The following discussion and analysis of our results of operations and financial
condition for fiscal years ended December 31, 2020 and 2019, should be read in
conjunction with our financial statements and the related notes and the other
financial information that are included elsewhere in this Annual Report. This
discussion includes forward-looking statements based upon current expectations
that involve risks and uncertainties, such as our plans, objectives,
expectations, and intentions. Forward-looking statements are statements not
based on historical information and which relate to future operations,
strategies, financial results, or other developments. Forward-looking statements
are based upon estimates, forecasts, and assumptions that are inherently subject
to significant business, economic, and competitive uncertainties and
contingencies, many of which are beyond our control and many of which, with
respect to future business decisions, are subject to change. These uncertainties
and contingencies can affect actual results and could cause actual results to
differ materially from those expressed in any forward-looking statements. 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, Special Note Regarding
Forward-Looking Statements, and Business sections in this Annual Report. We use
words such as "anticipate," "estimate," "plan," "project," "continuing,"
"ongoing," "expect," "believe," "intend," "may," "will," "should," "could," and
similar expressions to identify forward-looking statements.
Overview
At the present time, the Registrant's only incoming operating revenues are from
certain of its music recording distribution activities, but these revenues are
not sufficient to cover the Registrant's ongoing operating costs, and the
Registrant has no other existing resources from which to fund its operating
costs. To date, the excess of operating costs over revenues has been funded by a
$134,000 note payable (in 3 installments through May 15, 2021) from a third
party, other loan advances from third parties in excess of $200,000, accounts
payable of the Registrant of more than approximately $125,000, and personal
advances from CEO Stephen Brown in excess of $295,000. As previously reported,
the Registrant recently reduced by $250,000 the amount owed to Mr. Brown through
the issuance of shares of the Registrant's common stock.
The Registrant is in the process of a receiving a payment of approximately
$390,000 net to the Registrant from its music distribution activities through
December 31, 2021, but the $134,000 note payable, the $200,000 of loan advances
from third parties, and the Registrant's account payables alone exceed this
amount - without considering the Registrant's continuing monthly operating costs
of $85,000 to $95,000 and the additional expenditures for the activities
described above. The Registrant's music distribution activities to date indicate
that an additional payment for these activities will be made to the Registrant
approximately in the first week of August 2021. At the present time, the
Registrant's account with the music distribution entity shows a net amount to
the Registrant of approximately $350,000, and that additional accruals from
April through June 30, 2021 will increase the expected net amount of the early
August payment.
In order to obtain funds to cover a portion of the past operating deficit, the
Registrant raised approximately $260,000 through a private placement of
approximately 13 million units, with each unit consisting of one share of common
stock and one warrant, at a price of $.02 per unit. Each warrant is exercisable
at a price of $.10 per share for a period of two years. The Company is no longer
offering any shares or warrants pursuant to the private placement. The amounts
owed by the Registrant, as described in the two preceding paragraphs, is
calculated after application of this $260,000 to the Registrant's obligations.
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At the present time, the Registrant does not have sufficient financial resources
to fully pursue its business plan. The Registrant is in discussions with at
least one possible source of additional funding, but it has no binding
commitments, and there is no assurance that it will be able to obtain additional
funding. Any such additional funding, of which there is no assurance, is
anticipated to be through the issuance of additional equity securities or debt
instruments. If the Registrant is able to obtain funding, of which there is no
assurance, it is anticipated that such funding would have a significantly
dilutive effect on the existing capital structure of the Company. Such dilution
also would be expected to have a significant adverse effect on any trading
market for the Registrant's common stock.
Results of Operations
The following discussion and analysis should be read in conjunction with our
company's audited financial statements for the years ended December 31, 2020 and
2019 and accompanying notes appended thereto that are included in this quarterly
report.
For the Years Ended December 31, 2020 and 2019
Our operating results for the years ended December 31, 2020 and 2019, are as
follows:
Years Ended
December 31,
2020 2019 Changes ($)
Revenues $ 2,557 $ 2,557 $ -
Operating expenses 422,535 855,353 (432,818 )
Interest expense 9,656 37,091 (27,435 )
Net loss $ 429,634 $ 889,887 $ (460,253 )
Revenues are related to the Licensing Agreement dated November 1, 2016. The
onetime nonrefundable fee and the set up and training fees are being recognized
over the life of agreement, which terminates on December 1, 2021.
Operating Expenses
For the year ended December 31, 2020, operating expenses were $387,500 for
related party compensation expenses, $24,130 for professional fees, and $10,905
for office expenses.
For the year ended December 31, 2019, operating expenses were $450,000 for
related party compensation expenses, $350,000 for impairment of assets, $49,488
for professional fees, and $5,865 for office expenses.
Other Expenses
For the years ended December 31, 2020 and 2019, other expenses were $8,961 and
$12,786 for interest on loans and convertible notes, respectively and $695 and
$24,305 for amortization discount on convertible note, respectively.
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Liquidity and Capital Resources
The following table provides selected financial data about our company as of
December 31, 2020 and 2019, respectively:
Working Capital
December 31 December 31,
2020 2019
Cash $ 358 $ 214
Current Assets 358 214
Current Liabilities 492,597 837,819
Working Capital (Deficiency) $ (492,239 ) $ (837,605 )
Cash Flows
Year Ended
December 31,
2020 2019 Changes ($)
Cash Flows used in Operating Activities $ (28,640 ) $ (54,672 ) $ 26,032
Cash Flows provided by Financing Activities 28,784 54,672
(25,888 )
Net Change in Cash During Period $ 144 $ - $ 144
As of December 31, 2020, and 2019, our current assets were $358 and $214,
respectively, solely from cash.
As of December 31, 2020, our current liabilities and working capital deficiency
decreased as compared to December 31, 2019, primarily due to the forgiveness of
accrued related party compensation.
As of December 31, 2020, current liabilities consisted of $350,000 to
liabilities to be settled in stock, $91,240 to convertible notes payable,
$16,204 to loan payable, $12,450 due to related party, $20,358 to accounts
payable and accrued liabilities and $2,345 to deferred revenue.
As of December 31, 2019, our current liabilities consisted of $350,000 to
liabilities to be settled in stock, $337,500 to accrued compensation related
party, $90,545 to convertible notes, $38,757 to loan payable, $2,781 due to
related party, $13,334 to accounts payable and accrued liabilities and $4,902 to
deferred revenue.
Operating Activities
During the year ended December 31, 2020, net cash used in operating activities
was $28,640, compared to $54,672 for the year ended December 31, 2019.
The net cash used in operating activities for the year ended December 31, 2020
was attributed to a net loss of $429,634, decreased by amortization of discount
on convertible note of $695, and a change in an accrued related party
compensation of $387,500, accounts payable and accrued liabilities of $5,687 and
due to related party of $9,669, and increased by a change in deferred revenue of
$2,557.
The net cash used in operating activities for the year ended December 31, 2019
was attributed to a net loss of $889,887, decreased by amortization of discount
on convertible note of $24,305, loss on impairment of assets of $350,000, and a
change in an accrued related party compensation of $450,000 and accounts payable
and accrued liabilities of $13,467 and increased by a deferred revenue of
$2,557.
Investing Activities
The Company did not use any funds for investing activities during the years
ended December 31, 2020 and 2019.
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Financing Activities
During the year ended December 31, 2020, net cash provided by financing
activities was $28,784, compared to $54,672 for the year ended December 31,
2019. During the year ended December 31, 2020, the Company received $28,784 from
a loan and $50,000 from issuance of common stock and used $50,000 in repayments
to related party loans. During the year ended December 31, 2019, the Company
received $54,672 from a loan.
Off-Balance Sheet Arrangements
As of December 31, 2020, the Company had no material off-balance sheet
arrangements.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with the accounting principles generally accepted in the United States of
America. Preparing financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenue, and expenses. These estimates and assumptions are affected by
management's application of accounting policies. We believe that understanding
the basis and nature of the estimates and assumptions involved with the
following aspects of our financial statements is critical to an understanding of
our financial statements.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 financial statements. The estimates and judgments will also affect the
reported amounts for certain revenues and expenses during the reporting period.
Actual results could differ from these good faith estimates and judgments.
Recent Accounting Pronouncements
The Company has considered all recent accounting pronouncements issued and
determined that the adoption of these pronouncements would not have a material
effect on the financial position, results of operations or cash flows of the
Company.
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