and business skills, experience, expertise, diversity, judgment and such other factors as it deems appropriate given the current needs of the Board and our company, to maintain a balance of knowledge, experience and capability.

The Board’s process for identifying and evaluating nominees for director, including nominees recommended by stockholders, will involve compiling names of potentially eligible candidates, conducting background and reference checks, conducting interviews with the candidate and others (as schedules permit), meeting to consider and approve the final candidates and, as appropriate, preparing an analysis with regard to particular recommended candidates.

Director Compensation

Our director does not receive any compensation for his service as a director and there is no director compensation being considered at this time.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Exchange Act requires directors, executive officers and holders of more than 10% of an equity security registered pursuant to Section 12 of the Exchange Act to file various reports with the SEC. Our equity securities are not registered pursuant to Section 12 of the Exchange Act, so our directors, executive officers and 10% holders are not subject to Section 16(a).

Procedures for Nominating Directors

There have been no material changes to the procedures by which security holders may recommend nominees to the Board during the quarter ended December 31, 2017.

ITEM 11. EXECUTIVE COMPENSATION

The following table summarizes compensation recorded by us for the years ended December 31, 2017 and 2016 for our principal executive officer who also serves as our principal financial officer.

Summary Compensation Table

Narrative Disclosure to Summary Compensation Table

The Company has not established a base salary for the President and Chief Executive Officer. However, from time to time, the President, Chief Executive Officer and sole director approves, in his sole discretion, payments to be made to himself by the Company in the form of a management fee. The management fee is intended to compensate Mr. Kupchik for services rendered to the Company in his capacity as an executive officer. There is no written agreement regarding the management fee and no terms in place regarding the amount and timing of management fees. In addition, from time to time, the President, Chief Executive Officer and sole director approves, in his sole discretion, the payment by the Company of certain of the President and Chief Executive Officer’s personal expenses and/or financial obligations.

There are no compensatory plans or arrangements, including payments to be received from the Company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, or our subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company.

Employment Agreements

There are no current employment agreements between the Company and our executive officer or understandings regarding future compensation.

Outstanding Equity Awards at Fiscal Year-End

No executive officer received any equity awards, or holds exercisable or unexercisable options, as of December 31, 2017.

Long-Term Incentive Plans

There are no arrangements or plans in which the Company would provide pension, retirement or similar benefits for directors or executive officers.

Compensation Committee

We do not currently have a compensation committee of our Board of Directors. The Board as a whole determines executive compensation.

Compensation of Directors

Our current director does not receive separate compensation for his service on our Board of Directors. Our Board has the authority to fix the compensation of directors. We do not intend to pay employee directors a separate fee for their Board services.

No compensation was paid to our director for his service as a director during the year ended December 31, 2017.

Director Independence

Our Board of Directors currently consists of one member, who does not qualify as an independent director in accordance with the listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, including whether the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our Board has not made a subjective determination as to each director that no relationships exist which, in the opinion of our Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our Board of Directors made these determinations, our Board would have reviewed and discussed information provided by our sole director with regard to his business and personal activities and relationships as they may relate to us and our management.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth certain information regarding beneficial ownership of our capital stock as of April 16, 2017, by (i) each person known by us to be the beneficial owner of more than 5% of each class of our outstanding capital stock, (ii) each director and each of our executive officers and (iii) all executive officers and directors as a group. As of April 16, 2017, there were 4,032,500 shares of our common stock outstanding and 1,954,000 shares of Series A Preferred Stock outstanding.

The number of shares of capital stock beneficially owned by each person is determined under the rules of the Commission and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which such person has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days after the date hereof, through the exercise of any stock option, warrant or other right. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.

1. The shares of Series A Preferred Stock are convertible, at the option of the holder, into shares of common stock at a conversion price of $0.005 per share. The holder of Series A Preferred Stock may not convert any portion of the Series A Preferred Stock if, after giving effect to such conversion, the holder would beneficially own in excess of 4.99%, except that the holder may, by written notice to the Company, increase or decrease this percentage up to a maximum of 9.99%, provided that any such increase will not be effective until the 61^st day after such notice is delivered to us. See “DESCRIPTION OF SECURITIES.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

During the year ended December 31, 2017 and 2016, the Company borrowed an aggregate of $49,580 and $40,629, respectively, from Bryan Glass, the sole member of Ventureo, LLC, the owner of all of the outstanding shares of Series A Preferred Stock. The loans are evidenced by demand promissory notes that bear interest at the rate of 2% per year.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table shows the fees that were billed for the audit and other services for the fiscal years ended December 31, 2017 and 2016 provided by Fruci & Associates II, PLLC (commencing November 11, 2016).

Audit Fees — This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.

Audit-Related Fees — This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the SEC, other accounting consulting and other audit services.

Tax Fees — This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.

All Other Fees — This category consists of fees for other miscellaneous items.

Our Board of Directors has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under the procedure, the Board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the Board, or, in the period between meetings, by a designated member of Board. Any such approval by the designated member is disclosed to the entire Board at the next meeting.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are being filed as part of this report:

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.

Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.