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    FLCX   US33974L2051

FLOOIDCX CORP.

(FLCX)
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FLOOIDCX : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

06/16/2021 | 03:46pm EDT
RESULTS OF OPERATIONS



Overview


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 Accounting Principles.




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Fiscal Year Ended February 28, 2021 Compared to Fiscal Year Ended February 29, 2020

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 compensation.

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.




Material Commitments



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 interests.




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 of operations.

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.



MATERIAL COMMITMENTS


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 operations.

© Edgar Online, source Glimpses

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Financials (USD)
Sales 2021 0,08 M - -
Net income 2021 -1,48 M - -
Net Debt 2021 3,16 M - -
P/E ratio 2021 -1,98x
Yield 2021 -
Capitalization 1,03 M 1,03 M -
EV / Sales 2020 210x
EV / Sales 2021 77,0x
Nbr of Employees 4
Free-Float 63,1%
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Managers and Directors
Richard Hue President, CEO, CFO, Secretary & Treasurer
Mark Vange Director & Chief Technical Officer
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