GLX, Inc. Consolidated Financial Statements and Accompanying Notes. for the annual periods ending December 31, 2016 and December 31, 2015

Transcription

1 GLX, Inc. Consolidated Financial Statements and Accompanying Notes for the annual periods ending December 31, 2016 and December 31, 2015 Address 340 Royal Poinciana Way, Suite Palm Beach FL Telephone (855) SIC / NAICS / Proprietary Online Service Network / Social Media Industry Professional and Social Networks Sector Financial Networks Fiscal Year December 31 st

2 GLX, INC. Table of Contents PART I Financial Statements Report of Independent Registered Public Accounting Firm 1 Consolidated Balance Sheet 2 Consolidated Profit & Loss Statement 3 Consolidated Statements of Changes in Stockholders Equity / (Deficit) 4 Consolidated Statement of Cash Flows 5 Notes to the Financial Statements 6-16

3 Pybus & Company, P.A. Certified Public Accountants American Institute Of Certified Public Accountants 824 US Highway One, Suite 240 Florida Institute Of Certified Public Accountants North Palm Beach, Florida Phone (561) Fax (561) REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of GLX, Inc. and Subsidiaries We have audited the accompanying consolidated balance sheets of GLX, Inc. as of December 31, 2016 and 2015, and the related consolidated statements of income, stockholders equity, and cash flows for each of the years in the two-year period ended December 31, GLX, Inc. s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of GLX, Inc. as of December 31, 2016 and 2015, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. Pybus & Company, P.A. North Palm Beach, Florida May 29, 2018

4 GLX, Inc. Consolidated Balance Sheet As of As of December 31, 2016 December 31, 2015 ASSETS Current Assets: Cash $ 75,750 $ 156,380 Other receivables (Note 11) 344,560 - Prepaid expenses and other current assets (Note 4) 6, TOTAL Current Assets 427, ,864 Property, plant and equipment, net of depreciation (Note 3) 3,524 - Deposits (Note 2) 13,297 1,000 Deferred tax asset, net of valuation allowance (Note 6) - - TOTAL ASSETS $ 444,081 $ 157,864 LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) Current Liabilities: Accounts payable $ - $ - Short term liabilities 3,478 - Notes payable - 37,205 Accrued Expenses (Note 5) 40,315 21,326 TOTAL Current Liabilities 43,793 58,531 Convertible Debt (Note 8) 164, ,600 TOTAL LIABILITIES 208, ,131 Commitments and contingencies (Note 7) - - Stockholders' Equity/(Deficit): Common stock, par $0.0001; 110,000,000 authorized; 25,848,437 and 21,007,782 shares issued and outstanding as of December 31, 2016 and 2015, respectively 2,585 2,101 Preferred stock, par $0.0001; 10,000,000 authroized; none issued and outstanding - - Additional paid in capital 2,919, ,864 Accumulated deficit (2,685,903) (651,232) TOTAL Stockholders' Equity/(Deficit) 235,688 (40,267) TOTAL LIABILITIES & STOCKHOLDERS' EQUITY/(DEFICIT) $ 444,081 $ 157,864 The accompanying notes are an integral part of the consolidated financial statements. 2

5 GLX, Inc. Consolidated Profit & Loss Statement For the Years Ended December 31, Net Revenue $ - $ - Operating Expenses Consulting 1,686, ,974 Database acquisition and hosting 132,330 51,473 Advertising, marketing & promotional 5,400 - Depreciation & amortization Professional fees 79,862 40,237 Rent 30, Travel & meals 29,535 11,686 Taxes 1,262 1,060 Office, general & administrative 42,838 11,944 Telecommunication & data 12, TOTAL Operating Expenses 2,021, ,276 LOSS FROM OPERATIONS (2,021,598) (648,276) Other Expenses Interest expense, net 13,073 2,956 TOTAL Other Expenses 13,073 2,956 LOSS BEFORE INCOME TAXES (2,034,671) (651,232) Income Tax Benefit - - NET LOSS $ (2,034,671) $ (651,232) Loss per share Basic $ (0.08) $ (0.03) Diluted $ (0.07) $ (0.03) Shares outstanding as of respective year end Basic 25,848,437 21,007,782 Diluted 29,241,968 23,341,182 The accompanying notes are an integral part of the consolidated financial statements. 3

6 GLX, Inc. Consolidated Statements of Changes in Stockholders' Equity/(Deficit) For the years ending December 31, 2015 and 2016 Total Common Stock Additional Accumulated Stockholders' $ Par Value Paid in Capital Deficit Deficit Shares Amount Amount Amount Amount BALANCES - DECEMBER 31, $ - $ - $ - $ - Common stock issued to founders, $ per share 20,000,000 2, ,000 Common stock issued for services, $0.39 per share 127, ,722-49,735 Common stock, subscribed during 2015, $0.39 per share 880, , ,800 Stock options expense , ,430 Net Loss (651,232) (651,232) BALANCES - DECEMBER 31, ,007,782 $ 2,101 $ 608,864 $ (651,232) $ (40,267) Common stock issued for services, $0.29 per share 153, ,985-45,000 Common stock issued for services, $0.39 per share 249, ,351-97,376 Common stock, subscribed during 2016, $0.39 per share 4,437, ,730,034-1,730,478 Stock options expense , ,772 Net Loss (2,034,671) (2,034,671) BALANCES - DECEMBER 31, ,848,437 $ 2,585 $ 2,919,006 $ (2,685,903) $ 235,688 The accompanying notes are an integral part of the consolidated financial statements. 4

7 GLX, Inc. Consolidated Statement of Cash Flows For the Years Ended December 31, CASH FLOWS FROM OPERATING ACTIVITIES: NET LOSS $ (2,034,671) $ (651,232) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization Issuance of common stock for services 142,376 51,735 Stock option expense 437, ,430 Change in operating assets and liabilities Other Receivable (344,560) - Prepaid expenses (6,466) - Other assets (12,297) (1,484) Other payable 3,478 - Accrued expenses 18,990 21,326 NET CASH USED IN OPERATING ACTIVITIES (1,794,902) (394,225) CASH FLOW FROM INVESTMENT ACTIVITIES: Purchases of Fixed Assets (4,000) - NET CASH USED IN INVESTING ACTIVITIES (4,000) - CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from convertible debt 25, ,600 Proceeds from note payable (37,205) 37,205 Stock issuance proceeds, net 1,730, ,800 NET CASH FLOW FROM FINANCING ACTIVITIES 1,718, ,605 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (80,630) 156,380 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 156,380 - CASH AND CASH EQUIVALENTS AT END OF YEAR $ 75,750 $ 156,380 Supplemental disclosure of cash flow information Cash paid for interest $ - $ - Cash paid for taxes $ - $ - The accompanying notes are an integral part of the consolidated financial statements. 5

8 NOTE 1 - ORGANIZATION GLX, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS GLX, Inc. and its subsidiaries (the Company ), a Nevada corporation, was incorporated on April 13, The Company is currently building, with the intention to operate, an online financial sector focused network through which the Company s members are able to create, manage and share their professional and personal identities, build and engage with their financial sector focused networks, access shared knowledge and insights, utilize and access the Company s vast and proprietary financial sector focused databases, and find business opportunities, enabling them to be more productive and successful. The Company believes it will be the most extensive, accurate, and accessible network focused on the financial sector. GLX Data Services, LLC (sometimes referred to as GLX DS ) is a wholly owned subsidiary of GLX, Inc. and was organized as a Florida limited liability corporation effective March 01, The purpose of GLX DS is to track the marketing and business development efforts in a separate entity. These activities were initially primarily located in a New Jersey office to take advantage of proximity to influential and important New York City connections, but currently covers the business development efforts in all locations throughout the Company s network. From approximately June 1, 2016 to February 15, 2017, the Company had its technology development team located in New Jersey, in addition to the business development team. During this period, the Company assembled a technology development team in Medellin, Columbia and as of February 15, 2017 began to use this team in Medellin exclusively and closed down the technology development operations in New Jersey. The Company has compiled, purchased or otherwise acquired an extensive number of databases containing information on financial sector related individuals, companies, agencies, organizations and exchanges which is at the heart of the GLX social network. This portfolio of databases will be available to the members of the GLX network once the website is live and operating in its fullest capacity. NOTE 2 SUMMARY OF ACCOUNTING POLICIES Basis of Consolidation The consolidated financial statements include the activities of GLX, Inc. and its wholly-owned subsidiary GLX Data Services, LLC, in accordance with the consolidation accounting guidance. The Company is consolidating, rather than combining, activities because GLX Data Services, LLC is wholly owned and controlled by GLX, Inc. All intercompany balances and transactions have been eliminated. Use of Estimates The preparation of the Company s consolidated financial statements in conformity with generally accepted accounting principles in the United States of America ( US GAAP ) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. These 6

9 estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from management s estimates. Cash and Cash Equivalents Cash equivalents consist of highly liquid marketable securities with original maturities of three months of less at the time of purchase and consist primarily of money market funds. Cash equivalents are stated at fair value. As of December 31, 2016 and December 31, 2015, the Company has $75,750 and $156,380 in cash and cash equivalents, respectively. Accounts Receivable Accounts receivable represent unsecured obligations due from customers under terms requesting payments upon receipt of invoice up to sixty days, depending on the customer. Accounts receivable are non-interest bearing and are stated at the amounts billed to the customer net of an allowance for uncollectible accounts. Customer balances with invoices over 60 days old are considered delinquent. Payments of accounts receivable are applied to the specific invoices identified on the customer remittance, or if unspecified, are applied to the earliest unpaid invoice. The Company had no accounts receivable for the years ending December 31, 2016 and December 31, Property, Plant and Equipment Property, Plant and Equipment are recorded at cost. Depreciation is provided using the straightline method over the estimated useful lives of the various classes of assets as follows (the Company does not currently have assets in every asset class listed below, the following being our depreciation policy if such assets would be acquired in the future): Leasehold improvements Computers, peripherals and software Office Equipment Furniture and fixtures Buildings lesser of useful life or term of lease 3 years 3 years 7 years 30 years Gains and losses on depreciable assets retired or sold are recognized in the statement of operations in the year of disposal. Repairs and maintenance expenditures are expensed as incurred and expenditures that increase the value or useful life of the asset are capitalized. Assets are begun to be depreciated when they are first placed into use. Depreciation expense totaled $476 and $0 for the years ended December 31, 2016 and 2015, respectively. Deposits Deposits currently represent security obligations in two areas: office leases and secured credit cards. These amounts represent money held by landlords, banks or escrow accounts that the Company fully expects to receive back either by the end of a particular contract, in the case of an office lease, or after a short, but unspecified, time has transpired for the Company to increase its credit worthiness in the view of banks, in the case of the secured credit cards. As of December 31, 2016, and 2015, the total amounts held on deposit for security purposes was $13,297 and $1,000, respectively. 7

10 Subsequent to December 31, 2016, but before the date of this audit, some security deposits were returned due to expiring or terminated office leases and as of June 30, 2017, outstanding security deposits held with landlords was $9,997. As of June 30, 2017, there were no outstanding deposits being held for secured credit cards. Revenue Recognition From inception through December 31, 2016, the Company has had no revenue as it has been working on developing its products and services during this time and has not released a version to the public as of December 31, The Company will recognize revenue when it is realized or realizable and collection is reasonably assured. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales prices id fixed or determinable, and (iv) collectability is reasonably assured. Research & Development Costs Research and development costs are charged to operations when incurred and are included in operating expenses within the Consulting line item on the Consolidated Profit & Loss Statement. The amounts charged in 2016 and 2015 were $355,692 and $219,559, respectively. Loss Per Share The financial statements include basic and diluted per share information. Basic net loss per share is computed by dividing net loss by the number of shares of common stock outstanding as of the last day of the period. Diluted net loss per share is computed by dividing net loss by the number of shares of common stock outstanding as of the last day of the period and potentially outstanding shares of common stock as of the last day of the period. Common stock equivalents are excluded from the computation of diluted loss per share when their effect is anti-dilutive. For the year ended December 31, 2016, potential dilutive common stock equivalents consisted of 658,400 shares underlying convertible debt instruments and 2,735,131 shares underlying stock options, which were not included in the calculation of the diluted loss per share because they would be antidilutive. For the year ended December 31, 2015, potential dilutive common stock equivalents consisted of 458,400 shares underlying convertible debt instruments and 1,875,000 shares underlying stock options, which were not included in the calculation of the diluted loss per share because they would be antidilutive. Concentrations and Credit Risk The Company maintains cash balances, at times, with financial institutions in excess of amounts insured by the United States Federal Deposit Insurance Corporation. Management monitors the soundness of these institutions and has not experienced any collection losses with these financial institutions. Financial instruments which potentially expose the Company to concentrations of credit risk consist principally of operating demand deposit accounts and, for brief times in small amounts, cryptocurrency accounts. The Company s policy is to place our operating demand deposit 8

11 accounts with high credit quality financial institutions that are insured by the FDIC, however, account balances may at times exceed insured limits. Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, notes payable, leases, promissory notes, convertible debt and short-term loans approximate fair value because of the short-term nature of these items. Changes in Accounting Policies Including Initial Adoption There are no recently adopted accounting pronouncements that impact the Company s consolidated financial statements. NOTE 3 PROPERTY, PLANT AND EQUIPMENT Property, Plant and Equipment consist of the following at December 31, 2016: Accumulated 2016 Cost Depreciation Net Book Value Furniture and fixtures $ 4,000 $ (476) $ 3,524 TOTAL $ 4,000 $ (476) $ 3,524 At December 31, 2016 and 2015, the Company recognized $476 and $0, respectively, of depreciation expense. NOTE 4 PREPAID EXPENSES The following table presents the detail of Prepaid Expenses for the periods presented: Prepaid Expenses Years Ended December 31, Prepaid Expense $ - $ 484 Prepaid Consulting 4,000 - Prepaid Software 1,350 - Prepaid Rent 1,600 - TOTAL PREPAID EXPENSES $ 6,950 $ 484 NOTE 5 ACCRUED LIABILITIES The following table presents the detail of Accrued Liabilities for the periods presented: Accrued Liabilities Years Ended December 31, Accrued Interest $ 17,135 $ 3,001 Accrued Operating Expenses 23,180 18,325 TOTAL ACCRUED LIABILITIES $ 40,315 $ 21,326 9

12 NOTE 6 INCOME TAXES The following table summarizes the activities for the years ended December 31, 2016 and 2015: Years Ended December 31, Federal Tax Calculation Loss from operations before recovery of income taxes $ 2,034,671 $ 651,232 United States statutory tax rate 34% 34% 691, ,419 State Tax Calculation Loss from operations before recovery of income taxes estimated to be attributable to New Jersey 1,831, ,616 New Jersey 9% 9% 164,808 29,305 Expected income tax recovery from continuing operations $ 856,596 $ 250,724 Deferred tax asset valuation allowance 856, ,724 Deferred tax asset, net $ - $ - We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, taxplanning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. As such, the Company is recording both a deferred tax asset and a deferred tax asset valuation allowance for the years ended December 31, 2016 and December 31, 2015 at $856,596 and $250,724, respectively. As the deferred tax asset and deferred tax asset valuation allowance equal each other for both periods, the net deferred tax asset is $0 for the years then ended. The Company had no income tax expense on its $2,034,671 and $651,232 losses from continuing operations for the years ended December 31, 2016 and December 31, 2015, respectively. 10

13 NOTE 7 COMMITMENTS AND CONTINGENCIES Commitments As of December 31, 2016, the Company has no long-term commitments or any significant commitment that would have a materially adverse effect on the consolidated financial statements of the Company. Legal Contingencies From time to time, the Company may be subject to claims, lawsuits, investigations, and other proceedings that arise in the ordinary course of business. The Company, if subject to such contingency in the future, would record a liability when it believes that it is both probably that a loss has been incurred, and the amount can be reasonably estimated. Significant judgment is required to determine both likelihood of there being and the estimated amount of a loss related to such matters. The Company periodically evaluates developments in its legal matters that could affect the amount of liability that it has previously accrued, if any, and adjusts accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Until the final resolution of such matters, there may be an exposure to loss in excess of the amount recorded, and such amounts could be material. Any estimates and assumptions that change or prove to have been incorrect could have a material impact on the Company s business, consolidated financial position, results of operations, or cash flows. The Company is involved in an arbitration proceeding in the State of Florida, initiated by the Company against three former independent contractors for non-performance, fraud, gross negligence and theft, and those independent contractors countersued for non-payment. On February 20, 2018, GLX agreed to a settlement with regards to the outstanding arbitration between GLX, the Plaintiff, and Secure Internet Solutions, LLC, IWTA Technologies, LLC, and Paolillo Consulting, LLC, (collectively herein the Defendants ). GLX agreed to make payments totaling $95,000 to the Defendants. $20,000 was paid on February 20, 2018 and $5,000 permonth is to be paid on the 15th of every month, beginning on March, 15, 2018, through May 15, The Plaintiff agreed to drop all allegations against the Defendants. The Defendants agreed to drop all allegations against the Plaintiff including past cash compensation and equity compensation due as well as a release on any future claims relating to intellectual property. Indemnifications In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company s breach of such agreements and out of intellectual property infringement claims made by third parties. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, the Company s obligations under these agreements may be limited in terms of time and/or amount, and in some instances, it may have recourse against third parties for certain payments. 11

14 NOTE 8 CONVERTIBLE DEBT INSTRUMENTS On April 20, 2015, the Company issued a $25,000 principal amount of a 10% convertible note (the 2015 Note ). The 2015 Note is unsecured and does not contain any financial covenants or any restrictions. The 2015 Note matures on April 19, 2017, unless converted, and bears interest at a rate of 10% per annum. On December 31, 2015, the Company issued a $114,600 principal amount of a 10% convertible note (the Codelitt Note ). The Codelitt Note is unsecured and does not contain any financial covenants or any restrictions. It was given to a contractor in lieu of partial payment to all of its 2015 invoices, which was the only year the contractor, Codelitt, worked with the Company. The Codelitt Note has no maturity date. On May 1, 2016, the Company issued a $25,000 principal amount of a 10% convertible note (the 2016 Note ). The 2016 Note is unsecured and does not contain any financial covenants or any restrictions. The 2016 Note matures on April 30, 2018, unless converted, and bears interest at a rate of 10% per annum. The Conversion Price per-share is equal to the lower of twenty-five Cents ($0.25) per-share or seventy-five percent (75%) of the Pre-money Valuation price per-share (the Conversion Price ). Pre-money Valuation shall be the pre-money valuation of the Company as of the date immediately prior to the closing of a Qualified Financing, or if there is no Qualified Financing, as determined in the good faith determination of the Company s Board of Directors. Qualified Financing means the issuance or series of related issuances of the Company s Common Stock or Common Stock derivatives by the Company, for an aggregate amount of at least $2,500,000 (excluding all proceeds from the incurrence of indebtedness that is converted into such capital stock, or otherwise cancelled in consideration for the issuance of such capital stock, including conversion of the Notes) after the date hereof and closest to, but not after, the Conversion Date. The Company may prepay all or part of this Note at any time; provided that the Company shall pay the principal amount being prepaid plus accrued but unpaid interest plus a prepayment premium in an amount equal to ten percent (10%) of the principal amount being prepaid if prepaid on or before the Maturity Date. In the event that the Company exercises the prepayment option, the holder will have three (3) business days to accept the prepayment in cash or Common Stock or any combination. The following table presents the detail of the total liability with regard to both the 2015 Note and the 2016 Note for the periods presented: Convertible Notes Years Ended December 31, Convertible Notes (aggregate) $ 164,600 $ 139,600 Accured Interest on Notes 17,135 1,740 TOTALS $ 181,735 $ 141,340 Maturities of long-term debt for the next five years are as follows: Years Ending December 31, Years Ending December 31, 2017 $ 25, ,

15 NOTE 9 STOCKHOLDERS DEFICIT Preferred Stock The Company has authorized one class of preferred shares, to be designated the Class A Preferred Shares ( Preferred Stock ). The maximum number of shares of Preferred Stock that this Company is authorized to issue and have outstanding at any one time is ten million (10,000,000) shares. The Preferred Stock has a par value of $ per share. Common Stock The maximum number of shares of Common Stock that this Company is authorized to issue, and have outstanding at any one time is 110 million (110,000,000) shares collectively consisting of (i) 100 million (100,000,000) shares of Class A Common Stock, and (ii) 10 million (10,000,000) shares of Class B Common Stock. All Common Stock has a par value of $ per share. Class B Common Shares carries the same rights to dividends, liquidations, conversions and/or redemption as Class A Common Shares. Class B Common Shares carries 10 votes per share, for the purposes of voting rights in a cumulative manner for any matters where shareholder approval is necessary. On April 13, 2015, the Company issued 10,000,000 shares of Class A common stock at par and 10,000,000 shares of Class B common stock at par to the CEO and Founder of the Company, Ronald P Russo, Jr. The following table is a summary of common stock activity for the number of shares that is issued and outstanding as of December 31, 2016 and the total dollar value that those shares were issued: Number of Shares Founders Shares Class A Founders Shares Class B Common Stock paid in lieu of services Common Stock sold at $ ,527 4,437, ,000,000 10,000, , ,256 TOTAL 10,000,000 10,000, ,053 5,317,384 Total Dollar Value 2016 $ - $ - $ 142,376 $ 1,730, ,000 1,000 49, ,800 TOTAL $ 1,000 $ 1,000 $ 192,111 $ 2,104,278 NOTE 10 STOCK-BASED COMPENSATION PLANS AND AWARDS The Company adopted the 2015 Long-Term Equity Incentive Plan (the 2015 Plan ) on April 15, The aggregate number of Class A common shares reserved for issuance pursuant to incentive or non-qualified stock options, stock appreciation rights ( SARs ), restricted stock, restricted stock Shares, deferred stock Shares and performance awards will be equal to 5,000,000. As of December 31, 2016, 2,735,131 options to purchase common stock granted under the 2015 Plan remain outstanding, 1,333,324 of which have vested. Total remaining shares available for future grants under the 2015 Plan was 2,264,869 as of December 31,

16 The 2015 Plan is administered by the compensation committee of the Board of Directors of the Company, or in the absence of a committee, the full Board of Directors of the Company. The Plan was enacted in April of 2015, and prior to this time, no plan and consequently, no stock options or shares of restricted stock were granted under an equity compensation plan. Stock Option Activity The following table summarizes information about outstanding and vested stock options from April 13, 2015 through December 31, 2016: Number of securities to be issued upon exercise of Weighted average exercise price of outstanding outstanding options, options, warrants Number of Total Options Vested as of December 31, Plan Name warrants and rights and rights /13/ Founder Options 1,500,000 $ , ,000 04/15/ Employee Stock Option Plan (ESOP) 541, ,734-05/01/ Retainer Warrants - Underwriter 200, , ,000 08/01/ Capital Raise Warrants - Underwriter 18, ,590-05/01/ Capital Raise Warrants - Investor 475, ,000 - TOTAL 2,735,131 $ ,333, ,000 Valuation of Awards The per-share fair value of each stock option granted during the years ended December 31, 2016 and December 31, 2015 was determined on the date of grant using the Black-Scholes option pricing model using the following assumptions: Expected life (in years) 4.00 Risk free interest rate 0.50% Expected volatility Expected dividend yield 0.00% Performance Awards Performance awards may be granted for, among other things, the contributions, responsibilities and other compensation of the grantee. Generally, these awards will be based on specific performance criteria and may be paid in cash or in shares of common stock, or in a combination of both. On April 15, 2015, the Company issued 39,321 shares of Class A common stock to four (4) individuals for services rendered to the Company. The settlement price per share was $0.39, which is based on the trading price of our common stock on April 15, On May 1, 2015, the Company issued 10,000 shares of Class A common stock to two (2) individuals for services rendered to the Company. The settlement price per share was $0.39, which is based on the trading price of our common stock on April 15, On October 7, 2015, the Company issued 78,205 shares of Class A common stock to one (1) individual for services rendered to the Company. The settlement price per share was $0.39, which is based on the trading price of our common stock on April 15,

17 On January 1, 2016, the Company issued 153,846 shares of Class A common stock to the CEO and Founder of the Company, Ronald P Russo, Jr. The settlement price per share was $0.2925, which is based on a 25% discount to the trading price of our common stock on April 15, On May 12, 2016, the Company issued 10,000 shares of Class A common stock to one (1) individual for services rendered to the Company. The settlement price per share was $0.39, which is based on the trading price of our common stock on April 15, On August 10, 2016, the Company issued 2,500 shares of Class A common stock to one (1) individual for services rendered to the Company. The settlement price per share was $0.39, which is based on the trading price of our common stock on April 15, On several dates throughout October of 2016, the Company issued 237,181 shares of Class A common stock to four (4) individuals for services rendered to the Company. The settlement price per share was $0.39, which is based on the trading price of our common stock on April 15, The following table summarizes information about stocks granted based on Performance Awards: Year Awarded Number of Shares Awarded Dollar Amount of Award Weighted Average Per Share Price ,527 $ 142,376 $ ,526 49, TOTAL 531,053 $ 192,111 $ NOTE 11 RELATED PARTY TRANSACTIONS AND BALANCES On May 1, 2015, GLX entered into two separate agreements with the CEO and Founder of the Company ( CEO ). The first agreement extended a line of credit from GLX to the CEO in the amount of $250,000 and the second agreement extended a line of credit from the CEO to GLX in the amount of $250,000, effectively allowing either GLX or the CEO to lend to the other party any amount up to $250,000. Both lines of credit carry an annualized interest rate of Prime + 1%. The monies transferred to and from the CEO as described in this section are in accordance with the terms of that agreement. On October 1, 2016, an amendment to the first agreement was entered into increasing the amount of the line of credit from GLX to the CEO by $100,000 to allow a total maximum limit of $350,000. The same terms of the original agreement apply to the amendment detailing the increase. Related Party Transactions for GLX fall into one of three categories. The first is money that was loaned to the CEO by GLX, often for personal purposes, or money that was either paid back by the CEO to GLX or paid by the CEO to GLX to help facilitate ongoing operations. These bilateral exchanges are governed by the documents detailed in the preceding two paragraphs of this section. For the years ending December 31, 2016 and 2015, respectively, the CEO received from GLX as a temporary loan $139,470 and $62,822. For the years ending December 31, 2016 and 2015, respectively, the CEO paid to GLX, for either repayment of said loans or additional money for operations, $30,467 and $100,027. The second type of related party transaction is when the CEO borrowed money from the company to invest on behalf of the company in a brokerage account at Fidelity. Because the money was 15

18 placed in accounts under the CEO s name, the Company is considering this a loan to the CEO with the expectation of complete reimbursement. The excess money received above the amount originally loaned to the CEO is treated as income to GLX. For the year ending December 31, 2016, GLX transferred $250,000 to Fidelity accounts under the ownership of the CEO. The third type of related party transaction, similar to the second, is when the CEO had borrowed money from the company to invest on behalf of the company in crypto-assets, (i.e. Bitcoin and Ether), in various exchanges used to purchase crypto-assets. Because these online exchanges do not allow for accounts to be opened up in names of companies and must have an individual associated with the ownership, the Company is considering this a loan to the CEO with the expectation of complete reimbursement. The excess money received above the amount originally loaned to the CEO is treated as income to GLX or as an offset to any losses that may occur from the Fidelity investments described in the preceding paragraph. For the year ending December 31, 2016, GLX transferred $21,875 to various crypto-asset accounts under the ownership of the CEO. On November 23, 2016, the CEO borrowed $21,875 to invest in crypto-assets, specifically Bitcoin. Because crypto-asset exchange companies do not allow corporate accounts, the CEO opened an account at Gemini in his personal name. At December 31, 2016, the entire $21,875 was still outstanding. Subsequent to that date, but before the date of the audit, as of March 31, 2017, the CEO had paid back the entire initial amount in addition to the excess personal gain he realized of $21,872 for a total reimbursement to GLX of $43,747. As of December 31, 2016, the amount the CEO owed to the Company with regard to the line of credit agreement is $344,560, inclusive of the crypto-asset investment of $21,875 and the initial Fidelity investment of $250,000. At the end of 2016, Mr. Russo owed the Company $887 in interest due to these transactions. Throughout 2015 and 2016, GLX paid for the registrations, extensions and purchases of several databases that are owned by the CEO and as such are amounts owed by the CEO to GLX and are included in the $344,560 owed at December 31, 2016 by the CEO. In 2015, the total of these costs was $4,952. In 2016, the total of these costs was $29,502. Related Party Transactions Years Ended December 31, Beginning Balance $ 37,205 $ - Paid to CEO for personal use (139,470) (62,822) Received from CEO 30, ,027 Paid to CEO to invest GLX money at Fidelity (250,000) Received from CEO from Fidelity proceeds - Paid to CEO to invest GLX money in crypto-assets (21,875) Received from CEO from crypto-assets proceeds - Interest Receivable from CEO (887) Ending Balance $ (344,560) $ 37,205 Interest Payable to CEO $ - $ 1,261 NOTE 12 SUBSEQUENT EVENTS In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through May 29,