The following is management’s discussion and analysis of certain significant
factors that have affected our financial position and operating results during
the periods included in the accompanying condensed consolidated financial
statements, as well as information relating to the plans of our current
management. This report includes forward-looking statements. Generally, the
words “believes,” “anticipates,” “may,” “will,” “should,” “expect,” “intend,”
“estimate,” “continue,” and similar expressions or the negative thereof or
comparable terminology are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties, including the matters
set forth in this report or other reports or documents we file with the
results or outcomes to differ materially from those projected. Undue reliance
should not be placed on these forward-looking statements which speak only as of
the date hereof. We undertake no obligation to update these forward-looking
statements.
Although the Company believes that the expectations reflected in the
forward-looking statements are reasonable, the Company cannot guarantee future
results, levels of activity, performance, or achievements. Except as required by
applicable law, including the securities laws of
does not intend to update any of the forward-looking statements to conform these
statements to actual results.
Our financial statements are prepared in accordance with accounting principles
generally accepted in
require us to make certain estimates, judgments, and assumptions. We believe
that the estimates, judgments, and assumptions upon which we rely are reasonable
based upon information available to us at the time that these estimates,
judgments, and assumptions are made. These estimates, judgments, and assumptions
can affect the reported amounts of assets and liabilities as of the date of the
financial statements as well as the reported amounts of revenues and expenses
during the periods presented. Our financial statements would be affected to the
extent there are material differences between these estimates.
The following discussion should be read in conjunction with our unaudited
financial statements and the related notes that appear elsewhere in this
Quarterly Report on Form 10-Q.
THE COMPANY
the laws of the
the business of imagineering, developing and securing disruptive technologies.
Results of Operations for the three months ended
Revenues of
2021, respectively, were from deferred revenue on subscription agreements being
recognized.
Revenues consist of our proprietary software, integration consulting services,
tech support and product maintenance billed to the customer. Revenues increased
for the three months ended
revenue recognized on subscription agreements entered into and being recognized
in the current quarter.
Operating expenses decreased by
2022
December 31,
Description 2022 2021
Stock based expenses $ 551,668 $ 455,985
Professional fees 53,146 111,296
Consulting expenses (excluding stock expenses) 199,787 18,450
Related party expenses (excluding stock expenses) 177,868 426,219
Depreciation expense
11,904 11,904 Equipment and demo expenses 25,369 8,981 General and Administrative officers 1,606 3,670 Auto, Travel and Meals and Entertainment 25,530 28,560
Rent expense 6,116 4,147 Investor relations expense 31,162 13,954 Other operating expenses 22,287 35,820 Total Operating expenses$ 1,106,443 $ 1,118,986 15 Table of Contents
Stock-based expenses increased in the current period compared to the prior
period. The current period expense includes
3,925,000 shares to consultants. The expense is based on the price of the common
stock on the dates the Company agreed to issued the shares. The Company also
recorded
the three months ended
payable and accrued expenses on the
expense of
of the amortization of
31, 2021
Professional fees decreased in the current period compared to the prior period,
substantially due to lower legal fees of approximately
period, due to less costs associated with the Skoblow case in the current
period.
Consulting expenses increased during the three months ended
compared to the three months ended
of
costs. Also, additional consulting costs related to sales and marketing and
finance of
Related party expenses decreased for the three months ended
compared to the three months ended
Three months ended
December 31,
2022 2021
Management fees, Chief Executive Officer (CEO)
Chief Technology Officer (CTO)
60,000 145,000 Chief Administration Officer (CAO) 45,000 120,000 Office rent and expenses 12,868 16,219 Total$ 177,868 $ 426,219
Effective
and CTO, from
increased the monthly fee to
For the three months ended
expenses of
respectively. For the three months ended
Company expensed
On
the Company agreed to an annual lease payment of
renewed he lease for an additional year for
2022
and expenses for the three months ended
and
Investor relations fee increased for the three months ended
compared to the three months ended
a result of the Company engaging additional consultants as well the Company
attending trade shows and conferences to expose the Company to potential
investors.
16
Table of Contents
The following tables set forth key components of our balance sheet as of
December 31, September 30,
2022 2022
Current Assets $ 175,263 $ 788,019
Property and Equipment $ 111,086 $ 122,990
Total Assets $ 286,349 $ 911,009
Current Liabilities $ 517,990 $ 449,217
Total Liabilities $ 517,990 $ 449,217
Stockholders' Equity (Deficit)$ (231,641 ) $ 461,792 Total Liabilities and Stockholders' Equity$ 286,349 $ 911,009
Liquidity and Capital Resources
As of
and our other existing resources will not be sufficient to provide the working
capital needed for our current business Additional capital will be required to
meet our obligations, and to further expand our business. We may be unable to
obtain the additional capital required. Our inability to generate capital or
raise additional funds when required will have a negative impact on our business
development and financial results. These conditions raise substantial doubt
about our ability to continue as a going concern as well as our recurring losses
from operations and the need to raise additional capital to fund operations.
This “going concern” could impair our ability to finance our operations through
the sale of debt or equity securities.
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As of
Company had an accumulated deficit of
since inception. These factors, among others, raise substantial doubt about the
ability of the Company to continue as a going concern.
As of
and current liabilities of
deficiency of
payable, accounts payable-related parties, accrued expenses, deferred revenue
and stock to be issued.
In
COVID-19 infections have been reported throughout
federal, state and local governmental authorities have issued stay-at-home
orders, proclamations and/or directives aimed at minimizing the spread of
COVID-19. The ultimate impact of the COVID-19 pandemic on the Company’s
operations is unknown and will depend on future developments, which are highly
uncertain and cannot be predicted with confidence, including the duration of the
COVID-19 outbreak, new information which may emerge concerning the severity of
the COVID-19 pandemic, and any additional preventative and protective actions
that governments, or the Company, may direct, which may result in an extended
period of continued business disruption, and reduced operations. Any resulting
financial impact cannot be reasonably estimated at this time but it may have a
material adverse impact on our business, financial condition and results of
operations. Management expects that its business will be impacted to some
degree, but the significance of the impact of the COVID-19 outbreak on the
Company’s business and the duration for which it may have an impact cannot be
determined at this time.
Operating Activities
For the three months ended
activities was
31, 2021
operating activities was primarily attributable to the net loss of
adjusted by stock-based compensation of
Net changes of
used in operating activities.
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Table of Contents
For the three months ended
activities was primarily attributable to the net loss of
stock-based compensation of
operating activities.
Investing Activities
For the three months ended
in investing activities.
Financing Activities
For the three months ended
activities. For the three months ended
financing activities was
of Series F Preferred Stock at
Critical Accounting Policies
Our significant accounting policies are summarized in Note 3 of our financial
statements. While all these significant accounting policies impact our financial
condition and results of operations, we view certain of these policies as
critical. Policies determined to be critical are those policies that have the
most significant impact on our financial statements and require management to
use a greater degree of judgment and estimates. Actual results may differ from
those estimates. Our management believes that given current facts and
circumstances, it is unlikely that applying any other reasonable judgments or
estimate methodologies would cause an effect on our results of operations,
financial position or liquidity for the periods presented in this report.
Accounts Receivable
The Company records accounts receivable at the time products and services are
delivered. An allowance for losses is established through a provision for losses
charged to expenses. Receivables are charged against the allowance for losses
when management believes collectability is unlikely. The allowance (if any) is
an amount that management believes will be adequate to absorb estimated losses
on existing receivables, based on evaluation of the collectability of the
accounts and prior loss experience.
Property and Equipment
Property and equipment are stated at cost, and depreciation is provided by use
of a straight-line method over the estimated useful lives of the assets.
The Company reviews property and equipment for potential impairment whenever
events or changes in circumstances indicate that the carrying amounts of assets
may not be recoverable. The estimated useful lives of property and equipment is
as follows:
Vehicles and equipment 5 years Software 3 years Revenue Recognition
Effective
with Customers. Under ASC 606, the Company recognizes revenue from the
commercial sales of products by: (1) identify the contract (if any) with a
customer; (2) identify the performance obligations in the contract (if any); (3)
determine the transaction price; (4) allocate the transaction price to each
performance obligation in the contract (if any); and (5) recognize revenue when
each performance obligation is satisfied. The Company has no outstanding
contracts with any of its’ customers. The Company recognizes revenue when title,
ownership, and risk of loss pass to the customer, all of which occurs upon
shipment or delivery of the product and is based on the applicable shipping
terms.
18
Table of Contents
Stock-Based Compensation
The Company accounts for its stock based compensation under the recognition and
measurement principles of the fair value recognition provisions of Statement of
Financial Accounting Standards No. 123 (revised 2004) “Share-Based Payment”
(“SFAS No. 123R”)(ASC 718) using the modified prospective method for
transactions in which the Company obtains employee services in share-based
payment transactions and the
Issues Task Force Issue No
Issued To Other Than Employees For Acquiring, Or In Conjunction With Selling
Goods Or Services” (“EITF No. 96-18”) for share-based payment transactions with
parties other than employees provided in SFAS No. 123(R) (ASC 718). All
transactions in which goods or services are the consideration received for the
issuance of equity instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instrument issued,
whichever is more reliably measurable. The measurement date used to determine
the fair value of the equity instrument issued is the earlier of the date on
which the third-party performance is complete or the date on which it is
probable that performance will occur.
Earnings (Loss) Per Share
The Company computes net loss per share in accordance with FASB ASC 260,
“Earnings per Share.” ASC 260 requires presentation of both basic and diluted
earnings per share (EPS) on the face of the statement of operations. Basic EPS
is computed by dividing net income (loss) available to common shareholders by
the weighted average number of common shares outstanding during the period.
Diluted EPS gives effect to all dilutive potential common shares outstanding
during the period including stock options, using the treasury stock method, and
convertible notes and stock warrants, using the if-converted method. In
computing diluted EPS, the average stock price for the period is used in
determining the number of shares assumed to be purchased from the exercise of
stock options, warrants and conversion of convertible notes. Diluted EPS
excludes all dilutive potential common shares if their effect is anti-dilutive.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements including arrangements that would
affect our liquidity, capital resources, market risk support and credit risk
support or other benefits.
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