Certain statements set forth below under this caption constitute forward-looking
statements. See "Forward-Looking Statements" preceding Item 1 of this Annual
Report on Form 10-K for additional factors relating to such statements.
You should read the following discussion and analysis of financial condition and
results of operations in conjunction with the consolidated financial statements
and related notes appearing elsewhere in this Report.
Results of Operations
Material changes in line items in our Statement of Operations for the year ended
December 31, 2020 as compared to the same period last year, are discussed below:
Increase (I) or
Item Decrease (D) Reason
Revenue I Increased revenues from processing and
Cost of revenue D Decrease due to guard services being
Operating expenses D Reduced payroll and operating expenses
as Company streamlined operations
Gain on lease I Increase as lease terminated
Gain on settlement of I Increase as accounts payable settled
Interest expense D Decrease in interim borrowings.
Loss on derivate I Additional convertible loans
Capital Resources and Liquidity
Our material sources and <uses> of cash during the years ended December 31, 2020
and 2019 were:
Cash provided by <used in> operations 463,254 (336,051 )
Purchase of property, plant and equipment (39,470 ) (86,602 )
Loan payments (248,147 ) (181,913 )
Loan proceeds 24,000 633,817
As of December 31, 2019 the Company had closed its Service-Guards segment.
Our material capital commitments over the next five years are as follows:
On October 27, 2016 the Company sold its building located at 5765 Logan Street,
Denver, Colorado to an unrelated third party for $1,400,000. The Company repaid
the mortgage on the building in the amount of $677,681. After the sale, the
Company leased the building from the purchaser of the property. The lease is for
an initial term of ten years, with the Company having the option to extend the
term of the lease for two additional five year periods. The lease requires
rental payments of approximately $10,612 per month which increases 2% annually.
Future minimum lease payments:
2022 and thereafter 2,260
Total minimum lease payments $ 88,712
See Notes 6 and 7 to the financial statements included as part of this report
for information concerning our notes payable.
Other than as disclosed above, we do not anticipate any material capital
requirements for the twelve months ending December 31, 2021.
Other than as disclosed elsewhere in this report, we do not know of any trends,
demands, commitments, events or uncertainties that will result in, or that are
reasonable likely to result in, our liquidity increasing or decreasing in any
Other than as disclosed in this Item 7, we do not know of any significant
changes in our expected sources and uses of cash.
We do not have any commitments or arrangements from any person to provide us
with any equity capital. During the next 12 months, we anticipate that we will
incur approximately $1,835,000 of general and administrative expenses in order
to execute our current business plan. We also plan to incur sales, marketing,
research and development expenses during the next 12 months. We must obtain
additional financing to continue our operations. We may not be able to obtain
additional funding on terms that are favorable to us or at all. We may not be
able to obtain sufficient funding to continue our operations, or if we do
receive funding, to generate adequate revenues in the future or to operate
profitably in the future. These conditions raise substantial doubt about our
ability to continue as a going concern.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements.
Critical Accounting Policies
Management considers the following policies critical because they are both
important to the portrayal of our financial condition and operating results, and
they require management to make judgments and estimates about inherently
Accounts receivable. Accounts receivable are stated at the amount we expect to
collect from outstanding balances and do not bear interest. We provide for
probable uncollectible amounts through an allowance for doubtful accounts, if an
allowance is deemed necessary. The allowance for doubtful accounts is our best
estimate of the amount of probable credit losses in our existing accounts
receivable; however, changes in circumstances relating to accounts receivable
may result in a requirement for additional allowances in the future. On a
periodic basis, management evaluates its accounts receivable and determines the
requirement for an allowance for doubtful accounts based on its assessment of
the current and collectible status of individual accounts with past due balances
over 90 days. Account balances are charged against the allowance after all
collection efforts have been exhausted and the potential for recovery is
Revenue recognition. As all of our Revenue is generated from services offerings,
Revenue recognition is the same for each of our revenue streams. We recognize
revenue when all of the following conditions are satisfied: (1) there is
persuasive evidence of an arrangement; (2) the service has been provided to the
customer; (3) the amount of fees to be paid by the customer is fixed or
determinable; and (4) the collection of its fees is reasonably assured.
Stock-based compensation. The Company records stock based compensation in
accordance with the guidance in ASC Topic 505 and 718, which requires the
Company to recognize expenses related to the fair value of our employee stock
option awards. This eliminates accounting for share-based compensation
transactions using the intrinsic value and requires instead that such
transactions be accounted for using a fair-value-based method. We recognize the
cost of all share-based awards on a graded vesting basis over the vesting period
of the award.
The Company accounts for equity instruments issued in exchange for the receipt
of goods or services from other than employees in accordance with FASB ASC
718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at
the estimated fair market value of the consideration received or the estimated
fair value of the equity instruments issued, whichever is more reliably
measureable. The value of equity instruments issued for consideration other than
employee services is determined on the earliest of a performance commitment or
completion of performance by the provider of goods or services as defined by
FASB ASC 505-50.
Significant Accounting Policies
See Note 2 to the financial statements included as part of this report for a
description of our significant accounting policies.
Recent Accounting Pronouncements
From time to time, the FASB or other standards setting bodies issue new
accounting pronouncements. Updates to the FASB ASCs are communicated through
issuance of an Accounting Standards Update ("ASU"). Unless otherwise discussed,
we believe that the impact of recently issued guidance, whether adopted or to be
adopted in the future, is not expected to have a material impact on our
consolidated financial statements upon adoption.
To understand the impact of recently issued guidance, whether adopted or to be
adopted, please review the information provided in Note 2 - Summary of
Significant Accounting Policies to our consolidated financial statements
included as part of this Report.
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