the company has over $6 mil in convertible notes which is astounding by itself, but i found this even more interesting and a huge red flag:
On May 2, 2018, the Company purchased a 25% interest in Payroll Express, LLC (PE), a California limited liability company for $500,000 in cash. The Company recognized this investment under the equity method due to its ability to exercise significant influence over the operating and financial policies of PE. Additionally, the Company had the right, but not the obligation, to purchase an additional 26% interest under similar terms. On June 11, 2018, the Company paid $250,000 in cash to the owners of Payroll Express as a deposit towards purchasing additional shares in PE and is recorded in Other Assets on the Balance Sheet
On August 3, 2018, the Company entered into a Membership Interest Purchase Agreement with PE, pursuant to which the Company purchased an additional 26 % of the membership interests of PE for a purchase price of (a) $250,000, plus (b) warrants (the “Warrants”) to purchase 2,000,000 shares of the Company’s common stock. As a result of this transaction, the Company owned a total of 51% of the membership interests of PE. The Warrants were exercisable for a period of 24 months from the date of issuance. The Warrants provided for the purchase of shares of the Company’s Common Stock an exercise price of $1.06 per share. The Warrants were exercisable for cash, or on a cashless basis. The number of shares of Common Stock to be deliverable upon exercise of the Warrants were subject to adjustment for subdivision or consolidation of shares and other standard dilutive event.
On September 28, 2018, the Company, consummated a real property purchase and sale transaction (“Setco Property Purchase Transaction”) with Setco International Forwarding Corporation, a Texas corporation (“Setco”), pursuant to which the Company purchased a 16.84 acre tract of land from Setco, located at 13000 S. Lyndon B. Johnson Freeway in Dallas, Texas, for an aggregate purchase price of $11,000,000 , paid as follows:
? $1,125,000, by the Company’s execution and delivery of a Real Estate Lien Note made to Setco (the “September 2018 Note”);
? $4,875,000, by the Company’s issuance to Setco of 15,000,000 shares of the Company’s common stock (valued at $0.325 per share); and
? $5,000,000, by the Company’s transfer to Setco of the Company’s 51% ownership interest in Payroll Express .
how in the hell did they pay only $500k for 25% interest in payroll express and then turn around and value 51% interest of payroll express 6 months later at $5 million when they used their 51% interest in payroll express to purchase land they claimed cost $11 mil to purchase? the sec and irs should be contacted on that little item alone from their financials. that sounds like a fraudulent assignment of value to real estate to artificially inflate the value of the real estate. i am going to contact a real estate agent in dallas to inquire about this particular purchase, and i am going to check the public records for this transaction too. this company's management should be investigated bigtime. i am going to forward this information to the us attorney's office in dallas and to the state's attorney general, because there is some shady business going on with gex. this looks fraudulent as hell.
AI
