Overview
We intend for this discussion to provide information that will assist in
understanding our financial statements, the changes in certain key items in
those financial statements, and the primary factors that accounted for those
changes, as well as how certain accounting principles affect our financial
statements.
The Company was originally founded in 1999 as Spectrum Ventures LLC, a private
company, registered in Tacoma, WA, for the purpose of developing, marketing and
selling voice over IP products and services. In 2002, the Company changed its
name to Nxtech Wireless Cable Systems, Inc. In August 2007, the Company changed
its name to Oriens Travel & Hotel Management Corp. In November 2014, the Company
changed its name to Pure Hospitality Solutions, Inc. During 2014, the Board of
Directors of the Company deemed it in the best interests of the Company and its
shareholders to switch directions and become involved in the business of
numismatics, specifically the collection and ultimately the sale of coins, paper
currency, bullion and medals.
Meso Numismatics, Inc., has established a growing numismatics operation Meso
Numismatics focuses on the Central American Caribbean region with a
concentration of products surrounding Mesoamerica (Mexico to Panama).
Having locations in Costa Rica and Florida for the purposes of conveniently
shipping products, the Company has the ability to export its inventory of coins,
paper currency, bullion and medals from Costa Rica, to be sold in the U.S. and
around the world. Likewise, the Company also imports such products back to Costa
Rica, to be sold throughout the local markets.
The Company adheres to strict processes related to acquisition and sale of its
products. It begins by selecting the best inventory, be it a rare coin from
Latin America, or a banknote with an error from the United States. Inventory is
carefully screened by management, is then sent to be graded by the proper
grading authority. For all coins, medals and bullion, the Company's inventory is
sent to the Numismatic Guaranty Company for authentication and grading. For all
banknotes, the Company utilizes the services of Paper Money Guaranty, LLC for
authentication and grading, both Florida-based companies. Once graded, the
inventory is sent to the Company's Florida-based location prior to being sent to
one of the Company's many customers around the world.
We maintain an online store with eBay (www.mesocoins.com) and participate in
live auctions with major companies such as Heritage Auctions, Stacks Bowers
Auctions, Lyn Knight Auctions and Sedwick Coins for the sale of its coins, paper
currency, bullion and medals. The Company also launched a new application
technology available on the Google Play Store, as well as the Apple App Store.
The Application is a banknote scanner which instantly identifies key
characteristics of a banknote. This includes the catalog reference number of the
note, the value, which entity it was issued by the country of origin and the
printer that printed the note. A picture of each note from our database of more
than 61,000 banknotes from a combined 750 countries and regions will also be
included with the information. For the numismatic industry in particular, this
application eliminates the need for reference books, as well as the hours of
time it takes to reference all the information about banknotes. With a simple
snap of a picture, information is provided to the end-user almost
instantaneously.
Meso continues to acquire rare inventory at market rates, from throughout the
Meso Region (including Central America and the Caribbean). The inventory is then
sent for authentication and grading, followed by said items being sold
throughout Meso's sales outlets. This includes an eBay store with up to, but not
limited to, $50,000 in items for sale at any one time. For some of the Company's
rarer inventory, items are sent to major auction houses around the world for
sale.
21
Results of Operations
Below is a summary of the results of operations for the three months ended March
31, 2020 and 2019.
For the Three Months Ended March 31,
%
2020 2019 $ Change Change
Revenue $ 11,320 $ 11,916 $ (596 ) -5.00 %
Cost of revenue 12,119 15,708 (3,589 ) -22.85 %
Gross profit (799 ) (3,792 ) 2,993 -78.93 %
Operating expenses
Advertising and marketing 44 233 (189 ) -81.12 %
Professional fees 12,729 53,454 (40,725 ) -76.19 %
Officer compensation 45,484 24,724 20,760 83.97 %
Depreciation expense 200 200 - 0.00 %
Investor relations 3,500 13,750 (10,250 ) -74.55 %
General and administrative 15,276 5,878 9,398 159.88 %
Total operating expenses 77,233 98,239 (21,006 ) -21.38 %
Other income (expense)
Interest expense (438,682 ) (97,968 ) (340,714 ) 347.78 %
Loss on conversion of debt (4,251 ) - (4,251 ) 0.00 %
Derivative financial instruments (325,308 ) (2,482,993 ) 2,157,685 -86.90 %
Net income (loss)
$ (846,273 ) $ (2,682,992 ) $ 1,836,719 -68.46 %
Results of Operations for the Three Months Ended March 31, 2020 and 2019
Revenue is affected by the grade assigned to each coin or banknote. Once an item
has been acquired it is sent for grading and authentication. Grading is the
process of determining the grade or condition of the coin and banknote, which is
the key factor in determining its value. Management carefully evaluates the
grades assigned to each piece of merchandise and then decides which items will
be sold through its eBay store, which items will be sold at live auction and
which items will be traded for other items. Grade assigned will ultimately
determine the sales price of the coin or banknote.
As of December 31, 2019, the Company is working on an inventory tracking system
by serial number. Until such time as an inventory tracking system exists, the
inventory costs cannot be properly confirmed and written-off to cost of revenue
along with the cost of grading.
Gross profit
Revenue from the sale of coins, metals and paper money for the three months
ended March 31, 2020 was $11,320, compared to $11,916 of revenue for the same
period in 2019. As a result of the write-off of inventory the company generated
a negative 7% gross profit of ($799) for the three months ended March 31, 2020
compared to a negative 32% gross profit of ($3,792) for the same period in 2019.
The key reason for the decrease in gross profit was a result of the amount of
inventory written-off in 2020 vs 2019.
22
Operating expenses
Operating expenses decreased by 21.38% in the amount of $21,006 for the three
months ended March 31, 2020, compared to the same period in 2019. Listed below
are the major changes to operating expenses:
Professional fees decreased by $40,725 for the three months ended March 31,
2020, compared to the same period in 2019, primarily due to audit and accounting
expenses.
Officer compensation increased by $20,760 for the three months ended March31,
2020, compared to the same period in 2019, primarily due to the appointment of
Mr. David Christensen as Director and President of the Company.
Investor relations expenses decreased by $10,250 for the three months ended
March 31, 2020, compared to the same period in 2019, primarily due to amounts
associated with filings.
General and administrative expenses increased by $9,398 for the three months
ended March 31, 2020, compared to the same period in 2019, primarily due to
expense reimbursements.
Other income (expense)
Other income (expense) decreased by $1,812,720 for the three months ended March
31, 2020, compared to the same period in 2019, primarily as a result of the
change in fair market value of the convertible notes in 2020.
Liquidity and Capital Resources
Since inception, the Company has financed its operations through private
placements and convertible notes. The following is a summary of the cash and
cash equivalents as of March 31, 2020 and December 31, 2019.
March 31, December 31,
2020 2019 $ Change % Change
Cash and cash equivalents $ 11,297 $ 23,379 $ (12,082 ) -51.68 %
To fund basic operations for the next twelve months, the Company projects a need
for $750,000 that will have to be raised through debt or equity. In addition to
the estimated $300,000 for operating expenses the Company is budgeting $180,000
for advertising and marketing and $90,000 for new technology. To attract more
customers to Meso Numismatics, the Company plans on hiring an advertising firm
and placing more ads on sites such as NGC and PMG. Along with the advertising
program the Company plans on investing in upgrading and expanding the Meso App.
To continue expanding sales the Company plans to invest $90,000 to acquire
additional inventory along with exploring possible acquisitions, which the
Company estimates it will need approximately $100,000.
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