The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes to those financial statements that are included elsewhere in this report and in conjunction with the audited financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 29, 2022. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Cautionary Statement Regarding Forward-Looking Statements and Business sections in the audited financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2021.





Background and Overview

Webstar Technology Group, Inc. (the "Company") was incorporated in Wyoming on March 10, 2015. The Company was established for the operation of certain licensed and purchased software solutions. Since inception, the Company signed two letters of intent with a related party to license proprietary software technology solutions, i.e., Gigabyte Slayer and WARP-G. The Company has been focused in large part on organizational activities and the development of its business plans to license the Gigabyte Slayer software application that is designed to deliver live video streams, video downloads and large data files more efficiently by using new proprietary data compression technology and to license the WARP-G software solution that is designed to enable enterprise customers that transmit live video streams, video downloads and large data files to push such data over existing pipelines at higher speeds in less time also by using new proprietary data compression technology. The Company completed the license of Gigabyte Slayer and WARP-G software on April 21, 2020. In 2022, the Company is taking a three-pronged approach to commercialize its business: 1) sub-license the Gigabyte Slayer and WARP-G software; 2) acquire rights to additional technology; 3) sell the right to sublicense the software.





COVID-19

While the Company's operations have not been materially affected by the COVID-19 outbreak to date, the ultimate duration and severity of the outbreak and its impact on the economic environment and business is uncertain. Accordingly, while the Company does not anticipate an impact on its operations, the duration of the pandemic and potential impact on the business cannot be estimated. The spread of the coronavirus, which has caused a broad impact globally, including restrictions on travel and quarantine policies put into place by businesses and governments, may have a material economic effect on our business. While the potential economic impact brought on by and the duration of the pandemic may be difficult to assess or predict, it has already caused, and is likely to result in further, significant disruptions of global financial markets, which may reduce the Company's future ability to access capital either at all or on favorable terms. In addition, a recession, depression or other sustained adverse market events resulting from the spread of the coronavirus could materially and adversely affect our business and the value of our common stock. In addition, a severe or prolonged economic downturn could result in a variety of risks to the business, including a possible delay in implementing our business plan. At this time, the Company is unable to estimate the impact of this event on its operations.





Recent Developments

On April 30, 2022, in accordance with their agreements, two of the Company's directors, Dr. Ron Landmann and Kevin Harrington, terms expired. Their replacements have not been named as of the date of this report.

Settlement Agreement to Compromise Debt

On June 3, 2022, the Company entered into a Settlement Agreement with James Owens, its Chairman and Chief Technology Officer to settle the $1,631,283 debt owed to Mr. Owens (comprised of $756,450 Due to Shareholder and $874,833 accrued salary and related expense on the Company's Balance Sheet) in exchange for a Convertible Promissory Note in the amount of $1,101,000. Additionally, Mr. Owens agreed to reduce the salary on his employment contract, effective immediately, to $1.00 per year.





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On June 3,2022, the Company issued Mr. Owens a Convertible Promissory Note in the amount of $1,101,000 in accordance with the Settlement Agreement. The maturity date of the note is twenty-four months from the date of issue. The conversion provision states that the note may be converted into Common Stock of the Company at any time beginning three days after issuance of the note and ending on the maturity date, at a conversion rate of $0.01 per share. The note bears interest at the rate of 8 percent per annum.

Cancelation of Stock Option Grant

On June 3, 2022, the Company's Board of Directors canceled the Stock Option Grant granted to the Company's CFO on December 9, 2022.

Restated Certificate of Designations of Preferences and Rights of Series A Preferred Stock

On June 14, 2022, the Company amended its Certificate of Designations for Series A Preferred Stock originally submitted on December 14, 2019.

The Restated Certificate of Designations removes the prohibition of sale and transferability of the Series A Preferred Stock.

2nd Amended and Restated Technology Marketing and License Agreement

On July 15, 2022, the Company amended its technology marketing and license agreement with Soft Tech Development Corp. The material changes to the existing agreement are as follows:





Change Item 1., License

- to make the license exclusive

- to grant the Company a Right-of-First Refusal to acquire future exclusive marketing license for new technologies

- to remove Company's option to broker and split proceeds on sale of Soft Tech's technology

Change Item 12, Termination

-to give Licensor (Soft Tech) right to terminate the agreement upon:

- change in executive management of Company

- sale of majority interest in Company to 3rd party

- there is a Change of Control in the Company





Plan of Operations



Marketing the Products

Management has decided that the fastest way to get the Company's technologies to market is to not bear the burden ourselves. Numerous third parties already have the requisite infrastructure in place and there is no need for the Company to re-build those elements. Additionally, the third parties we seek to align ourselves with, are better positioned to handle the retail, business and governmental marketing sectors worldwide. They will be experienced, globally well-known entities with everything already in place for a quick launch/utilization of the Company's technology.

There are three main paths that the Company is pursuing: 1) Licensing the technology to third parties; 2) Selling the technology via Permanent License to a third-party; 3) Acquisition of the Company by a third party via a change of control of the Company; all of which would generate up-front and residual revenues for the Company.

Gigabyte Slayer Software

Gigabyte Slayer is a distinct mobile application created to enable users to transmit more data over existing data streams to optimize data usage across mobile devices including smartphones and tablets. The application is designed to eliminate video streaming delays and reduce customers' data plan bandwidth usage from any 3G or 4G LTE cell phone network provider. The application is designed to deliver live video streams, video downloads and large data files more efficiently by using new proprietary data compression technology. This technology significantly reduces the data package size and enhances the data traffic control between cell phone provider data downloads and uploads to customers' mobile devices.

Web browsers perform various levels of caching data, the practice of storing data in and retrieving data from a memory device. Unfortunately, many use unsophisticated cache control capabilities. In comparison, Gigabyte Slayer data compression is capable of optimizing the high bandwidth downloads and returns the data to users' mobile devices. This process is expected to dramatically reduce the data bandwidth needed when watching online videos, playing online games, or simply downloading large data files. The service is targeted to enter the mobile device market by offering application downloads with a monthly service fee. A smartphone and tablet user utilizing the Gigabyte Slayer application is expected to be able to decrease their data usage on their current data plan, at no additional cost, from their cell phone provider. Further, Gigabyte Slayer is designed to eliminate downloads "buffering" currently experienced by many current applications.





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WARP-G Software

WARP-G is a business-to-business software solution that companies can use on an enterprise wide basis to transmit more data over existing data streams to optimize their data usage. The software is designed to enable enterprise users to deliver faster data streams, experience shorter download/upload times and increase the volume and speed of the data. The software is designed to create less congestion and increase the speed of packets being delivered more efficiently by using new proprietary data compression technology. This technology is expected to allow the enterprise users to push more data through existing pipelines meeting increasing consumer video demands and other large files.


Results of Operations for the three and six months ended June 30, 2022 and 2021




Revenue

Revenue was $0 for the three and six-month periods ended June 30, 2022 and 2021. In January 2021, the Company lost its only customer for the eCampus software thereby causing the drop in revenue. Cost of sales was $0 for the three and six months ended June 30, 2022 and 2021. Gross profit was $0 for the three and six months ended June 30, 2022 and 2021. The cost of sales and gross profit declines were also due to the loss of the eCampus customer.





Operating Expenses

Total operating expenses which are comprised of salaries and related expenses, and general and administrative expenses were $16,344,196 and $316,243 for the three months ended June 30, 2022 and 2021, respectively, and $16,674,060 and $626,273 for the six months ended June 30, 2022 and 2021, respectively. The increases are primarily attributable to the settlement agreement with Mr. Owens which resulted in a significant loss on extinguishment of liabilities and compensation expense, increases in stock exchange fees, and audit fees partially offset by decreases in internet cable fees, insurance, and repairs and maintenance.





Net Loss

The net loss was $30,247,045 and $316,243 for the three months ended June 30, 2022 and 2021, respectively, and $30,576,909 and $626,273 for the six months ended June 30, 2022 and 2021, respectively. The increases are primarily attributable to the settlement agreement with Mr. Owens which resulted in a significant loss on extinguishment of liabilities and compensation expense and increases in exchange fees, audit fees, and interest expense partially offset by decreases in internet cable fees, insurance, and repairs and maintenance.





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Liquidity, Going Concern and Uncertainties

Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. As of June 30, 2022, our working capital deficit amounted to $2,099,604 a decrease of $1,022,517 as compared to working capital deficit of $3,122,121 as of December 31, 2021. This decrease in working capital deficit is primarily a result of the decrease in accrued salaries and related expenses related to the amending of Mr. Owens' employment agreement and decreases in accounts payable and amounts due to stockholder and an increase in prepaid expenses and partially offset by an increase in accrued interest.

Net cash used in operating activities was $111,660 during the six months ended June 30, 2022 compared to $69,893 for the six months ended June 30, 2021. The increase in cash used in operating activities was primarily attributable to decreases in accounts payable and accrued salaries and related expenses, and an increase in prepaid expenses and accrued interest.

Net cash provided by financing activities was $111,815 during the six months ended June 30, 2022 compared to $68,642 in the six months ended June 30, 2021. The increase in cash from financing activities was the result of an increase in cash advances received from our controlling stockholder.

The unaudited condensed financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. To date, the Company's commercial operations have not generated adequate revenues to enable profitability. Based on the current business plans and the Company's operating requirements, management believes that the current cash balance will not be sufficient to fund operations for at least the next twelve months following the issuance of these financial statements. These factors raise substantial doubt regarding the Company's ability to continue as a going concern.

The Company's continued operations will depend on its ability to raise additional capital through various potential sources, such as equity offerings and/or debt financings, strategic relationships, and to successfully execute its business plans. Management is actively pursuing financing, but can provide no assurances that such financing will be available on acceptable terms, or at all. Without this funding, the Company could be required to delay, scale back or eliminate some or all of its business plans which would likely have a material adverse effect on the Company.

The unaudited condensed financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

Generally, the Company's operations are subject to a number of factors that can affect its operating result and financial condition. Such factors include, but are not limited to, the results of our marketing efforts to promote users for our software solutions, successful launch and acceptance of our software solutions in the marketplace, competition of our software solutions, attraction of talented and skilled employees to support the business and the ability to raise capital to support its operations.

Since our inception, we have been funded by loans from our controlling shareholder, James Owens. The loans from Mr. Owens are pursuant to an oral agreement, are non-interest bearing and payable upon demand by Mr. Owens. Mr. Owens has orally agreed not to demand repayment of his loans until such time as we have sufficient capital resources to repay such loans. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. There can be no assurance that additional capital will be available to us. Since we have no other such arrangements or plans currently in effect, our inability to raise funds for the above purposes that exceed our current working capital will have a severe negative impact on our ability to remain a viable company.




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We have incurred significant losses since our inception on March 10, 2015. We had a net loss for the six-month period ended June 30, 2022 of $30,576,909 and an accumulated deficit as of June 30, 2022 of $41,778,985. In the event we are unable to secure a line of credit from a related company, we will continue to seek sub-license agreements for our Gigabyte Slayer and WARP-G products but delay, scale back or eliminate some or all of our additional business plans until we raise additional capital. Since we have no agreement or arrangements for any future funding from Mr. Owens, we are unable to determine how long we will be able to operate our business. This raises substantial doubt about our ability to continue as a going concern.

Management's plan is to obtain such resources for our capital needs by obtaining capital from management and significant shareholders sufficient to meet its operating expenses. However, management cannot provide any assurances that we will be successful in accomplishing any of our plans.

Our ability to continue as a going concern is dependent upon our ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if we were unable to continue as a going concern.

Critical Accounting Policies and Estimates

Our significant accounting policies are more fully described in the notes to our unaudited condensed financial statements included herein for the six month period ended June 30, 2022 and in the notes to our annual report 10-K which includes audited financial statements for the years ended December 31, 2021 and 2020. We believe that the accounting policies below are critical for one to fully understand and evaluate our financial condition and results of operations.





Use of Estimates

The preparation of the unaudited condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Certain of our estimates, including evaluating the collectability of accounts receivable, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. We re-evaluate all of our accounting estimates at least quarterly based on these conditions and record adjustments when necessary. Significant estimates made by management include the valuation of deferred tax assets and fair value of preferred stock.





Revenue Recognition

The Company recognizes revenue when control of the promised goods or services are transferred to its customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. For student fees, the Company generates student fee revenue by registering each student that participates in an on-line classroom utilizing our eCampus platform. This revenue is earned at the time the on-line class takes place and is accrued during the period whether or not actually billed. The student fees are billed to the college conducting the classes during the period the classes are conducted. There are no prepayments for student fees so there is no deferred revenue related to student fees. The annual fee charged to the college is billed in the first quarter of the year and the income is recognized over the entire year.

The Company lost its only customer in January 2021 due to circumstances at the customer level. The Company will maintain its eCampus platform for future customers and the Company's revenue policies and procedures described above remain unchanged.

The Company recognized no revenue from student and annual fees during the three and six month periods ended June 30, 2022 and 2021.




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Leases

The Company accounts for leases under ASU 2016-02. Operating leases are included in operating lease right-of-use ("ROU") assets and operating lease liabilities on the condensed balance sheets. The Company leases office equipment used to conduct our business.

Operating lease ROU assets represent the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Operating lease expense is recognized on a straight-line basis over the lease term and is included in general and administrative expenses in the unaudited condensed statements of operations. During the three and six months ended June 30, 2022, the Company recorded $438 and $876, respectively, and $438 and $876, respectively, for the three and six months ended June 30, 2021 as operating lease expense which is included in general and administrative expenses on the unaudited condensed statements of operations. As of June 30, 2022 and December 31, 2021, the unamortized right-of-use assets resulting from the lease was $3,117 and $3,858, respectively, and the lease liabilities were $3,174 and $3,931, respectively.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

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