Item 2. Management’s Discussion and Analysis or Plan of Operation.
FORWARD-LOOKING STATEMENTS
Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:
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1.
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our future operating results;
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our business prospects;
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3.
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any contractual arrangements and relationships with third parties;
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the dependence of our future success on the general economy;
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5.
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any possible financings; and
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6.
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the adequacy of our cash resources and working capital.
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These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated as of the date of filing of this Form 10-Q. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of filing of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.
Summary of Business
We are a consulting company for the small business enterprise market (hereinafter referred to as the “SME Market”). In general, SME Market companies range from sole proprietors – the one-person operation with no employees to those companies that have up to 50 employees. We target those SME companies with limited resources and/or infrastructure looking to outsource all or part of their operations and/or corporate level functions. To get started, we recommend clients start with outsourcing one or more of these areas; financial and management reporting, accounting, tax reporting, legal and compliance, human resource management or sales and marketing (collectively our “Business Services”). We also look to help clients identify, implement and maintain business software products that are currently available in the marketplace that help streamline business operations through automation (our “Managed Software Services”). Our Business Services and Managed Software Services are collectively referred to as our Services.
Outsourcing has clearly become an integral part of a business strategy to achieve unparalleled performance. Packaged outsourcing takes it to the next level. Savvy business owners intent on guiding their companies toward optimized performance began by outsourcing a single process. That is the first step. Now, leading organizations are seeing the benefits from combining - or packaging - a comprehensive set of end-to-end processes across core functions into a single, outsourcing arrangement - for example, accounting, tax and risk management.
Bundled outsourcing also addresses the challenge of managing multiple providers and contacts. It is easier to manage and measure because it creates standardized, repeatable processes under one integrated governance structure that ensures maximum performance at lower sustained costs.
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Our Opportunity
SME company owners and managers often are tasked with functioning in a number of capacities in order to grow their business. However, at some point in time in the growth curve, a business owner or manager is faced with the decision of continuing to function in a number of capacities or to seek outside assistance. To help with this decision, we bring outsourced people, business processes and software tools to businesses to reduce costs and to run more efficiently and effectively. We believe that if a small business doesn’t embrace and leverage the power of outsourcing and automation, it significantly limits the company’s ability to keep pace with business growth goals and objectives. As such, we believe that our Services met a large un-met need for SME companies.
The SME Market is particularly attractive because:
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it is large, continues to grow and remains underserved by professional services companies; and
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it typically has fewer in-house resources than larger businesses and, as a result, is generally more dependent on external resources;
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Our Strategy
Our strategy for growing our operations includes:
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Rolling out various outbound sales and marketing campaigns to grow our client base;
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Expanding our outsourced third-party provider base to assist in cost efficiently delivering our services; and
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Growth through acquisition with complementary service providers and software product companies.
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Plan of Operations
We plan to establish a broad customer base by various traditional and internet marketing campaigns.
Over the next twelve months we plan to;
· Increase efforts to acquire new clients. We plan to do internet marketing that might include, search engine marketing, blogging, social media, affiliated marketing, organic and paid for search engine optimization. We may also employ certain traditional marketing tactics, including, mail, phone calls, content development, industry networking and direct selling.
· Expand our custom
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program offerings
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. Along with the launch of our new website, we introduced some of the programs. That included, Healthcare Cost Containment, Cause-Related Marketing, Business Innovation & Growth (BIG)
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Boot Camps.
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· Refine through independent research and feed-back from clients, our database of what we consider best-in-class business software-as-a-service tools. We currently have database of approximately 100 such products.
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· Further explore the use of
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For-Cause Alliance Partnerships
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whereby we partner up with non-profit educational-like mission-based organizations to further both business plans and reputation with the local community.
· Increase efforts to help international companies looking to establish operations in the United States with their back-office support services
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both setup and ongoing operations.
Results of Operations
Summary of Key Results
For the unaudited three-month periods ending March 31, 2018 and 2017
Revenues and Cost of Revenues
Total revenue for the three months ended March 31, 2018 and 2017 was $0 versus $12,500, respectively. Revenues are from professional services. The Company has been transitioning its business model to focus on provided packaged services that require a fixed monthly payment, not by project.
Cost of revenues for the three months ended March 31, 2018 and 2017 was $0 versus $4,750, respectively. Cost of revenue included payments to a related party for the three months ended March 31, 2018 and 2017, respectively.
Operating Expenses
Total operating expenses for the three months ended March 31, 2018 and 2017, was $11,444 versus $22,018, respectively. The decrease was primarily due to decreased office expenses, professional services fees and lower fees taken by the related party.
Liquidity and Capital Resources
As of March 31, 2018
At March 31, 2018, we had cash of $0 and a working capital deficit of $39,737. Since inception, we have raised $35,098 in equity capital. We had a total stockholders’ deficit of $39,412 and an accumulated deficit of $97,424 as of March 31, 2018.
We had $886 and $26,469 of cash used in operating activities for the three months ended March 31, 2018 and 2017, respectively. These include a net loss of $12,200 and $14,457, respectively. Cash flows provided by (used in) operating activities included changes in operating assets and liabilities totaling $11,314 and ($12,012) for the three months ended March 31, 2018 and 2017, respectively. During the three months ended March 31, 2018 and 2017, our current shareholder and MHL loaned the Company $886 and $8,500, respectively.
On March 8, 2017, we executed a promissory note for $25,000.
Our future growth in dependent upon achieving sales growth, management of operating expenses and ability of the Company to obtain the necessary financing to fund future obligations, and upon profitable operations.
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We believe we will require a minimum of $50,000 in additional cash over the next 12 months to maintain our regulatory reporting and filings and cover our operations costs. Should our revenues not increase as expected and if our costs and expenses prove to be greater than we currently anticipate, or should we change our current business plan in a manner that will increase or accelerate our anticipated costs and expenses, the depletion of our working capital would be accelerated. In the event that our revenues from operations are insufficient to meet our working capital needs, our major shareholder, Flemming Hansen has indicated that he may be willing to provide funds required to maintain the reporting status in the form of a non-secured loan for the next twelve months as the expenses are incurred if no other proceeds are obtained by the Company. However, there is no contract in place or written agreement securing this agreement. Management believes if the Company cannot maintain its reporting status with the SEC it will have to cease all efforts directed towards the Company. As such, any investment previously made would be lost in its entirety.
Consistent with Section 144 of the Delaware General Corporation Law, it is our current policy that all transactions between us and our officers, directors and their affiliates will be entered into only if such transactions are approved by a majority of the then existing directors, are approved by vote of the stockholders, or are fair to us as a corporation as of the time it is us at is authorized, approved or ratified by the board. We will conduct an appropriate review of all related party transactions on an ongoing basis, and, where appropriate, we review the potential of conflicts of interest.
Off-balance sheet arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
Critical Accounting Policies
Our discussion and analysis of the financial condition and results of operations are based upon the Company’s financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). 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 believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies. Because of the uncertainty inherent in these matters, actual results could differ from the estimates we use in applying the critical accounting policies. Certain of these critical accounting policies affect working capital account balances, including the policies for revenue recognition, allowance for doubtful accounts and income taxes. These policies require that we make estimates in the preparation of our financial statements as of a given date.
Within the context of these critical accounting policies, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.
Revenue Recognition
The Company derives its revenue from the sale of compliance, legal, risk management and management and public reporting consulting services. The Company utilizes written contracts as the means to establish the terms and condition services are sold to customers.
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In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606 which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Topic 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among others. Topic 606 also provides guidance on the recognition of costs related to obtaining customer contracts.
Topic 606 is effective as of January 1, 2018 using either of two methods: (1) retrospective application of Topic 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic 606 or (2) retrospective application of Topic 606 with the cumulative effect of initially applying Topic 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic 606. We adopted Topic 606 pursuant to the method (2) and we determined that any cumulative effect for the initial application did not require an adjustment to retained earnings at January 1, 2018.
Services revenue is recognized when the professional consulting or other ancillary services are provided to the customer.