RESULTS OF OPERATIONS
Overview
The following discussion should be read in conjunction with our audited combined
financial statements and the related notes that appear under Item 8 in this
Annual Report on Form 10-K. The following discussion contains forward-looking
statements that reflect our plans, estimates and beliefs. The Company's actual
results could differ materially from those discussed in the forward-looking
statements. Factors that could cause or contribute to such differences include,
but are not limited to those discussed below and elsewhere in this Annual Report
on Form 10-K. The combined financial statements are stated in United States
Dollars and are prepared in accordance with United States Generally Accepted
Accounting Principles.
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Fiscal Year Ended February 28, 2022 Compared to Fiscal Year Ended February 28,
2021
Revenue. We generated revenues of $53,710 for the fiscal year ended February 28,
2022, as compared to $79,520 for the fiscal year ended February 28, 2021.
Operating expenses: During fiscal year ended February 28, 2022, we incurred
operating expenses in the amount of $880,991 compared to operating expenses
incurred during fiscal year ended February 28, 2021 of $1,466,666, a decrease of
$585,675. Operating expenses include: (i) general and administrative of $344,270
(2021: $464,027); and (ii) research and development of $536,721 (2021:
$1,002,639). General and administrative expenses decreased by $119,757,
primarily due to decrease in stock-based compensation. Research and development
expenses decreased by $465,918 due primarily to decrease in stock-based
compensation.
Net loss. The Company had a net loss of $838,833 or $0.42 per share for the
fiscal year ended February 28, 2022 compared to $1,475,030 or $0.76 per share
for the fiscal year ended February 28, 2021.
LIQUIDITY AND CAPITAL RESOURCES
Fiscal Year Ended February 28, 2022
As at February 28, 2022, our current assets were $8,320 (2021 - $16,372) and our
current liabilities were $5,037,472 (2021 - $4,371,772), which resulted in a
working capital deficit of $5,029,152 (2021 - $4,355,400). Our current assets
were comprised of: $587 (2021 - $1,251) in cash, $nil (2021 - $7,380) in
accounts receivable, and $7,733 (2021 - $7,741) in prepaid expenses and
deposits. Our current liabilities were comprised of: $360,895 (2021 - $282 in
accounts payable and accrued liabilities; $3,436,010 (2021 - 3,143,792) in loans
payable; and $1,240,567 (2021 - $945,220) due to related parties.
Cash Flows from Operating Activities
We have generated negative cash flows from operating activities. For the fiscal
year ended February 28, 2022, net cash flows used in operating activities was
$405,446 compared to $424,846 for fiscal year ended February 28, 2021. The use
of cash in operating activities is consistent with the prior year given the
Company did not have any significant changes in its operations.
Cash Flows from Investing Activities
We used cash of $812 in investing activities during the fiscal year ended
February 28, 2022, which consisted of the purchase of equipment. In comparison,
cash of $1,441 was used during the fiscal year ended February 28, 2021 for the
purchase of equipment.
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Cash Flows from Financing Activities
Net cash flows provided from financing activities during the fiscal year ended
February 28, 2022 was $401,111, which consisted of $298,144 in proceeds from
loans and $102,967 in proceeds from related party loans. During the fiscal year
ended February 28, 2021, cash flows provided by financing activities was
$436,103, which consisted of $502,103 from the proceeds of loans, offset by
repayment of loans payable in the amount of $66,000.
Material Commitments
The balances due to related parties and shareholder ($1,240,567) are interest
free, unsecured and are repayable on demand. The balances due to related parties
and shareholders are mainly in connection with the services and financing
provided for the development of an online complaint resolution platform. A loan
in the amount of $196,875 was due November 25, 2020 and secured by 588,235
shares of common stock of the Company owned by the President of the Company.
Loans in the amounts of $94,500 and $23,625 are unsecured and bear interest at
5% per annum, and are due November 25, 2020 and June 1, 2021, respectively. The
Company also obtained a government-backed loan to assist businesses during the
COVID-19 pandemic in the amount of $47,250. This loan is unsecured and
non-interest bearing for the initial term until December 31, 2023 and thereafter
at 5% interest per annum for the extended term which ends on December 31, 2025.
It may be repaid at any time without penalty and if 75% is repaid on or within
the initial term, the remaining balance will be forgiven.
Off-Balance Sheet Arrangements
There were no off-balance sheet arrangements during fiscal year ended February
28, 2022 that have, or are reasonably likely to have, a current or future effect
on our financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to our
interests.
PLAN OF OPERATION
As at February 28, 2022, we had a working capital deficit of $5,029,152 and we
will require additional financing in order to enable us to proceed with our plan
of operations.
Thus far, we believe that COVID-19 has not impacted our business negatively. As
more businesses adopt virtual office operation models due to the risk of the
virus, such adoption may in fact present us with more opportunities to offer
businesses cost-effective, cloud-based solutions.
When we will require additional financing, there can be no assurance that
additional financing will be available to us, that it can be obtained on
commercially reasonable terms. If we are not able to obtain the additional
financing on a timely basis, we will not be able to meet our other obligations
as they become due. We are pursuing various alternatives to meet our immediate
and long-term financial requirements.
We anticipate continuing to rely on equity sales of our common stock in order to
fund our business operations. Issuances of additional shares will result in
dilution to existing stockholders. There is no assurance that we will achieve
any additional sales of equity securities or arrange for debt or other financing
to fund our planned business activities.
Our auditor has issued a going concern opinion. This means that there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we generate sufficient revenues. There is no assurance we
will ever reach that point. In the meantime, the continuation of the Company is
dependent upon the continued financial support from our shareholders, our
ability to obtain necessary equity financing to continue operations and the
attainment of profitable operations.
Our operations and financial results are subject to various risks and
uncertainties that could adversely affect our business, financial condition and
results of operations.
We require approximately $1,500,000 for the next 12 months as a reporting issuer
and additional funds are required. Before generation of revenue, the additional
funding may come from equity financing from the sale of our common stock or
loans from management or related third parties. In the event we do not raise
sufficient capital to implement its planned operations or divest, your entire
investment could be lost.
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MATERIAL COMMITMENTS
We have no reportable material commitments as at February 28, 2022.
RECENT ACCOUNTING PRONOUNCEMENTS
As reflected in Note 2 of the Notes to the Consolidated Financial Statements,
there have been recent accounting pronouncements or changes in accounting
pronouncements that impacted fiscal year ended February 28, 2022 or which are
expected to impact future periods as follows:
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. This Update is intended to improve
financial reporting by requiring timelier recording of credit losses on loans
and other financial instruments held by financial institutions and other
organizations. The underlying premise of the Update is that financial assets
measured at amortized cost should be presented at the net amount expected to be
collected, through an allowance for credit losses that is deducted from the
amortized cost basis. The allowance for credit losses should reflect
management's current estimate of credit losses that are expected to occur over
the remaining life of a financial asset. The income statement will be affected
for the measurement of credit losses for newly recognized financial assets, as
well as the expected increases or decreases of expected credit losses that have
taken place during the period. The new standard is effective for fiscal years
and interim periods within those years beginning after December 15, 2022.
The Company has implemented all new accounting pronouncements that are in effect
and that may impact its consolidated financial statements and does not believe
that there are any other new accounting pronouncements that have been issued
that might have a material impact on its financial position or results of
operations.
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