APPSOFT TECHNOLOGIES, INC. Forward Looking Statements
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q, or Report.
The information in this discussion and elsewhere in this Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, the words "may," "will," "believe," "anticipate," "plan," "expect," "intend," "could," "estimate," "continue" and similar expressions or variations identify forward-looking statements.
Although we believe that we have a reasonable basis for each forward-looking statement contained in this Report, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Report. Factors that might cause such a discrepancy include, but are not limited to:
· Our ability to obtain financing as and when needed on acceptable terms.
· Our failure to develop or acquire and publish new Apps that achieve market
acceptance or we do not continue to enhance our existing Apps.
· Our inability to maintain a good relationship with the markets where our
Apps are distributed.
· Our ability to develop our eSports business and generate revenue from
sales, sponsorships, merchandise and advertiser supporter content;
· Our inability to keep pace with technological changes and market
conditions in the Apps industry.
· Our inability to compete against a wide range of companies that market
Apps, many of which have significantly greater resources than we do.
We caution readers not to place undue reliance on any forward-looking
statements made by us, which speak only as of the date they are made. We
disclaim any obligation, except as specifically required by law and the rules of
the
Overview
We develop, publish and market Apps for smartphones and tablet devices. We derive revenue from sales, or downloads, of our Apps and from advertisements published on our ad-supported game titles. During 2021, we did not generate any revenue. Over the course of 2022, we expect to generate revenue from the sale of software titles that we are developing for own account, from titles that were developed by third-parties which we acquired and from sales, sponsorships, and merchandise from our fanbase and advertisers published on ad supported content on our Esports platform. Operating margins are dependent in part upon our ability to release new, commercially successful software products and to manage effectively their development costs.
Our Apps titles include games designed to appeal to a broad cross section of consumers. We offer all of our game titles in both a free advertisement-supported version and a paid version that does not display ads. We believe that the ad supported versions allow for wider dissemination of our titles to consumers who might not otherwise spend money for an App without first playing the game.
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We market, sell and distribute our games through as Apple
During the second quarter of 2021, we launched an Esports/E-gaming platform which we refer to as Esportsreporter.com. Esportsreporter.com is a news channel for a broad spectrum of esports and gaming. The site publishes the most relevant breaking news for esports and gaming, including coverage of industry trends and guides on the business of esports and gaming for investors and aspiring esports and gaming professionals. The site covers the most important news in esports on a daily basis while also diving deeper with coverage of events with live reporters as well as conducting face to face and virtual interviews with professional players.
We recently launched Gamerfy.com, a site through which we hope to gain access to new game titles developed by third parties to expand our existing product offerings. We evaluate prospects based on a variety of factors. If we conclude that a particular prospect is worth pursuing, we may fund the development of the App through launch and beyond.
We have been constrained in our development and acquisition activities by a lack of cash. Our ability to pursue and achieve our objectives is predicated on our receipt of meaningful revenue from sales of our existing Apps and those we may release in the future and from our ability to raise capital from outside sources.
Growth Strategies and Outlook
Our principal growth strategy entails developing and acquiring new Apps to supplement our existing Apps portfolio and promoting our Esports platform.
Our primary focus will be to release new game titles. We seek to solicit new games and concepts that we may acquire from third parties. We also will seek to develop and publish free-to-play games. Free-to-play games are games that a player can download and play for free, but which allow players to access a variety of additional content and features for a fee, through "in-app purchases" utilizing virtual currency that may be purchased through digital storefronts, and to engage with various advertisements and offers that generate revenues for us. We may seek to acquire franchises around which we develop games, including movies, television programs, toys and other cultural phenomena that lend themselves to gamification.
During the first quarter of 2022, we launched a video game incubator, Gamerfy.com, which will seek to acquire and commercialize the next generation of game titles with particular focus on community play, the Metaverse and NFT's, each of which would allow us to sell into rapidly growing market segments. We expect Gamerfy to be the principal source of new games for us for the foreseeable future.
Our revenues will depend significantly on growth in the mobile games market and
our ability to develop or acquire and publish Apps that are well-received by
consumers. In addition, because our products are purchased with disposable
income, our success is dependent on the overall strength of the economy in
We are currently seeking to build a following on digital media for our Esports/E-gaming platform and will seek to monetize the site and our audience utilizing an array of proven techniques, including generating revenue from sales, sponsorships, merchandise, and advertiser supported content.
Our ability to achieve and sustain profitability will depend not only on our ability to generate meaningful our revenues, but also on our ability to manage our operating expenses. Currently, we have one full-time employee, who receives compensation when and as determined by the board of directors. For the foreseeable further, we expect to utilize the services of independent contractors and consultants, who we believe are readily available for our purposes, in order to manage our personnel costs. We also will continue to maintain a virtual office as long as our operations permit us to do so to contain our office space overhead.
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We require significant additional capital to fund the development of Apps in process that we have developed internally or acquired from third parties during the last year. We also require capital to fund marketing initiatives for our existing products and the launch and marketing of Apps in development. We cannot be sure that the additional capital we require will be available on acceptable terms or at all. If adequate funds are not available on acceptable terms or at all, we may be unable to develop or enhance our services and products, take advantage of future opportunities, repay debt obligations as they become due, or respond to competitive pressures, any of which would have a material adverse effect on our business, prospects, financial condition, and results of operations.
Results of Operations for the Three Months Ended
The following table presents our results of operations for the three
months ended
Three Months Ended
June 30,
2022 2021
Revenue $ $ -
ExpensesSelling, General and Administrative 3,714 3,311 Amortization/Depreciation Expense
- 104
Interest Expense 1,575 232
Outside Services 174 6,923
Professional Fees 3,840 585
Total Expenses 9,303 11,155
Net loss from operations $ 9,303 ) $ (11,155 ) Results of Operations for the Six Months Ended
The following table presents our results of operations for the six
months ended
Six Months Ended
June 30,
2022 2021
Revenue $ - $ -
ExpensesSelling, General and Administrative 7,886 7,074 Amortization/Depreciation Expense
- 207
Interest Expense 3,107 2,530
Outside Services 1,629 13,149
Professional Fees 4,690 835
Total Expenses 17,312 23,795
Net loss from operations $ (17,312 ) $ (23,795 )
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Liquidity and Capital Resources
Liquidity is the ability of a company to generate adequate amounts of cash to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, the availability of credit facilities, levels of accounts receivable and accounts payable and capital expenditures.
As of
Since our inception, we have financed our operations through the sale of equity securities, from third party loans and from revenue generated from operations.
Over the last several years, we have been borrowing cash from
Our primary requirements for liquidity and capital are to fund the development of Esports platform, and the development and acquisition of new Apps and for sales and marketing initiatives in connection with the launch and promotion of our games, as well as for working capital to fund our general corporate needs, including filing reports under the federal securities laws. We work with independent game designers, developers and programmers who provide us with new ideas and titles to publish. We also are soliciting new games and concepts that we may acquire from third parties.
Since our customers pay for their purchases by credit or debit card at the time of sale, neither inventories nor receivables are relevant to our business.
Our cash on hand and cash flow from operations are not sufficient to fund our existing operations or support our desired development and acquisition strategy or required in connection with launching, marketing and promoting our games. Over the last twelve months, we have been using the proceeds from loans to fund our operations. We are seeking to identify meaningful sources of capital to fund the entire range of our operations and development activities, though we cannot provide any assurance that we will identify any such sources of capital. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities or through other financing mechanisms. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital will continue to constrain our operations, including App development and marketing, and restrict our ability to grow. If we are unable to obtain additional financing, we may possibly have to cease our operations.
Cash Flows:
The following table presents summary cash flow information:
For the six For the six
months months
ended ended
June 30, June 30,
2022 2021
Net cash used in operating activities $ (14,205 ) $ (21,057 )
Net cash used in investing activities - -
Net cash provided by financing activities 13,890 21,057
Net increase (decrease) in cash $ (315 ) $ 676
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Contractual Commitments as of
As of
Going Concern
The notes to our financial statements for the quarter ended
The presence of the going concern explanatory paragraph suggests that we may not have sufficient liquidity, or minimum cash levels, to operate our business. Since our inception, we have incurred losses and anticipate that we will continue to incur losses until such time as our Apps generate sufficient revenue to offset our research and development, general and administrative and sales and marketing expenses. We will need to raise additional capital to fund our near-term operational plans described elsewhere in this report. We cannot assure you that we will be successful in our operational plans. We cannot be sure that the additional capital we require will be available on acceptable terms or at all. If adequate funds are not available on acceptable terms or at all, we may be unable to develop or enhance our services and products, take advantage of future opportunities, repay debt obligations as they become due, or respond to competitive pressures, any of which would have a material adverse effect on our business, prospects, financial condition, and results of operations.
Off-Balance Sheet and Other Arrangements
We do not engage in any activities involving variable interest entities or off-balance sheet arrangements.
Inflation
We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we might not be able to fully offset these higher costs through price increases. Our inability or failure to do so could harm our business, operating results and financial condition.
Critical Accounting Policies and Use of Estimates
The discussion and analysis of financial condition and results of
operations are based upon the Company's financial statements, which have been
prepared in accordance with generally accepted accounting principles in
The Company believes that its significant accounting policies affect
its more significant estimates and judgments used in the preparation of its
consolidated financial statements. Our significant accounting policies are
described in Note C to our audited financial statements included in our annual
report on Form 10-K for the period ended
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Recent Accounting Pronouncements
Emerging Growth Company Critical Accounting Policy Disclosure: We qualify as an "emerging growth company" under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.
See Note C to the financial statements furnished with this report for a discussion of recent accounting pronouncements that had a material effect on the financial statements presented herein.
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