ZOOS HLDG This discussion and analysis should be read in conjunction with the accompanying unaudited interim condensed consolidated financial statements and related notes for the three and nine months endedSeptember 30, 2020 as filed with theSecurities and Exchange Commission and included in this Form 10-Q and the annual financial statements and management discussion and analysis for the year endedDecember 31, 2019 filed on Form 10-K. Forward-looking Statements This Quarterly Report on Form 10-Q contains statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements included or incorporated by reference in this Quarterly Report on Form 10-Q, other than statements of historical fact, that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements appear in several places, including, but not limited to in this "Management's Discussion and Analysis of Financial Condition and Results of Operations." These statements represent our reasonable judgment of the future based on various factors and using numerous assumptions and are subject to known and unknown risks, uncertainties and other factors, including the impact of the coronavirus (COVID-19) pandemic on our business, that could cause our actual results and financial position to differ materially from those contemplated by the statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts, and use words such as "anticipate," "believe," "estimate," "expect," "forecast," "may," "will", "should," "plan," "project" and other words of similar meaning. These include, but are not limited to, statements relating to the following:
• Projected operating or financial results, including anticipated cash flows
used in operations
• Expectations regarding capital expenditures; and
• Assumptions relating to our liquidity position, including our ability to
obtain additional financing, if required.
• Any or all our forward-looking statements may turn out to be wrong. They can
be affected by inaccurate assumptions or by known or unknown risks,
uncertainties and other factors including, among others:
• The loss of key management personnel on whom the Company depends;
• Our ability to operate our business efficiently, manage capital expenditures
and costs (including general and administrative expenses) and obtain
financing if required.
• Our expectations with respect to our acquisition activity.
In addition, there may be other factors that could cause our actual results to be materially different from the results referenced in the forward-looking statements, some of which are included in this Quarterly Report on Form 10-Q, including in this "Management's Discussion and Analysis of Financial Condition and Results of Operations." Many of these factors will be important in determining our actual future results. Consequently, no forward-looking statement can be guaranteed. Our actual future results may vary materially from those expressed or implied in any forward-looking statements. All forward- looking statements contained in this Quarterly Report on Form 10-Q are qualified in their entirety by this cautionary statement. Forward-looking statements speak only as of the date they are made, and the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q, except as otherwise required by applicable law. The discussion and analysis of the financial condition and results of operations are based upon the financial statements, which have been prepared in accordance with accounting principles generally accepted inthe United States ("U.S. GAAP"). The preparation of financial statements in conformity withU.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis management reviews our estimates and assumptions. The estimates were based on historical experience and other assumptions that management believes to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions. 4 Business Overview The Company is a Software Fintech company and continue to develop and acquire software platforms and services to sell to customers globally with a focus on leading edge technologies and software as a service. The company is actively seeking opportunities to acquire software companies with existing revenue streams.Zoompass Holdings, Inc. formerly known asUVIC. Inc. ("Zoompass Holdings " or the "Company") was incorporated under the laws of theState of Nevada on August
21, 2013.
In
EffectiveMarch 6, 2018 , the Company's Canadian operating subsidiary,Zoompass, Inc. , entered into an Asset Purchase Agreement (the "Agreement") for the sale of its Prepaid Card Business ("Prepaid Business") toFintech Holdings North America Inc. , or its designee. The aggregate purchase price of the Prepaid Business wasC$400,000 . The transaction was completed onMarch 26, 2018 . OnOctober 17, 2018 , the Company purchased certain business assets that represents a business fromVirtublock Global Corp. ("Virtublock", "VGC") in return the Company issued 44,911,724 shares to Virtublock and pursuant to the issuance of shares Virtublock ended up owning 45% of total outstanding common shares of the Company.
OnFebruary 27, 2020 , the Company cancelled 44,911,724 shares of the common stock which were issued in connection with the asset purchase agreement datedOctober 17, 2018 withVirtublock Global Corp. Pursuant to a General Release agreement datedNovember 29, 2019 , the asset purchase agreement datedOctober 17, 2018 withVirtublock Global Corp. was deemed cancelled and each party acknowledged and agreed that no party has or shall have any claim with respect to intellectual property, software or other assets owned by any other party and that no agreements exist or remain unsatisfied with respect to the transfer of any asset from a releasing party to any other party, andVirtublock Global Corp. assigned and tendered the 44,911,724 shares of common stock of the Company
to the Company for cancellation.
OnMay 31, 2020 , the Company closed a Share Exchange Agreement (the "Share Exchange Agreement") by and among the Company,Blockgration Global Corp. , anOntario corporation and its subsidiaries ("BGC"), and the shareholders of BGC (the "BGC Shareholders"). This acquisition gives the Company controlling interest in BGC's subsidiaries inCanada andIndia which is engaged in the business of digital wallet deployments, prepaid card platform, blockchain and mobile apps deployment. OnJuly 15, 2020 , the Company entered into certain Intellectual Property Rights Purchase and Transfer Agreement withMoxie Holdings Private Ltd. , an Indian corporation for (i) cash consideration of$1.2 million to be paid in installments, (ii) four million (4,000,000) newly issued shares of common stock, and (iii) warrants to purchase two million (2,000,000) shares of common stock at an exercise price of$0.50 per share valid for three years. The Company has incurred recurring losses from operations and as ofSeptember 30, 2020 andDecember 31, 2019 , had net working capital deficiency and an accumulated deficit. The Company's continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing. We continue to evaluate various potential strategies with the goal of improving our ability to achieve additional revenue and profit growth for software products and services. These possible strategies, which are generally focused on ways to create a more complete slate of customer experience solutions for potential clients, include further software or technology development expenditures, pursuit of merger, acquisitions or joint ventures with companies that provide complimentary products and services, software licensing arrangements, and investment in additional infrastructure within our Company. Each of these possible strategies will be thoroughly vetted by our board of directors to assess the expected level of enterprise value creation for each strategy compared to the various risks associated with each possible scenario. In addition, we may require financing to pursue these strategies that is beyond our current financial resources. Accordingly, there is no assurance that we will be able to pursue any strategies that are identified by our board of directors. In addition, inDecember 2019 , a novel strain of coronavirus ("COVID-19") was reported inWuhan, China and has since extensively impacted the global health and economic environment. InMarch 2020 , theWorld Health Organization characterized COVID-19 as a pandemic. The COVID-19 pandemic and the government responses to the outbreak presents uncertainty and risk with respect to the Company and its performance and financial results. 5 Business Developments Completed the acquisition ofBlockgration Global Corp. , and its subsidiaries through a share exchange agreement thereby giving the Company potential revenues from the many significant contracts for the prepaid card platform and digital wallets.
Completed the purchase of the Digital asset platform putting in place the infrastructure required to expand on the multicurrency and cross border technology platform globally.
Appointed executive officers at the corporate level to channel the operations of the Company.
Our Business Model and Objectives
For the near term, our business objectives include:
• Continue to leverage our ability as a Program Manager in
and
• Target to launch the Ride Hail platform in
association
• Target to launch the Agriculture Supply Chain platform in the Jamaican market
Results of operations for the three months ended
The following table shows our results of operations for the three months endedSeptember 30, 2020 and 2019. The historical results presented below are not necessarily indicative of the results that may be expected for any future period. Period Change Three Months Ended Three Months Ended September 30, 2020 September 30, 2019 Dollars Percentage Revenues$ 671,251 $ -$ 671,251 100 % Operating expenses 1,489,594 256,126 1,233,468 482 % Loss from operations (818,343 ) (256,126 ) (562,217 ) 220 % Other income (expenses) Impairment of goodwill - - - - Interest accretion (61,118 ) - (61,118 ) 100 % Change in FV of contingent consideration 1,868,233 - 1,868,233 100 % 1,807,115 - 1,807,115 100 % Net Income (loss) 988,772 (256,126 ) 1,244,898 486 % Revenue Total revenue for the three months endedSeptember 30, 2020 was$671,251 which represented an increase of 100%, compared to total revenue of $Nil for the three months endedSeptember 30, 2019 . OnMay 31, 2020 , the Company completed acquisition ofBlockgration Global Corp and its subsidiaries and the revenue is the result of this acquisition for the period endedSeptember 2020 . The revenue for the period is relatively lower than the historical amounts due to the impact of COVID-19. The Company did not recognize any revenue for three months endedSeptember 30, 2019 . 6 Operating Expenses Period Change Three Months Ended Three Months Ended September 30, 2020 September 30, 2019 Dollars Percentage Staff related expenses$ 368,187 $ 165,335 $ 202,852 123 % Salaries and consulting fees 313,973 138,982 Professional fees 54,214 26,353 Research and development 343,922 28,246 315,676 1118 % Cost of sales 342,730 - Software development costs 1,192 28,246 General and administrative 107,282 39,150 68,132 174 % Insurance 36,816 - Filing fees and regulatory costs 7,026 - Rent expense 54,431 6,683 Office and sundry expense 8,780 32,467 Travel expense 229 - Bad debts 5,333 - 5,333 100 % Share-based payments 680,029 - 680,029 100 % Depreciation and amortization 195,162 - 195,162 100 % Other expenses (210,321 ) 23,395 (233,716 ) (999 %) (Gain) on settlement/revaluation of debt (126,376 ) - Foreign exchange loss (gain) (83,945 ) 23,395 Total operating expenses 1,489,594 256,126 1,233,468 482 %
Our operating expenses were comprised of staff related costs, research and development costs, general and administrative, share-based payments, depreciation and amortization and other expenses. Our operating expenses during the three months period endedSeptember 30, 2020 and 2019 were$1,489,594 and$256,126 , respectively. The overall increase of$1,233,468 was primarily attributable to the following changes in operating expenses of:
• Staff related expenses increased by
ended
attributed to the staff expenses for
subsidiaries for the period for approximately 50 employees in
benefits that were not previously accrued.
• Research and development cost increased by
analysis, we have classified the cost of generating revenue from the operations
in
increase is primarily related to this cost. 7
• General and administrative expenses increased by
primarily related to the insurance premium by
ended
rent and office expenses for
• Bad debt expenses for the three months ended
due to the impact of COVID-19.
• Share-based payments decreased by
2,000,000 stock options to officers, directors and consultant of the Company on
vest over 3-year period, the fair value of vested options during the three
months ended
period the Company issued 2,000,000 shares of the common stock to Officers and
consultants as compensation for services rendered. The fair value of these
shares was determined to be in the amount of
• Depreciation and amortization increased by
assets acquired from
• Other expenses (income) increased by
currency exchange rate difference for transactions at the corporate office and
unrealized gain on revaluation of debts. Net Income The Company reported a net income of$988,772 for the three months endedSeptember 30, 2020 , compared to net loss of$256,126 for the three months endedSeptember 30, 2019 . The change is due to the gain on the change in fair value of contingent consideration of$1,868,233 and for the reasons discussed above. The loss from operations for the three months endedSeptember 30, 2020 amounted to$818,343 . Results of operations for the nine months endedSeptember 30, 2020 and 2019 The following table shows our results of operations for the nine months endedSeptember 30, 2020 and 2019. The historical results presented below are not necessarily indicative of the results that may be expected for any future period. Period Change Nine Months Ended Nine Months Ended September 30, 2020 September 30, 2019 Dollars Percentage Revenues$ 758,007 $ -$ 758,007 100 % Operating expenses 2,584,139 625,014 1,959,125 313 % Loss from operations (1,826,132 ) (625,014 ) (1,201,118 ) 192 % Other income (expenses) Impairment of goodwill (13,243,071 ) - (13,243,071 ) 100 % Interest accretion (61,118 ) - (61,118 ) 100 % Change in FV of contingent consideration (1,121,144 ) - (1,121,144 ) 100 % (14,425,333 ) - (14,425,333 ) 100 % Net loss (16,251,465 ) (625,014 ) (15,626,451 ) 2500 % Revenue Total revenue for the nine months endedSeptember 30, 2020 was$758,007 which represented an increase of 100%, compared to total revenue of $Nil for the nine months endedSeptember 30, 2019 . OnMay 31, 2020 , the Company completed acquisition ofBlockgration Global Corp and its subsidiaries and the revenue is the result of this acquisition for the period endedSeptember 2020 . The Company did not recognize any revenue for nine months endedSeptember 30, 2019 . 8 Operating Expenses
Our operating expenses were comprised of staff related costs, research and development costs, general and administrative, share-based payments, depreciation and amortization and other expenses. Our operating expenses during the nine months period endedSeptember 30, 2020 and 2019 were$2,584,139 and$625,014 , respectively. The increase of$1,959,125 is primarily due to the increase in share-based payments by$905,631 , depreciation and amortization by$260,215 and bad debts of$45,905 as shown in the table below: Period Change Nine Months Nine Months Ended September 30, Ended September 30, 2020 2019 Dollars Percentage Staff related expenses $ 626,389 $ 344,854$ 281,535 82 % Salaries and consulting fees 527,251 256,866 Professional fees 99,138 87,988 Research and development 412,854 79,010 333,844 423 % Cost of sales 399,019 - Software development costs 13,835 79,010 General and administrative 221,452 55,549 165,903 299 % Insurance 72,730 -
Filing fees and regulatory costs 38,975
2,406 Rent expense 79,352 12,655 Office and sundry expense 24,474 40,488 Travel expense 5,921 - Bad debt 45,905 - 45,905 100 % Share-based payments 1,132,631 227,000 905,631 399 % Depreciation and amortization 260,215 - 260,215 100 % Other expenses (115,307 ) (81,399 ) (33,908 ) 42 % (Gain) on settlement of debt (159,567 ) - Foreign exchange loss (gain) 44,260 (81,399 ) Total operating expenses 2,584,139 625,014 1,959,125 313 % Net loss
We had net operating loss of
Liquidity, Capital Resources and Cash Flows
Management believes that we will continue to incur losses for the immediate future. Therefore, we will need additional equity or debt financing until we can achieve profitability and positive cash flows from operating activities. These conditions raise substantial doubt about our ability to continue as a going concern. Our unaudited condensed consolidated financial statements do not include and adjustments relating to the recovery of assets or the classification of liabilities that may be necessary should we be unable to continue as a going concern. For the nine months endedSeptember 30, 2020 , we have generated revenue and are trying to achieve positive cash flows from operations. As ofSeptember 30, 2020 , we had a cash balance of$102,058 , accounts receivable of$651,554 and$2,870,043 in current liabilities. At the current cash consumption rate, we will need to consider additional funding sources going forward. We are taking proactive measures to reduce operating expenses and drive growth in revenue. The successful outcome of future activities cannot be determined at this time and there is no assurance that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operating results.
Capital Resources
The following table summarizes total current assets, liabilities and working capital (deficit) for the periods indicated:
September 30, December 31,
2020 2019
Current assets $ 895,426 $ 32,040
Current liabilities 2,870,043 849,201
Working capital (1,974,617 ) (817,161 )
As of
© Edgar Online, source
