Item
1. Financial Statements.
EZTD
INC.
INTERIM
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2016
IN
U.S. DOLLARS
UNAUDITED
INDEX
|
Page
|
|
|
Condensed
Consolidated Balance Sheets
|
F-1
- F-2
|
|
|
Condensed
Consolidated Statements of Comprehensive Income
|
F-3
|
|
|
Condensed
Consolidated Statements of Cash Flows
|
F-4
|
|
|
Notes
to Condensed Consolidated Financial Statements
|
F-5
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
U.S.
Dollars (in thousands)
|
|
June 30, 2016
|
|
December 31, 2015
|
|
|
Unaudited
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Segregated client cash accounts
|
|
|
2,617
|
|
|
|
1,501
|
|
Restricted cash
|
|
|
55
|
|
|
|
42
|
|
Receivable from credit card companies
|
|
|
1,577
|
|
|
|
1,874
|
|
Other current assets
|
|
|
839
|
|
|
|
856
|
|
Total current assets
|
|
|
5,088
|
|
|
|
4,273
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
3,174
|
|
|
|
2,389
|
|
Intangible assets, net
|
|
|
360
|
|
|
|
380
|
|
|
|
|
|
|
|
|
|
|
Total non-current assets
|
|
|
3,534
|
|
|
|
2,769
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
8,622
|
|
|
|
7,042
|
|
The
accompanying notes are an integral part of the condensed consolidated financial statements.
CONDENSED
CONSOLIDATED BALANCE SHEETS
U.S.
Dollars (in thousands, except share and per share data)
|
|
|
|
|
June 30, 2016
|
|
|
December 31,
2015
|
|
|
|
Note
|
|
|
Unaudited
|
|
|
|
|
LIABILITIES AND EQUITY CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
Short term loan
|
|
|
|
|
-
|
|
|
594
|
|
Obligation to customers
|
|
|
|
|
|
|
3,514
|
|
|
|
3,922
|
|
Financial liabilities
|
|
|
|
|
|
|
1,435
|
|
|
|
109
|
|
Convertible loans
|
|
|
4
|
|
|
|
4,945
|
|
|
|
4,943
|
|
Accounts payable
|
|
|
|
|
|
|
1,313
|
|
|
|
1,235
|
|
Accrued expenses and other accounts payable
|
|
|
|
|
|
|
4,099
|
|
|
|
1,909
|
|
Total current liabilities
|
|
|
|
|
|
|
15,306
|
|
|
|
12,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LONG TERM LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued severance pay, net
|
|
|
|
|
|
|
238
|
|
|
|
230
|
|
Total liabilities
|
|
|
|
|
|
|
15,544
|
|
|
|
12,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY (DEFICIT):
|
|
|
6
|
|
|
|
|
|
|
|
|
|
Common stock of $ 0.03 par value:
|
|
|
|
|
|
|
|
|
|
|
|
|
Authorized: 10,000,000 shares at June 30, 2016 and December 31, 2015; Issued and outstanding: 4,973,614 shares at June 30, 2016 and 3,863,260 shares at December 31, 2015
|
|
|
|
|
|
|
149
|
|
|
|
116
|
|
Prepayment on account of shares
|
|
|
|
|
|
|
52
|
|
|
|
-
|
|
Additional paid-in capital
|
|
|
|
|
|
|
42,075
|
|
|
|
34,875
|
|
Accumulated deficit
|
|
|
|
|
|
|
(49,198
|
)
|
|
|
(40,891
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity (deficit)
|
|
|
|
|
|
|
(6,922
|
)
|
|
|
(5,900
|
)
|
Total liabilities and equity
|
|
|
|
|
|
|
8,622
|
|
|
|
7,042
|
|
The
accompanying notes are an integral part of the condensed consolidated financial statements.
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
U.S.
Dollars (in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
|
Three months ended
|
|
|
|
|
June 30, 2016
|
|
|
|
June 30, 2015
|
|
June 30, 2016
|
|
June 30, 2015
|
|
|
Note
|
|
Unaudited
|
|
Unaudited
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
11,964
|
|
|
|
12,545
|
|
4,920
|
|
5,402
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
|
11,636
|
|
|
|
9,178
|
|
4,790
|
|
3,955
|
General and administrative
|
|
|
|
4,236
|
|
|
|
1,840
|
|
2,212
|
|
1,090
|
Research and development
|
|
|
|
940
|
|
|
|
884
|
|
516
|
|
471
|
Stock-based compensation
|
|
|
|
569
|
|
|
|
910
|
|
196
|
|
453
|
Expenses
related to potential legal settlement
|
|
5B
|
|
1,500
|
|
|
|
-
|
|
1,500
|
|
-
|
Total operating expenses
|
|
|
|
18,881
|
|
|
|
12,812
|
|
9,214
|
|
5,969
|
Operating loss
|
|
|
|
(6,917)
|
|
|
|
(267)
|
|
(4,294)
|
|
(567)
|
Financial expenses, net
|
|
|
|
(1,390)
|
|
|
|
(2,270)
|
|
(641)
|
|
(718)
|
Net loss before taxes on income
|
|
|
|
(8,307)
|
|
|
|
(2,537)
|
|
(4,935)
|
|
(1,285)
|
Taxes on income
|
|
|
|
-
|
|
|
|
-
|
|
-
|
|
-
|
Net loss attributable to the Company
|
|
|
|
(8,307)
|
|
|
|
(2,537)
|
|
(4,935)
|
|
(1,285)
|
Total basic net loss per share
|
|
|
|
(1.88)
|
|
|
|
(0.80)
|
|
(0.99)
|
|
(0.41)
|
Weighted average number of common stock used in computing basic net loss per share
|
|
|
|
4,429,083
|
|
|
|
3,154,099
|
|
4,971,634
|
|
3,172,010
|
The
accompanying notes are an integral part of the condensed consolidated financial statements.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S.
Dollars (in thousands)
|
|
|
|
|
|
|
Six months ended
|
|
|
June 30, 2016
|
|
June 30, 2015
|
|
|
Unaudited
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(8,307
|
)
|
|
|
(2,537
|
)
|
Adjustments required to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
569
|
|
|
|
910
|
|
Depreciation and amortization
|
|
|
518
|
|
|
|
191
|
|
Fair value of warrants granted
|
|
|
33
|
|
|
|
1,279
|
|
Accrued interest and amortization of discount and exchange differences of loans
|
|
|
84
|
|
|
|
(136
|
)
|
Decrease in receivables from credit card companies
|
|
|
297
|
|
|
|
63
|
|
Decrease (increase) in other current assets
|
|
|
17
|
|
|
|
(757
|
)
|
Decrease (increase)in accounts payable
|
|
|
78
|
|
|
|
(154
|
)
|
Increase (decrease) in obligation to customers and other payables
|
|
|
1,782
|
|
|
|
(687
|
)
|
Increase in financial liabilities
|
|
|
1,326
|
|
|
|
345
|
|
Increase in severance pay, net
|
|
|
8
|
|
|
|
78
|
|
Increase (decrease) in related parties payables
|
|
|
(1
|
)
|
|
|
(53
|
)
|
Net cash used in operating activities
|
|
|
(3,596
|
)
|
|
|
(1,458
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(1,283
|
)
|
|
|
(723
|
)
|
Decrease (Increase) in segregated client cash accounts
|
|
|
(1,116
|
)
|
|
|
692
|
|
Increase in restricted cash
|
|
|
(13
|
)
|
|
|
(151
|
)
|
Net cash used in investing activities
|
|
|
(2,412
|
)
|
|
|
(182
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Issuance of shares and warrants
|
|
|
5,850
|
|
|
|
65
|
|
Prepayment on account of shares
|
|
|
52
|
|
|
|
1,683
|
|
Proceeds received from convertible loans
|
|
|
1,436
|
|
|
|
—
|
|
Repayment of short-term loan
|
|
|
(578
|
)
|
|
|
—
|
|
Repayment of convertible loans
|
|
|
(752
|
)
|
|
|
(108
|
)
|
Net cash provided by financing activities
|
|
|
6,008
|
|
|
|
1,640
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents
|
|
|
—
|
|
|
|
—
|
|
Cash and cash equivalents at the beginning of the period
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flows information:
|
|
|
|
|
|
|
|
|
Interest paid
|
|
|
271
|
|
|
|
136
|
|
Conversion of convertible loan to shares
|
|
|
783
|
|
|
|
364
|
|
The
accompanying notes are an integral part of the condensed consolidated financial statements.
NOTE
1: GENERAL:
|
A.
|
EZTD Inc. (“the Company”) was incorporated in April 2002 under the laws of the State of Nevada. On June 3, 2015, the Company reincorporated in Delaware. The Company is engaged in the business of offering online trading of binary options and forex, enabling trading on contracts for differences in shares, indices, commodities and foreign exchanges. The Company’s shares were quoted on the OTCQB Marketplace in the United States under the symbol “EZTD” from 2010 until August 2013, when the Company terminated its registration under the Securities Exchange Act of 1934, as amended, and as a result the Company’s shares were quoted on the OTC Pink. The Company filed with the Securities and Exchange Commission (“SEC”) a Form 10, which became effective on August 31, 2015 and on October 30, 2015 the Company was officially quoted again in the OTCQB Marketplace. On December 30, 2015, the Company upgraded to be officially quoted in the OTCQX Marketplace.
|
|
|
|
|
|
The Company conducts its operations and business with and through its active wholly-owned subsidiaries, (a) Win Global Markets Inc. (Israel) Ltd., an Israeli company, (b) WGM Services Ltd., a company registered in Cyprus (“WGM”), (c) EZ Invest Securities Ltd., a Japanese corporation, (d) SCGP Investments Limited, a Belizean company, (e) EZTD Australia PTY Ltd., an Australian company, and (f) EZ Trader, Ltd, a company registered in Vanuatu. On January 26, 2015, the Company changed its name from EZ Trader, Inc. to EZTD Inc.
|
|
|
|
|
B.
|
The accompanying consolidated financial statements have been prepared assuming that the Company will continue
as a going concern. The Company has suffered losses from operations and negative cash flows from operations since inception. For
the six months ended June 30, 2016, the net loss attributable to the Company was $8.307 million and the negative cash flows from
operations were $3.596 million. As of June 30, 2016, the Company’s obligations to customers amounted to $3.514 million, while
current assets were $5.088 million. Customers may withdraw their deposits upon demand. According to regulatory requirements in
Cyprus, WGM is required to maintain capital of at least €730 thousand and have funds exceeding client obligations. Funds consist
of cash, segregated client cash accounts, restricted cash and receivables from credit card companies. Despite its negative cash
flows, the Company has been able to secure financing to support its operations to date based on share issuances and loans. The
Company plans to seek additional funds from equity issuances in order to continue its operations and to leverage its binary options
business. Although there is a substantial doubt that the Company will continue as a going concern, the consolidated financial statements
do not include any adjustments that may result from the outcome of this uncertainty.
|
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis
of presentation
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim
financial information. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial
statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements
contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the
Company. Operating results for the six months ended June 30, 2016 are not necessarily indicative of the results that may be expected
for the year ending December 31, 2016. The interim condensed consolidated financial statements incorporate the financial statements
of the Company and all of its subsidiaries. All intercompany balances and transactions have been eliminated on consolidation.
Use
of Estimates
The
preparation of the financial statements in conformity with U.S. GAAP 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 dates of the
financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ
from those estimates.
Principles
of consolidation
The
consolidated financial statements comprise the results and position of the Company and its subsidiaries. Control is the power
to govern the financial and operating policies of an entity so as to obtain benefits from its operating activities. In assessing
control, legal and contractual rights are taken into account. The consolidated financial statements of subsidiaries are included
in the consolidated financial statements from the date that control is achieved until the date that control ceases. Intercompany
transactions and balances are eliminated upon consolidation.
Reclassifications
Clearance
expenses in the comparative figures have been reclassified from sales and marketing expenses to finance expenses to conform to
the current presentation.
Following the Company's reverse stock split, described
in note 6, the comparative loss per share for the period of six and three months ended June 30, 2015 was amended from $0.03 to
$0.80, and from $0.01 to $0.41, respectively.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Cont.):
Recently
Issued Accounting Pronouncements:
In
March 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standard Update (“ASU”)
No. 2016-09, “Improvements to Employee Share-Based Payment Accounting”, which revises the guidance in ASC 718, Compensation
- Stock Compensation, and will change how companies account for certain aspects of share-based payments to employees, including
the income tax impact, classification on the statement of cash flows and forfeitures. The guidance is effective for reporting
periods (interim and annual) beginning after December 15, 2017, for public companies. Early adoption is permitted. The Company
is currently assessing the potential impact of this ASU on its consolidated financial position and results of operations.
In
February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which establishes the principles to report transparent
and economically neutral information about the assets and liabilities that arise from leases. This guidance results in a more
faithful representation of the rights and obligations arising from operating and capital leases by requiring lessees to recognize
the lease assets and lease liabilities that arise from leases in the statement of financial position and to disclose qualitative
and quantitative information about lease transactions, such as information about variable lease payments and options to renew
and terminate leases. This guidance is effective prospectively for interim and annual periods beginning after December 15, 2018.
Early adoption is permitted. The new guidance must be adopted using a modified retrospective approach. The Company is currently
assessing the impact of this guidance.
In
January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10) (“ASU 2016-01”),
which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 will
be effective for the Company beginning in its first quarter of 2019. The Company is currently assessing the potential impact of
this ASU on its consolidated financial position and results of operations.
In August 2014, the FASB issued ASU No. 2014-15,
“Presentation of Financial statements - Going concern (subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability
to Continue as a Going Concern”. The new standard provides guidance on management’s responsibility in evaluating whether
there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures.
For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial
doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are
issued. ASU 2014-15 applies prospectively to annual periods ending after December 15, 2016, and to annual periods thereafter. Early
application is permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on its consolidated financial
statements.
NOTE
3 - FAIR VALUE MEASUREMENT:
The
Company measures fair value and discloses fair value measurements for financial and non-financial assets and liabilities. Fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The
accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair
value into three broad levels, which are described below:
Level
1
: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The
fair value hierarchy gives the highest priority to Level 1 inputs.
Level
2
: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
Level
3
: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority
to Level 3 inputs.
In
determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the
use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.
NOTE
3 - FAIR VALUE MEASUREMENT (Cont.):
Items
carried at fair value as of June 30, 2016 and December 31, 2015 are classified in the table below in one of the three categories
described above.
|
|
Fair value measurements using
input type
|
|
|
|
June 30, 2016
|
|
|
|
U.S. Dollars (in thousands)
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Segregated client cash accounts
|
|
|
2,617
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,617
|
|
Restricted cash
|
|
|
55
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55
|
|
Financial liabilities - Forex
|
|
|
-
|
|
|
|
(1,208
|
)
|
|
|
-
|
|
|
|
(1,208
|
)
|
Financial liabilities - Binary
|
|
|
-
|
|
|
|
-
|
|
|
|
(227
|
)
|
|
|
(227
|
)
|
|
|
|
2,672
|
|
|
|
(1,208
|
)
|
|
|
(227
|
)
|
|
|
1,237
|
|
The
Company measures changes in the fair value of “long term options” (classified as financial liabilities) through profit
or loss using valuation techniques.
Total
gain for the period recognized in earnings amounted to $1,112 thousand and total unrealized gain related to those financial liabilities
at the end of the period recognized in earnings amounted to $340 thousand. All instruments were issued during the period and no
transfers took place into or out of Level 3 during the period.
The
following table summarizes the Level 3 Roll-Forward:
|
|
Financial
liabilities - Binary
as
of
December 31,
2015
|
|
|
Net realized / unrealized
gain
|
|
|
Issuance
|
|
|
Transfers
out of (into)
Level 3
|
|
|
Settlements (realized gain)
|
|
|
Financial
liabilities - Binary
as
of
June 30,
2016
|
|
|
Unrealized gain- still
held
|
|
|
|
U.S. Dollars (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative options based
on commodities
|
|
|
(5
|
)
|
|
|
56
|
|
|
|
(105
|
)
|
|
|
-
|
|
|
|
39
|
|
|
|
(11
|
)
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative options based on exchange
differences
|
|
|
(23
|
)
|
|
|
233
|
|
|
|
(439
|
)
|
|
|
-
|
|
|
|
162
|
|
|
|
(48
|
)
|
|
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative options based on equity
shares
|
|
|
(81
|
)
|
|
|
823
|
|
|
|
(1,547
|
)
|
|
|
-
|
|
|
|
571
|
|
|
|
(168
|
)
|
|
|
252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(109
|
)
|
|
|
1,112
|
|
|
|
(2,091
|
)
|
|
|
-
|
|
|
|
772
|
|
|
|
(227
|
)
|
|
|
340
|
|
NOTE
3 - FAIR VALUE MEASUREMENT (Cont.):
This
fair value measurement of the derivatives in the table above is based on significant unobservable inputs (other than quoted prices
in active markets that are observable for liability)
and thus represent a Level 3 measurement within the fair value hierarchy.
The key inputs used in measuring the fair value of financial liabilities depend upon the type of derivative and the nature of
the underlying instrument, and include: risk-free interest rates, quoted foreign exchange rates, quoted market prices, contractual
life of the derivative and expected volatility based on past experience.
The
Company’s financial liabilities are evaluated on a quarterly basis by the Company’s Finance Department based upon
the Rubenstein and Reiner pricing model for cash-or-nothing options in determining fair value. These evaluations are independently
reviewed on an annual basis by an independent third party. Any changes in fair value of financial liabilities are recorded in
the consolidated statement of operations. Changes in fair value of financial liability are recorded in consolidated statement
of operations.
The
measurement of financial liabilities classified within Level 3 of the fair value hierarchy is evaluated by the head of the Company’s
risk department and the Company’s Chief Financial Officer. Measurements deemed necessary are reviewed by the Board of Directors.
The
following table summarizes the valuation techniques and inputs for Level 3 fair value measurements.
|
|
Fair
|
|
|
|
|
|
|
Weighted
|
|
Liabilities
|
|
value
|
|
|
Methodology
|
|
Input
|
|
Average
|
|
Derivative options based on
|
|
$
|
11
|
|
|
Cash or Nothing- option model
|
|
Expected volatility
|
|
|
25
|
%
|
commodities
|
|
|
|
|
|
|
|
Risk-free interest rate
|
|
|
0.25
|
%
|
|
|
|
|
|
|
|
|
Expected contractual life
|
|
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative options based on
|
|
$
|
48
|
|
|
Cash or Nothing- option model
|
|
Expected volatility
|
|
|
15
|
%
|
exchange differences
|
|
|
|
|
|
|
|
Risk-free interest rate
|
|
|
0.25
|
%
|
|
|
|
|
|
|
|
|
Expected contractual life
|
|
|
0.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative options based on
|
|
$
|
168
|
|
|
Cash or Nothing- option model
|
|
Expected volatility
|
|
|
28
|
%
|
equity shares
|
|
|
|
|
|
|
|
Risk-free interest rate
|
|
|
0.25
|
%
|
|
|
|
|
|
|
|
|
Expected contractual life
|
|
|
0.32
|
|
The
following section describes the ranges of the most significant unobservable inputs used by the Company in Level 3 fair value measurements.
The level of aggregation and the diversity of instruments held by the Company lead to a wide range of unobservable input that
may not be evenly distributed across the Level 3 liabilities.
Volatility
generally depends on the tenor of the underlying instrument and the strike price or level defined in the contract. Volatilities
for certain combinations of tenor and strike price are not observable. Generally, as the volatility increases in the long term
positions the value of the derivative increases; the inverse is also true. Some instruments are more sensitive to changes in volatility
than others. For example, an at-the-money option would experience a larger percentage change in its fair value than a deep-in-the-money
option. In addition, the fair value of an option with more than one underlying security depends on the volatility of the individual
underlying securities. Specific volatility inputs vary widely by asset type. For example, ranges for foreign exchange volatility
are generally lower and narrower than equity volatility. Equity instruments (stock) volatilities are wider due to the nature of
the stock market and the terms of certain exotic instruments. For most instruments, the interest rate volatility input is on the
lower end of the range; however, for certain structured or exotic instruments (such as market-linked asset or exotic interest
rate derivatives), the range is much wider. Volatility represents the speed and severity of market price changes and is a key
factor in pricing options. Typically, instruments can become more expensive if volatility increases. For example, as an index
becomes more volatile, the cost to maintaining a given level of exposure increases because more frequent rebalancing of the portfolio
is required.
|
|
Fair value measurements using
input type
|
|
|
|
December 31, 2015
|
|
|
|
U.S. Dollars (in thousands)
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Segregated client cash accounts
|
|
|
1,501
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,501
|
|
Restricted cash
|
|
|
42
|
|
|
|
-
|
|
|
|
-
|
|
|
|
42
|
|
Financial liabilities - Binary
|
|
|
-
|
|
|
|
-
|
|
|
|
(109
|
)
|
|
|
(109
|
)
|
|
|
|
1,543
|
|
|
|
-
|
|
|
|
(109
|
)
|
|
|
1,434
|
|
Note
4 - Convertible loanS:
|
A.
|
On
February 13 and 27, 2014, the Company entered into a Convertible Loan Agreement with
some of its shareholders and new investors, in which it borrowed an aggregate amount
of $2.8 million. The loans are convertible into a total of 265,451 (in fixed dollar conversion
price and fixed Euro - Dollar currency exchange rate) common shares of the Company. Some
of the loans are indexed to the Euro, and all of the loans bear interest at an annual
rate of 10%. The Company shall repay the loan amount and the interest, in one lump sum,
on the “Final Repayment Day”, which is 12 months after the applicable closing
date or, if extended by the lender, 24 months from the applicable closing date.
The
Company recorded issuance costs of approximately $154 thousand, which are amortized using the effective rate of the loan
over the loan period. As of June 30, 2016,
all the deferred issuance costs were recorded in the Statements of Operations.
In 2015, the Company repaid $408 thousand of the February
2014 loans and $364 thousand of the February 2014 loans were converted into 34,686 shares of common stock. The remaining $2 million
in loans were extended for one additional year to be repaid with interest in February 2016, in consideration of the issuance of
an additional 42,857 warrants at an exercise price of $10.50 per share. In April 2016, $500 thousand of the February 2014 loans
were repaid. In March 2016, €364 thousand of the February 2014 loans were converted into 55,556 shares of common stock.
In
March 2016 the Company and one of the lenders under the Convertible Loan Agreement dated February 2014 agreed to extend
the payment date of $1 million, under the same terms until February 13, 2017 with a yearly interest of 5%. In addition,
one of the lenders under the Convertible Loan Agreement dated February 27, 2014, elected to convert $500 thousand into
55,556 shares of common stock of the Company.
On
April 7, 2016, the Company repaid one of the February 2014 convertible loans plus interest in the amount of $590 thousand.
As
of June 30, 2016, the outstanding loan balance amounted to $1 million.
The
Company determined that the convertible loans do not fall within the scope of ASC 480-10. The embedded conversion feature
and the extension clause should not be bifurcated in accordance with ASC 815. In addition, the Company followed ASC 470-20
to determine whether a beneficial conversion feature exists at loan inception and came to the conclusion that a beneficial
conversion feature should not be recognized.
|
|
B.
|
On
January 29, 2016, the Company entered into a convertible loan agreement pursuant to which the lender loaned the Company the
principal amount of $1.436 million. The loan matures in January 2017, and bears an annual interest rate of 12%, to be paid
together with the outstanding principal in one lump sum. The loan is convertible into 249,967 shares of common stock of the
Company.
As of June 30, 2016, the outstanding loan balance amounted to $1.344 million.
The
Company determined that the convertible loans do not fall within the scope of ASC 480-10. The embedded conversion feature
and the extension clause should not be bifurcated in accordance with ASC 815. In addition, the Company followed ASC 470-20
to determine whether a beneficial conversion feature exists at loan inception and came to the conclusion that a beneficial
conversion feature should not be recognized.
|
NOTE
5
-
CONTINGENCIES:
|
A.
|
On June 17, 2015, Feyenoord Rotterdam N.V. (“Feyenoord”) instituted an arbitration proceeding against the Company before the Netherlands Arbitration Institute in Rotterdam, the Netherlands.
On April 6, 2016 the arbitral tribunal issued the award which stated that the agreement between the Company and Feyenoord was terminated and dissolved as of January 27, 2015, and both parties share responsibility for this termination. In view of this conclusion, a provision was included in the Company's condensed consolidated financial statements. The Company appealed to revert this decision on July 6, 2016.
|
|
B.
|
On
January 11, 2016, the Company received a written “Wells Notice” from SEC staff (the “Staff”)
indicating its preliminary determination to recommend that the SEC file an action against the Company for violations of
certain federal securities laws primarily related to its binary options platform. A Wells Notice is neither a formal
allegation of wrongdoing nor a finding that any violations of law have occurred. Rather, it provides the Company with an
opportunity to respond to issues raised by the Staff and offer its perspective prior to any Commission decision to
institute proceedings. If the Staff makes a recommendation to the SEC to file an action against the Company, the
recommendations may involve a civil injunctive action, public administrative proceeding, and/or cease-and-desist
proceeding. The SEC may also seek remedies that include an injunction and/or cease and desist order, disgorgement,
pre-judgment interest, and civil money penalties. On February 3, 2016, the Company submitted a written submission to the
Staff setting forth reasons why the proposed enforcement should not be filed. At this time the Company is unable to
predict the outcome of the investigation, any potential enforcement actions or any other impact on the Company that may
arise as a result of such investigation.
A
proper provision was included in the Company's condensed consolidated financial statements
.
|
|
C.
|
The
Company evaluates estimated losses for indemnifications due to product infringement under FASB Topic ASC 450 “Contingencies.”
At this time, it is not possible to determine the maximum potential amount under these indemnification clauses due to lack
of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Such indemnification
agreements may not be subject to maximum loss clauses. Historically, the Company has not incurred material costs as a result
of obligations under these agreements and has not accrued any liabilities related to such indemnification obligations in the
Company’s financial statements.
|
NOTE
6 - SHARE CAPITAL:
|
A.
|
On
February 11, 2016, the Company’s Board of Directors and stockholders approved (1)
an amendment to the Company’s Certificate of Incorporation to reduce the Company’s
authorized Common Stock from 300,000,000 shares, with a par value of $0.001 per share,
to 10,000,000 shares with a par value of $0.03 per share (the “Amendment”),
and (2) a 1-for-30 reverse stock split of the Company’s issued and outstanding
shares of Common Stock, such that each 30 shares of Common Stock held by stockholders
of record on April 7, 2016 will be combined into one share of Common Stock, except to
the extent that such actions result in any of the Company’s stockholders holding
a fractional share of Common Stock (in which instance, because such stockholder’s
number of shares is not evenly divisible by the 30:1 ratio, such stockholder will be
automatically entitled to receive an additional fraction of a share of common stock to
round up to the next whole share) (the “Reverse Stock Split”).
On
April 7, 2016, the Reverse Stock Split became effective. The number of shares and per share amounts for the prior periods
presented below have been retroactively restated to reflect the Reverse Stock Split.
|
|
|
|
|
B.
|
During
the six months ended June 30, 2016, the Company granted 86,000 options to employees in accordance with the terms and conditions
of the Company’s 2004 Global Share Option Plan.
|
|
|
|
|
C.
|
On
March 31, 2016, the Company entered into a securities purchase agreement with Compagnie Financiere St. Exupery Sicav-Sif,
as purchaser, providing for the issuance and sale by the Company to the purchaser, in a private placement, of an aggregate
of 1,000,000 shares of the Company’s common stock at a price of $6.00 per share, corresponding to an aggregate purchase
price of $6 million, and a warrant to purchase up to an additional 888,889 shares of the Company’s common stock at an
exercise price of $6.75 per share, which is exercisable 6 months after the closing.
|
NOTE
7 - RELATED PARTIES:
Transactions
|
|
Six months ended
June
30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
U.S. Dollars (in thousands)
|
|
Stock-based compensation
|
|
|
337
|
|
|
|
509
|
|
Management fees (1), salaries (2), and bonuses (3)
|
|
|
770
|
|
|
|
737
|
|
|
|
|
1,107
|
|
|
|
1,246
|
|
Balances
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
U.S. Dollars (in thousands)
|
|
Accrued fees and bonuses
|
|
|
(32
|
)
|
|
|
33
|
|
(1)
|
Management fees of $127 thousand and $126 thousand for the six month periods ended June 30, 2016 and 2015,
respectively, were paid to the Company’s Chief Executive Officer (“CEO”) for each of the six month periods ended
June 30, 2016 and 2015.
|
(2)
|
Salaries were paid to the Company’s CEO and Media Manager in the amounts of $56 thousand and $32 thousand,
respectively, for the six month period ended June 30, 2016. Salaries were paid to the Company’s CEO and Media Manager in
the amounts of $73 thousand and $38 thousand, respectively, for the six month period ended June 30, 2015. Fees of $149 thousand
and $142 thousand were paid to the Company’s directors, for the six month periods ended June 30, 2016 and 2015, respectively.
|
(3)
|
Bonuses were paid to Company’s CEO in the amount of $172 thousand and $156 thousand for the six month periods ended June 30, 2016 and 2015, respectively, pursuant to the terms of the consulting agreement by and between the Company and Citron Investments Ltd., dated as of September 23, 2008, as amended; bonuses were paid to the Company’s Media Manager in the amount of $234 thousand and $202 thousand for the six month periods ended June 30, 2016 and 2015, respectively, pursuant to the terms of the consulting agreement by and between the Company and Yariv Citron Marketing Ltd. dated as of October 1, 2014.
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
Overview
Our
unaudited condensed consolidated financial statements are stated in United States Dollars (in thousands) and are prepared in accordance
with U.S. generally accepted accounting principles.
You
should read the following discussion of our financial condition and results of operations together with the unaudited condensed
consolidated financial statements and the notes to unaudited condensed consolidated financial statements included elsewhere in
this Quarterly Report on Form 10-Q.
Our
Company was incorporated under the laws of the State of Nevada on April 23, 2002. On June 3, 2015, the Company reincorporated
in Delaware. Effective as of January 26, 2015, we changed our name from EZTrader, Inc. to EZTD Inc.
We are engaged in the business of offering online trading
of binary options and forex, enabling trading on contracts for differences in shares, indices, commodities and foreign exchanges.
We conduct our operations and business with and through our wholly owned subsidiaries: (a) Win Global Markets Inc. (Israel) Ltd.,
an Israeli company, (b) WGM Services Ltd., a company registered in Cyprus (“WGM”), (c) EZ Invest Securities Ltd., a
Japanese corporation, (d) SCGP Investments Limited, a Belizean company, (e) EZTD Australia PTY Ltd., an Australian company, and
(f) EZ Trader, Ltd., a company registered in
Vanuatu. Trading is being offered by WGM on http://www.eztrader.com,
http://www.globaloption.com, and http://www.ezinvest.com. Information contained on, or that can be accessed through, our websites
does not constitute a part of this Quarterly Report on Form 10-Q, and we have included our website addresses in this Quarterly
Report on Form 10-Q solely as inactive textual references.
We
have developed and currently operate an online trading platform for retail customers to trade a wide range of binary options internationally
with more than 100 different assets including indices, international stocks, commodities and currency pairs (“Trading Platform”).
The
Trading Platform enables retail customers to trade binary options in more than 30 countries. The self-developed, proprietary Trading
Platform is accessible from multiple operating systems and the internet. The Trading Platform has been designed to be as intuitive
and as easy to use as possible, and is localized into eleven languages. We believe that our emphasis on technology, together with
targeted online marketing strategy, has helped to differentiate us from our competitors.
We
conduct our operations from three offices which are located in Nicosia, Cyprus, London, England and Tel-Aviv, Israel. We also
recently opened an office in Tokyo, Japan. We manage risk in a number of ways, in particular by limiting financial exposure to
any individual customer to a relatively low level as well as limiting exposure to any individual asset. We generate our revenues
principally from the margin between winning customers and losing customers. We do not charge customers a commission on trades.
In
February 2016, our Board of Directors and stockholders approved (1) an amendment to the Company’s certificate of Incorporation
to reduce the Company’s authorized Common Stock from 300,000,000 shares, with a par value of $0.001 per share, to 10,000,000
shares, with a par value of $0.03 per share, or the Amendment, and (2) a 1-for-30 reverse stock split of the Company’s issued
and outstanding shares of Common Stock, such that each 30 shares of Common Stock held by stockholders of record on April 7, 2016
was combined into one share of Common Stock, except to the extent that such actions resulted in any of the Company’s stockholders
holding a fractional share of Common Stock (in which instance, because such stockholder’s number of shares is not evenly
divisible by the 1:30 ratio, such stockholder is entitled to receive an additional fraction of a share of Common Stock to round
up to the next whole share), or the Reverse Stock Split.
The Board determined that it was in the best
interests of the Company and its stockholders to reduce the number of outstanding shares of its Common Stock as part of its intention
to list the Company’s shares of Common Stock on the NASDAQ and the corresponding requirements. In order to initially list
the Company’s shares on NASDAQ, its Common Stock must have a closing price of at least $3.00 per share. On August 15, 2016,
the closing price of our Common Stock was $3.25 per share.
Selected
Financial Information
We calculate the average revenue per user, or
ARPU, by dividing the total revenues for the period by the total number of current active users. Current active users are defined
as customers who performed at least one deposit or one transaction within the past seven months from the reported period. We had
revenues net for the three months ended June 30, 2016 and 2015 of $4,920,000 and $5,402,307, respectively, while the number of
active users for those periods was 10,507 and 9,188, respectively. As a result, the ARPU for those periods was $468 and $588, respectively.
We had revenues net for the six months ended June 30, 2016 and 2015 of $11,964,000 and $12,545,307, respectively, while the number
of active users for those periods was 28,932 and 26,663, respectively. As a result, the ARPU for those periods was $414 and $471,
respectively. We measured these metrics in order to track the difference in ARPU and to change our marketing strategy accordingly,
if needed, during the year.
We calculate the average user acquisition
cost, or AUAC, by dividing the total acquisition costs by the total number of active users for any given period. Total acquisition
costs for the three months ended June 30, 2016 and 2015 were $2,862,280 and $2,630,888, respectively, and total acquisition costs
for the six months ended June 30, 2016 and 2015 were $7,861,306 and $6,207,551, respectively. They are included as part of our
Sales and Marketing expenses.
We ascertain the Return on Investment
(“ROI”) by dividing the ARPU by AUAC in order to track fluctuations in the ratio. The ROI for the three months ended
June 30, 2016 was 1.72 as compared to an ROI of 2.05 for the three months ended June 30, 2015. The ROI for the six months ended
June 30, 2016 was 1.52 as compared to an ROI of 2.02 for the six months ended June 30, 2015.
This
discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those anticipated in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements”
in this Quarterly Report on Form 10-Q, and “Risk Factors” in our Form 10-K.
RESULTS
OF OPERATIONS FOR THREE AND SIX MONTHS ENDED JUNE 30, 2016 COMPARED TO THREE AND SIX MONTHS ENDED JUNE 30, 2015
Revenues
and Cost of Revenues
During
the three and six months ended June 30, 2016 and 2015 we mainly generated revenues from our binary options business.
Total
revenues for the three months ended June 30, 2016 decreased by 8.9% to $4,920,000 from $5,402,000 in the three months ended June
30, 2015. Total revenues for the six months ended June 30, 2016 decreased by 4.6% to $11,964,000 from $12,545,000 for the six
months ended June 30, 2015. The decreases for the three and six months ended June 30, 2016 are mainly attributable to a significant
increase in withdrawals of customers as a result of new regulations imposed by our Cypriot regulator.
Trading
volume for the three months ended June 30, 2016 and 2015 was $29,060,559 and $17,364,385, respectively. Trading volume for the
six months ended June 30, 2016 and 2015 was $81,886,559 and $41,643,385, respectively. Revenues as a percentage of trading volume
for the three months ended June 30, 2016 and 2015 was 17% and 31%, respectively. Revenues as a percentage of trading volume for
the six months ended June 30, 2016 and 2015 was 15% and 30%, respectively.
The
ARPU for the three months ended June 30, 2016 and 2015 was 468 and 588, respectively. The ARPU for the six months ended June 30,
2016 and 2015 was 414 and 471, respectively.
The AUAC for the three months ended
June 30, 2016 and 2015 was 272 and 286, respectively. The AUAC for the six months ended June 30, 2016 and 2015 was 272 and 233,
respectively.
The ROI for the three months ended
June 30, 2016 and 2015 was 1.72 and 2.05, respectively. The ROI for the six months ended June 30, 2016 and 2015 was 1.52 and 2.02,
respectively.
Sales
and
Marketing
Our
sales and marketing expenses consist primarily of traffic acquisition costs, which are paid to our affiliate partners, media and
advertising companies, as well as compensation and related expenses for marketing personnel.
Total sales and marketing expenses
for the three months ended June 30, 2016 increased by 21.1% to $4,790,000 from $3,955,000 for the three months ended June 30,
2015. Selling and marketing expenses for the six months ended June 30, 2016 increased by 26.78% to $11,636,000 compared to $9,178,000
for the six months ended June 30, 2015. These increases in sales and marketing expenses are attributable to the expansion of our
business and increased marketing efforts, including expenses relating to employee payroll and payments to media agents and their
affiliates.
Research
and Development
Our
research and development expenses consist primarily of compensation and related expenses for our software development personnel,
outsourced labor and expenses for testing new versions of our software.
Research
and development expenses for the three months ended June 30, 2016 increased by 9.5% to $516 from $471 for the three months ended
June 30, 2015. Research and development expenses for the six months ended June 30, 2016 increased by 6.3% to $940 from $884 for
the six months ended June 30, 2015. These increases are mainly attributed to the increase in payroll and related expenses due
to salary increases and growth in our research and development team.
General
and Administrative
Our
general and administrative expenses consist primarily of compensation and related expenses for executive, accounting, legal, human
resources and administrative personnel, professional fees and other general corporate expenses.
General and administrative expenses for the
three months ended June 30, 2016 increased by 102.9% to $2,212,000 from $1,090,000 for the three months ended June 30, 2015. General
and administrative expenses for the six months ended June 30, 2016 increased by 130.2% to $4,236,000 from $1,840,000 for the six
months ended June 30, 2015. These increases are mainly attributable to a significant increase in legal expenses, mainly due to
the arbitration's outcome related to the Feyenoord arbitration described in Note 5 to the Financial Statements included in Part
I, Item 1 of this Quarterly Report on Form 10-Q, an increase in payroll, an increase in depreciation expenses due to investment
in our platform, and additional costs due to the expansion of operations in our Cyprus and Japanese offices, and the opening of
new offices in London.
In addition, we made a provision
of $1,500,000 relating to a potential legal settlement, as further described in Note 5.B. to the Financial Statements included
in Part I, Item I of this Quarterly Report on Form 10-Q.
Financial Expenses
Our financial expenses, net for the three months
ended June 30, 2016 were $641,000 compared to the financial expenses of $718,000 for the three months ended June 30, 2015. Our
financial expenses, net for the six months ended June 30, 2016 were $1,390,000 compared to the financial expenses of $2,270,000
for the six months ended June 30, 2015. These decreases in financial expenses are mainly attributable to the grant of warrants
recorded during the first half of 2015.
Net
Loss Attributable to the Company
Net loss attributable to the Company for the
three months ended June 30, 2016 was $4,935,000 compared to a net loss of 1,285,000 for the three months ended June 30, 2015. Net
loss for the six months ended June 30, 2016 was $8,307,000 compared to a net loss of $2,537,000 for the six months ended June 30,
2015. Net loss per share from operations for the three months ended June 30, 2016 and June 30, 2015 was $0.99 and $0.41, respectively.
Net loss per share from operations for the six months ended June 30, 2016 and June 30, 2015 was $1.88 and $0.80, respectively.
Net loss for the three and six months ended June 30, 2016 and June 30, 2015 was mainly attributable to the operations of our binary
options business, which incurred significant marketing and operational expenses primarily consisting of online advertising for
our binary options websites, and employee related expenses
Liquidity
and Capital Resources
We
require cash to fund our operations and we have experienced significant losses and negative cash flows in the recent past. Further,
our independent auditors modified their report for the years ended December 31, 2015 and 2014 to express substantial doubt as
to our ability to continue as a going concern. Since our inception, we have funded our operations primarily through the public
and private sales of our securities, revenues received from customers and otherwise. We had a decrease in issued and
outstanding shares of our common stock from 115,895,731 shares at December 31, 2015, to 4,973,614 at June 30, 2016, due to the
Reverse Stock Split, as further described in the “Overview” section of Part I, Item 2 of this Quarterly Report on
Form 10-Q.
As of June 30, 2016, our total current assets
were $5,088,000 and our total current liabilities were $15,306,000. On June 30, 2016, we had an accumulated deficit of $49,198,000. We
currently finance our operations through revenues from our binary options business, and with funds provided by borrowings and issuance
of stock and warrant activities described below. We plan to continue raising funds in such ways in order to continue our operations
and to leverage our binary options business. There is no assurance, however, that we will be successful in raising such funds.
On
March 31, 2016, we entered into a securities purchase agreement with Compagnie Financiere St. Exupery Sicav-Sif providing for
the issuance and sale by us to the purchaser, in a private placement, of an aggregate of 1,000,000 shares of our common stock
at a price of $6.00 per share, corresponding to an aggregate purchase price of $6,000,000, and a warrant to purchase up to an
additional 888,889 shares of our common stock at an exercise price of $6.75 per share, which is exercisable 6 months after the
closing.
On
January 29, 2016, the Company entered into a convertible loan agreement pursuant to which the lender loaned the Company the principal
amount of £1,000,000. The loan matures in January 2017, and bears an annual interest rate of 12%, to be paid together with
the outstanding principal in one lump sum. The loan is convertible into 249,967 shares of common stock of the Company upon either:
(i) the Company’s election to convert all or part of the principal amount of the Loan outstanding at such time, including
any accrued and unpaid interest into the converted common stock (or a pro rata portion thereof in case of partial conversion)
or (ii) the occurrence of an event of default under the convertible loan agreement.
On
February 16, 2016, one of the lenders under a prior convertible loan agreement dated October 29, 2013, by and among the Company
and certain Company shareholders, elected to convert €200,000 into 48,129 shares of common stock of the Company.
Net
cash used in operating activities was $3,596,000 during the six months ended June 30, 2016 as compared to net cash used in operating
activities of $1,458,000 in the six months ended June 30, 2015 which resulted primarily from
operating
expenses of our binary options business, including marketing expenses, employee wages, and depreciation expenses due to investment
in our platform.
Net cash used in investing activities during
the six months ended June 30, 2016 was $2,412,000, as compared to net cash used in investing activities during the six months ended
June 30, 2015 of $182,000, mainly due to purchasing of $1,283,000 in fixed assets and investment in our platform, and the increase
in segregated client cash accounts of approximately $1,116,000.
Net
cash provided by financing activities during the six months ended June 30, 2016 was $6,008,000 as compared to $1,640,000 provided
by financing activities during the six months ended June 30, 2015, the resulting difference primarily from the issuance of shares
and warrants in the amount of approximately $5,850,000 following the March 2016 security purchase agreement, an increase of $1,436,000
in proceeds received from convertible loans, offset by repayment of approximately $1,330,000 convertible and short term loans
and a decrease of approximately $1,631,000 in prepayment on account of shares.
Off-Balance
Sheet Arrangements
As
of June 30, 2016, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have
a future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.
Outlook
We
believe that our future success will depend upon our ability to enhance our binary options business. Although our current anticipated
levels of revenues and cash flow are subject to many uncertainties and cannot be assured, we believe that we have sufficient cash
to fund our operations for at least the next 12 months.