Readers are urged to carefully review and consider the various disclosures made
by us in this report and in our other reports filed with the Securities and
Exchange Commission. Important factors currently known to management could cause
actual results to differ materially from those in forward-looking statements. We
undertake no obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events or changes
in the future operating results over time. We believe that our assumptions are
based upon reasonable data derived from and known about our business and
operations. No assurances are made that actual results of operations or the
results of our future activities will not differ materially from our
assumptions. Factors that could cause differences include, but are not limited
to, expected market demand for our products, fluctuations in pricing for our
products, and competition. Readers are cautioned not to place undue reliance on
these forward-looking statements, which are only predictions and speak only as
of the date hereof. When used in the throughout, the words "may", "will",
"anticipate", "believe", "estimate", "expect", "future", "intend", "plan", or
the negative of these terms and similar expressions as they relate to the
Company or the Company's management are intended to identify forward-looking
statements. Such statements reflect the current view of the Company with respect
to future events and we caution you that these statements are not guarantees of
future performance or events and are subject to risks, assumptions, and other
factors.
The following discussion provides information that management believes is
relevant to an assessment and understanding of our past financial condition and
plan of operations. The discussion below should be read in conjunction with the
consolidated financial statements and related notes thereto included elsewhere
in this annual report.
About Beyond Commerce
Beyond Commerce, Inc. was formed as a Nevada corporation on January 12, 2006.
We plan to operate within two markets: (1) the Business-to-Business Internet
Marketing Technology and Services market and (2) the Information Management
market. Our goal is to develop proprietary software for digital transformation
of clients' existing content. We believe our planned platform, strategy, and
suite of software products and services will provide secure and scalable
information control solutions for global companies. We believe our planned
software will assist organizations in finding, utilizing, and sharing business
information between devices in ways that are intuitive, efficient and
productive. We believe that our business model will ensure that information will
remain secure and private, as necessitated by the current market climate.
In addition, we plan to provide solutions which facilitate the exchange of
information and data transactions between supply chain participants, such as
manufacturers, retailers, distributors and financial institutions. The goal is
to automate potential client internal processes thereby increasing productivity
and lowering costs. We plan to develop proprietary algorithms which it will
embed in the planned software to enable clients to access data and gain insight
into their business, through that data, leading to improved internal decision
making.
We plan to offer the proposed software through traditional on-premise solutions,
SaaS as a cloud based solution, or a combination of on-premise, SaaS or cloud
based solutions. We plan to work with our clients and their needs as to which
delivery method they prefer. We believe giving clients a choice and flexibility
will help us to obtain long-term client value.
RESULTS OF OPERATIONS
Through our Service 800 Inc. subsidiary, many of our clients, such as GE
Healthcare, Audiology System, Inc., 3M Healthcare, Johnson & Johnson Vision
Care, Albany Molecular Research Inc., Sakura Finetek, Abbott Diagnostics,
Biosense Webster, a Johnson & Johnson Company and Medtronic to name a few took
the time during the pandemic to begin strategic planning with Service 800 to
grow their business with the Company through renewals, expansion, and developing
better ways to grow our programs with each and every one of them for the future.
This select market segment continues to be a major source of revenue for the
Company as we expand our services within this business segment. Renewals have
been strong during the last nine months, and we anticipate revenue getting back
in line with exceeding our expectations as we progress further into the year.
All renewals that have taken place are on a minimum of a one to two-year term
with an auto renewal taking place when the contract expires. The pandemic helped
our customers recognize the value that Service 800 brings to its clients in the
form of providing valuable information to not only help their growth within
their own companies, but also help them be better providers to their customers
as well. We continue to look forward to growth into each division of these
companies and expansion to exceed expectations that have been set. We value
these customers and seek to achieve positive growth we have set for the
remainder of the year and moving onwards for future years to come.
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For the Three months Months ended Ended September 30, 2021 and September 30,
2020.
Revenue
Revenue generated for the three months ended September 30, 2021 was $1,024,501
compared to $983,155 from the comparable three-month period in 2020.
Operating Expenses
For three months ended September 30, 2021, operating expenses were $1,540,241
and for the three months ended September 30, 2020, operating expenses were
$1,654,956. This decrease is in part attributable to a reduction in payroll
expense of $20,898 due to Service 800 increasing the organization structure and
changing the mix of employees, an offsetting increase in professional fees of
$40,722, a decrease in general and administrative costs of $76,685, a decrease
in cost of revenue of $39,013 and a decrease in depreciation and amortization
expense of $18,841 during the three months ended September 30, 2021 compared to
the same period ending September 30, 2020.
Non-Operating Income (Expense)
The Company reported non-operating income expense of $943,521 for the three
months ended September 30, 2021, as compared to $7,057,648 for the three months
ended September 30, 2020, attributable principally to the reduction in
derivative liability related expenses of $6,123,139 offset in part by a loss on
extinguishment of debt of $1,131,856. There were increases of $628,403 due to
the gain on forgiveness of Paycheck Protection Program loans and a decrease in
interest expense of $448,890.
Net Income (loss)
For three months ended September 30, 2021, the Company incurred a net loss of
$1,459,261 as compared to a net loss of $7,729,449 for the three months ended
September 30, 2020, which was primarily due to the reduction in derivative
related expenses.
For the Nine Months Ended September 30, 2021 and September 30, 2020.
Revenue
Revenue generated for the nine months ended September 30, 2021 was $3,258,619
compared to $3,012,754 for the comparable nine-month period in 2020 nine months
ended September 30, 2020.
Operating Expenses
For the nine months ended September 30, 2021, operating expenses were $5,135,496
and for the nine months ended September 30, 2020, operating expenses were
$4,946,098. This increase is in part attributable to an increase in payroll
expenses of $225,066 from $1,897,723 to $2,122,789 for the nine months ended
September 30, 2020 and 2021, respectively, due to the Service 800 increasing the
organizational structure and changing the mix of employees. Cost of revenue
increased slightly by $11,614, and professional fees increased by $353,158.
General and administrative expenses decreased by $344,774 due to continued
efforts to reduce overhead expenses, and depreciation and amortization expense
decreased by $55,666.
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Non-Operating Income (Expense)
The Company reported non-operating expense of $6,928,746 for the nine months
ended September 30, 2021, as compared to $8,734,813 for the nine months ended
September 30, 2020, a decrease of $1,806,067 attributable in part to a decrease
in derivative related expenses of $4,134,510, a reduction in the amortization of
debt discount of $541,078, a decrease in interest expense of $1,085,520 due to
settlements and debt forgiveness of the Payroll Protection Program loans of
$1,133,514. The Company incurred a loss on the extinguishment of debt in the
amount of $5,088,555 recognized during the nine months ended September 30, 2021.
Net Income (loss)
For nine months ended September 30, 2021, the Company incurred a net loss of
$8,805,623 as compared to a net loss of $10,317,457 for nine months end
September 30, 2020, which was primarily due to the reduction in changes to the
derivative liability and derivative related expenses, interest expense and debt
forgiveness during the current period ended September 30, 2021 compared to the
prior year comparative period. The reduction was offset in part by a loss on the
extinguishment of debt.
Purchase of Significant Equipment
We do not anticipate the purchase or sale of any plant or significant equipment
during the next twelve (12) months.
Going Concern
There is substantial doubt about our ability to continue as a going concern.
As of September 30, 2021, we had an accumulated deficit of $67,437,753 and a
working capital deficit of $4,870,536. These conditions raise substantial doubt
about our ability to continue as a going concern. We intend to continue relying
upon the issuance of debt and equity securities to finance our operations. In
this regard, we are restricted by the number of shares available for issuance in
an equity financing, and we will likely need to increase our authorized capital
in order to take advantage of such financing. However, there can be no assurance
that we will be successful in obtaining shareholder approval to increase our
authorized capital, that we will be successful in raising the funds necessary to
maintain operations, or that a self-supporting level of operations will ever be
achieved. The likely outcome of these future events is indeterminable. Our
financial statements do not include any adjustment to reflect the possible
future effect on the recoverability and classification of the assets or the
amounts and classification of liabilities that may result should we cease to
continue as a going concern.
Liquidity and Capital Resources
Our ability to continue as a going concern is dependent on our ability to raise
additional capital and implement our business plan. Since inception, we have
been funded by related parties through capital investment and borrowing of
funds.
We had total current assets of $1,274,772 and $1,276,871 as of September 30,
2021 and December 31, 2020, respectively. Current assets would consist primarily
of cash and accounts receivable. The Company had a $67,437,753 accumulated
deficit on its balance sheet as of September 30, 2021.
We had total current liabilities of $6,145,308 and $7,025,541 as of September
30, 2021 and December 31, 2020, respectively. Current liabilities consisted
primarily of the derivative liability, accounts payable, accrued payroll and
payroll taxes, related party debt, conventional and convertible debt, lease
liability, accrued loss contingency, and accrued interest. In the current nine
months there were increases in accrued interest of $192,761, in accrued loss
contingency of $871,656 related to litigation and in convertible notes
short-term to a related party of $1,446,000. There were decreases in accounts
payable of $339,354, accrued payroll and payroll liabilities of $1,275,908 due
to the exchange of accrued payroll by an officer to a convertible note, and in
short term borrowings of $1,198,555. A change in the value of derivative
liability corresponding to an existing note decreased by $581,569.
We had a working capital deficit of $4,870,536 and $5,748,670 as of September
30, 2021 and December 31, 2020, respectively.
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Cash Flow from Operating Activities
For the nine months ended September 30, 2021 and 2020, cash used in operating
activities was $1,464,373 and $920,073 respectively. This increase of cash used
is attributable to the reduction in accounts payable and payroll related
liabilities offset in part by noncash transactions relating to stock issuances,
conversations and depreciation expense.
Cash Flow from Investing Activities
For the nine months ended September 30, 2021 and 2020, cash used in investing
activities was $0 and $16,230, respectively.
Cash Flow from Financing Activities
For the nine months ended September 30, 2021 and 2020, cash provided by
financing activities was $1,683,684 and $446,015, respectively mainly
attributable to proceeds from the sale of preferred stock of $1,000,000,
proceeds from SBA loan of $150,000, and proceeds from a Payroll Protection
Program loan of $625,000 during the nine months ended September 30, 2021.
Contractual Obligations
As a "smaller reporting company," we are not required to provide tabular
disclosure of contractual obligations.
Inflation
Inflation and changing prices have not had a material effect on our business and
we do not expect that inflation or changing prices will materially affect our
business in the foreseeable future.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity or
capital expenditures or capital resources that is material to an investor in our
securities.
Seasonality
In the past, our operating results and operating cash flows historically have
not been subject to seasonal variations. This pattern may change, however, in
the event that we succeed in bringing our planned products to market.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations
is based on our unaudited condensed consolidated financial statements, which
have been prepared in accordance with U.S. GAAP. The preparation of these
unaudited condensed consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent liabilities. On an
on-going basis, we evaluate past judgments and our estimates, including those
related to allowance for doubtful accounts, allowance for inventory write-downs
and write offs, deferred income taxes, provision for contractual obligations and
our ability to continue as a going concern. We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.
Note 2 to the consolidated financial statements, presented in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2020, describes the critical
accounting estimates and policies used in preparation of our consolidated
financial statements. There were no significant changes in our critical
accounting estimates during the nine months ended September 30, 2021.
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