Results of Operations

The following is a discussion of the results of operations for the year ended December 31, 2019 compared to the year ended December 31, 2018.





Revenues:

Revenues decreased to $583,530 for the year ended December 31, 2019 from $703,833 for the year ended December 31, 2018.

Our licenses are structured such that we receive royalty payments representing a percentage of revenues of the licensee, or structured with a flat monthly rate. The foregoing decrease is a direct result of a decline in royalty revenues. This decrease is primarily due to the decrease in the number of licensing agreements for 2018 from twelve agreements to ten agreements for 2019.





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Other Income/(Expense)

Total other income increased to $117,359 for the year ended December 31, 2019 from total other expenses of $619,052 for the year ended December 31, 2018. Total other income for the year ended December 31, 2019 included a $90,000 recovery of the $1,300,000 Litigation Settlement payment paid to us by various licensees, interest expense of $16,441, and other income of $43,800 representing a recovery of royalty revenue previously written off as bad debt and collected during 2019. Total other expense for 2018 included the net payment of $894,340 of the Litigation Settlement, $6,468 of interest income, and other income of $268,820 representing a recovery of royalty revenue previously written off as bad debt and collected during 2018.

General and Administrative Expenses:

General and administrative expenses for the years ended December 31, 2019 and 2018 were $706,691 and $755,576, respectively. Virtually all the decrease in operating expenses can be attributed to the decrease in salary, legal and other expenses. Legal expenses, which are reflected in general and administrative expenses, attributable to ongoing litigation amounted to $111,609 for 2019 and $185,909 for 2018.





Provision for Income Taxes

The provision for income taxes relates primarily to the greater of average assets and capital taxable income. The average assets and capital are not impacted by net operating losses.





Net Income (Loss) per share:

Our net loss was $5,802 or ($.00) per share for the year ended December 31, 2019 as compared to net loss was $670,795 or ($.00) per share for the year ended December 31, 2018. The decrease in net loss for the year ended December 31, 2019, was primarily due to the litigation settlement. For an explanation of this change, refer to the above discussion of revenues, other income, and general and administrative expenses.

Net income(loss) per share data for both the years ended 2019 and 2018 is based on net income(loss) available to common shareholders divided by the weighted average of the number of common shares outstanding.

Liquidity and Capital Resources

At December 31, 2019, we had $9,331 in cash and cash equivalents compared to $7,662 in cash and cash equivalents at December 31, 2018.

Various conditions such as the decrease in revenue, accumulated losses, significant debt, and the results of litigation raise substantial doubt about the Company's ability to continue as a going concern. The Company intends to raise additional working capital through the continued licensing of its brand with its current and new operators. There are no assurances that the Company will be able to achieve the level of revenues adequate to generate sufficient cash flow from operations to support the Company's working capital requirements. To the extent that funds generated from any future use of licensing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not continue its operations. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.





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Cash:

At December 31, 2019, we had $9,331 in cash and cash equivalents compared to $7,662 in cash and cash equivalents at December 31, 2018.





Operating Activities:

Net cash provided by operating activities for the 2019 year was $101,528 and net cash used in operating activities for the 2018 year was $471,265. The increase in cash provided by operating activities is related to the decrease in accrued expenses.





Financing Activities:

Net cash used in financing activities for the 2019 year was $99,859 and net cash provided by financing activities for the 2018 year was $445,470. The decrease in cash provided by financing activities is related to $400,470 that was owed to Metropolitan Lumber Hardware and Building Supplies affiliate under the Offset Agreement for the y2018 year.

As of December 31, 2019, we owed $7,500 in rent to our Westside Realty affiliate and $37,500 to our Metropolitan Lumber Hardware and Building Supplies, Inc. affiliate. As of December 31, 2018, we owed $7,500 in rent to our Westside Realty affiliate and $67,500 to our Metropolitan Lumber Hardware and Building Supplies, Inc. affiliate.





Future Capital Requirements:

We have incurred significant losses since the inception of our business. Since our inception, we have been dependent on funding from private lenders and investors to conduct operations. As of December 31, 2019, we had an accumulated deficit of $(6,899,995). As of December 31, 2019, we had total current assets of $70,763 and total current liabilities of $221,644 or negative working capital of $150,881. As of December 31, 2018, we had an accumulated deficit of $(6,894,193). As of December 31, 2018, we had total current assets of $73,576 and total current liabilities of $231,496 or negative working capital of $157,920. The decrease in the amount of working capital has been primarily attributable to the decrease in payables.


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