|
|
|
|
| |
|
January 31, 2019
|
|
October 31, 2018
|
Working capital deficit
|
$
|
(1,025,654)
|
|
$
|
(894,941)
|
Current assets
|
$
|
25,256
|
|
$
|
23,745
|
Total liabilities
|
$
|
1,050,910
|
|
$
|
918,686
|
Common stock and additional paid in capital
|
$
|
5,481,470
|
|
$
|
5,481,470
|
Deficit
|
$
|
(6,543,287)
|
|
$
|
(6,422,908)
|
Accumulated other comprehensive income
|
$
|
44,433
|
|
$
|
50,428
|
2
Results of Operation
Our operating results for the three-month periods ended January 31, 2019 and 2018, and the changes in the operating results between those periods are summarized in the table below.
Three-Months Summary
|
|
| |
|
Three Months Ended
January 31,
|
Percentage
|
|
2019
|
2018
|
Decrease
|
Operating expenses
|
$(118,531)
|
$(112,225)
|
6%
|
Foreign exchange
|
-
|
(20,159)
|
(100)%
|
Interest expense
|
(1,848)
|
(459)
|
303%
|
Net loss
|
(120,379)
|
(132,843)
|
(9)%
|
Translation to reporting currency
|
(5,995)
|
15,301
|
(139)%
|
Comprehensive loss
|
$(126,374)
|
$(117,542)
|
8%
|
Revenue
During the three-month period ended January 31, 2019 and 2018, we did not have any revenue generating operations; as such we can provide no assurances that we will be able to generate enough cash flow from our operations to support our ongoing operations.
Operating Expenses
Our operating expenses for the three months ended January 31, 2019 and 2018, consisted of the following:
|
|
| |
|
Three Months Ended
January 31,
|
Percentage
|
|
2019
|
2018
|
Decrease
|
Operating expenses:
|
|
|
|
Accounting
|
$ 2,254
|
$ 3,480
|
(35)%
|
Amortization
|
1,361
|
-
|
n/a
|
General and administrative expenses
|
13,106
|
12,349
|
6%
|
Professional fees
|
3,825
|
2,010
|
90%
|
Regulatory and filing
|
6,960
|
4,386
|
59%
|
Salaries and wages
|
81,533
|
-
|
n/a
|
Software development costs
|
230
|
90,000
|
(100)%
|
Travel and entertainment
|
9,262
|
-
|
n/a
|
Total
|
$ 118,531
|
$ 112,225
|
6%
|
During the three-month period ended January 31, 2019, our operating expenses increased by $6,306 or 6% from $112,225, for the three months ended January 31, 2018, to $118,531 for the three months ended January 31, 2019.
The most significant change in our operating expenses was associated with salaries and wages we incurred through our subsidiary, Vgrab Malaysia, which totaled $81,533 and were mainly associated with salaries and reimbursable expenses we accrued to our CEO and CFO. The second largest expense was associated with $13,106 in general and administrative expenses, which increased by $757 as compared to the period ended January 31, 2018. In addition, during the three-month period ended January 31, 2019, we recorded $9,262 in travel and entertainment expenses, which were associated with increased operating activity in VGrab Malaysia, $6,960 in regulatory and filing fees (2018 - $4,386), $3,825 in legal fees (2018 - $2,010), and $1,361 in amortization on equipment that we purchased for Vgrab Malaysias operations. The above increases in expenditures were in part offset by decrease in software development costs, which, for the period ended January 31, 2019, amounted to $230, as opposed to $90,000 we recorded for the period ended January 31, 2018, the decrease resulted in bringing our operations in-house, as opposed to outsourcing the development to a third-party. Our accounting fees decreased by $1,226 from $3,480 we incurred during the three-month period ended January 31, 2018, to $2,254 we incurred during the three-month period ended January 31, 2019.
3
Other Items
During the three-month period ended January 31, 2019, we recorded $1,848 (2018 - $459) in interest associated with our liabilities under the notes payable we issued to our major shareholder.
During the three-month period ended January 31, 2018, we recorded $20,159 in realized foreign exchange loss associated with the fluctuation in foreign exchange between the US, Canadian, and Malaysian currencies. During the three-month period ended January 31, 2019, we did not realize any losses or gains associated with foreign exchange transactions.
Translation to Reporting Currency
Changes in translation to reporting currency result from a difference between our functional currency, being the Canadian dollar for the parent Company and Malaysian Ringgit for VGrab Malaysia, and our reporting currency, being the United States dollar. These differences are caused by fluctuation in foreign exchange between the three currencies as well as different accounting treatments between various financial instruments.
Liquidity and Capital Resources
GOING CONCERN
The unaudited interim consolidated financial statements included in this Quarterly Report have been prepared on a going concern basis, which implies that we will continue to realize our assets and discharge our liabilities in the normal course of business. We have not generated any revenues from operations since inception, have never paid any dividends and are unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. Our continuation as a going concern depends upon the continued financial support of our shareholders, our ability to obtain necessary debt or equity financing to continue operations, and the attainment of profitable operations.
Based on our current plans, we expect to incur operating losses in future periods. At January 31, 2019, we had a working capital deficit of $1,025,654 and accumulated losses of $6,543,287 since inception. These factors raise substantial doubt about our ability to continue as a going concern. We cannot assure you that we will be able to generate significant revenues in the future. These unaudited interim consolidated financial statements do not give effect to any adjustments that would be necessary should we be unable to continue as a going concern. Therefore, we may be required to realize our assets and discharge our liabilities in other than the normal course of business and at amounts different from those reflected in our financial statements.
Working Capital
|
|
|
|
| |
|
At January 31, 2019
|
|
At October 31, 2018
|
Current assets
|
$
|
25,256
|
|
$
|
23,745
|
Current liabilities
|
|
(1,050,910)
|
|
|
(918,686)
|
Working capital deficit
|
$
|
(1,025,654)
|
|
$
|
(894,941)
|
During the three-month period ended January 31, 2019, our working capital deficit increased by $130,713, from $894,941 as at October 31, 2018, to $1,025,654 as at January 31, 2019. The increase in the working capital deficit was primarily related to a $135,260 increase in amounts payable to our related parties, mainly on account of accrued salaries to our CEO and CFO, and advances we received from our major shareholder to support our ongoing operations. The decrease in our cash balances from $17,964 we held in our banks at October 31, 2018, to $9,797 we held in our banks at January 31, 2019, also negatively effected our working capital.
4
Cash Flows
|
|
|
|
| |
|
Three Months
Ended January 31,
|
|
2019
|
|
2018
|
Net cash used in operating activities
|
$
|
(63,291)
|
|
$
|
(28,303)
|
Net cash used in investing activities
|
|
(5,515)
|
|
|
-
|
Net cash provided by financing activities
|
|
60,459
|
|
|
15,940
|
Effect of exchange rate changes on cash
|
|
180
|
|
|
145
|
Net decrease in cash
|
$
|
(8,167)
|
|
$
|
(12,218)
|
Net cash used in operating activities
During the three-month period ended January 31, 2019, we used $63,291 to support our operating activities. This cash was used to cover our cash operating expenses of $116,614, to increase our GST recoverable by $106, to pay $9,560 towards future expenses, and to decrease our accounts payable and accrued liabilities by $3,046. These uses of cash were offset by $12,008 increase in amounts due to related parties for reimbursable expenses, and by $54,027 increase to accrued salaries payable to our CEO and CFO.
During the three-month period ended January 31, 2018, we used $28,303 to support our operating activities. This cash was used to cover our cash operating expenses of $111,649 and to increase our GST recoverable by $5. These uses of cash were offset by increases in our accounts payable and accrued liabilities of $82,651 and increases in our prepaid expenses of $700.
Non-cash operating activities
During the three-month period ended January 31, 2019, we recorded $556 in foreign exchange fluctuation between the US, Canadian, and Malaysian currencies and $1,848 in interest associated with our liabilities under the notes payable we issued to our major shareholder. In addition, we recorded $1,361 in amortization of our office equipment.
During the three-month period ended January 31, 2018, we recorded $20,735 in foreign exchange fluctuation between the US and Canadian currencies and $459 in interest associated with our liabilities under the notes payable we issued to our major shareholder.
Net cash provided by financing activities
During the three-month period ended January 31, 2019, we received $86,774 in exchange for the notes payable to Hampshire Avenue SDN BHD (Hampshire Avenue), a parent company of Hampshire Capital Limited and Hampshire Infotech SDN BHD. The loans bear interest at 4% per annum, are unsecured and payable on demand. During the same period we repaid $21,761 (2018 - $Nil) in loans advanced from Hampshire Avenue.
During the three-month period ended January 31, 2018, we received $15,940 as proceeds from the loan agreements with Hampshire Avenue SDN BHD. The loans bear interest at 4% per annum, are unsecured and payable on demand.
Net cash used in investing activities
During the three-month period ended January 31, 2019, we used $5,515 to acquire computer and other equipment for our operations in Malaysia. We did not have any investing activities during the three-month period ended January 31, 2018.
Capital Resources
Our ability to continue the development and marketing of the VGrab Applications and SMART Systems is subject to our ability to obtain the necessary funding. We expect to raise funds through sales of our debt or equity securities. We have no committed sources of capital. If we are unable to raise funds as and when we need them, we may be required to curtail, or even to cease our operations.
5
As of January 31, 2019, we had $9,797 in cash on hand and a working capital deficit of $1,025,654, which raises substantial doubt about our continuation as a going concern. We plan to mitigate our losses in future years by controlling our operating expenses and actively seeking new distribution channels for our Vgrab Applications, SMART Systems, and the related services. We cannot provide assurance that we will be successful in generating additional capital to support our development. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements and no non-consolidated, special-purpose entities.
Critical Accounting Policies
The preparation of financial statements in conformity with the United States generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.
The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an emerging growth company, we may, under Section 7(a)(2)(B) of the Securities Act, delay adoption of new or revised accounting standards applicable to public companies until such standards would otherwise apply to private companies. We may take advantage of this extended transition period until the first to occur of the date that we (i) are no longer an "emerging growth company" or (ii) affirmatively and irrevocably opt out of this extended transition period. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. Until the date that we are no longer an "emerging growth company," affirmatively and irrevocably opt out of the exemption provided by Securities Act Section 7(a)(2)(B), or upon issuance of a new or revised accounting standard that applies to our financial statements and that has a different effective date for public and private companies, we will disclose the date on which adoption is required for non-emerging growth companies and the date on which we will adopt the recently issued accounting standard.
Our significant accounting policies are disclosed in the notes to the audited financial statements for the year ended October 31, 2018. The following accounting policies have been determined by our management to be the most important to the portrayal of our financial condition and results of operation:
Principles of Consolidation
The Companys interim consolidated financial statements include the accounts of the Company and its subsidiaries. On consolidation, the Company eliminates all intercompany balances and transactions.
Internal-Use Software
The Company incurs costs related to the development of its VGrab Applications, SMART Systems, and VGrab.com website. Costs incurred in the planning and evaluation stage of internally-developed software and website, as well as development costs where economic benefit cannot be readily determined, are expensed as incurred. Costs incurred and accumulated during the development stage, where the economic benefit of the software can be readily determined, are capitalized and included as part of Intangible assets on the balance sheets. Additional improvements to the website and applications following the initial development stage are expensed as incurred. Capitalized internally-developed software and website development costs will be amortized over their expected economic life using the straight-line method.
6
Foreign Currency Translation and Transaction
The Parent Companys functional currency is the Canadian dollar, and VGrab Malaysias functional currency is Malaysian ringgit, the Companys reporting currency is the United States dollar. VGrab Internationals functional and reporting currency is the United States dollar. The Company translates assets and liabilities to US dollars using year-end exchange rates and translates revenues and expenses using average exchange rates during the period. Gains and losses arising on translation to the reporting currency are included in the other comprehensive income.
Foreign exchange gains and losses on the settlement of foreign currency transactions are included in foreign exchange expense. Except for translations of intercompany balances, all translations of monetary balances to the functional currency at the year-end exchange rate are included in foreign exchange expense. The translations of intercompany balances to the functional currency at the year-end exchange rate are included in accumulated other comprehensive income or loss.
Fair Value of Financial Instruments
Our financial instruments include cash, accounts payable and accruals as well as amounts due to related parties. We believe the fair value of these financial instruments approximates their carrying values due to their short-term nature.
Concentration of Credit Risk
Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and accounts receivable.
At January 31, 2019, we had $1,716 in cash on deposit with a large chartered Canadian bank and $8,081 in cash on deposits with a bank in Malaysia. As part of our cash management process, we perform periodic evaluations of the relative credit standing of these financial institutions. We have not experienced any losses in cash balances and do not believe we are exposed to any significant credit risk on our cash.