The following discussion provides an analysis of the Company's financial
condition and results of operations and should be read in conjunction with the
Interim Consolidated Financial Statements and notes thereto included in Item 1
of Part I of this Quarterly Report on Form 10-Q and with the Company's Annual
Report on Form 10-K filed for the fiscal year ended February 28, 2019. The
discussion contains forward-looking statements that involve risks, uncertainties
and assumptions. Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of many factors.
Overview
flooidCX Corp., formerly known as Gripevine, Inc. (the "Company"), was
incorporated under the name Baixo Relocation Services, Inc. in the state of
Nevada on January 7, 2014, to operate as a relocation service provider for
clients moving to the State of Goa, India. On May 31, 2016, Rosy Rodrigues, our
prior majority shareholder, sole executive officer and member of the Board of
Directors, entered into those certain stock purchase agreements effective
October 3, 2016 with certain individuals and/or entities, and sold and
transferred the control block of the Company consisting of 5,000,000 shares of
restricted common stock, representing approximately 62.5% of the total issued
and outstanding shares of common stock and resulting in a change in control.
Effective February 28, 2017, we entered into a share exchange agreement (the
"MBE Exchange Agreement") with MBE Holdings Inc., a private corporation
organized under the laws of Delaware ("MBE") and the shareholders of MBE (the
"MBE Shareholders"), pursuant to which MBE Exchange Agreement we acquired all
the technology and assets and assumed all liabilities of MBE, and MBE became our
wholly-owned subsidiary. In accordance with the terms and provisions of the MBE
Exchange Agreement, an aggregate of 5,248,626 shares of our restricted common
stock were issued to the MBE Shareholders in exchange for 157,458,778 of the
total issued and outstanding shares of MBE.
Effective March 18, 2019, we changed our name to flooidCX Corp. pursuant to
Certificate of Amendment to its Articles of Incorporation filed with the Nevada
Secretary of State. The name of the Company was changed as part of our
rebranding, which better reflects our new business direction into the customer
care and feedback solutions space - offering easy to adapt customer care and
feedback solutions to enterprises of all sizes.
On May 17, 2019, we entered into a Share Exchange Agreement (the "R1 Exchange
Agreement") with the stockholders of Resolution 1, Inc., a Delaware corporation
("R1"), to acquire all of the outstanding shares of R1 in exchange for
10,000,000 restricted shares of our common stock (the "Acquisition"). R1 has
developed a comprehensive customer care and feedback management platform, which
is delivered as a cloud-based, software as a service solution. R1 was founded in
August 2012 by Richard Hue, the CEO and a director of our Company. The
Acquisition was approved by the independent members of the board of directors of
the Company. Since the majority shareholders of the Company and R1 are the same,
this did not result in the change in control at the ultimate parent or the
controlling shareholder level, and was accounted for as a common control
transaction.
Our mission is to help businesses bring back the conversation with customers
with innovative, simple to use solutions that empower both the businesses and
customers to communicate and create positive outcomes. With the consummation of
the R1 Exchange Agreement resulting in R1 being our subsidiary, we now offer a
suite of customer relationship management (CRM) solutions that enhances and
builds upon our initial offering, "GripeVine."
We offer unified communications and collaboration online CRM solutions -
GripeVine and Resolution1. GripeVine is a consumer-to-business platform that
helps build a customer feedback-minded community, focused on transparency,
mutual respect and open communications among like-minded customers and
businesses - all working together - to facilitate positive outcomes. It allows
for private messaging between customers and businesses for positive resolutions,
so that businesses are not forced to communicate via the comments section.
Resolution1 functions as a cloud-based customer care and feedback workflow
management platform, where businesses can manage the entire logistics of
customer care, feedback or inquiries throughout their entire organizations.
Businesses can respond quickly and accurately to customers, while keeping track
of every customer interaction. The platform is designed to grow and scale, so
that businesses of all sizes, from small to medium-size enterprises (SMEs) to
large enterprises, can use this cloud-based customer care and feedback
management system.
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Results of Operations
The following discussions are based on our unaudited interim consolidated
financial statements, including our wholly-owned subsidiaries. These discussions
summarize our unaudited interim consolidated financial statements for the three
and nine-month periods ended November 30, 2019, and should be read in
conjunction with the Company's audited consolidated financial statements for the
year ended February 28, 2019 and notes thereto included in the Form 10-K filed
with the SEC on June 13, 2019.
The following discussion contains forward-looking statements that reflect our
plans, estimates and beliefs. Our 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 Quarterly Report on Form 10-Q. The financial
statements are stated in United States Dollars and are prepared in accordance
with United States Generally Accepted Accounting Principles.
Three-Month Period Ended November 30, 2019 Compared to Three-Month Period Ended
November 30, 2018
Revenue. We did not generate any revenue during the three months ended November
30, 2019 or 2018.
Operating expenses: During the quarter ended November 30, 2019, we incurred
operating expenses in the amount of $658,728 compared to operating expenses
incurred during the quarter ended November 30, 2018 of $276,276 (an increase of
$382,452). Operating expenses include: (i) general and administrative of
$346,650 (2018: $117,636); and (ii) research and development of $316,078 (2018:
$158,640). General and administrative expenses increased by $229,014 due to
issuance of shares for financial services and stock-based compensation. Research
and development expenses increased by $157,438 due to increase in stock-based
compensation.
Nine-Month Period Ended November 30, 2019 Compared to Nine-Month Period Ended
November 30, 2018
Revenue. We did not generate any revenue during the nine months ended November
30, 2019 or 2018.
Operating expenses: During the nine months ended November 30, 2019, we incurred
operating expenses in the amount of $2,215,644 compared to operating expenses
incurred during the nine months ended November 30, 2018 of $1,181,527 (an
increase of $1,034,117). Operating expenses include: (i) general and
administrative of $730,209 (2018: $385,863); and (ii) research and development
of $1,485,435 (2018: $795,664). General and administrative expenses increased by
$344,346 due to new stock options and issuance of shares as compensation in
general and administrative services. Research and development expenses increased
by $689,771 due to new stock options as compensation in research and development
expenses.
Liquidity and Capital Resources
As of November 30, 2019
As at November 30, 2019, our current assets were $100,098 and our current
liabilities were $3,577,176, which resulted in a working capital deficit of
$3,477,078. As of November 30, 2019, current assets were comprised of: (i)
$90,709 in cash; and (ii) $9,389 in prepaid expenses and deposits. Also as of
November 30, 2019, current liabilities were comprised of: (i) $128,868 in
accounts payable and accrued liabilities; (ii) $15,000 in deferred revenue;
(iii) $2,694,314 in loans payable and (iv) $738,994 due to related party.
As of November 30, 2019, our total assets were $120,383 comprised of: (i)
current assets of $100,098; and (ii) equipment, net of depreciation of $20,285.
The increase in total assets during the nine months ended November 30, 2019 from
the fiscal year ended February 28, 2019 was due to an increase in cash, offset
by decreases in prepaid expenses and deposits and the depreciated value of
equipment.
As of November 30, 2019, our total liabilities were $3,577,176 comprised of
current liabilities.
Stockholders' deficit increased from $3,232,026 as of February 28, 2019 to
$3,456,793 as of November 30, 2019.
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Cash Flows from Operating Activities
We have generated negative cash flows from operating activities. For the nine
months ended November 30, 2019, net cash flows used in operating activities was
$526,163 compared to $849,529 for the nine months ended November 30, 2018.
Cash Flows from Financing Activities
Net cash flows provided from financing activities during the nine months ended
November 30, 2019 was $639,907, which consisted of $364,907 in proceeds from
loans and $275,000 in proceeds from the issuance of common stock. During the
nine months ended November 30, 2018, cash flows provided by financing activities
was $835,492, which consisted of $625,000 from the issuance of shares and
$215,938 from the proceeds of loans, offset by $5,446 in repayments of loans
payable.
Material Commitments
The balance due to a related party is interest free, unsecured and are repayable
on demand. The balance due to a related party is mainly in connection with the
services and financing provided for the development of an online complaint
resolution platform.
On October 7, 2019, the Company entered into an agreement with a company who is
to provide general financial advisory and investment banking services to the
Company. The Company is to pay this company $5,000 per month for a period of six
months. The monthly fee can be paid in cash or in shares at the Company's
option. If paid in shares of common stock of the Company, the shares shall be
valued using the volume-weighted average price of the shares for the five
trading days immediately preceding each monthly fee payment due date. The
Company is to issue 2,500,000 shares of common of stock upon execution of the
agreement (issued) and 2,500,000 shares of common stock upon an uplisting of the
Company's common stock to a national exchange. For any financing, the Company
will pay this company a commission of 8% of financing raised, a cash fee for
unallocated expenses of 1% of the amount of financing raised, and issue agent's
warrants equal to 8% of the number of shares of common stock underlying the
securities issued in the financing. Each agent's warrant will be exercisable at
an exercise price equal to the price of the securities issued to the investors
in the financing expiring five years from the date of issuance.
Off-Balance Sheet Arrangements
There were no off-balance sheet arrangements during the nine months ended
November 30, 2019 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 November 30, 2019, we had a working capital deficit of $3,477,078 and we
will require additional financing in order to enable us to proceed with our plan
of operations. There can be no assurance that additional financing will be
available to us or 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 and loans
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.
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Our auditor has issued a going concern opinion on our financial statements for
the fiscal year ended February 28, 2019. Additionally, at November 30, 2019, the
Company has a working capital deficit of $3,477,078, and has an accumulated
deficit of $54,149,162 since inception. Furthermore, during the nine months
ended November 30, 2019, the Company used $526,163 in operating activities. 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.
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.
We have not paid any sums for public relations or investor relations.
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 the nine months ended November 30, 2019 or which
are expected to impact future periods as follows:
In February 2016, the FASB issued new lease accounting guidance in ASU No.
2016-02, "Leases". This new guidance was initiated as a joint project with the
International Accounting Standards Board to simplify lease accounting and
improve the quality of and comparability of financial information for users.
This new guidance would eliminate the concept of off-balance sheet treatment for
"operating leases" for lessees for the vast majority of lease contracts. Under
ASU No. 2016-02, at inception, a lessee must classify all leases with a term of
over one year as either finance or operating, with both classifications
resulting in the recognition of a defined "right-of-use" asset and a lease
liability on the balance sheet. However, recognition in the income statement
will differ depending on the lease classification, with finance leases
recognizing the amortization of the right-of-use asset separate from the
interest on the lease liability and operating leases recognizing a single total
lease expense. Lessor accounting under ASU No. 2016-02 would be substantially
unchanged from the previous lease requirements under GAAP. ASU No. 2016-02 will
take effect for public companies in fiscal years beginning after December 15,
2018, including interim periods within those fiscal years. Early adoption is
permitted and for leases existing at, or entered into after, the beginning of
the earliest comparative period presented in the financial statements, lessees
and lessors must apply a modified retrospective transition approach. The Company
is currently evaluating the new guidance and has not determined the impact this
standard may have on the consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, "Changes to Disclosure Requirements
for Fair Value Measurements", which will improve the effectiveness of disclosure
requirements for recurring and nonrecurring fair value measurements. The
standard removes, modifies, and adds certain disclosure requirements, and is
effective for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2019. The Company will be evaluating the impact
this standard will have on the Company's financial statements.
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.
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