The information set forth in this Management's Discussion and Analysis of
Financial Condition and Results of Operations ("MD&A") contains certain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995, including,
among others (i) expected changes in our revenue and profitability, (ii)
prospective business opportunities and (iii) our strategy for financing our
business. Forward-looking statements are statements other than historical
information or statements of current condition. Some forward-looking statements
may be identified by use of terms such as "believes", "anticipates", "intends"
or "expects". These forward-looking statements relate to our plans, liquidity,
ability to complete financing and purchase capital expenditures, growth of our
business including entering into future agreements with companies, and plans to
successfully develop and obtain approval to market our product. We have based
these forward-looking statements largely on our current expectations and
projections about future events and financial trends that we believe may affect
our financial condition, results of operations, business strategy and financial
needs.
Although we believe that our expectations with respect to the forward-looking
statements are based upon reasonable assumptions within the bounds of our
knowledge of our business and operations, in light of the risks and
uncertainties inherent in all future projections, the inclusion of
forward-looking statements in this Report should not be regarded as a
representation by us or any other person that our objectives or plans will be
achieved.
We assume no obligation to update these forward-looking statements to reflect
actual results or changes in factors or assumptions affecting forward-looking
statements.
Our revenues and results of operations could differ materially from those
projected in the forward-looking statements as a result of numerous factors,
including, but not limited to, the following: the risk of significant natural
disaster, the inability of our company to insure against certain risks,
inflationary and deflationary conditions and cycles, currency exchange rates,
and changing government regulations domestically and internationally affecting
our products and businesses.
You should read the following discussion and analysis in conjunction with the
Financial Statements and Notes attached hereto, and the other financial data
appearing elsewhere in this Report.
US Dollars are denoted herein by "USD", "$" and "dollars".
Impact of COVID-19 Outbreak
The ongoing COVID-19 global and national health emergency has caused significant
disruption in the international and United States economies and financial
markets. In March 2020, the World Health Organization declared the COVID-19
outbreak a pandemic. The spread of COVID-19 has caused illness, quarantines,
cancellation of events and travel, business and school shutdowns, reduction in
business activity and financial transactions, labor shortages, supply chain
interruptions and overall economic and financial market instability. The
COVID-19 pandemic has the potential to significantly impact the Company's supply
chain and other service providers.
In addition, a severe prolonged economic downturn could result in a variety of
risks to the business, including weakened demand for products and services and a
decreased ability to raise additional capital when needed on acceptable terms,
if at all. As the situation continues to evolve, the Company will continue to
closely monitor market conditions and respond accordingly.
Overview and Recent Developments
The Company was organized in the State of Florida on January 26, 2012, to
develop an e-waste recycling business. The Company was not successful in its
efforts and ceased those operations.
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On August 28, 2021, the Company filed a certificate of amendment (the
"Certificate of Amendment") with the Secretary of State of the State of Florida
in order to effectuate a name change from E-Waste Corp. to EZRaider Co. The
Certificate of Amendment became effective on September 3, 2021.
On September 14, 2021, our wholly owned subsidiary, E-Waste Acquisition Corp., a
Delaware corporation, merged with and into EZRaider Global, Inc., a private
Nevada corporation ("EZ Global"). EZ Global was the surviving corporation in the
merger (the "Merger") and became our wholly owned subsidiary. At the time of the
Merger, all of the outstanding shares of capital stock of EZ Global, were
exchanged for 28,550,000 shares of our common stock. As a result of the Merger,
we discontinued our prior activities, which consisted primarily of seeking a
business for a merger or acquisition, and acquired the business of EZ Global,
and will continue the existing business operations of EZ Global, and its wholly
owned subsidiary, EZ Raider, LLC, a Washington limited liability company ("EZ
LLC"), as a publicly-traded company under the name "EZRaider Co."
On November 15, 2021, our board of directors (the "Board") appointed George
Andrew Lear III as Chief Financial Officer of the Company. Prior to Mr. Lear's
appointment, Moshe Azarzar, had served as Chief Financial Officer on an interim
basis since September 14, 2021. In connection with his appointment as Chief
Financial Officer, Mr. Lear also replaced Mr. Azarzar as the Company's
"Principal Financial and Accounting Officer" for SEC reporting purposes. In
connection with Mr. Lear's appointment as the Company's Chief Financial Officer,
the Company entered into an Employment Agreement with Mr. Lear, effective as of
November 15, 2021. Said agreement has an initial term through January 31, 2022,
at which time the terms for an extension will be negotiated.
On November 18, 2021, the Board appointed Yoav Tilan as Chief Operating Officer
of the Company. In connection with Mr. Tilan's appointment as the Company's
Chief Operating Officer, the Company entered into an Employment Agreement with
Mr. Tilan, effective as of November 18, 2021, which has an initial term through
January 31, 2023, at which time the terms for an extension will be negotiated.
On December 30, 2021, EZ Global entered into a memorandum of understanding (the
"Memorandum") with D.S. Raider Ltd., a company incorporated under the laws of
Israel ("D.S Raider"), that designs, manufactures and sells electric-powered,
tactical manned vehicles known as "EZRaider Vehicles." The Memorandum amended
certain terms of the Share Purchase Agreement EZ Global, D.S Raider, and the
shareholders of D.S Raider entered into on August 31, 2021 (as previously
amended on March 30, 2021 and August 31, 2021, the "Purchase Agreement"),
pursuant to which, among other things, EZ Global had the exclusive right to
acquire 100% of the capital stock of D.S Raider on or before December 31, 2021
(the "Exclusivity Date"), for an aggregate purchase price of $30,000,000. EZ
Global previously purchased approximately 6.7% of the issued and outstanding
capital stock of D.S Raider (295,947 Ordinary Shares), for an aggregate purchase
price of $3,850,000.
Pursuant to the Memorandum, in consideration for D.S Raider's agreement to
extend the Exclusivity Date to March 15, 2022, EZ Global agreed that, by
December 31, 2021, it would secure $1,600,000 of purchase orders for EZRaider
Vehicles for the 2022 year (the "Purchase Orders") and will pay to pay DS Raider
a down payment of $800,000 (the "Down Payment"), representing 50% of the
purchase price for the Purchase Orders, no later than January 17, 2022. Upon
securing the Purchase Orders and making the Down Payment, EZ Global's right to
be the exclusive distributer of EZRaider Vehicles in the United States, which
was granted to EZ Global's wholly owned subsidiary, EZ LLC, pursuant to the
Authorized Exclusive Distribution Agreement EZ LLC and D.S Raider entered into
on September 12, 2019 (as previously amended on September 2, 2021, the
"Distribution Agreement"), will be extended through January 31, 2023. However,
if (a) the Purchase Orders are not secured, (b) the Down Payment is not made, or
(c) EZ Global does not consummate any of the Purchase Orders previously placed,
D.S Raider has the right to terminate the Distribution Agreement in its sole
discretion. Subject to the consummation of EZ Global's acquisition of D.S Raider
by March 15, 2022, EZ Global may thereafter change or cancel any of the Purchase
Orders in its sole discretion. The $800,000 Down Payment was paid to D.S Raider
on January 13, 2022.
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On December 31, 2021, the Company closed two additional private placement
offerings: (a) a private placement offering of up to $750,000 in shares of the
Company's Common Stock at a purchase price of $1.50 per share, in which the
Company sold 143,335 shares of common stock to six accredited investors for the
aggregate gross proceeds to the Company of $215,001, and (b) a private placement
offering of up to $300,000 in principal amount of 6% unsecured promissory notes,
in which the Company received $125,000 in gross proceeds and sold and issued
promissory notes to three accredited investors in total principal amount of
$125,000 and issued total of 12,500 shares of common stock to these investors.
The Company is currently conducting an additional private placement offering of
up to $500,000 of shares of the Company's common stock at a purchase price. As
of the date of this Report, the Company sold 30,000 shares of common stock to
one accredited investor in this offering for aggregate gross proceeds of
$45,000.
Results of Operations
Three-Month Period Ended November 30, 2021 Compared to Three-Month Period Ended
November 30, 2020
Revenues from operations were $127,537 for the three months ended November 30,
2021, as compared to $125,129 for the three months ended November 30, 2020. This
decrease was primarily due to a decrease in customers due to supply chain issues
related to the COVID-19 pandemic.
Cost of Revenue
Cost of revenues was $83,468 for the three months ended November 30, 2021, as
compared to $93,423 for the three months ended November 30, 2020. This decrease
was primarily due to delays in shipping product, as well as selling the
remaining lower-cost units available for sale in the quarter. Gross profits were
$44,069 and $31,706 for the three months ended November 30, 2021 and 2020,
respectively. Gross profit margin increased to 35% from 25% for the three months
ended November 30, 2021 and 2020, respectively. The increase was primarily due
to higher margins associated with the mix of products sold, namely higher margin
accessories and machines.
Operating Expenses
Operating expenses increased 671% to approximately $702,949 for the three months
ended November 30, 2021, as compared to $91,212 for the three months ended
November 30, 2020. This increase was primarily due to an increase in
professional fees, advertising expense and general administrative expenses
attributable to fees required in connection with the Merger with EZRaider
Global.
Other Expenses
The Company's other expenses increased to $264,733 for the three months ended
November 30, 2021, as compared to other expenses of $1,742 during the three
months ended November 30, 2020. The primary reason for this increase was due to
interest expense on the loans on the outstanding debt and loss on debt
settlement.
Due to the described factors above, we had a net loss of $923,613 and $61,248
for the three months ended November 30, 2021 and 2020, respectively.
Nine-Month Period Ended November 30, 2021 Compared to Nine-Month Period Ended
November 30, 2020
Revenues from operations were $327,147 for the nine months ended November 30,
2021, as compared to $571,861 for the nine months ended November 30, 2020. This
decrease was primarily due to a decrease in customers due to supply chain issues
related to the COVID-19 pandemic.
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Cost of Revenue
Cost of revenues was $313,930 for the nine months ended November 30, 2021, as
compared to $399,425 for the nine months ended November 30, 2020. This decrease
was primarily due to the limited number of available products to sell as a
result of the COVID-19 pandemic. Gross profits were $13,217 and $172,436 for the
nine months ended November 30, 2021 and 2020, respectively. Gross profit margin
decreased to 4% from 30% for the nine months ended November 30, 2021 and 2020,
respectively. This decrease was primarily due to lower margins associated with
the available product to sell versus product sales in 2020 having been procured
at a lower cost.
Operating Expenses
Operating expenses increased 334% to approximately $1,225,234 for the nine
months ended November 30, 2021, as compared to $281,170 for the nine months
ended November 30, 2020. The increase was primarily due to increase in
professional fees, advertising expense and general administrative expenses
attributable to fees required in connection with the merger with EZRaider
Global, Inc.
Other Expenses
The Company's other expenses increased to $330,519 from other expense of $3,390
during the nine months ended November 30, 2021, as compared to the nine months
ended November 30, 2020. The primary reason for this increase was due to
interest expense on the Company's outstanding loans and loss on debt settlement.
Due to the described factors above, we had a net loss of $1,542,536 and $112,124
for the nine months ended November 30, 2021 and 2020, respectively.
Liquidity and Capital Resources
For the nine months ended November 30, 2021, net cash used in operations of
$436,907 was the result of a net loss of $1,542,536, depreciation expense of
$19,793, stock issued for services of $183,334, loss on debt conversion of
$256,658, can increase in accounts receivable of $286,243, an increase in
inventory of $48,285. These were offset by an increase of accounts payable of
$620,226 and an increase in accounts payable - related party of $10,000, an
increase in accrued interest payable of $55,723, and an increase in deferred
revenue of $294,513.
For the nine months ended November 30, 2020, net cash used in operations of
$79,362 was the result of a net loss of $112,124, depreciation expense of
$4,116, an increase in accounts receivable of $7,000, and a decrease in
inventory of $95,335. These were offset by a decrease of accounts payable of
$79,364 and an increase in deferred revenue of $19,675.
Net cash used in investing activities was $3,349,642 for the nine months ended
November 30, 2021, which was attributable to an investment in D.S. Raider of
$3,350,000 and cash acquired in connection with recapitalization of $358, as
compared to net cash used in investing activities, which was $0 for the nine
months ended November 30, 2020.
Net cash provided by financing activities was $3,637,353 for the nine months
ended November 30, 2021, which was a repayment of advances from related party of
$404,429, repayment of note payable - former related party of $255,000,
repayment of note payable of $107,837 and these were offset by proceeds from
convertible notes of $320,000, common stock issued for cash of $4,290,001,
partially offset by recapitalization of $205,382.
Net cash provided by financing activities was $58,311 for the nine months ended
November 30, 2020, reflecting the repayment of advances from related party of
$158,081, offset by proceeds from notes payable of $203,177 and proceeds from
PPP loan of $13,215.
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Liquidity, Going Concern and Management's Plans
These condensed consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business.
As reflected in the accompanying consolidated financial statements, for the nine
months ended November 30, 2021, the Company had:
? Net loss of $1,542,536; and
? Net cash used in operations was $436,907.
Additionally, at November 30, 2021, the Company had:
? Accumulated deficit of $2,135,999;
? Stockholders' equity of $2,499,269; and
? Working capital deficit of $1,434,669
We manage liquidity risk by reviewing, on an ongoing basis, our sources of
liquidity and capital requirements. The Company had cash on hand of $18,641 at
November 30, 2021.
The Company expects business operations to generate sufficient revenues and
positive cash flows from operations to meet its current obligations. However,
the Company may seek to raise debt or equity-based capital at favorable terms,
though such terms are not certain. Currently, the Company expects to incur
losses from operations and have negative cash flows from operating activities
for the near-term.
The Company has incurred significant losses since its inception and has not
demonstrated an ability to generate sufficient revenues from the sales of its
products and services to achieve profitable operations. There can be no
assurance that profitable operations will ever be achieved, or if achieved,
could be sustained on a continuing basis. In making this assessment we performed
a comprehensive analysis of our current circumstances including: our financial
position, our cash flows and cash usage forecasts for the twelve months ended
November 30, 2022, and our current capital structure including equity-based
instruments and our obligations and debts.
During the nine months ended November 30, 2021, the Company has partially
satisfied its obligations from the sale of common stock ($3,840,001); however,
there is no assurance that such successful efforts will continue during the
twelve months subsequent to the date these consolidated financial statements are
issued.
If the Company does not obtain additional capital, the Company will be required
to reduce the scope of its business development activities or cease operations.
The Company continues to explore obtaining additional capital financing and the
Company is closely monitoring its cash balances, cash needs, and expense levels.
These factors create substantial doubt about the Company's ability to continue
as a going concern within the twelve-month period subsequent to the date that
these consolidated financial statements are issued. The consolidated financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern. Accordingly, the consolidated
financial statements have been prepared on a basis that assumes the Company will
continue as a going concern and which contemplates the realization of assets and
satisfaction of liabilities and commitments in the ordinary course of business.
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Management's strategic plans include the following:
? Pursuing additional capital raising opportunities;
? Investing in the development and growth of EZ Global's electric vehicles
business;
? Identifying and pursuing additional acquisitions, including the acquisition of
D.S Raider; and
? Identifying unique market opportunities that represent potential positive
short-term cash flow.
Critical Accounting Policies and Estimates
We prepare our condensed consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America, and
make estimates and assumptions that affect our reported amounts of assets,
liabilities, revenue and expenses, and the related disclosures of contingent
liabilities. We base our estimates on historical experience and other
assumptions that we believe are reasonable in the circumstances. Actual results
may differ from these estimates.
The following critical accounting policies affect our more significant estimates
and assumptions used in preparing our consolidated financial statements.
Accounts Receivable
Accounts receivable are stated at the amount management expects to collect from
outstanding customer balances. Credit is extended to customers based on an
evaluation of their financial condition and other factors. Interest is not
accrued on overdue accounts receivable. The Company does not require collateral.
Management periodically assesses the Company's accounts receivable and, if
necessary, establishes an allowance for estimated uncollectible amounts. The
Company provides an allowance for doubtful accounts based upon a review of the
outstanding accounts receivable, historical collection information and existing
economic conditions. Accounts determined to be uncollectible are charged to
operations when that determination is made.
When a client is invoiced, the amount is recorded as an asset in Accounts
Receivable and as Deferred Revenue in Current Liabilities. When payment is
received the amount is moved to Cash on the balance sheet.
Inventory
Inventory consists of components held for assembly and finished goods held for
resale. Inventory is valued at lower of cost or net realizable value on a
first-in, first-out basis. The Company's policy is to record a reserve for
technological obsolescence or slow-moving inventory items. The Company only
carries finished goods to be shipped to customers. All existing inventory is
considered current and usable.
The Company recorded no reserve for slow-moving or obsolete inventory for the
three and nine months ended as of November 30, 2021 and 2020.
Equity securities without a readily determinable fair value
Certain equity securities are carried at cost as these securities did not have a
readily determinable fair value. There were no observable price changes in
orderly transactions for the identical or a similar investment of the same
issuer as of November 30, 2021 and 2020.
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Recent Accounting Pronouncements
The recent accounting standards that have been issued or proposed by Financial
Accounting Standard Board (FASB) or other standard setting bodies that do not
require adoption until a future date are not expected to have a material impact
on the financial statement upon adoption.
The recent accounting pronouncements are described in Note 3 to the condensed
consolidated financial statement appearing elsewhere in this report.
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EZRAIDER CO. 
