The following discussion and analysis should be read in conjunction with the
audited Financial Statements and accompanying notes thereto included in the
Company's Annual Report on Form 10-K as of and for the fiscal year ended
December 31, 2020. Unless otherwise noted, all the financial information in
this Report is financial information for the Company.
General
The Company is engaged in the sale of 3D haptics products and equipment. Haptics
refers to one's sense of touch. The Company's focus is in the consumer
interactive computer gaming market, but the Company also does project work in
other areas. The Company sells its haptics products primarily to consumers
through online retail marketplaces.
Results of Operations for the Three Months Ended September 30, 2021 and 2020
Revenues
Three months ended June 30,
2021 2020 Change
Revenue $ 913 $ - $ 913The Company recorded revenue of $913 and $0 for the three-month period ended
September 30, 2021 and June 30, 2020. The Company generated revenue from the
sales of Falcon 3D Touch Haptic Controller. The Company expects to continue to
incur significant expenses and operating losses for the foreseeable future. The
Company's net losses may fluctuate significantly from quarter to quarter and
year to year.
Operating Expenses
Three months ended September 30,
2021 2020 Change
Operating Expenses $ 28,074 $ 51,498 $ (23,424)
Operating expenses decreased by $23,424 or 45% to $28,074 for the three months
ended September 30, 2021, from $51,498 for the three months ended September 30,
2020. This decrease was primarily due to a decrease in professional and legal
fees during the three months ended September 30, 2021.
Other Expense
Three months ended September 30,
2021 2020 Change
Other Expense $ 50 $ 58 $ (8)Other expense decreased by $8 or 14% to $50 during the three months ended
September 30, 2021 compared with $58 during the three months ended September 30,
2020. Other expense for the three months ended September 30, 2021 consisted of
interest expense related to finance charges on credit cards.
Results of Operations for the Nine Months Ended September 30, 2021 and 2020
Revenues
Nine months ended September 30,
2021 2020 Change
Revenue $ 2,568 $ 1,000 $ 1,568The Company recorded revenue of $2,568 and $1,000 for the nine-month period
ended September 30, 2021 and September 30, 2020. The Company generated revenue
from the sales of Falcon 3D Touch Haptic Controller. The Company expects to
continue to incur significant expenses and operating losses for the foreseeable
future. The Company's net losses may fluctuate significantly from quarter to
quarter and year to year.
Operating Expenses
Nine months ended September 30,
2021 2020 Change
Operating Expenses $ 114,486 $ 134,296 $ (19,810)Operating expenses decreased by $19,810 or 15% to $114,486 for the nine months
ended September 30, 2021, from $134,296 for the nine months ended September 30,
2020. This decrease was primarily due to a decrease in professional and legal
fees during the three months ended September 30, 2021.
Other Expense
Nine months ended September 30,
2021 2020 Change
Other Expense $ 155 $ 224 $ (68)Other expense decreased by $69 or 31% to $155 during the nine months ended
September 30, 2021 compared with $224 during the nine months ended September 30,
2020. Other expense for the nine months ended September 30, 2021 consisted of
interest expense related to finance charges on credit cards.
10
Liquidity and Capital Resources
The following table summarizes select balance sheet and working capital amounts
as of September 30, 2021 and December 31, 2020:
As of As of
September 30, December 31, Change
2021 2020 Increase (Decrease)
Cash $ 229,022 $ 322,032 $ (93,010 )
Working capital deficit $ 486,670 $ 374,597 $ 112,073
At September 30, 2021, the Company had a working capital deficit of
approximately $486,670. Accumulated deficit amounted to $41,566,194 and
$41,454,121 at September 30, 2021 and December 31, 2020, respectively. Net loss
for the nine months ended September 30, 2021 and 2020 was $112,073 and $133,520,
respectively. Net cash used in operating activities was $93,010 and $94,793 for
the nine months ended September 30, 2021 and 2020, respectively. Operations
since inception have been funded primarily with the proceeds from equity and
debt offerings. As of September 30, 2021, the Company had cash of $229,022 .
The Company's management has evaluated whether there is substantial doubt about
the Company's ability to continue as a going concern and has determined that
substantial doubt existed as of the date of this filing. This determination was
based on the following factors: (i) the Company's available cash as of the date
of this filing will not be sufficient to fund its anticipated level of
operations for the next 12 months; (ii) the Company has incurred recurring
losses and at September 30, 2021, had an accumulated deficit of $41,566,194;
(iii) the Company sustained an operating loss of $112,073 for the period ended
September 30, 2021; and (iv) if the Company fails to obtain the needed capital,
it will be forced to delay, scale back, or eliminate some or all of its programs
or perhaps cease operations. In the opinion of management, these factors, among
others, raise substantial doubt about the ability of the Company to continue as
a going concern.
There is no assurance that the Company will be successful in any capital-raising
efforts that it may undertake to fund operations during 2021. The Company
anticipates that it will continue to issue equity and/or debt securities as a
source of liquidity, until it begins to generate positive cash flow to support
its operations. Any future sales of securities to finance operations will dilute
existing stockholders' ownership. The Company cannot guarantee when or if it
will generate positive cash flow.
The audit report prepared by our independent registered public accounting firm
relating to the Company's consolidated financial statements for the year ended
December 31, 2020 included an explanatory paragraph expressing substantial doubt
about our ability to continue as a going concern.
Cash Flow Activities
The following table summarizes the Company's cash flows for the periods set
forth below:
Nine months ended September 30,
2021 2020 Change
Net cash used in operating activities $ 93,010 $ 94,793 $ (1,783 )
Net cash used in operating activities for the nine months ended September 30,
2021 was $93,010 compared with net cash used in operating activities of $94,793
for the nine months ended September 30, 2020. The decrease in net cash used in
operating activities during the nine months ended September 30, 2021 was
primarily due to a decrease in net loss to $112,073, partially offset by a
decrease of $18,000 in accounts payable and accrued expenses and decrease in
prepaid expenses of $1,072.
Net cash used in operating activities for the nine months ended September 30,
2020 was $94,793, representing a net loss of $133,520 partially offset by an
increase of $42,744 in accounts payable and accrued expenses.
Effects of Inflation
We do not believe that inflation has had a material impact on our business,
sales, or operating results during the periods presented.
Off-Balance Sheet Arrangements
We currently do not have any off-balance sheet arrangements or financing
activities with special-purpose entities.
Critical Accounting Policies and Use of Estimates
Critical accounting policies are those policies which are both important to the
presentation of a company's financial condition and results and require
management's most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain. There have been no recent significant changes to our accounting
policies and use of estimates during the nine months ended September 30, 2021.
For a further discussion of our critical accounting policies, see our Annual
Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the
SEC on March 24, 2021.
Forward Looking Statements and Certain Factors That May Affect Future Results of
Operations
The Securities and Exchange Commission encourages companies to disclose
forward-looking information so that investors can better understand a company's
future prospects and make informed investment decisions. This Quarterly Report
on Form 10-Q contains such "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995.All statements in this
report, other than statements of historical fact, are forward-looking statements
for purposes of these provisions, including any projections of earnings,
revenues or other financial items, any statements of the plans and objectives of
management for future operations, any statements concerning proposed new
products or services, any statements regarding future economic conditions or
performance, and any statements of assumptions underlying any of the foregoing.
All forward-looking statements included in this report are made as of the date
hereof and are based on information available to us as of such date. We assume
no obligation to update any forward-looking statement. In some cases,
forward-looking statements can be identified by the use of terminology such as
"may," "will," "expects," "plans," "anticipates," "intends," "believes,"
"estimates," "potential," or "continue," or the negative thereof or other
comparable terminology. Although we believe that the expectations reflected in
the forward-looking statements contained herein are based upon reasonable
assumptions at the time made, there can be no assurance that any such
expectations or any forward-looking statement will prove to be correct. Our
actual results will vary, and may vary materially, from those projected or
assumed in the forward-looking statements. Future financial condition and
results of operations, as well as any forward-looking statements, are subject to
inherent risks and uncertainties, many of which we cannot predict with accuracy
and some of which we might not anticipate, including, without limitation,
product recalls and product liability claims; infringement of our technology or
assertion that our technology infringes the rights of other parties; termination
of supplier relationships, or failure of suppliers to perform; inability to
successfully manage growth; delays in obtaining regulatory approvals or the
failure to maintain such approvals; concentration of our revenue among a few
customers, products or procedures; development of new products and technology
that could render our products obsolete; market acceptance of new products;
introduction of products in a timely fashion; price and product competition,
availability of labor and materials, cost increases, and fluctuations in and
obsolescence of inventory; volatility of the market price of our common stock;
foreign currency fluctuations; changes in key personnel; work stoppage or
transportation risks; integration of business acquisitions; and other factors
referred to in our reports filed with the SEC, including our Registration
Statement on Form 10. All subsequent forward-looking statements attributable to
us or persons acting on our behalf are expressly qualified in their entirety by
these cautionary statements. Additional factors that may have a direct bearing
on our operating results are discussed in Item 1A "Risk Factors" in our
Registration Statement on Form 10. In light of these assumptions, risks and
uncertainties, the results and events discussed in the forward-looking
statements contained in this Quarterly Report or in any document incorporated by
reference might not occur. Stockholders are cautioned not to place undue
reliance on the forward-looking statements, which speak only as of the date of
this Quarterly Report. We are not under any obligation, and we expressly
disclaim any obligation, to update or alter any forward-looking statements,
whether as a result of new information, future events or otherwise. All
subsequent forward-looking statements attributable to us or to any person acting
on our behalf are expressly qualified in their entirety by the cautionary
statements contained or referred to in this section.
11
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