Our management's discussion and analysis provides a narrative about our
financial performance and condition that should be read in conjunction with the
audited and unaudited consolidated financial statements and related notes
thereto included in this quarterly report on Form 10-Q. This discussion contains
forward looking statements reflecting our current expectations and estimates and
assumptions about events and trends that may affect our future operating results
or financial position. Our actual results and the timing of certain events could
differ materially from those discussed in these forward-looking statements due
to a number of factors, including, but not limited to, those set forth in the
sections of our annual report on Form 10-K titled "Risk Factors".
Results of Operations
For the Three Months Ended February 28, 2023 and 2022
Revenues
For the three months ended February 28, 2023, and 2022, we had revenues of
$877,281 and $736,147, respectively. The increase was due to the new business
model created after combining the businesses of the two entities that we
acquired in 2022 (Alchemy and Helix).
Operating Expenses
For the three months ended February 28, 2023, and 2022, we had operating
expenses of $983,920 and $1,751,728, a decrease of 43.7%, due to a decrease of
$460,461 in salaries and wages, $116,322 in General and Administrative expenses,
and $284,497 in advertising and promotion. These decreases were all due to
operational efficiencies attained from the acquisitions and no employee
performance bonuses paid this year. This was offset by an increase in
professional services of $93,472 due to an increase in attorney and accounting
fees.
Net Loss
Our Net income (Loss) for the three months ended February 28, 2023, and 2022,
was $(2,496,252) versus $(1,040,832) respectively. The decrease is attributable
to a contingent settlement of $(2,509,620) for a pending liability that would be
due in March of 2024. The Company is working on ways to restructure that
agreement that will reduce the probability of the liability taking affect and/or
an extension on the term that will give the Company the opportunity to eliminate
the liability completely. Overall, without the contingent settlement, in a year
over year comparison, the Company had a 19.2% increase in sales, a 43.8%
decrease in operating expenses and an increase in other income resulting in the
net improvement of $1,054,200 compared to the same period last year.
Assets and Liabilities
Our total current assets decreased to $939,978 from $1,011,896 for the period
ended February 28, 2023, compared to August 31, 2022. This majority of the
decrease was due to a decrease in Accounts Receivables collected, but slightly
offset by an increase in cash.
Total current liabilities increased to $3,275,926 from $2,974,009 during the
three-month period ended February 28, 2023, compared to our year end at August
31, 2022. The increase reflects an increase in accounts payable and accrued
liabilities to $1,831,463 compared to $1,063,345 on August 31, 2022, but offset
by a decrease of $469,697 in deferred revenue.
Total liabilities increased to $7,948,584 for the period ended February 28,
2023, compared to $3,248,034 for the period ended August 31, 2022. The increase
is due to a line of credit for $1,416,661, a contingent liability recorded for
$2,509,620, and a non-cash derivative liability for $514,925. As mentioned
above, the Company believes they will be able to greatly reduce the contingent
liability.
Liquidity and Capital Resources
Cash used by operating activities
The Company's net cash from operating activity was $(727,027) for the quarter
ended February 28, 2023 compared to $(685,254) for the quarter ended February
28, 2022. The decrease is due to a decrease in deferred revenue, an increase in
a contingency liability, and increase in accounts payable and accrued
liabilities.
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Cash provided by investing activities
Net cash from investing activities was $96,584 for the period ended February 28,
2023, as compared to net cash of $(160,488) for the period ended February 28,
2022. The increase in net cash is due to the collection of loan receivables from
the small business loans provided by Business Warrior Funding and the reduction
of a property lease in the current period.
Cash provided by financing activities
Net cash from financing activities decreased to $705,791 as of February 28, 2023
as compared to $2,482,761 for the same period in 2022. The decrease was due to a
decrease of proceeds from the issuance of Common Stock and the conversion of
Preferred Shares to debt, but partially offset by the proceeds from a new Line
of Credit.
We currently do not have sufficient capital to fund our cash needs for the next
12 months. We intend to rely on financing from convertible debt, promissory
notes, and sale of stock to fund our operations.
For the Six Months Months Ended February 28, 2023 and 2022
Revenues
For the six months ended February 28, 2023, and 2022, we had revenues of
2,333,023 and $1,188,637, respectively. The increase was due to the new business
model created after combining the businesses of the two entities that we
acquired in 2022 (Alchemy and Helix).
Operating Expenses
For the six months ended February 28, 2023, and 2022, we had operating expenses
of $1,462,402 and $1,631,477, a decrease of 10.4%, due to a decrease in salaries
and wages, General and Administrative expenses, and advertising and promotion.
These decreases were all due to operational efficiencies attained from the
acquisitions and no employee performance bonuses paid this year. This was offset
by an increase in professional services of $74,013 due to an increase in
attorney and accounting fees.
Net Loss
Our Net income (Loss) for the six months ended February 28, 2023, and 2022, was
$(3,486,494) versus $(1,554,623) respectively. The decrease is attributable to a
contingent settlement of $(2,509,620) for a pending liability that would be due
in March of 2024. The Company is working on ways to restructure that agreement
that will reduce the probability of the liability taking affect and/or an
extension on the term that will give the Company the opportunity to eliminate
the liability completely. Overall, without the contingent settlement, in a year
over year comparison, the Company had a 92.2% increase in sales, a 10.4%
decrease in operating expenses.
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