FACT, INC. PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. The reader should understand that several factors govern whether any forward-looking statement contained herein will be or can be achieved. Any one of those factors could cause actual results to differ materially from those projected herein. These forward-looking statements include plans and objectives of management for future operations, including plans and objectives relating to the products and the future economic performance of the Company. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, future business decisions, and the time and money required to successfully complete development projects, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of those assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in any of the forward-looking statements contained herein will be realized. Based on actual experience and business development, the Company may alter its marketing, capital expenditure plans or other budgets, which may in turn affect the Company's results of operations. In light of the significant uncertainties inherent in the forward-looking statements included therein, the inclusion of any such statement should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved.
A complete discussion of these uncertainties are contained in our Annual
Financial Statements included in the Form 10-K for the fiscal year ended
Introduction
Tiburon International Trading, Corp ("Tiburon") was established under the laws
of the
Kryptos had been working on a technology designed to detect and eliminate fraud in the art world. Kryptos has assigned all of its technological know-how in this area to the Company which we will pursue as our primary business operations. In connection therewith, the Company has entered into and is negotiating a series of development and consulting agreements with software and hardware developers to complete the development of our products The Company expects to enter into a license agreement to utilize fraud detection technology in the art area. The Company expects to enter into such license agreement with an award winning forensic ballistic technology company that revolutionized the Criminal Justice system's approach to ballistics.
On
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All data is stored securely on the block-chain for real time collection
management. We are currently developing a front-end user interface as well as
modifying existing ballistics firmware for a comprehensive verification,
tracking and reporting system. A workable prototype (the "Prototype") is
expected to be ready during the Company's second quarter ending
We plan to market to various channels in different capacities including, but not
limited to, subscription models, leasing models, and individual point of sale
models. The fees for our different models will range from a flat fee to a
percentage of sales fee. We are hopeful the Company will commence its marketing
efforts in Company's first quarter ending
The following is a discussion of our financial condition, results of operations, financial resources, and working capital. This discussion and analysis should be read in conjunction with our financial statements contained in this Form 10-Q.
OVERVIEW
The Company's sales from continuing operations for the six months ended
GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking third party equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Results of Operations.
Three months ended
The following summary of our operations should be read in conjunction with our unaudited financial statements for the three months endedJuly 31, 2021 and 2020. Three Months Ended July 31, 2021 2020 Change Revenue $ - $ - $ - Operating expenses 267,466 2,160 265,306 Other expenses 749,399 - 749,399 Net loss$ (1,016,865 ) $ (2,160 ) $ (1,014,705 )
During the three months ended
Our financial statements report a net loss of
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Our operating expenses for the three months ended
For the three months ended
Our other expenses for the three months ended
Six months ended
The following summary of our operations should be read in conjunction with our
unaudited financial statements for the six months ended
Six Months Ended
July 31,
2021 2020 Change
Revenue $ - $ - $ -
Operating expenses 727,730 5,807 721,923
Other expenses 748,429 - 748,429Net loss$ (1,476,159 ) $ (5,807 ) $ (1,470,352 )
During the six months ended
Our financial statements report a net loss of
Our operating expenses for the six months ended
For the six months ended
Our other expenses for the six months ended
Liquidity and Capital Resources
The following table provides selected financial data about our company as of
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Working Capital
July 31, January 31,
2021 2021 Change
Cash and cash equivalents $ 279 $ 9,945 $ (9,666 )
Current Assets $ 1,321 $ 12,237 $ (10,916 )
Current Liabilities $ 1,479,316 $ 664,482 $ 814,834
Working Capital (Deficiency)
Stockholders' deficit was
Cash Flows
Six Months Ended
July 31,
2021 2020
Cash used in operating activities
$ (9,666 ) $ 43 Operating Activities
We have not generated positive cash flows from operating activities. For the six
months ended
For the six months ended
Investing Activities
The Company did not use any funds for investing activities during the six months
ended
Financing Activities
For six months ended
For six months ended
Critical Accounting Policies
We believe that several accounting policies are important to understanding our historical and future performance. We refer to these policies as "critical" because these specific areas generally require us to make judgments and estimates about matters that are uncertain at the time we make the estimate, and different estimates-which also would have been reasonable-could have been used, which would have resulted in different financial results.
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Our management's discussion and analysis of financial condition and results of
operations is based on our condensed financial statements, which have been
prepared in accordance with
The notes to our condensed financial statements contained herein contain a summary of our significant accounting policies. We consider the following accounting policies critical to the understanding of the results of our operations:
Convertible Financial Instruments
The Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable GAAP.
When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument.
Derivative financial instruments - Derivative financial instruments are classified as equity if the contracts (1) require physical settlement or net-share settlement, or (2) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). Contracts which (1) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (2) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (3) that contain reset provisions that do not qualify for the scope exception are classified as liabilities. The Company assesses classification of its common stock purchase warrants and derivatives at each reporting date to determine whether a change in classification between equity and liabilities is required.
Beneficial Conversion Feature - The issuance of the convertible debt generated a beneficial conversion feature ("BCF"), which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. The Company recognized the BCF by allocating the intrinsic value of the conversion option, which is the number of shares of common stock available upon conversion multiplied by the difference between the effective conversion price per share and the fair value of common stock per share on the commitment date, resulting in a discount on the convertible debt (recorded as a component of additional paid-in capital). The discount is amortized to interest expense over the term of the convertible debt.
Share-Based Compensation
ASC 718 "Compensation - Stock Compensation," prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
Equity-based payments to non-employees are measured at grant-date fair value of the equity instruments that the Company is obligated to issue when the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. Equity-classified nonemployee share based payment awards are measured at the grant date
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Off- Balance Sheet Arrangements
The Company currently does not have any off-balance sheet arrangements.
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