Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The
information set forth in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)
contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995,
including, among others (i) expected changes in our revenue and profitability, (ii) prospective business opportunities and (iii)
our strategy for financing our business. Forward-looking statements are statements other than historical information or statements
of current condition. Some forward-looking statements may be identified by use of terms such as “believes”, “anticipates”,
“intends” or “expects”. These forward-looking statements relate to our plans, liquidity, ability to complete
financing and purchase capital expenditures, growth of our business including entering into future agreements with companies,
and plans to successfully develop and obtain approval to market our product. We have based these forward-looking statements largely
on our current expectations and projections about future events and financial trends that we believe may affect our financial
condition, results of operations, business strategy and financial needs.
Although
we believe that our expectations with respect to the forward-looking statements are based upon reasonable assumptions within the
bounds of our knowledge of our business and operations, in light of the risks and uncertainties inherent in all future projections,
the inclusion of forward-looking statements in this Quarterly Report should not be regarded as a representation by us
or any other person that our objectives or plans will be achieved.
We
assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions
affecting forward-looking statements.
Our
revenues and results of operations could differ materially from those projected in the forward-looking statements as a result
of numerous factors, including, but not limited to, the following: the risk of significant natural disaster, the inability of
the company to insure against certain risks, inflationary and deflationary conditions and cycles, currency exchange rates, and
changing government regulations domestically and internationally affecting our products and businesses.
You
should read the following discussion and analysis in conjunction with the Financial Statements and Notes attached hereto, and
the other financial data appearing elsewhere in this Quarterly Report.
US
Dollars are denoted herein by “USD”, “$” and “dollars”.
Overview
Intelligent
Cloud Resources Inc. (“Intelligent Cloud”) was incorporated on March 27, 2014 under the laws of the State of Nevada
as a development stage company. The Company aims to offer cloud enabler and cloud broker services to small and medium sized organizations
in Canada and plans to expand to such organizations in the United States in the future. The Company has a strong development team
who can build all types of applications on cloud computing and can perform cloud enabler and cloud broker services. Intelligent
Cloud Resources will help businesses to break away all of the barriers associated with installing software on to physical hardware
by making the software from anywhere on the globe. For those enterprises that have security concerns for deploying their applications
on a public cloud, the Company can also build a private cloud accessible to only those persons who work within the organization.
The launch of the Fonia “All Access Mobile” platform will be a powerful consumer oriented addition to Intelligent
Cloud Resources’ product offering.
As
of the date of this annual report, neither our website nor any other application has been developed to the point that we can describe
specifically its nature or its scope. We have started generating minimal revenue and anticipate an increase in revenue from the
sale of our cloud services to companies. Specifically, Intelligent Cloud plans to offer the best quality cloud computing services
to the SME (small and medium-sized enterprises) sector of Canada for a monthly service charge and eventually expand such services
to this sector in the United States.
As
of the date of this prospectus, the amounts of the prices for our range from $500 and up depending on the complexity of the software.
As our platform and services are developed, we will adjust the prices based upon our costs, the prices of competing services and
the terms of the contract with our clients.
We
have limited operational history. We have not yet generated significant revenue and we continue to incur substantial operating
loss and an accumulated deficit. These conditions raise substantial doubt about our ability to continue as a going concern. Our
ability to continue as a going concern is dependent upon our ability to develop additional sources of capital, our cloud services,
website and other applications, and ultimately, achieve profitable operations.
We
are currently a development stage company and have just started generating minimal revenue. We do not currently engage in significant
business activities that provide cash flow. The contracts we have secured are expected to be an assessment of our current capabilities
and will help us determine factors such as how many hours are put in and whether or not we should adjust our prices accordingly.
We may require additional capital to implement our business and fund our operations. See “Management’s Discussion
and Analysis” on page 10.
The
Company’s fiscal year end is December 31. The Company’s principal executive office and mailing address is 6418 Ambrosia
Dr., #5301, San Diego, CA, 92124. Our telephone number is (647) 478-6385.
Our
Business
The
Company intends to offer cloud-enabler and cloud broker services mainly to small and medium sized organizations in Canada. The
Company plans to hire a strong development team who can build all types of applications on cloud computing and can perform cloud
enabler and cloud broker services. Intelligent Cloud Resources will help businesses to break away all of the barriers associated
with installing software on to physical hardware by making the software available from anywhere on the globe. For those enterprises
that have security concerns for deploying their applications on a public cloud, the Company also plans to build a private cloud
accessible to only those persons who work within the organization.
The launch of the Fonia “All
Access Mobile” platform will be a powerful consumer oriented addition to Intelligent Cloud Resources’ product offering.
Intelligent
Cloud will offer enormous advantages over traditional ways of managing information on the customer local desktop or in a LAN.
An important advantage involves better access to the data and improved reliability and robustness. Data in the cloud can be easily
mirrored and backed up in multiple geographical locations, giving customers far higher reliability even if one server location
is affected due to natural or man-made disasters. There is also a great advantage of scalability because companies can instantly
add new servers and disc spaces to their infrastructure if a website gets a lot of hits. Thus, Intelligent Cloud computing is
a way of utilizing computing infrastructure – applications, data storage, and accounting – on the Internet, allowing
access to the data and applications from multiple locations. The following are the key features of Intelligent Cloud computing:
☐ Server
Virtualization and Consolidation.
☐ Network
Virtualization and optimizing Storage.
☐ Scalability.
☐ High
Availability.
☐ Efficient
Backup.
☐ On
Demand Provisioning.
☐ Management
and Automation.
☐ Less
CAPEX High ROI
The
team of Intelligent Cloud Resources has experts who will guide its customers through the right process for the migration and will
provide hand holding support to them during the entire process and will help them tap the full power of the cloud.
As
of the date of this Annual Report, our cloud enabler and cloud broker services have not been fully developed and we have not received
significant revenue from the sale of our cloud services. Specifically, customers will be charged a customized fee to develop their
cloud platform for a fee of between $500 and $2,000. Customers will also pay us a monthly hosting fee of between $20 and $50.
Prior
to filing this Annual Report, we entered into contracts with two clients under which we will provide cloud computing services
for 6 months. We will work directly with the clients to design customized internal databases for their companies. The fees to
the Company under the terms of these contract are $500 and $400.
The
team of experts that Intelligent Cloud Resources plans to hire will be competitive enough to manage the IT infrastructure of small,
medium, multinationals and large companies and enterprises and would perform the services in the following major areas:
|
|
●
|
Cloud Migration
- Migrating to the cloud is a complex task and it requires careful planning and analysis of data storage and application
requirements. Intelligent Cloud Resources would help to develop the right migration strategy and migrate the clients’
data and processes to the cloud with the least amount of service disruption.
|
|
|
●
|
Infrastructure
Management
- The Company’s team of engineers would assist the clients’ developers in setting up the production
environment, managing the release schedules and getting the infrastructure configured.
|
|
|
●
|
VoIP Solution
on Cloud
- For businesses providing enterprise-grade VoIP solutions it is imperative that they cut their infrastructure
costs while working to improve their reliability. Cloud computing can pair up with VoIP to offer a quality and reliable voice
solution at an affordable price. Intelligent Cloud Resources team will setup VoIP infrastructure on the cloud.
|
|
|
●
|
Cloud Management
- Cloud management is a set of approaches and technologies that lets the client leverage the full power of the cloud.
Intelligent Cloud Resources would provide the tools and support to maintain a 24/7 uptime with proper disaster planning and
a solution that will satisfy the security compliance requirements.
|
|
|
●
|
Application Development
- Application development on the cloud is quite different from application development involving a single server. Intelligent
Cloud Resources would plan and design the whole application with the cloud in mind and will the clients scale application
in a big way.
|
|
|
●
|
Cloud Enablement
- The cloud enablement service of Intelligent Cloud Resources will be designed to help in developing the right cloud strategy
that has a sound business footing. It will help to understand the flexibility, reliability and scalability, cloud computing
can provide with various data points and technical support to choose the right approach in migrating to servers and applications
to the cloud.
|
As
of the date of this Annual Report, the amounts of the prices for our products have not been determined. As our technology is further
developed and completed, we will determine the prices based upon our costs, the prices of competing products and the terms of
the contract with our clients.
At
any phase, if we find that we do not have adequate funds to complete a phase, we may have to suspend its operations and attempt
to raise more money so we can proceed with the business operations. If we cannot raise the capital to proceed we may have to suspend
operations until we have sufficient capital. We expect to raise the required funds for the next 12 months with equity or debt
financing.
To
become profitable and competitive, we need to develop and advance the technology to a point where it can be sold commercially.
To achieve this goal, management has prepared the following phases for its plan of operation for the next 12 months.
Phase
1 - Develop the Technology (12 months)
Intelligent
Cloud Resources has planned to perform the services in two major areas (i) Cloud Broker Services (ii) Cloud Enabler Services.
Intelligent Cloud Resources would help its clients in the following manner:
|
|
●
|
Developing private clouds and to determine hardware
procurements
|
|
|
●
|
Identifying the right cloud technology
|
|
|
●
|
Migrating existing applications and services
to the cloud environment
|
|
|
●
|
Documenting the procedure and training in-house
staff
|
Intelligent
Cloud Resources would also help customers migrate their applications or servers which are running on traditional hardware to move
to Amazon AWS or Rackspace and will provide consultation services and technical services for doing this migration. For cloud enablement,
we have implemented open source cloud technologies for the private cloud, which can compete with the licensed and costly cloud
technologies. Currently many licensed cloud technologies are creating a vendor lock-in for the enterprises, which would need customers
to pay hefty amount for the licenses and support.
Expansion
Plan
The
Company will undergo an aggressive expansion after the successful execution of the initial Phase 1. The business will be expanded
in four steps. In the first phase, the Company will focus on the Toronto area. In the second phase, the Company will move to the
Ottawa, Ontario and Winnipeg areas, and then throughout the Canada in the next phase. In the fourth phase, the Company will expand
into the United States. The time spam for moving one phase to other depends on the market scenario and overall performance of
the Company.
Cloud
Broker Services
It
can be a difficult task for a business to choose the right cloud provider. Intelligent Cloud Resources will play the role of a
cloud broker and can explain the advantages and disadvantages in each cloud provider.
Cloud
Enabler Services
Intelligent
Cloud Resources will offer services of all four models of cloud deployment: Private Cloud, Public Cloud, Hybrid Cloud and Community
Cloud. However, due to data security issues in Canada, we will focus on private clouds.
Private
Cloud -
Private Cloud Computing architecture is dedicated to the customer and is not shared with other organizations.
This model of computing is expensive but considered more secure than public clouds. However, we will offer private clouds at
the same rates as public cloud computing. Services such as those sold by Amazon and Salesforce.com have diminished to an
extent the demand for in-house equipment and software licenses has increased. Private clouds are popular for companies that
have security concerns such as government and financial services. They enable these companies to control all aspects of their
cloud services and safeguard all data and applications flowing through the organization.
Public
Cloud -
The computing infrastructure is hosted at the vendor’s premises. The customer has no visibility over the
location of the cloud computing infrastructure. The computing infrastructure is shared between organizations. We will also
offer the services of Public Cloud for customers who request this service.
Hybrid
Cloud -
Organizations host some critical, secure applications in private clouds. Other applications are hosted in the
public cloud. The combination is known as Hybrid Cloud. Also, another form of a hybrid cloud is called ‘Cloud
bursting.’ This term is used to define a system where the organization uses its own infrastructure for normal usage,
but cloud is used for peak loads.
Community
Cloud -
The cloud infrastructure is shared between the organizations of the same community. For example, all the
government agencies in a city can share the same cloud but not the non-government agencies.
The
Cloud Computing Market
Software
as a Service
This
is the most common form of cloud computing which we see in action. It is a complete software offering on the cloud. Data is accessed
by the customers on pay per use basis. The consumer does not manage or control the underlying cloud infrastructure, network, servers,
operating systems, storage, or even individual application capabilities, with the possible exception of limited user-specific
application configuration settings.
Platform
as a Service
Platform
as a service (PaaS) is the delivery of a computing platform and solution stack as a service. PaaS offerings facilitate deployment
of applications without the cost and complexity of buying and managing the underlying hardware and software and provisioning hosting
capabilities, providing all of the facilities required to support the complete life cycle of building and delivering web applications
and services entirely available from the Internet. PaaS offerings may include facilities for application design, application development,
testing, deployment and hosting as well as application services such as team collaboration, web service integration and marshalling,
database integration, security, scalability, storage, persistence, state management, application versioning, application instrumentation
and developer community facilitation. These services may be provisioned as an integrated solution over the web.
Infrastructure
as a Service
Hardware
related services are provided using the principles of Cloud Computing. These include disk storage and virtual servers. The consumer
has control over operating systems, storage, deployed applications, and certain networking components (e.g., firewalls, load balancers).
Competition
There
are many companies who compete directly with the products and services we plan to develop. These companies may already have an
established market in our industry. Most of these companies have significantly greater financial and other resources than us and
have been developing their products and services longer than we have been developing ours. Additionally, there are not significant
barriers to entry in our industry and new companies may be created that will compete with us and other, more established companies
who do not now directly compete with us, may choose to enter our markets and compete with us in the future.
Intelligent
Cloud’s principal competitors are AFORE Solutions, Allstream, BlackIron Data, Bell Business Solutions, Cacloud, Canadian
Cloud Computing Inc., Canadian Web Holding, Centrilogic, Cirruc Computing, Cloud A, Cloud Dynamics, Canada Post Vault Service,
Cloud Post Vault Service, Cloud Path, Cloud Pockets, Netelligent and Radiant Communications. Some of these competitors are private
corporations with no requirement for financial disclosure, Intelligent Cloud is unable to ascertain the size of their market and
there is no way of quantifying and qualifying what position on a sale’s basis Intelligent Cloud is in relative to its competition.
Marketing
We
will be using several marketing tools to market our products such as print and electronic media marketing. The most effective
marketing channels are taken into consideration while preparing the local and print media marketing strategies. The company intends
to work closely with marketing professionals to ensure that it is on the cutting edge of advertising technology. We will be focusing
our efforts on internet-based marketing because we believe it to be more effective and cost-effective. However, we will not ignore
local and print media marketing. The marketing methods we plan to employ are below:
Website
Development
– The Intelligent Cloud Resources website will be developed in the first step of Internet marketing. The
website will be updated regularly and will be full with information regarding the benefit of cloud computing adoption.
Listing
in Online Directories and Magazines
– We plan to list the name of Company in all local and international online directories
of IT companies. Online directories and magazines play a critical role in Internet marketing.
Search
Engine Optimization (SEO)
– The Company will look into hiring a part time SEO specialist to work on improving the visibility
of the website on all major search engines such as: Google, Bing, Ask, Yahoo, etc.
Paid
Advertisement (Google AdSense, Facebook, etc.)
– Organic SEO takes longer time to show results. It could take from 3
months to as long as 1 year or 2 to be more fruitful. Therefore, along with traditional search engine techniques, the Company
may consider paid advertisements to gain a quick customer base. Initially, this will mean paid advertisements with Google and
Facebook to display company website ads on all major search results and Facebook pages. The paid advertising campaign will last
as the traditional SEO start showing some results.
Social
Media Marketing
– Social Media has proven itself the most cost-effective and efficient medium to communicate with potential
clients. Intelligent Cloud Resources hopes to make full use of all popular Social Media channels such as Facebook, Twitter, YouTube,
and Google+, etc. Advertisements will also be placed on Social Media sites to entice more and more customers.
YouTube
Commercials
– Another important channel to market the website effectively to a selected range of target audience is
through YouTube commercials. The company may place properties promo videos on YouTube. This will be a cost-effective and customer
focused marketing strategy.
Professional
Networking
– Intelligent Cloud Resources would build a professional network of industry experts mainly through online
efforts such as LinkedIn etc.
Blog
– A dedicated blog to educate website visitors about the important information and latest happening in the area about
cloud computing will be useful.
RSS
and Newsletters
– Really Simple Syndication (RSS) and Newsletters will be the main features of the website. This strategy
will keep the customers glued to the website.
Intellectual
Property and Proprietary Rights
Proprietary
rights are important to our success and our competitive position. To protect our proprietary rights, we rely on copyright, service
marks and trade secret laws, confidentiality procedures and contractual provisions.
We
cannot assure you that any of our proprietary rights with respect to our products or services will be viable or of value in the
future since the validity, enforceability and type of protection of proprietary rights in Internet-related industries are uncertain
and still evolving.
Despite
our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or obtain and
use information that we regard as proprietary. Policing unauthorized use of our products is difficult, and while we are unable
to determine the extent to which piracy of our software products exists, software piracy can be expected to be a persistent problem.
In addition, the laws of some foreign countries do not protect proprietary rights to as great an extent as do the laws of the
United States, and effective copyright, trademark and trade secret protection may not be available in those jurisdictions. Our
means of protecting our proprietary rights may not be adequate to protect us from the infringement or misappropriation of such
rights by others.
Cloud
Computing Market in Canada
TechNavio,
a leading technology research and advisory company, forecast the Cloud Computing market in Canada will grow at a CAGR of
17.8 percent over the period 2013-2018.
http://www.marketwatch.com/story/cloud-computing-market-in-canada-2014-2018-2014-08-12
Canada is currently ranked 9th out of 24 countries in the BSA Global Cloud Computing Scorecard, due largely to the lack of
cyber security standards in Canada, as well as outdated copyright laws that are perceived to provide insufficient protection
for online material. Existing security and privacy legislation for private firms is largely irrelevant to the cloud services
industry. Despite these gaps in the regulatory framework, the Information and Communications Technology Council (ICTC)
believes that cloud computing provides a high value proposition for Canada.
http://www.ictc-ctic.ca/wp-content/uploads/2013/09/Canadas-Cloud-Imperative.pdf
,
page 4.
On
the basis of the cloud industry’s total direct employment, ICTC estimates that the Canadian cloud sub-sector contributes
up to $4.6 billion annually to Canadian GDP. As job opportunities in the cloud economy continue to grow and salary for ICT professionals
continues to appreciate in response to growing demand for their services, the annual contribution will become $8.2 billion by
2018. According to primary consultations with Canadian cloud companies, the cloud services industry is expected to grow 20% in
five years. Following are the facts of cloud computing market of Canada.
http://www.ictc-ctic.ca/wp-content/uploads/2013/09/Canadas-Cloud-Imperative.pdf
, page 20.
|
|
●
|
Half of the 360
Canadian enterprises (IT and non-IT) surveyed by ICTC have adopted identifiable cloud services. This figure is 71% for IT
firms.
|
|
|
●
|
70% of cloud-using
enterprises use some form of paid cloud service.
|
|
|
●
|
4/5 of paid users
have recurring subscriptions to cloud services, and one-third (31%) have made a one-time purchase of cloud products/services.
|
|
|
●
|
Nearly two-thirds
(61%) of companies have reduced their IT costs by switching over to cloud. This number is 68% for IT firms.
|
|
|
●
|
SaaS is the most
commonly used public cloud service; more than half (53%) of cloud-using enterprises use SaaS, and an additional one-quarter
are developing SaaS capabilities.
|
|
|
●
|
By 2018, ICT occupations
central to cloud computing will grow by 47%.
|
|
|
●
|
By 2018, it is estimated
that Canada’s cloud economy will directly employ more than 57,000 workers. When we factor indirect employment, Canada
will employ more than 71,000 workers in 2018 as a result of cloud computing.
|
|
|
●
|
The Canadian cloud
economy contributes $4.6 billion annually to Canadian GDP, and by 2018, this contribution will grow to become $8.2 billion.
|
Source:
http://www.ictc-ctic.ca/wp-content/uploads/2013/09/Canadas-Cloud-Imperative.pdf
page 3.
According
to the survey by Global Industry Analysts & Gartner’s, cloud computing is one of the fastest growing markets, the market size
is forecast to touch $222.5 billion by 2015. Cloud computing is going to change the way the world is today, the way pervasive
devices store, communicate, connect and operate today, going to change the way tomorrow’s products are going to be designed and
developed. It is going to change the way business is conducted as on today. Many of existing technologies would be converging
into cloud. Today the storage occupies biggest space in all of the connected and disconnected electronic devices. For every device
which is connected to net, the storage is going to diminish and at some point there is not going any storage on these devices,
they are going to be using cloud and devices would become much smaller, thinner and sleeker. More and more devices would get connected
to cloud, changing the way we talk, we function& the way we work. An Independent research firm Forrester Research expects
the global cloud computing market to reach $241 billion in 2020 compared to $68.5 in 2010. Forrester’s report provides market
forecast on 12 different market segments for the next decade, forecasting shifts in the usage patterns of cloud infrastructure,
business applications for the cloud and cloud platforms that are becoming increasingly widespread.
http://airccj.org/CSCP/vol2/csit2232.pdf
, page 326.
In
recent years, there has been significant litigation in the United States involving patents and other intellectual property rights,
particularly in the software and Internet-related industries. We could become subject to intellectual property infringement claims
as the number of our competitors grows and our planned products and services overlap with competitive offerings. These claims,
even if not meritorious, could be expensive to defend and could divert management’s attention from operating our company.
If we become liable to third parties for infringing their intellectual property rights, we could be required to pay a substantial
award of damages and to develop non-infringing technology, obtain a license or cease selling the products that contain the infringing
intellectual property. We may be unable to develop non-infringing technology or obtain a license on commercially reasonable terms,
if at all.
Government
Regulation
Our
activities are not currently subject to any particular regulations by governmental agencies other than those routinely imposed
on corporate businesses. However, we cannot predict the impact of future regulations on either us or advertisers that may advertise
with our Apps.
Employees
The
Company does not employ any employees outside of its officers and directors, Rehan Saeed and Fatima Khan.
During
the next 12 months, management anticipates spending approximately $420,000 on the development, marketing and sales of the Technology.
Intelligent Cloud anticipates a product launch in the spring season of 2018.
The
estimated breakdown is as follows:
|
Purpose
|
|
Amount
|
|
|
Payroll
|
|
$
|
180,000
|
|
|
Research and Development
|
|
$
|
28,000
|
|
|
Marketing
|
|
$
|
57,000
|
|
|
Professional and Consulting Fees
|
|
$
|
50,000
|
|
|
Office Lease Expenses
|
|
$
|
30,000
|
|
|
Travel Expenses
|
|
$
|
20,000
|
|
|
Management and Operational Costs
|
|
$
|
30,000
|
|
|
Miscellaneous Costs
|
|
$
|
25,000
|
|
|
Total
|
|
$
|
420,000
|
|
Results
of Operations – Three months ended March 31, 2017 and 2016
A
summary of our operations for the three months ended March 31, 2017 and 2016 is as follows:
|
|
|
Three months
ended
March 31,
2017
|
|
|
Three months
ended
March 31,
2016
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
900
|
|
|
Advertising and Promotion
|
|
|
55,935
|
|
|
|
-
|
|
|
Marketing Expense
|
|
|
6,433
|
|
|
|
-
|
|
|
Legal Fees
|
|
|
5,520
|
|
|
|
6,045
|
|
|
Management Fees
|
|
|
19,500
|
|
|
|
4,559
|
|
|
Audit and Accounting Fees
|
|
|
4,974
|
|
|
|
4,346
|
|
|
Other Professional Fees
|
|
|
12,630
|
|
|
|
2,708
|
|
|
Interest and Bank Charges
|
|
|
389
|
|
|
|
2,889
|
|
|
Change in fair value of derivatives
|
|
|
-
|
|
|
|
858
|
|
|
General expenses
|
|
|
-
|
|
|
|
494
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
105,381
|
|
|
$
|
20,999
|
|
Revenue
The
Company has conducted minimal operations since inception. Minimal revenue has been generated by the Company from March 27, 2014
(Inception) to March 31, 2017. The Company’s financial statements have been prepared on a going concern basis, which contemplates
the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include
any adjustment relating to recoverability and classification of recorded amounts of assets and liabilities that might be necessary
should the Company be unable to continue as a going concern.
There
can be no assurance that we will be able to raise funds, in which case we may be unable to meet its obligations. Should we be
unable to realize our assets and discharge liabilities in the normal course of business, the net realizable value of its assets
may be materially less than the amounts recorded in these financial statements.
Expenses
Total
operating expenses for the three months ended March 31, 2017 were $104,992. These mainly comprised of advertising and promotion
of $55,935, management fees amounting to $19,500, and other professional fees of $12,630.
Total
operating expenses for the three months ended March 31, 2016 were $18,152. These mainly comprised legal fee amounting to $6,045,
bookkeeping and review fee amounting to $4,346, other professional fee amounting to $2,708 and Management fees of $4,559.
Operating
expenses are higher by $86,840 in the three months ended March 31, 2017 mainly because of higher advertising and promotion expenses
($55,935) and higher management fees ($14,941).
The
Company has a minimum cash balance available for payment of ongoing operating expenses, has experienced losses from operations,
and it does not have a significant source of revenue. Its continued existence is dependent upon its ability to continue to execute
its operating plan and to obtain additional debt or equity financing. There can be no assurance the necessary debt or equity financing
will be available, or will be available on terms acceptable to the Company.
Net
Losses
For
the three months ended March 31, 2017 and 2016, the Company had a net loss of $105,381 ($105,516 with foreign currency translation
adjustment of $135) and $20,999 ($20,920 with foreign currency translation adjustment of ($79)), respectively.
Liquidity
and Capital Resources
As
of March 31, 2017, the Company had cash of $73,908. The Company’s liabilities as of March 31, 2017 were $50,993, which comprised
accrued liabilities amounting to $48,229 and an amount of $2,764 due to related parties. As at March 31, 2017, the Company had
a working capital surplus of $121,372.
As
of March 31, 2016, the Company had cash of $27,643. The Company’s current liabilities as of March 31, 2016 were $77,345,
which was comprised of accrued and other liabilities amounting to $60,570, $14,978 for cash advances for shares to be issued and
$1,791 due to a related party. As at March 31, 2016, the Company had a working capital surplus of $40,388. The increase in working
capital from March 31, 2016 to March 31, 2017 is due to increase in cash from proceeds of shares issued.
The
following is a summary of the Company’s cash flows provided by (used in) operating, investing, and financing activities for the
three months ended March 31, 2017 and 2016:
|
|
|
For the three
months
ended
March 31,
2017
$
|
|
|
For the three months
ended
March 31,
2016
$
|
|
|
Net Cash (Used in) Operating Activities
|
|
|
(125,100
|
)
|
|
|
(71,360
|
)
|
|
Net Cash Used In Investing Activities
|
|
|
-
|
|
|
|
-
|
|
|
Net Cash Provided by Financing Activities
|
|
|
171,500
|
|
|
|
1,970
|
|
|
Net (Decrease) Increase in Cash and Cash Equivalents
|
|
|
46,400
|
|
|
|
(69,390
|
)
|
The
Company has incurred losses since inception and the ability of the Company to continue as a going concern depends upon its ability
to develop profitable operations and to continue to raise adequate financing. In order for the Company to meet its liabilities
as they become due and to continue its operations, the Company is solely dependent upon its ability to generate such financing.
Going
Concern
Our
financial statements have been prepared on a going concern basis. As of March 31, 2017, we have not generated significant revenues
since inception. We expect to finance our operations primarily through our existing cash, our operations and any future
financing. However, there exists substantial doubt about our ability to continue as a going concern because we will be required
to obtain additional capital in the future to continue our operations and there is no assurance that we will be able to obtain
such capital, through equity or debt financing, or any combination thereof, or on satisfactory terms or at all. Additionally,
no assurance can be given that any such financing, if obtained, will be adequate to meet our capital needs. If adequate capital
cannot be obtained on a timely basis and on satisfactory terms, our operations would be materially negatively impacted. Therefore,
our auditor has substantial doubt as to our ability to continue as a going concern. Our ability to complete additional offerings
is dependent on the state of the debt and/or equity markets at the time of any proposed offering, and such market’s reception
of the Company and the offering terms. There is no assurance that capital in any form would be available to us, and if available,
on terms and conditions that are acceptable.
Critical
Accounting Policies and Estimates
Basis
of Presentation
Our
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
and the SEC. The preparation of these financial statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually
evaluate our estimates, including those related to bad debts, recovery of long-lived assets, income taxes, and the valuation of
equity transactions. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable
under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material
change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under
different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments
and estimates used in the preparation of the financial statements.
Our
financial statements do not include any comparative information as there were no significant transactions for the three months
ended March 31, 2017.
Cash
and Cash Equivalents
For
purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to
withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less
to be cash and cash equivalents.
Revenue
Recognition
The
Company is in the development stage and has yet to realize revenues from operations. Once the Company has commenced operations,
it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence
of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated
terms and conditions, and collection of any related receivable is probable.
Loss
per Common Share
Basic
loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of
shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per share
except that the denominator is increased to include the number of additional common shares that would have been outstanding if
the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial
instruments issued or outstanding for the three months ended March 31, 2017.
Estimates
The
financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation
of financial statements in conformity with generally accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities
as of the date of the financial statements, and revenues and expenses for the three months ended March 31, 2017. Actual results
could differ from those estimates made by management.
Recent
Accounting Pronouncements
Accounting
standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have
a material impact on the financial statements upon adoption.
Off
Balance Sheet Arrangements
We
do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, sales or expenses, results of operations, liquidity or capital expenditures, or capital
resources that are material to an investment in our securities.