The following discussion provides information which management believes is
relevant to an assessment and understanding of our results of operations and
financial condition. The discussion should be read along with our unaudited
condensed consolidated financial statements for the three months ended March 31,
2022 and 2021 and notes thereto contained elsewhere in this Report, and our
annual report on Form 10-K for the twelve months ended December 31, 2021, as
amended including the consolidated financial statements and notes thereto. The
following discussion and analysis contains forward-looking statements, which
involve risks and uncertainties. Our actual results may differ significantly
from the results, expectations and plans discussed in these forward-looking
statements. See "Cautionary Note Concerning Forward-Looking Statements."
Overview
We are engaged in media and digital technology, primarily in sports
entertainment and related technologies that bring fans closer to athletes and
celebrities.
Current Structure of the Company
Touchpoint Group Holdings, Inc. (we", "us" the "Company" or "TG") has the
following subsidiaries:
Subsidiary name % Owned
? 123Wish, Inc. (considered dormant) 51 %
? One Horizon Hong Kong Ltd (Limited operations) 100 %
? Horizon Network Technology Co. Ltd (Limited operations) 100 %
? Love Media House, Inc. (Discontinued Operations) 100 %
? Air Race Limited (formerly called Touchpoint Connect Limited) 100 %
In addition to the subsidiaries listed above, Suzhou Aishuo Network Information
Co., Ltd ("Suzhou Aishuo") is a limited liability company, organized in China
and controlled by us via various contractual arrangements. Suzhou Aishuo is
treated as one of our subsidiaries for financial reporting purposes in
accordance with generally accepted accounting principles in the United States
("GAAP").
Summary Description of Core Business
We are a software developer which supplies a robust fan engagement platform
designed to enhance the fan experience and drive commercial aspects of the sport
and entertainment business.
We bring users closer to the action by enabling them to engage with clubs,
favorite players, peers and relevant brands through features, available through
the Touchpoint APP and program, that include live streaming, access to limited
edition merchandise, gamification (chance to win unique one-off life
experiences), user rewards, third party branded offers, credit cards and
associated benefits.
In September 2021 we determined to revitalize the "World Championship Air Race
Series" which had been developed by Red Bull GmbH, the worldwide energy drinks
company, for marketing purposes and promoted as the "Red Bull Air Race." Red
Bull hosted 94 championship races around the globe until it elected to terminate
the Series in 2019. Over the course of the Series, it attracted viewers in 187
countries and was broadcast to an audience of over 230 million viewers. It is
estimated to have achieved 2.3 billion media impressions worldwide in its 2019
season and AC Nielsen forecast that each race in the 2022 season would attract a
TV audience of 49.5 million. It is the largest live spectator sports event in
the world attracting over 1 million spectators to a single air race on multiple
occasions in cities such as Rio De Janeiro and Barcelona.
As part of our effort to restore the WCAR, we engaged key operational staff
which planned and staged the races for Red Bull and acquired certain rights to
the Series. We have contacted previous host cities and have entered into
agreements to host Air Race World Championships for the 2022 race season in the
United Kingdom, Australia, Malaysia and Jakarta and are currently in discussions
with two additional cities. On May 6, 2022, wet received the initial payment of
AUD 1,000,000 (approximately US$720,000) due pursuant to the Host City Agreement
entered into with respect to an Air Race World Championship event to be held in
Lake Macquarie, Australia during 2022.
We are based in the United States of America and the United Kingdom.
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Results of Operations
Comparison of three months ended March 31, 2022 and 2021
The following table sets forth key components of our results of operations for
the periods indicated.
(All amounts, other than percentages, in thousands of U.S. dollars, unaudited)
Three Months Ended
March 31, Change
Increase/ Percentage
2022 2021 (decrease) Change
Revenue $ 30 $ 32 $ (2 ) (6.7 )
Cost of revenue 31 139 (108 ) (77.7 )
Gross deficit (1 ) (108 ) (107 ) (99.1 )
Operating expenses:
General and administrative 606 921 315 34.1
Total operating expenses 606 921 315 34.1
Loss from operations (607 ) (1,029 ) (422 ) (40.9 )
Other (expense) income (426 ) (87 ) (339 ) (389.7 )
Loss for the period (1,033 ) (1,116 ) (83 ) (7.3 )
Net loss $ (1,033 ) $ (1,116 ) (83 ) (7.3 )
Revenue: Revenue decreased by $2,000 to approximately $30,000 in the three
months ended March 31, 2022 as compared to the three months ended March 31,
2021.
Gross Deficit: Gross deficit for the three months ended March 31, 2022 was
approximately $1,000 as compared to $108,000 for the three months ended March
31, 2021, a reduction of approximately $107,000, due to reduced cost of revenue.
Operating Expenses: Operating expenses, including general and administrative
expenses and depreciation were approximately $606,000 and $921,000 during the
three months ended March 31, 2022 and 2021, respectively. The major decrease
related to commissions and legal costs incurred in fundraising by the Company in
the three months ended March 31, 2022 as compared to the costs incurred in the
three months ended March 31, 2021.
Other (expense)income: The Company incurred interest and other costs totaling
$426,000 in the three months ending March 31, 2022 compared other costs of
$87,000 in the three months ended March 31, 2021. This was primarily
attributable to in the three months ended March 31, 2022, to debt discount of
$200,000and interest paid on loans of $166,000 .
Net Loss: Net loss for the three months ended March 31, 2022 was approximately
$1,033,000 as compared to net loss of approximately $1,116,000 for the same
period in 2021.
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