The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes to those financial statements that are included elsewhere in this report and in conjunction with the audited financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2020 filed with the SEC on April 13, 2021. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. 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, Cautionary Statement Regarding Forward-Looking Statements and Business sections in the audited financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2020.





Background and Overview


Webstar Technology Group, Inc. (the "Company") was incorporated in Wyoming on March 10, 2015. The Company was established for the operation of certain licensed and purchased software solutions. Since inception, the Company signed two license agreements with a related party to license proprietary software technology solutions, i.e., Gigabyte Slayer and WARP-G. The Company has been focused in large part on organizational activities and the development of its business plans to license the Gigabyte Slayer software application that is designed to deliver live video streams, video downloads and large data files more efficiently by using new proprietary data compression technology and to license the WARP-G software solution that is designed to enable enterprise customers that transmit live video streams, video downloads and large data files to push such data over existing pipelines at higher speeds in less time also by using new proprietary data compression technology. Further, the Company purchased the intellectual property rights for the Webstar eCampus virtual classroom access platform from a related party. The Company completed the license of Gigabyte Slayer and WARP-G software on April 21, 2020 and is now implementing the marketing plan to sub-license the software.





COVID-19


While the Company's operations have not been materially affected by the COVID-19 outbreak to date, the ultimate duration and severity of the outbreak and its impact on the economic environment and business is uncertain. Accordingly, while the Company does not anticipate an impact on its operations, the duration of the pandemic and potential impact on the business cannot be estimated. The spread of the coronavirus, which has caused a broad impact globally, including restrictions on travel and quarantine policies put into place by businesses and governments, may have a material economic effect on our business. While the potential economic impact brought on by and the duration of the pandemic may be difficult to assess or predict, it has already caused, and is likely to result in further, significant disruptions of global financial markets, which may reduce the Company's future ability to access capital either at all or on favorable terms. In addition, a recession, depression or other sustained adverse market events resulting from the spread of the coronavirus could materially and adversely affect our business and the value of our common stock. In addition, a severe or prolonged economic downturn could result in a variety of risks to the business, including a possible delay in implementing our business plan. At this time, the Company is unable to estimate the impact of this event on its operations.





Recent Developments



On August 2, 2021, the Company's Common Stock, under the trading symbol WBSR, began trading in the market for unlisted securities (i.e., the "over-the-counter market").





Plan of Operations



Gigabyte Slayer Software

Gigabyte Slayer is a distinct mobile application created to enable users to transmit more data over existing data streams to optimize data usage across mobile devices including smartphones and tablets. The application is designed to eliminate video streaming delays and reduce customers' data plan bandwidth usage from any 3G or 4G LTE cell phone network provider. The application is designed to deliver live video streams, video downloads and large data files more efficiently by using new proprietary data compression technology. This technology significantly reduces the data package size and enhances the data traffic control between cell phone provider data downloads and uploads to customers' mobile devices.

Web browsers perform various levels of caching data, the practice of storing data in and retrieving data from a memory device. Unfortunately, many use unsophisticated cache control capabilities. In comparison, Gigabyte Slayer data compression is capable of optimizing the high bandwidth downloads and returns the data to users' mobile devices. This process is expected to dramatically reduce the data bandwidth needed when watching online videos, playing online games, or simply downloading large data files. The service is targeted to enter the mobile device market by offering application downloads with a monthly service fee. A smartphone and tablet user utilizing the Gigabyte Slayer application is expected to be able to decrease their data usage on their current data plan, at no additional cost, from their cell phone provider. Further, Gigabyte Slayer is designed to eliminate downloads "buffering" currently experienced by many current applications.





16






WARP-G Software

WARP-G is a business to business software solution that companies can use on an enterprise wide basis to transmit more data over existing data streams to optimize their data usage. The software is designed to enable enterprise users to deliver faster data streams, experience shorter download/upload times and increase the volume and speed of the data. The software is designed to create less congestion and increase the speed of packets being delivered more efficiently by using new proprietary data compression technology. This technology is expected to allow the enterprise users to push more data through existing pipelines meeting increasing consumer video demands and other large files.

Webstar eCampus



Webstar eCampus is an affordable, virtual online education and e-learning technology that allows the possibility of almost any organization to offer educational services online. Following completion of the license of the Gigabyte Slayer software, we plan to enhance the Webstar eCampus virtual classroom access platform by incorporating the Gigabyte Slayer data technology which is designed to securely deliver all content at greater efficiency and significantly increase storage capabilities. This enhancement is expected to enable universities and other educational institutions to increase student participation and convenience with an enhanced experience for the students. Students will no longer experience delays in data transmission or "buffering" that is experienced by other online e-learning solutions. Webstar eCampus makes it possible for educators to offer their students visual online access to classroom activities from anywhere in the world. Remote students who use the service will be able to virtually access their classroom via the internet using their web enabled Smartphone, device or computer. The Webstar eCampus software was used in 2020 by California College of Early Childhood Development (the "California College") pursuant to an oral agreement. Under the terms of the oral agreement, the California College paid us an annual non-refundable license fee of $995 plus $195 per classroom, and $49.95 per student per class. Either party could terminate this use right at any time during its month-to-month term. California College, our only customer, terminated our agreement in January 2021.

Designed with customer and user simplicity in mind, there is no complex customer setup, expensive servers or software to buy or build. Webstar eCampus allows classes with increased scheduling flexibility in real time or after hours. It makes it possible and affordable for educators to offer students virtual on-demand classroom activities and to increase their student base and attendance around the world through increased availability and reduced cost of education per student, with enhanced delivery quality. Webstar eCampus offers virtual real-time e-library and e-bookstore capabilities as well as virtual auditorium and student body gathering venues. Ongoing reach of this technology is planned to include the development and implementation of virtual online learning centers in third world countries as well as medical support services and disaster relief services connected to our innovative software and virtual capabilities. Moreover, Webstar eCampus encompasses Cloud learning with secured connection and is smartphone ready.

Results of Operations for the three and nine months ended September 30, 2021 and 2020





Revenue



Revenue was $0 and $2,197 for the three months ended September 30, 2021 and 2020, respectively, and $0 and $4,793 for the nine months ended September 30, 2021 and 2020, respectively. In January 2021, the Company lost its only customer for the eCampus software thereby causing the drop in revenue. In the immediate future, the Company is focusing its efforts on sub-licensing the Gigabyte Slayer and WARP-G software to generate revenue. Cost of sales was $0 and $400 for the three months ended September 30, 2021 and 2020, respectively and $0 and $1,200 for the nine months ended September 30, 2021 and 2020, respectively. The cost of sales for the three and nine months ended September 30, 2020 was the amortization expense of the eCampus software. The amortization expense of the software for the three and nine months ended September 30, 2021, was included in general and administrative expenses due to the lack of revenue resulting from the loss of the eCampus customer. Gross profit was $0 and $1,797 for the three months ended September 30, 2021 and 2020, respectively, and $0 and $3,593 for the nine months ended September 30, 2021 and 2020, respectively. The gross profit decline was also due to the loss of the eCampus customer.





Operating Expenses


Total operating expenses which are comprised of salaries and related expenses, consulting fees and general and administrative expenses were $298,935 and $350,094 for the three months ended September 30, 2021 and 2020, respectively, and $925,209 and $1,045,141 for the nine months ended September 30, 2021 and 2020, respectively. The decreases are primarily attributable to the decreases in professional services, consulting fees, maintenance, and telephone expenses resulting from the Company's decreased need for legal services and the discontinuance of the use of consultants in an effort to reduce expenses and partially offset by increases in transfer agent fees due to the Company's stock issuances and transfers.





17






Net Loss


The net loss was $298,935 and $348,297 for the three months ended September 30, 2021 and 2020, respectively, and $925,209 and $1,041,548 for the nine months ended September 30, 2021 and 2020, respectively. The decrease in loss is primarily a result of the decreases in professional services, consulting fees, maintenance, and telephone expenses discussed above offset by an increase in transfer agent fees.

Liquidity, Going Concern and Uncertainties

Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. As of September 30, 2021, our working capital deficit amounted to $2,824,927 an increase of $924,113 as compared to working capital deficit of $1,900,814 as of December 31, 2020. This increase in working capital deficit is primarily a result of decreases in accounts receivable, and prepaid expenses and increases in accounts payable, accrued salaries and related expenses, and borrowings from our majority stockholder and partially offset by an increase in cash.

Net cash used in operating activities was $114,575 during the nine months ended September 30, 2021 compared to $204,997 for the nine months ended September 30, 2020. The decrease in cash used in operating activities was primarily attributable to a decrease in the net loss from less operating expenses, a decrease in accounts receivable and partially offset by increases in accounts payable and accrued salaries and related expenses.

Net cash provided by financing activities was $117,587 during the nine months ended September 30, 2021 compared to $229,172 in the nine months ended September 30, 2020. The decrease in cash from financing activities was the result of a decrease in cash advances received from our controlling stockholder and a decrease in proceeds from the sale of common stock.

The unaudited condensed financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. To date, the Company's commercial operations have not generated adequate revenues to enable profitability. Based on the current business plans and the Company's operating requirements, management believes that the current cash balance will not be sufficient to fund operations for at least the next twelve months following the issuance of these financial statements. These factors raise substantial doubt regarding the Company's ability to continue as a going concern.

The Company's continued operations will depend on its ability to raise additional capital through various potential sources, such as equity offerings and/or debt financings, strategic relationships, and to successfully execute its business plans. Management is actively pursuing financing, but can provide no assurances that such financing will be available on acceptable terms, or at all. Without this funding, the Company could be required to delay, scale back or eliminate some or all of its business plans which would likely have a material adverse effect on the Company.

The unaudited condensed financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

Generally, the Company's operations are subject to a number of factors that can affect its operating result and financial condition. Such factors include, but are not limited to, the results of our marketing efforts to promote users for our software solutions, successful launch and acceptance of our software solutions in the marketplace, competition of our software solutions, attraction of talented and skilled employees to support the business and the ability to raise capital to support its operations.

Since our inception, we have been funded by loans from our controlling shareholder, James Owens. The loans from Mr. Owens are pursuant to an oral agreement, are non-interest bearing and payable upon demand by Mr. Owens. Mr. Owens has orally agreed not to demand repayment of his loans until such time as we have sufficient capital resources to repay such loans. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. There can be no assurance that additional capital will be available to us. Since we have no other such arrangements or plans currently in effect, our inability to raise funds for the above purposes that exceed our current working capital will have a severe negative impact on our ability to remain a viable company.





18





We have incurred significant losses since our inception on March 10, 2015. We had a net loss for the nine month period ended September 30, 2021 of $925,209 and an accumulated deficit as of September 30, 2021 of $9,498,267. In the event we are unable to secure a line of credit from a related company, we will continue to seek sub-license agreements for our Gigabyte Slayer and WARP-G products but delay, scale back or eliminate some or all of our additional business plans until we raise additional capital. Since we have no agreement or arrangements for any future funding from Mr. Owens, we are unable to determine how long we will be able to operate our business. This raises substantial doubt about our ability to continue as a going concern.

Management's plan is to obtain such resources for our capital needs by obtaining capital from management and significant shareholders sufficient to meet its operating expenses. However, management cannot provide any assurances that we will be successful in accomplishing any of our plans.

Our ability to continue as a going concern is dependent upon our ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if we were unable to continue as a going concern.

Critical Accounting Policies and Estimates

Our significant accounting policies are more fully described in the notes to our unaudited condensed financial statements included herein for the nine month period ended September 30, 2021 and in the notes to our annual report 10-K which includes audited financial statements for the years ended December 31, 2020 and 2019. We believe that the accounting policies below are critical for one to fully understand and evaluate our financial condition and results of operations.





Use of Estimates


The preparation of the unaudited condensed financial statements 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 unaudited condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Certain of our estimates, including evaluating the collectability of accounts receivable, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. We re-evaluate all of our accounting estimates at least quarterly based on these conditions and record adjustments when necessary. Significant estimates made by management include the valuation of deferred tax assets and fair value of preferred stock.





Revenue Recognition


The Company recognizes revenue when control of the promised goods or services are transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. For student fees, we generate student fee revenue by registering each student that participates in an on-line classroom utilizing our eCampus platform. This revenue is earned at the time the on-line class takes place and is accrued during the period whether or not actually billed. The student fees are billed to the college conducting the classes during the period the classes are conducted. There are no prepayments for student fees so there is no deferred revenue related to student fees. The annual fee charged to the college is billed in the first quarter of the year and the income is recognized over the entire year. The Company billed $0 in annual fees in January 2021 and recognized no revenue in annual fees during the nine months ended September 30, 2021. Annual fees paid in advance of services performed would be presented as contract liabilities. The Company recognized revenue of $0 and $2,197 from student and annual fees during the three months ended September 30, 2021 and 2020, respectively, and $0 and $4,793 during the nine months ended September 30, 2021 and 2020, respectively.





19






Leases


The Company accounts for leases under ASU 2016-02. Operating leases are included in operating lease right-of-use ("ROU") assets and operating lease liabilities on the condensed balance sheets. The Company leases office equipment used to conduct our business.

Operating lease ROU assets represent the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Operating lease expense is recognized on a straight-line basis over the lease term and is included in general and administrative expenses in the unaudited condensed statements of operations. During the three and nine months ended September 30, 2021, the Company recorded $438 and $1,314, respectively, and $438 and $1,314, respectively, for the three and nine months ended September 30, 2020 as operating lease expense which is included in general and administrative expenses on the condensed statements of operations. As of September 30, 2021 and December 31, 2020, the unamortized right-of-use assets resulting from the lease was $4,218 and $5,258, respectively, and the lease liabilities were $4,297 and $5,360, respectively.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

© Edgar Online, source Glimpses