RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our audited combined
financial statements and the related notes that appear under Item 8 in this
Annual Report on Form 10-K. The following discussion contains forward-looking
statements that reflect our plans, estimates and beliefs. The Company's actual
results could differ materially from those discussed in the forward-looking
statements. Factors that could cause or contribute to such differences include,
but are not limited to those discussed below and elsewhere in this Annual Report
on Form 10-K. The combined financial statements are stated in United States
Dollars and are prepared in accordance with United States Generally Accepted
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Fiscal Year Ended February 28, 2021 Compared to Fiscal Year Ended February 29,
Revenue. We generated revenues of $79,520 for the fiscal year ended February 28,
2021, as compared to $46,875 for the fiscal year ended February 29, 2020.
Operating expenses: During fiscal year ended February 28, 2021, we incurred
operating expenses in the amount of $1,466,666 compared to operating expenses
incurred during fiscal year ended February 29, 2020 of $2,803,710 (a decrease of
$1,337,044). Operating expenses include: (i) general and administrative of
$464,027 (2020: $930,558); and (ii) research and development of $1,002,639
(2020: $1,873,152). General and administrative expenses decreased by $466,531,
primarily due to decrease in stock-based compensation. Research and development
expenses decreased by $870,513 due primarily to decrease in stock-based
Net loss. The Company had a net loss of $1,475,030 or $0.76 per share for the
fiscal year ended February 28, 2021 compared to $2,805,835 or $1.61 per share
for the fiscal year ended February 29, 2020.
LIQUIDITY AND CAPITAL RESOURCES
Fiscal Year Ended February 28, 2021
As at fiscal year ended February 28, 2021, our current assets were $16,372 and
our current liabilities were $4,371,772, which resulted in a working capital
deficit of $4,355,400. As of the fiscal year ended February 28, 2021, current
assets were comprised of: (i) $1,251 in cash; and (ii) $7,380 in accounts
receivables and $7,741 in prepaid expenses and deposits. As at fiscal year ended
February 28, 2021, current liabilities were comprised of: (i) $282,760 in
accounts payable and accrued liabilities; (ii) $3,143,792 in loans payable; and
(iii) $945,220 due to related parties.
As of the fiscal year ended February 28, 2021, our total assets were $31,784
comprised of: (i) current assets of $16,372; and (ii) property and equipment,
net of depreciation of $15,412. The decrease in total assets during fiscal year
ended February 28, 2021 from fiscal year ended February 29, 2020 was due to
decreases in cash, accounts receivable and operating lease right-of-use asset.
As of February 28, 2021, our total liabilities were $4,371,772 comprised of
accounts payable and accrued liabilities of $282,760, loans payable of
$3,143,792 and due to related party of $945,220.
Stockholders' deficit increased from $3,357,941 for fiscal year ended February
29, 2020 to $4,339,988 for fiscal year ended February 28, 2021.
Cash Flows from Operating Activities
We have generated negative cash flows from operating activities. For fiscal year
ended February 28, 2021, net cash flows used in operating activities was
$424,846 compared to $778,910 for fiscal year ended February 29, 2020. Net cash
flows used by operating activities consisted primarily of the net loss of
$1,475,030 (2020: $2,805,835), which was partially adjusted by $578,978 (2020:
$1,666,647) in stock-based compensation, $66,368 (2020: $nil) in financing
costs, $38,148 (2020: $181,808) in shares issued for services, $21,516 (2020:
$49,000) in loss on settlement of debt, and $5,332 (2020: $7,629) in
depreciation. Net cash flows used by operating activities was further changed
by: (i) an increase of $7,380 (2020: $nil) in account receivable; a decrease of
$16,875 (2020: ($16,875)) in accrued receivable; (ii) an increase of $10,571
(2020: $146) in prepaid expenses and deposits; (iii) an increase of $15,377
(2020: $46,083) in accounts payable and accrued liabilities; and (iv) an
increase of $204,399 (2020: $92,487) in due to related parties.
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Cash Flows from Investing Activities
We used cash of $1,441 in investing activities during the fiscal year ended
February 28, 2021, which consisted of the purchase of equipment. In comparison,
cash of $1,453 was used during fiscal year ended February 29, 2020 for the
purchase of equipment.
Cash Flows from Financing Activities
Net cash flows provided from financing activities during fiscal year ended
February 28, 2021 was $436,103, which consisted of $502,103 in proceeds from
loans, offset by repayment of loans payable in the amount of $66,000. During
fiscal year ended February 29, 2020, cash flows provided by financing activities
was $854,829, which consisted of $576,500 from the issuance of shares and
$438,828 in proceeds from loans, offset by repayment of loans payable in the
amount of $160,499.
The balances due to related parties and shareholder ($2,678,695) are interest
free, unsecured and are repayable on demand. The balances due to related parties
and shareholders are mainly in connection with the services and financing
provided for the development of an online complaint resolution platform. A loan
in the amount of $197,075 was due November 30, 2020 and secured by 588,235
shares of common stock of the Company owned by the President of the Company.
Loans in the amounts of $118,245 and $23,649 are unsecured and bear interest at
5% per annum, and are due November 25, 2020 and June 1, 2021, respectively. The
Company also obtained a government-backed loan to assist businesses during the
COVID-19 pandemic in the amount of $31,532. This loan is unsecured and
non-interest bearing for the initial term until December 31, 2022 and thereafter
at 5% interest per annum for the extended term which ends on December 31, 2025.
It may be repaid at any time without penalty and if 75% is repaid on or within
the initial term, the remaining balance will be forgiven.
Off-Balance Sheet Arrangements
There were no off-balance sheet arrangements during fiscal year ended February
28, 2021 that have, or are reasonably likely to have, a current or future effect
on our financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to our
PLAN OF OPERATION
As at February 28, 2021, we had a working capital deficit of $4,355,400 and we
will require additional financing in order to enable us to proceed with our plan
Thus far, we believe that COVID-19 has not impacted our business negatively. As
more businesses adopt virtual office operation models due to the risk of the
virus, such adoption may in fact present us with more opportunities to offer
businesses cost-effective, cloud-based solutions.
When we will require additional financing, there can be no assurance that
additional financing will be available to us, that it can be obtained on
commercially reasonable terms. If we are not able to obtain the additional
financing on a timely basis, we will not be able to meet our other obligations
as they become due. We are pursuing various alternatives to meet our immediate
and long-term financial requirements.
We anticipate continuing to rely on equity sales of our common stock in order to
fund our business operations. Issuances of additional shares will result in
dilution to existing stockholders. There is no assurance that we will achieve
any additional sales of equity securities or arrange for debt or other financing
to fund our planned business activities.
Our auditor has issued a going concern opinion. This means that there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we generate sufficient revenues. There is no assurance we
will ever reach that point. In the meantime, the continuation of the Company is
dependent upon the continued financial support from our shareholders, our
ability to obtain necessary equity financing to continue operations and the
attainment of profitable operations.
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Our operations and financial results are subject to various risks and
uncertainties that could adversely affect our business, financial condition and
results of operations.
We require approximately $1,500,000 for the next 12 months as a reporting issuer
and additional funds are required. Before generation of revenue, the additional
funding may come from equity financing from the sale of our common stock or
loans from management or related third parties. In the event we do not raise
sufficient capital to implement its planned operations or divest, your entire
investment could be lost.
In October 2019, we entered into an agreement for financial advisory and
investment banking services and issued 2,500,000 (pre-reverse stock split)
shares of our common stock with a fair value of $172,500 as partial compensation
for these services. We agreed to pay $5,000 per month for a period of six
months, which payment can be paid in cash or in shares at our option. We also
agreed to issue an additional 2,500,000 shares upon an uplisting of our common
stock to a national exchange. Additional compensation, consisting of a cash
commission, cash payment for expenses, and common stock purchase warrants, would
be paid upon achieving financing. On November 20, 2020, we entered into a
settlement and release agreement to terminate this arrangement. All outstanding
fees owed by us under this arrangement were waived and 2,000,000 (pre-reverse
stock split) shares of our common stock were returned to us.
We have no reportable material commitments for current fiscal year ending
February 28, 2021.
RECENT ACCOUNTING PRONOUNCEMENTS
As reflected in Note 2 of the Notes to the Consolidated Financial Statements,
there have been recent accounting pronouncements or changes in accounting
pronouncements that impacted fiscal year ended February 28, 2021 or which are
expected to impact future periods as follows:
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit
Losses: Measurement of Credit Losses on Financial Instruments, which changes the
impairment model for most financial assets. This Update is intended to improve
financial reporting by requiring timelier recording of credit losses on loans
and other financial instruments held by financial institutions and other
organizations. The underlying premise of the Update is that financial assets
measured at amortized cost should be presented at the net amount expected to be
collected, through an allowance for credit losses that is deducted from the
amortized cost basis. The allowance for credit losses should reflect
management's current estimate of credit losses that are expected to occur over
the remaining life of a financial asset. The income statement will be affected
for the measurement of credit losses for newly recognized financial assets, as
well as the expected increases or decreases of expected credit losses that have
taken place during the period. The new standard is effective for fiscal years
and interim periods within those years beginning after December 15, 2022.
The Company has implemented all new accounting pronouncements that are in effect
and that may impact its consolidated financial statements and does not believe
that there are any other new accounting pronouncements that have been issued
that might have a material impact on its financial position or results of
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