Our management's discussion and analysis provides a narrative about our
financial performance and condition that should be read in conjunction with the
audited consolidated financial statements and related notes thereto included in
this annual report. This discussion contains forward looking statements
reflecting our current expectations and estimates and assumptions about events
and trends that may affect our future operating results or financial position.
Our actual results and the timing of certain events could differ materially from
those discussed in these forward-looking statements due to a number of factors,
including, but not limited to, those set forth in the sections of this annual
report titled "Risk Factors" and "Forward-Looking Statements".
Overview
We were incorporated under the laws of the State of Nevada on July 20, 2010.
Following incorporation, we commenced the business of representing authors to
publishers.
Our business is a services and development business that provides a turnkey set
of services for companies to develop and integrate blockchain and payment
technologies into their business operations. We anticipate that we will enable
companies to focus on their core competencies while providing the necessary
resources and expertise to execute a strategy that will enable companies to
integrate new blockchain plus payment technologies into their business
operations. Our plan is to be compensated on a fee-for-services model,
technology licensing model and reoccurring transactions revenue model. We may
accept tokens, coins or equity in payment for our services, to the extent
permitted under applicable law.
Results of Operations
Revenue
We recognized revenues of $250,000 from consulting services for the year ended
December 31, 2019 compared to $0 in 2018.
Operating Expenses
We incurred operating expenses of $2,187,114 and $3,980,160 for the years ended
December 31, 2019 and 2018, respectively, representing a decrease of $1,793,046
between the two periods. These expenses consisted primarily of consulting fees,
service costs, professional fees, stock-based compensation, interest and bank
charges, and other general and administrative expenses. The decrease in
operating expenses between the two periods related to an decrease in consulting
expenses from $1,449,681 in 2018 to $656,737 in 2019 due to our company amending
consulting agreement with Business Instincts Group Inc. and other individuals to
provide strategic and project management services, a decrease in service costs
from $675,633 in 2018 to a credit of $58,454 in 2019 due to the impairment
related to Ryde, and a decrease in other general and administrative expenses
from $1,390,489 in 2018 to $1,378,834 in 2019 as travel costs and advertising
expenses have decreased due to lowered activity in 2019.
Net Loss from Operations
We incurred net losses from operations of $1,937,114 and $3,980,160 for the
years ended December 31, 2019 and 2018, respectively, representing a decrease of
$2,043,046 primarily attributable to the factors discussed above under the
heading "Operating Expenses".
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Other Income (Expense)
Other income includes $56,096 of interest earned for the year ended December 31,
2019 on a loan receivable to a related party compared to $30,864 for the period
ended December 31, 2018. Other expenses include interest expense on convertible
notes payable of $113,413 compared to $70,558 interest expense for the same
period last year. There was also bad debt expense of $110,000 and an impairment
of $2,783,834 for the year ended December 31, 2019.
The loan receivable of $1,250,000, plus accrued interest of $86,762, was
impaired as the loan matured at the end of Q3 and there were concerns about
collectability. Efforts to pursue the receivable amounts will continue.
Liquidity and Capital Resources
Working Capital
As at As at
December 31, 2019 December 31, 2018
Current Assets $ 42,886 $ 3,170,861
Current Liabilities 1,844,693 286,457
Working Capital (Deficit) $ (1,801,807 ) $ 2,884,404
Current Assets
Current assets of $42,886 as at December 31, 2019 and $3,170,861 as at December
31, 2018 were comprised of only cash and cash equivalents, accounts receivable,
prepaid expenses, an outstanding loan receivable, deferred service costs and our
capitalized service costs. The decrease in current assets as at December 31,
2019 is due to our company impairing the matured loan and accrued interest of
$1,280,666 and the write down of deferred service costs of $874,838 were
impaired as the path to bringing these clients to a revenue generating position
is no longer likely. Cash and cash equivalents also decreased by $896,873 as it
was used for operating costs in the year.
Current Liabilities
Current liabilities as at December 31, 2019 were attributable to $264,808 in
accounts payable, $41,307 in accounts payable, related party, $534,840 in loans
payable, related party and $1,003,738 in convertible notes and accrued interest
due within the year compared to $239,026 in accounts payable and accrued
expenses and $47,431 in accounts payable, related party as at December 31, 2018.
Cash Flow
Our cash flows for the year ended December 31, 2019 and December 31, 2018 are as
follows:
Year ended Year ended
December 31, 2019 December 31, 2018
Net cash (used in) operating activities $ (2,292,337 ) $ (4,074,305 )
Net cash (used in) investing activities
- (1,150,000 )
Net cash provided by financing activities 1,395,890 5,907,454
Net changes in cash and cash equivalents $ (896,873 ) $ 683,149
Operating Activities
Net cash used in operating activities was $2,292,337 for the year ended December
31, 2019, as compared to $4,074,305 for the year ended December 31, 2018, a
decrease of $1,781,968. The decrease in net cash used in operating activities
was primarily due to impairment of the deferred service costs and the loan
receivable.
Investing Activities
Net cash used in investing activities was $nil for the year ended December 31,
2019, as compared to $1,150,000 from the loan to Wenn Digital Inc. for the year
ended December 31, 2018.
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Financing Activities
Financing activities provided cash of $1,395,890 for the year ended December 31,
2019 and $5,907,454 for the year ended December 31, 2018. In 2019, sBetOne
issued $575,000 of convertible debentures, net proceeds of $294,550 were raised
in a private placement, and $526,340 was raised from issuance of loans payable.
On June 1, 2018, we issued an aggregate of 9,274,524 shares of common stock for
total consideration of $5,468,195 and paid offering costs of $235,206. On
November 27, 2018, we issued an aggregate of 674,950 share of common stock for
total consideration of $674,950 and paid offering costs of $18,485.
Cash Requirements
We expect that we will require $780,000, including our current working capital,
to fund our operating expenditures for the next twelve months. Projected working
capital requirements for the next twelve months are as follows:
Estimated Working Capital Expenditures During the Next Twelve Months
General and administrative expenses $ 780,000
Total $ 780,000Our estimated general and administrative expenses for the next 12 months are
$780,000 and are comprised of: consulting fees, accounting services, board of
directors and our advisory board, investor relations consultants, and to our
public relations and marketing consultants; legal and professional fees
(including auditing fees); for insurance; marketing and advertising expenses;
trade shows; travel expenses; office rent and miscellaneous and office expenses.
We will require additional cash resources to meet our planned capital
expenditures and working capital requirements for the next 12 months. We expect
to derive such cash through the sale of equity or debt securities or by
obtaining a credit facility. The sale of additional equity securities will
result in dilution to our stockholders. The incurrence of indebtedness will
result in debt service obligations, could cause additional dilution to our
stockholders, and could require us to agree to financial covenants that could
restrict our operations or modify our plans to source a new business
opportunity. Financing may not be available in amounts or on terms acceptable to
us, if at all. Failure to raise additional funds could cause our company to
fail.
Going Concern
Our consolidated financial statements are prepared using generally accepted
accounting principles in the United States of America applicable to a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. We have not yet established a
source of revenues sufficient to cover our operating costs and to allow us to
continue as a going concern. We have incurred losses since inception resulting
in an accumulated deficit of $9,310,776 as at December 31, 2019 (December 31,
2018: $4,712,862). Our ability to operate as a going concern is dependent on
obtaining adequate capital to fund operating losses until we become profitable.
In its report on our financial statements for the years ended December 31, 2019
and 2018, our independent registered public accounting firm included an
explanatory paragraph regarding substantial doubt about our ability to continue
as a going concern. Our consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Off-Balance Sheet Arrangements
We have no 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.
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