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MarketScreener Homepage  >  Equities  >  OTC Bulletin Board - Other OTC  >  Voip-Pal.Com Inc    VPLM

VOIP-PAL.COM INC

(VPLM)
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VOIP PAL COM : Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-K)

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01/11/2019 | 10:37am EDT

The following management's discussion and analysis (MD&A) should be read in conjunction with our audited consolidated financial statements for the year ended September 30, 2018 and notes thereto.

This MD&A for the year ending September 30, 2018 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amending, and Section 21E of the Securities Exchange Act of 1934, as amending. Forward-looking statements may be identified by the use of forward-looking terminology, such as "may", "shall", "could", "expect", "estimate", "anticipate", "predict", "probable", "possible", "should", "continue", or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and are considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.



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The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements



Overview


VOIP-PAL.com Inc. ("Voip-Pal", the "Company") was incorporated in the state of Nevada in September 1997 as All American Casting International, Inc. and changed its name to VOIP MDI.com in 2004 and subsequently to Voip-Pal.Com Inc. in 2006. Since March 2004, the Company has been in the development stage of becoming a VoIP re-seller, a provider of a proprietary transactional billing platform tailored to the points and air mile business, and a provider of anti-virus applications for smartphones. All business activities prior to March 2004 have been abandoned and written off to deficit.

In 2013, Voip-Pal acquired Digifonica International (DIL) Limited ("Digifonica"), to fund and co-develop Digifonica's patent suite. Digifonica had been founded in 2003 with the vision that the internet would be the future of all forms of telecommunications - a team of twenty top engineers with expertise in Linux and Internet telephony developed and wrote a software suite with applications that provided solutions for several core areas of internet connectivity. In order to properly test the applications, Digifonica built and operated three production nodes in Vancouver, Canada (Peer 1), London, UK (Teliasonera), and Denmark. Upon successfully developing the technology, Digifonica filed for patents with the United States Patent and Trademark Office ("USPTO").

The Digifonica patents formed the basis for Voip-Pal's current intellectual property, now a worldwide portfolio of twenty-six issued and pending patents primarily designed for the broadband VoIP market.

Voip-Pal's intellectual property value is derived from its issued and pending patents. Voip-Pal inventions described in these patents, among other things, provide the means to integrate VoIP services with legacy telecommunications systems such as the public switched telephone network (PSTN) to create a seamless service using either legacy telephone numbers or IP addresses, and enhance the performance and value of VoIP implementations worldwide.

VoIP has been and continues to be a green field for innovation that has spawned numerous inventions, greatly benefitting consumers large and small across the globe. VoIP is used in many places and by every modern telephony system vendor, network supplier, and retail and wholesale carrier.

Liquidity and capital resources

As of September 30, 2018, the Company had an accumulated deficit of $42,648,364 as compared to an accumulated deficit of 34,246,816 at September 30, 2017. As of September 30, 2018, the Company had a working capital surplus of $3,386,340 as compared to a working capital deficit of $192,375 at September 30, 2017. The increase in the Company's working capital of $3,386,340 was primarily due to an increase in cash on hand resulting from increased cash receipts from financing completed during the year ending September 30, 2018 as compared to the prior year.

Net cash used by operations for the years ending September 30, 2018 and 2017 was $2,243,694 and $1,731,468, respectively. The increase in net cash used for operations for the year ending September 30, 2018 as compared to the year ending September 30, 2017 was primarily due to cash expenditures for patent-related professional fees, services and legal costs for the year ending September 30, 2018.

Net cash used in investing activities for the years ending September 30, 2018 and 2017 was $(Nil) and $(Nil). Net cash provided in financing activities for the year ending September 30, 2018 and 2017 was $5,407,060 and $1,622,510, respectively. The increase in net cash provided by financing activities of $5,407,060 was primarily due to an increase in proceeds from private placement of common shares and exercise of warrants during the year ending September 30, 2018.




Liquidity



The Company primarily finances its operations from cash received through the issuance of common stock and the exercise of warrants to investors and through the payment of stock-based compensation. The Company believes its resources are adequate to fund its operations for the next twelve months.



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Results of operations


The Company's operating costs consist of expenses incurred to monetizing, selling and licensing its VoIP patents. Other operating costs include expenses for legal, accounting and other professional fees, financing costs, and other general and administrative expenses.

Comparison of Years Ending September 30, 2018 and 2017



                                    Years ending
                                    September 30              Increase /
                                2018             2017         (Decrease)        Percent
Revenue                    $          -     $          -     $         -               -
Cost of Revenue                       -                -               -               -
Gross Margin                          -                -               -               -
General and
administrative expenses      (8,263,348 )     (2,472,482 )     5,790,866             234 %
Amortization of
intangible assets              (138,200 )       (138,191 )             9            0.01 %
Net loss                   $ (8,401,548 )$ (2,610,673 )$ 5,790,877             222 %



Revenues, Cost of Revenues and Gross Margin

The Company had no revenues, cost of revenues or gross margin for the years ending September 30, 2018 and 2017.

General and Administrative Expenses

General and administrative expenses for the year ending September 30, 2018 totaled $8,263,348 compared to $2,472,482 during the same period in 2017. The increase in general and administrative expenses of 5,790,866, or 234% more than the previous year, was primarily due to an increase in patent-related professional fees, services, legal costs and stock-based compensation.

Amortization of Intangible Assets

Amortization of intellectual VoIP communications patent properties for the year ending September 30, 2018 totaled $138,200 compared to $138,191 during the same period in 2017. There was no material change in the amortization expenses for the current year as compared to the prior year.

The Company follows GAAP (FAS 142) and is amortizing its intangibles over the remaining patent life of approximately eleven (11) years. The Company evaluates its intangible assets annually and determines if the fair market value is less than its historical cost. If the fair market value is less, then impairment expense is recorded on the Company's financial statements. The intangible assets on the financial statements of the Company relate primarily to the Company's acquisition of Digifonica (International) Limited.



Interest Expense


The Company had no interest costs for the years ending September 30, 2018 and 2017.




Net Loss



The Company reported a net loss of $8,401,548 for the year ending September 30, 2018 compared to a net loss of $2,610,673 for the same period in 2017. The net loss increase of $5,790,877, or 222% over the same period in 2017 was due primarily to an increase in the amount of patent-related related professional fees, services, legal costs and stock based compensation.

Off-Balance Sheet Arrangements

During the year ended September 30, 2016, in February 2016, the board of directors authorized the Company to provide a performance bonus (the "Performance Bonus") of up to 3% of the capital stock of the Company by way of the issuance of Common shares from its treasury to an as yet undetermined group of related and non-related parties upon the occurrence of a bonusable event, defined as the successful completion of a sale of the Company or substantially all its assets, or a major licensing transaction. In order to provide maximum flexibility to the Company with respect to determining what constitutes such a bonus able event, the level of Performance Bonus payable, and who may qualify to receive a pro-rata share of such a Performance Bonus, the Company authorized full discretion to the Board in making such determinations.

During the year ended September 30, 2018, the board of directors authorized the increase of the Performance Bonus to up to 10% of the capital stock of the Company.



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As at September 30, 2018, no bonusable event had occurred and there was no Performance Bonus payable.

Subsequent to the year ended September 30, 2018, the board of directors resolved to reduce the Performance Bonus from 10% to 3.33% of the issued and outstanding capital stock of the Company. Concurrently, the board of directors authorized the payment of Common shares ("Bonus Shares") in an equivalent percentage to the 6.67% reduction to the Performance Bonus to a group of related and non-related parties, which included members of management, a director and several consultants, who received an aggregate 127,000,000 Bonus Shares. The Bonus Shares are restricted from trading under Rule 144 and are also subject to voluntary lock-up agreements, pursuant to which they cannot be traded, pledged, hypothecated, transferred or sold by the holders until such time as the Company has met the requirements of the bonusable event as described above.

There are no other off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.



Impact of Inflation


We believe that inflation has not had a material impact on our results of operations for the year ending September 30, 2018. We cannot assure you that future inflation will not have an adverse impact on our operating results and financial condition.

© Edgar Online, source Glimpses

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Managers
NameTitle
Emil Malak Chief Executive Officer & Director
Ryan L. Thomas President & Director
Colin Patrick Tucker Chairman
Donald Barry Lee Chief Financial Officer & Director
Edwin Candy Independent Director
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