UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

☒    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended February 28, 2021

 

☐    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from __________ to __________

 

Commission file number 333-200629

 

BOATIM INC.

(Exact name of small business issuer as specified in its charter)

 

Nevada

7370

84-4779679

State or other jurisdiction

of incorporation or organization

Primary Standard Industrial

Classification Number

IRS Employer

Identification Number

 

7950 NW 53rd Street, Suite 337, Miami, FL 33166.

Tel: +1 (786) 713-2340

(Address and telephone number of principal executive offices)

 

__________________________________________________________ 

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act: None 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No ☒

 

As of April 18, 2021, there were 51,645,800 common shares issued and outstanding.

   

 

 

  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain information included in this Quarterly Report on Form 10-Q and other filings of the Registrant under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as information communicated orally or in writing between the dates of such filings, contains or may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements in this Quarterly Report on Form 10-Q, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from expected results. Among these risks, trends and uncertainties are the availability of working capital to fund our operations, the competitive market in which we operate, the efficient and uninterrupted operation of our computer and communications systems, our ability to generate a profit and execute our business plan, the retention of key personnel, our ability to protect and defend our intellectual property, the effects of governmental regulation, and other risks identified in the Registrant’s filings with the Securities and Exchange Commission from time to time.

 

In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms or other comparable terminology. Although the Registrant believes that the expectations reflected in the forward-looking statements contained herein are reasonable, the Registrant cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither the Registrant, nor any other person, assumes responsibility for the accuracy and completeness of such statements. The Registrant is under no duty to update any of the forward-looking statements contained herein after the date of this Quarterly Report on Form 10-Q. 

   

 
2

 

 

BOATIM INC.

 

QUARTERLY REPORT ON FORM 10-Q

 

TABLE OF CONTENTS

 

Page

PART I FINANCIAL INFORMATION:

Item 1.

Consolidated Financial Statements (Unaudited)

4

Consolidated Balance Sheets as of February 28, 2021 (Unaudited) and August 31, 2020

4

Consolidated Statements of Operations and comprehensive loss for the Three and Six Months Ended February 28, 2021 and February 29 2020 (unaudited)

5

 

Consolidated Statements of Changes in Stockholders’ Deficit for the Three and Six Months Ended February 28, 2021 and February 29, 2020 (unaudited)

 

6

 

Consolidated Statements of Cash Flows for the Six Months Ended February 28, 2021 and February 29, 2020 (unaudited)

7

Notes to the Unaudited Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

21

Item 4.

Controls and Procedures

21

PART II OTHER INFORMATION:

Item 1.

Legal Proceedings

22

Item 1A.

Risk Factors

22

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

23

Item 3.

Defaults Upon Senior Securities

23

Item 4.

Submission of Matters to a Vote of Securities Holders

23

Item 5.

Other Information

23

Item 6.

Exhibits

24

Signatures

25

  

 
3

Table of Contents

  

PART I. FINANCIAL INFORMATION

 

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

 

BOATIM INC.

 

CONSOLIDATED BALANCE SHEETS

 

(Unaudited)

 

 

 

February 28,

 

 

August 31,

 

 

 

2021

 

 

2020

 

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash

 

$ 28,936

 

 

$ 38,427

 

VAT Receivable

 

 

8,316

 

 

 

34,265

 

Total Current Assets

 

 

37,252

 

 

 

72,692

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

66,588

 

 

 

4,787

 

Fixed assets, net

 

 

21,023

 

 

 

11,350

 

Capitalized software costs, net

 

 

445,925

 

 

 

259,156

 

Right of use asset - operating lease

 

 

111,206

 

 

 

162,304

 

Total non-current assets

 

 

644,742

 

 

 

437,597

 

TOTAL ASSETS

 

$ 681,994

 

 

$ 510,289

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$ 251,374

 

 

$ 189,680

 

Related party loan

 

 

1,158,588

 

 

 

348,031

 

Loan payable

 

 

20,000

 

 

 

47,962

 

Convertible notes payable, net of unamortized discount

 

 

211,153

 

 

 

464,650

 

Derivative liability

 

 

81,501

 

 

 

307,446

 

Current portion - operating lease obligation

 

 

103,554

 

 

 

141,276

 

Total Current Liabilities

 

 

1,826,170

 

 

 

1,499,045

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

-

 

 

 

-

 

Operating lease obligation, net of current portion

 

 

7,653

 

 

 

38,391

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

1,833,823

 

 

 

1,537,436

 

 

 

 

 

 

 

 

 

 

STOCKHOLDER'S DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock: authorized 500,000,000; $0.001 par value,

 

 

 

 

 

 

 

 

51,645,800 and 50,500,011 shares issued and outstanding at February 28, 2021 and August 31, 2020, respectively

 

 

51,646

 

 

 

50,500

 

Additional paid in capital

 

 

2,036,094

 

 

 

(259,635 )

Accumulated deficit

 

 

(3,242,869 )

 

 

(797,306 )

Accumulated other comprehensive income (loss)

 

 

3,300

 

 

 

(20,706 )

Total Stockholder's deficit

 

 

(1,151,829 )

 

 

(1,027,147 )

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

 

$ 681,994

 

 

$ 510,289

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
4

Table of Contents

    

BOATIM INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

  

 

 

For Three Months Ended

 

 

For Six Months Ended

 

 

 

February 28 and 29,

 

 

February 28 and 29,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$ 717

 

 

$ -

 

 

$ 717

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

 

236,089

 

 

 

-

 

 

 

236,089

 

 

 

-

 

General and administrative

 

 

1,094,507

 

 

 

165,008

 

 

 

1,373,035

 

 

 

242,689

 

Total Operating Expenses

 

 

1,330,596

 

 

 

165,008

 

 

 

1,609,124

 

 

 

242,689

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(1,329,879 )

 

 

(165,008 )

 

 

(1,608,407 )

 

 

(242,689 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of derivative liability

 

 

89,697

 

 

 

-

 

 

 

(191,208 )

 

 

-

 

Interest expense

 

 

(260,565 )

 

 

-

 

 

 

(645,948 )

 

 

-

 

Loss on foreign exchange

 

 

(5,497 )

 

 

-

 

 

 

-

 

 

 

-

 

Total other income (expense)

 

 

(176,365 )

 

 

-

 

 

 

(837,156 )

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss before income tax provision

 

 

(1,506,244 )

 

 

(165,008 )

 

 

(2,445,563 )

 

 

(242,689 )

Provision for income tax

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$

(1,506,244 )

 

$

(165,008 )

 

$

(2,445,563 )

 

$

(242,689 )

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

-

 

 

 

-

 

Foreign currency translation adjustment

 

 

39,820

 

 

 

(159 )

 

 

24,006

 

 

 

(613 )

Total comprehensive loss

 

$ (1,466,424 )

 

$ (165,167 )

 

$ (2,421,557 )

 

$ (243,302 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$ (0.03 )

 

$ (0.00 )

 

 

(0.05 )

 

 

(0.00 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

51,645,800

 

 

 

50,500,011

 

 

 

51,645,800

 

 

 

50,500,011

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

  

 
5

Table of Contents

   

BOATIM INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2021 AND FEBRUARY 29 2020

 (Unaudited)

   

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Common Stock

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 Number of Shares

 

 

 Par

Value

 

 

 Paid in

Capital

 

 

Comprehensive

 Income (Loss)

 

 

Accumulated

 Deficit

 

 

 Totals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - August 31, 2020

 

 

50,500,011

 

 

$ 50,500

 

 

$ (259,635 )

 

 

(20,706 )

 

$ (797,306 )

 

$ (1,027,147 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

 -

 

 

 

(15,814 )

 

 

-

 

 

 

(15,814 )

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

(939,319 )

 

 

(939,319 )

Balance - November 30, 2020

 

 

50,500,011

 

 

$ 50,500

 

 

$ (259,635 )

 

 

(36,520 )

 

$ (1,736,625 )

 

$ (1,982,280 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

39,820

 

 

 

 -

 

 

 

39,820

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

704,228

 

 

 

 

 

 

 

 

 

 

 

704,228

 

Conversion of notes payable to common stock

 

 

1,145,789

 

 

 

1,146

 

 

 

1,058,854

 

 

 

 -

 

 

 

 -

 

 

 

1,060,000

 

Resolution of derivative liability

 

 

 

 

 

 

 

 

 

 

532,647

 

 

 

 

 

 

 

 

 

 

 

532,647

 

Net loss

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

(1,506,244 )

 

 

(1,506,244 )

Balance - February 28, 2021

 

 

51,645,800

 

 

$ 51,646

 

 

$ 2,036,094

 

 

 

3,300

 

 

$ (3,242,869 )

 

$ (1,151,829 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Common Stock

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 Number of Shares

 

 

 Par

Value

 

 

 Paid in

Capital

 

 

Comprehensive

Income (Loss)

 

 

Accumulated

 Deficit

 

 

 Totals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - August 31, 2019

 

 

50,500,000

 

 

$ 50,500

 

 

$ (403,425 )

 

 

(407 )

 

$ (387,391 )

 

$ (740,723 )

Forgiveness of related party loan

 

 

 -

 

 

 

-

 

 

 

81,290

 

 

 

 -

 

 

 

-

 

 

 

81,290

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

 -

 

 

 

(454 )

 

 

-

 

 

 

(454 )

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(77,681 )

 

 

(77,681 )

Balance - November 30, 2019

 

 

50,500,000

 

 

$ 50,500

 

 

$ (322,135 )

 

 

(861 )

 

$ (465,072 )

 

$ (737,568 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

(159 )

 

 

 -

 

 

 

(159 )

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(165,008 )

 

 

(165,008 )

Balance - February 29, 2020

 

 

50,500,000

 

 

$ 50,500

 

 

$ (322,135 )

 

 

(1,020 )

 

$ (630,080 )

 

$ (902,735 )

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

  

 
6

Table of Contents

  

BOATIM INC. 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Six Months ended February 28 and 29

   

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$ (2,445,563 )

 

$ (242,689 )

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation expense

 

 

2,543

 

 

 

 -

 

Change in fair value of derivative liability

 

 

191,208

 

 

 

-

 

Stock based compensation

 

 

704,228

 

 

 

 -

 

Amortization of discount - convertible notes

 

 

645,948

 

 

 

-

 

Amortization of capitalized software

 

 

20,635

 

 

 

 -

 

Amortization of right of use asset

 

 

51,098

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

VAT Receivable

 

 

25,949

 

 

 

-

 

Deposits

 

 

(61,801 )

 

 

-

 

Accounts payable and accrued liabilities

 

 

61,694

 

 

 

(8,111 )

Operating lease obligations

 

 

(68,460 )

 

 

-

 

Net Cash Used in Operating Activities

 

 

(872,521 )

 

 

(250,800 )

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Fixed asset purchases

 

 

(12,216 )

 

 

-

 

Capitalized software development costs

 

 

(207,404 )

 

 

-

 

Net Cash Used in Investing Activities

 

 

(219,620 )

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from related party loan

 

 

810,557

 

 

 

264,388

 

Proceeds from loan payable

 

 

20,000

 

 

 

-

 

Repayment of loan payable

 

 

(47,962 )

 

 

 

 

Proceeds from issuance of convertible promissory notes

 

 

276,049

 

 

 

-

 

Net Cash Provided by Financing Activities

 

 

1,058,644

 

 

 

264,388

 

 

 

 

 

 

 

 

 

 

EFFECT OF FOREIGN CURRENCY TRANSLATION

 

 

24,006

 

 

 

(613 )

 

 

 

 

 

 

 

 

 

Net change in cash for the year

 

 

(9,491 )

 

 

12,975

 

Cash at beginning of the year

 

 

38,427

 

 

 

15,691

 

Cash at end of the year

 

$ 28,936

 

 

$ 28,666

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$ -

 

 

$ -

 

Cash paid for interest

 

$ -

 

 

$ -

 

 

 

 

 

 

 

 

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Conversion of Convertible promissory notes to common stock

 

$ 1,060,000

 

 

$ -

 

Resolution of derivative liability

 

$ 532,647

 

 

 

 

 

Debt discount from derivative liability

 

 

115,494

 

 

 

 -

 

Forgiveness of related party loan

 

$ -

 

 

$ 81,290

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

  

 
7

Table of Contents

  

BOATIM INC.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

February 28, 2021

(Unaudited)

 

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

 

Boatim Inc. formerly known as Emerald Data Inc. (“we”, “our, “Boatim”, the “Company”) is a for profit corporation established under the corporate laws of the State of Nevada on August 15, 2014. On January 24, 2019 the Company´s board and shareholders passed a motion to change the Company name to “BOATIM INC.” Its fiscal year end is August 31.

 

Boatim, Inc. established Boatim Europe S.L. (“Boatim Europe”) as a private limited company pursuant to the laws of Spain on December 18, 2019, with the Company having indirect ownership of one hundred percent of the issued and outstanding membership interests of Boatim Europe. In December 2020, the Company finalized the process of collecting and submitting all required paperwork to the Spanish authorities to enter Boatim Inc. as direct owner on public records in Spain, making Boatim Europe a wholly owned subsidiary of the Company.

 

Originally in the business of producing and distributing furniture, the business was changed to online food blogging as a promotion channel for restaurants, bars and fine dining. Subsequently, following the acquisition of the Boatim software platform, the Company expanded into the boating industry by further developing the software platform. The Boatim software platform is an online boat trading marketplace, combining data-driven technology and digital marketing capabilities to offer a rolling subscription for service model of access to the platform for the extensive market of global boat dealers.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

 

Principles of Consolidation

 

The Company prepares its consolidated financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company with its fiscal year end of August 31, and its wholly owned subsidiary. All intercompany accounts, balances and transactions have been eliminated in the consolidation as at February 28, 2021.

 

Basis of Presentation

 

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-Q. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. The unaudited interim financial statements should be read in conjunction with those financial statements for the year ended August 31, 2020 included in the Form 10-K filed with the Securities and Exchange Commission. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the six months ended February 28, 2021 are not necessarily indicative of the results that may be expected for the year ending August 31, 2021.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

 

Fixed Assets

 

Fixed assets are stated at historical cost less accumulated depreciation. The historical cost of acquiring an item of fixed assets includes the costs necessarily incurred to bring it to the condition and location necessary for its intended use. Costs associated with repairs and maintenance are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are 3 years. 

 

Revenue Recognition

 

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.

 

 
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Fair Value of Financial Instruments

 

ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of August 31, 2020 and 2019.

 

Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows:

 

Level 1 - Quoted market prices available in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

 

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

 

The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities, convertible notes and notes payable. Fair values were assumed to approximate carrying values for these financial instruments due to their short-term maturities.

 

Foreign Currency

 

Assets and liabilities of Boatim Europe are translated into U.S. dollars at the respective rates of exchange prevailing at the end of the reporting period. Income and expense accounts are translated at average exchange rates prevailing during the reporting period. Translation adjustments resulting from this process are recorded directly in equity as accumulated other comprehensive (loss) income (“AOCI”) and will be included as income or expense only upon sale or liquidation of the underlying entity. Boatim Europe considers its local currency (EURO) as its functional currency.

 

In accordance with ASC Topic 830-30, “Translation of Financial Statements”, monetary asset and liability accounts are translated into the Company’s reporting currency, the US dollar, using the closing exchange rate in effect at the balance sheet date, nonmonetary accounts are translated using historical exchange rates and income and expense accounts are translated using the average exchange rate prevailing during the reporting period.

 

Translation of amounts from the local currency of Boatim Europe into US$ has been made at the following exchange rates:

 

 

 

February 28,

2021

 

 

August 31,

2020

 

Current EUR: US$ exchange rate

 

 

1.2096

 

 

 

1.1991

 

Average EUR: US$ exchange rate

 

 

1.1961

 

 

 

1.1136

 

 

Capitalized Software Development Costs

 

Computer software development costs related to software developed for internal use falls under the accounting guidance of ASC Topic 350-40, Intangibles Goodwill and Other–Internal Use Software, in which computer software costs are expensed as incurred during the preliminary project stage and capitalization begins in the application development stage once the capitalization criteria are met. Costs associated with post implementation activities are expensed as incurred.

 

Costs capitalized during the application development stage include external direct costs of materials and services consumed in developing or obtaining internal-use software. During the six months ended February 28, 2021 and for the fiscal year ended to August 31, 2020, the Company capitalized $207,404 and $259,156 in software development costs. Software costs are included in “Capitalized software costs, net” on the Company’s consolidated balance sheets and are depreciated using the straight-line method over their estimated useful life of five years.

 

 
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Impairment of Long-Lived Assets

 

The Company’s long-lived assets, including intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. Long-lived assets were evaluated for impairment and the Company recorded impairment loss on Capitalized software development costs of $0 and $0 during the six months ended February 28, 2021 and 2020, respectively.

 

Leases

 

As of September 1, 2019, the Company adopted the provisions of “Accounting Standards Codification Topic 842 Leases (ASC 842)” using the modified retrospective basis for all agreements

 

The Company recognizes a right-of-use asset and lease liability for all financing and operating leases with terms greater than twelve months. The lease liability is measured based on the present value of the lease payments not yet paid. The right-of-use asset is measured based on the initial measurement of the lease liability adjusted for any direct costs incurred upon commencement of the lease. The right-of-use assets are amortized on a straight-line basis over the lease term and are tested for impairment in a manner consistent with the other long-lived assets held by the Company.

 

Derivative Instrument Liability

 

The Company accounts for derivative instruments in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedging relationships and the types of relationships designated are based on the exposures hedged. At February 28, 2021 and August 31, 2020, the Company had a derivative liability of $81,501 and $307,446, respectively,

 

Use of Estimates

 

The preparation of the 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Management makes its best estimate of the outcome for these items based on information available when the financial statements are prepared. Actual results could differ from those estimates.

 

Basic and Diluted Loss Per Share

 

The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. For the three and six months ended February 28, 2021 and February 29, 2020, potential dilutive instruments were anti-dilutive due to the Company’s net losses.

 

 
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Stock Based Compensation

 

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors and non-employees (effective September 1, 2019), the fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the consolidated statements of operations, as if such amounts were paid in cash.

 

Recent Accounting Pronouncements

 

On December 18, 2019, the FASB issued ASU 2019-12, which modifies ASC 740 to simplify the accounting for income taxes. The ASU’s amendments are based on changes that were suggested by stakeholders as part of the FASB’s simplification initiative (i.e., the Board’s effort to reduce the complexity of accounting standards while maintaining or enhancing the helpfulness of information provided to financial statement users. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company is evaluating the impact of this on its consolidated financial statements.

 

On January 16, 2020, the FASB issued ASU 2020-01 in response to an EITF consensus. The ASU makes improvements related to the following two topics: (a) Accounting for certain equity securities when the equity method of accounting is applied or discontinued — The ASU clarifies that “an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method.” (b) Scope considerations related to forward contracts and purchased options on certain securities — The ASU clarifies that “for the purpose of applying paragraph 815-10- 15-141(a) an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option in accordance with the financial instruments guidance in Topic 825.” This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is evaluating the impact of this on its consolidated financial statements.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or in management’s opinion will not have a material impact on the Company’s present or future consolidated financial statements.

 

NOTE 3 – GOING CONCERN 

 

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, the Company had minimal revenues for the six months ended February 28, 2021 and incurred recurring losses. In addition, the Company had a negative working capital as of February 28, 2021 and has not completed its efforts to establish a stable source of revenues sufficient to cover operating costs over an extended period of time. Therefore, there is substantial doubt about the Company’s ability to continue as a going concern.

 

Management anticipates that the Company will be dependent, for the near future, on borrowings from a related party to fund operating expenses. There are no assurances that the Company will be successful in any of its endeavors or become financially viable and continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

 

NOTE 4 – RELATED PARTY TRANSACTIONS

 

Mr. Robert Glass, a lawyer, is providing services free of charge from time to time, such services involving advice on accounting matters and processing of information for reporting services.

 

On September 12, 2019, Veng Kun Lun, a former officer and director of the Company, forgave all amounts due to him from the Company, totaling $81,290, which was recorded as additional paid in capital.

 

 
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During the six months ended February 28, 2021, Cayo Ventures GmbH (“Cayo”), a related party, advanced a total of $810,557 to the Company. Cayo is owned by the former majority shareholder and former officer, Mr. Yves Toelderer. As of February 28, 2021, the Company owed a total of $1,158,588 to Cayo, which includes $2,833 owed to Yves Toelderer. These loans are unsecured, non-interest bearing and due on demand.

 

During the year ended August 31, 2019, the Company issued a note in the amount of $500,000 to Cayo for the purchase of the Boatim software platform. The note matured on January 23, 2020 but was extended to January 23, 2021. On July 21, 2020, the Company cancelled the note when Cayo transferred its claim against the Company to an unrelated party. On the same date, Cayo also assigned a portion of the related party loans (see above) amounting to $560,000 to another unrelated party. The Company then issued convertible notes to these unrelated parties. (See Note 7).

 

On June 1, 2020, the Company entered into services agreement with Mr. Wolfgang Tippner, who is an officer of the Company, as Chief Executive Officer. The agreement calls for a sign-on bonus of $24,000, payable within 6 months from the date of the agreement and a cash compensation for his services of $8,000 per month. During the six months ended February 28, 2021, a total of $0 has been paid to Mr. Tippner. As of February 28, 2021, $96,000 in accrued compensation remains outstanding.

 

On June 1, 2020, the Company entered into a services agreement with Mr. Patrick Heneise, who is a Director of the Company, as Chief Technology Officer. The agreement calls for an equity bonus of 200,000 common shares of the company within 6 months of the date of the agreement (See Note 9). As cash compensation for his services, he is to receive a total of €35,000, payable at €2,500 per month for technology consulting services and a €5,000 executive services fee payable annually. During the six months ended February 28, 2021, a total of $14,922 has been paid to Mr. Heneise. For the months of November 2020 through to February 2021, Mr Heneise elected to waive his monthly fee since there was minimal services rendered for these months. As of February 28, 2021, and August 31, 2020, $0 and $8,864 in accrued compensation remains outstanding, respectively. During the six months ended February 28, 2021 the Company recognized $250,000 of stock-based compensation expense for the 200,000 shares earned by Mr. Heneise.

 

On June 15, 2020, the Company entered into a service agreement with Mr. Chris Roy, who was a former member of the Board of Directors of the Company, as Chief Product Officer. The agreement calls for a base salary of €125,000 per year. In addition, Mr. Roy is eligible to receive a performance bonus equal to 50% of his base salary, based upon targets set by the board of directors of the Company. During the six months ended February 28, 2021, a total of $77,748 has been paid to Mr. Roy. As of February 28, 2021, $0 in accrued compensation remains outstanding. Mr. Chris Roy resigned as a member of the Board of Directors on February 12, 2021.

 

On July 1, 2020, the Company entered into a service agreement with Mr. Patrick Burkert, who was a former member of the Board of Directors of the Company, as Chief Marketing Officer. The agreement calls for a sign on bonus of 500,000 shares of restricted common stock, of which 50,000 shares are due within two weeks of the date of the agreement, 200,000 shares after 6 months, and the remaining shares after 12 months. He will also receive a base salary of €144,000 per year. In addition, Mr. Burkert is eligible to receive a performance bonus equal to 50% of his base salary, based upon targets set by the board of directors of the Company. During the six months ended February 28, 2021, a total of $86,121 has been paid to Mr. Burkert in cash compensation. As of February 28, 2021, $0 in accrued cash compensation remains outstanding. As of February 28, 2021, there was $0 earned or accrued for a performance-based bonus. During the six months ended February 28, 2021 the Company recognized $250,000 of stock-based compensation expense for the 200,000 shares earned by Mr. Burkert. Mr. Patrick Burkert resigned as a member of the Board of Directors on February 12, 2021.

 

On January 1, 2021, the Company entered into a service agreement with Mr. Benjamin Salter, as Director and Chief Financial Officer. The agreement calls for a sign on bonus of options for 500,000 shares of common stock at a strike price of $0.10 per share. See Note 10. The options must be exercised within 15 months from the date of the agreement and can be executed no earlier as follows: 50,000 within two weeks of the date of the agreement, 200,000 shares after 6 months, and the remaining shares after 12 months. The agreement calls for a base salary of Swiss francs (CHF) 150,000 per year, increasing to CHF 180,000, payable in increments of CHF 15,000 per month from April 1, 2021 onward. In addition, Mr. Salter is eligible to receive a performance bonus equal to 50% of his base salary, based upon targets set by the board of directors of the Company. During the six months ended February 28, 2021, a total of $60,966 has been paid to Mr. Salter in cash compensation. As of February 28, 2021, $32,073 in accrued cash compensation remains outstanding. As of February 28, 2021, there was $0 earned or accrued for a performance-based bonus. Mr. Salter resigned as a member of the Board of Directors and CFO on March 19, 2021. During the six months ended February 28, 2021 the Company recognized $204,228 of stock-based compensation expense for the options granted during the period. Mr. Salter continues with the Company heading business development and operations in Europe.

    

 
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On March 19, 2021, the Company entered into a service agreement with Mr. Mario Beckles, as Director and Chief Financial Officer, commencing on April 1, 2020. The agreement calls for cash compensation in the amount of $3,000 per month to be paid monthly. As of February 28, 2021, $12,000 has been paid to Mr. Beckles in cash compensation. As of February 28, 2021, $1,500 in accrued cash compensation is outstanding.

 

NOTE 5 – LEASES

 

On February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The ASU introduces a new leasing model for both lessees and lessors. Topic 842 provides guidance in how to identify whether a lease arrangement exists. Management has evaluated its leasing arrangements and has classified these as operating leases. Additionally, the lease terms of each of our office leases are short term in nature, however, the Company elected to apply ASC Topic 842 to these leases, because we intend to renew each lease for terms longer than 12 months. As a result of the adoption of ASC Topic 842, the Company recognized a right-of-use asset and operating lease liabilities of $250,066 based on the present value of the minimum rental payments utilizing a discount rate of 2.19%.

 

Operating Lease Obligations

 

On August 01, 2019, the Company entered into an office lease for a six-person office space located at Marina Port Vell Carrer de l’Escar, 26, 08039 Barcelona Spain with OnCoWork. The lease calls for rent payments of €2,340 plus VAT in monthly payments. The lease began August 1, 2019, is month to month with a six-month permanency clause, of which management intends to renew.

 

On December 01, 2019, the Company entered into an office lease for a nine-person office space located at Marina Port Vell Carrer de l’Escar, 26, 08039 Barcelona Spain with OneCoWork. The lease calls for rent payments of €3,120 plus VAT in monthly payments. The lease began December 1, 2019, is month to month with a six-month permanency clause, of which management intends to renew.

 

On April 20, 2020, the Company entered into an office lease for a six-person office space located at Marina Port Vell Carrer de l’Escar, 26, 08039 Barcelona Spain with OneCoWork. The lease calls for rent payments of €2,550 plus VAT in monthly payments. The lease began April 20, 2020 is month to month with a six-month permanency clause, of which management intends to renew.

 

The Company has recorded operating lease expense in the amount of $64,512 during the six months ended February 28, 2021 and $0 for the three months ended February 28, 2020. As of February 28, 2021, and August 31, 2020, the discount rate for these leases is 2.19% and the weighted average remaining term is 9 months.

 

Future minimum operating lease payments consist of:

 

2021

 

$ 104,094

 

2022

 

 

7,653

 

2023

 

 

0

 

Total minimum lease payments

 

 

111,747

 

Less: present value discount

 

 

(599 )

Present value of minimum lease payments

 

 

111,148

 

Current portion of operating lease obligation

 

 

103,495

 

Operating Lease obligation, less current portion

 

$ 7,653

 

 

 
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NOTE 6 – LOAN PAYABLE

 

On February 11, 2021, the Company received a short-term loan from an unrelated third party in the amount of $20,000. The loan is unsecured, has no maturity date and is non-interest bearing. As of February 28, 2021, $20,000 remains outstanding.

 

NOTE 7 – CONVERTIBLE NOTES

 

On July 21, 2020, the Company issued convertible notes in the amount of $500,000 and $560,000 to two unrelated parties, in exchange for their assumption of the December 8, 2018 note and related party loans owed to Cayo for the same amounts. (See Note 4). The notes do not bear interest and matured on January 22, 2021. The first note in the amount of $500,000 is convertible into common shares at the rate equivalent to 70% of the Company’s 30-day average stock price prior to conversion. The second note in the amount of $560,000 is convertible into common stock at the rate equivalent to 80% of the Company’s 30-day average stock price prior to conversion.

 

On January 10, 2021 the holder of the note in the amount of $500,000 converted $500,000 of its note into 578,680 shares of common stock and the unamortized discount at the date of conversion of $27,838 was written off to interest expense.

 

On January 10, 2021 the holder of the note in the amount of $560,000 converted $560,000 of its note into 567,108 shares of common stock and the unamortized discount at the date of conversion of $22,439 was written off to interest expense.

  

On September 22, 2020, the Board approved the issuance of up to $5,000,000 in new convertible notes, in multiple tranches, convertible at maturity into common shares. At February 28, 2021 the Company has received tranches of $62,500, $45,000, $60,000 and $110,000 respectively from unrelated parties under this facility. The note in the amount of $62,500 matures on March 31, 2021 and is convertible into common stock at the rate equivalent to 80% of the Company’s 30-day average stock price prior to conversion. The note in the amount of $44,550 matures on June 22, 2021, the note in the amount of $60,000 matures on July 22, 2021, and the note in the amount of $110,000 matures on August 22, 2021; these notes are convertible into common stock at the rate equivalent to 80% of the Company’s 30-day average stock price prior to conversion but no less than $0.10 value per share of Common Stock.

  

During the six months ended February 28, 2021, the Company recorded a debt discount of $121,792 on all convertible notes issued during the period and amortization of debt discount in the amount of $645,948 on all convertible notes. Unamortized discount as of February 28, 2021 amounted is $71,347.

 

Due to these provisions, the embedded conversion option qualified for derivative accounting under ASC 815-15, Derivatives and Hedging.

 

A summary of value changes to the notes for the six months ended February 28, 2021 is as follows:

  

Carrying value of Convertible Notes at August 31, 2020

 

$ 464,650

 

New principal

 

 

282,500

 

Total principal

 

 

747,150

 

Less: conversion of principal

 

 

(1,060,000 )

Less: discount related to fair value of the embedded conversion feature

 

 

(115,494

)

Less: deferred financing cost related to debt issuances

 

 

-

 

Less: discount related to original issue discount

 

 

(6,451 )

Less: Gain on Derivative

 

 

-

 

Add: amortization of discount

 

 

645,948

 

Carrying value of Convertible Notes at February 28, 2021

 

$ 211,153

 

 

 
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NOTE 8 – DERIVATIVE LIABILITY

 

The Company has determined that the variable conversion prices under its convertible notes caused the embedded conversion feature to be accounted for as a derivative instrument. The derivative instruments were valued at loan origination date and at February 28, 2021 and August 31, 2020 using the Black Scholes option pricing model, under the following assumptions:

 

 

 

31-Aug

 

 

28-Feb

 

 

 

2020

 

 

2021

 

 

 

 

 

 

 

 

Shares of common stock issuable upon exercise of debt

 

 

1,240,601

 

 

 

332,770

 

Estimated market value of common stock on measurement date

 

$ 0.7

 

 

 

0.90

 

Exercise price

 

$

0.80 - 0.91

 

 

 

0.85

 

Risk free interest rate (1)

 

 

0.13 %

 

 

0.04 %

Expected dividend yield (2)

 

 

0.00 %

 

 

0.00 %

Expected volatility (3)

 

 

171 %

 

 

109 %

Expected exercise term in years (4)

 

0.40 - 0.60

 

 

0.09-0.40

 

______________

 

(1)

The risk –free interest rate was determined by management using the one-month Treasury bill yield as of the valuation dates.

 

(2)

The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.

 

(3)

The volatility was determined by referring to the average historical volatility of a peer group of public companies because we do not have sufficient trade history to determine our historical volatility.

 

(4)

The exercise term is the remaining contractual term of the convertible notes at the valuation dates.

 

The change in fair values of the derivative liabilities related to the Convertible Notes for the six months ended February 28, 2021is summarized as:

 

 

 

 

 

 

 

Quoted market prices

 

 

 

 

 

 

 

 

 

Fair value at

 

 

 

for identical

 

 

Significant other

 

 

Significant

 

 

 

February 28,

 

 

 

assets/liabilities

 

 

observable inputs

 

 

unobservable inputs

 

 

 

2021

 

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Derivative Liability

 

$

81,501

 

 

 

$

-

 

 

$

-

 

 

$

81,501

 

 

Fair value of derivatives at August 31, 2020

 

$ 307,446

 

Addition of new derivative liabilities upon issuance of convertible notes as debt discount

 

 

115,494

 

Reduction of derivative liabilities from conversion of convertible notes to shares of common stock

 

 

(532,647 )

Loss on change in fair value of derivative liabilities

 

 

191,208

 

Fair value of derivative liabilities at February 28, 2021

 

$ 81,501

 

 

 
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NOTE 9 – COMMON STOCK

 

As of February 28, 2021, and August 31, 2020, a total of 51,645,800 and 50,500,011 shares of common stock were issued and outstanding. The Company has not issued the stock-based compensation of 250,000 shares of common stock to Patrick Burkert or the 200,000 shares of common stock to Patrick Heneise.

 

During the six months ended February 28, 2021, the Company issued 1,145,789 common shares to satisfy the conversion of $1,060,000 of convertible promissory notes.

 

NOTE 10: SHARE-BASED COMPENSATION

 

Stock Options

 

During the three months ended February 28, 2021, the Company granted options for the purchase of the Company’s common stock to certain employees and consultants as consideration for services rendered. The terms of the stock option grants are determined by the Company’s Board of Directors. The Company’s stock options generally vest upon the one-year anniversary date of the grant and have a maximum term of fifteen months.

 

The following summarizes the stock option activity for the six months ended February 28, 2021:

 

 

 

Options  

 

 

Weighted-Average

 

 

 

Outstanding

 

 

Exercise Price

 

Balance as of August 31, 2020

 

 

-

 

 

 

-

 

Grants

 

 

500,000

 

 

$ 0.10

 

Exercised

 

 

-

 

 

 

-

 

Cancelled

 

 

-

 

 

 

-

 

Balance as of February 28, 2021

 

 

500,000

 

 

$ 0.10

 

 

The weighted average grant date fair value of stock options granted during the three months ended February 28, 2021 was $1.29. The total fair value of stock options that granted during the six ended February 28, 2021 was approximately $644,930. The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions for stock options granted during the six months ended February 28, 2021:

 

Expected term (years)

 

1.25 years

 

Expected stock price volatility

 

 

632.06 %

Weighted-average risk-free rate

 

 

0.10 %

Expected dividend

 

 

-

 

  

Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company estimates expected volatility giving primary consideration to the historical volatility of its common stock. The risk-free interest rate is based on the published yield available on U.S. Treasury issues with an equivalent term remaining equal to the expected life of the stock option. The expected lives of the stock options represent the estimated period of time until exercise or forfeiture and are based on the simplified method of using the mid-point between the vesting term and the original contractual term.

 

 
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The following summarizes certain information about stock options vested and expected to vest as of February 28, 2021:

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

 

 

 

Remaining

 

 

 

 

 

 

Number of

 

 

Contractual Life

 

 

Weighted-Average

 

 

 

Options

 

 

(in Years)

 

 

Exercise Price

 

Outstanding

 

 

500,000

 

 

 

1.09

 

 

$ 0.10

 

Exercisable

 

 

83,333

 

 

 

1.09

 

 

$ 0.10

 

Expected to vest

 

 

416,667

 

 

 

1.09

 

 

$ 0.10

 

 

As of February 28, 2021, there was unrecognized compensation cost of $440,703 related to non-vested share-based compensation arrangements which is expected to be recognized within the next year.

 

Restricted Stock Awards 

 

During the six months ended February 28, 2021, the Company issued restricted stock awards for shares of common stock which have been reserved for the holders of the awards. Restricted stock awards were issued to certain employees and consultants  as consideration for services rendered. The terms of the restricted stock units are determined by the Company’s Board of Directors. The Company’s restricted stock shares generally vest over a period of one yea.

 

The following summarizes the restricted stock activity for the six months ended February 28, 2021 and year ended August 31, 2020:

 

 

 

 

 

 

Weighted-Average

 

 

 

Shares

 

 

Exercise Price

 

Balance as of August 31, 2019

 

 

-

 

 

 

-

 

Shares of restricted stock granted

 

 

700,000

 

 

$ 1.25

 

Exercised

 

 

-

 

 

 

-

 

Cancelled

 

 

-

 

 

 

-

 

Balance as of August 31, 2020

 

 

700,000

 

 

$ 1.25

 

Shares of restricted stock granted

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

Cancelled

 

 

-

 

 

 

-

 

Balance as of February 28, 2021

 

 

700,000

 

 

$ 1.25

 

  

 

 

February 28,

 

 

August 31,

 

Number of Restricted Stock Swards

 

2021

 

 

2020

 

Vested

 

 

450,000

 

 

 

62,500

 

Non-vested

 

 

250,000

 

 

637,500

 

 

 

 

700,000

 

 

 

700,000

 

 

As of February 28, 2021, and August 31, 2020, there was unrecognized compensation cost of $312,500 and $812,500, related to non-vested share-based compensation, respectively, which is expected to be recognized over the next year.

 

NOTE 11 – SUBSEQUENT EVENTS

 

On March 22, 2021 the Company issued $106,500 in a convertible note to an unrelated party, which is non-interest bearing and matures on September 22, 2021. It is convertible into common stock at the rate equivalent to 80% of the Company’s 30-day average stock price prior to conversion but no less than $0.10 value per share of Common Stock.

 

 
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward looking statement notice

 

Statements made in this Form 10-Q that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the “Act”) and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

 

Financial information contained in this quarterly report and in our unaudited interim financial statements is stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

 

In March 2020, the World Health Organization categorized Coronavirus Disease 2019 (“COVID-19”) as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The services we provide are currently designated an essential critical infrastructure business under the President’s COVID-19 guidance, the continued operation of which is vital for national public health, safety and national economic security. The extent of the impact of the COVID-19 outbreak on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on our customers and vendors, and the range of governmental and community reactions to the pandemic, which are uncertain and cannot be fully predicted at this time.

 

General

 

Boatim Inc. was incorporated in the State of Nevada as Emerald Data Inc., a for-profit company on August 15, 2014 and established a fiscal year end of August 31. On January 24th, 2019, the company name was changed to Boatim Inc. On April 29, 2019, Mr. Wolfgang Tippner was appointed as a new director and CEO of the company. On November 07, 2019, the Company’s Board of Directors approved a 3 for 1 Reverse stock Split. All share amounts have been retroactively adjusted to reflect the reverse stock split.

 

On June 10, 2020, Mr. Patrick Burkert was appointed as Director & Chief Marketing Officer, followed by Mr. Chris Roy, who was appointed Director & Chief Product Officer of the Company on June 15, 2020. On February 12, 2021, Mr. Chris Roy and Mr. Patrick Burkert resigned as members of the Board of Directors (the “Board”) of Boatim Inc. (the “Company”) to pursue other business opportunities. Mr. Roy´s and Mr. Burkert´s resignations were not due to any disagreement with the Company, its policies or practices.

 

On March 19, 2021, Mr. Mario Beckles, CPA was appointed as a member of the board of Directors (“Board”) of Boatim Inc. (“Company”) effective immediately and as new Chief Financial Officer of the company, commencing on April 1, 2021. The appointment was approved by the shareholders of the corporation representing approximately 63% of the issued and outstanding stock of the Company.

 

Mr. Beckles has over 20 years of experience in financial reporting, financial accounting, tax and audit works. He is US based (FL) and his areas of expertise include, inter alia, information technology and retail. He began his career as a Senior Auditor with Deloitte and has since held positions as CFO of First Liberty Power Corp, a publicly traded mining company, was a Partner at Jersey Fortress Capital Partners, a boutique investment banking firm or was a Senior Financial Reporting Analyst with SimplexGrinnell, a $2B Fire & Security Contractor. Mario is a member of the American Institute of Certified Public Accountants and holds a CPA license with the state board of Florida. 

 

Mario replaces Boatim Inc.´s prior CFO, Mr. Benjamin Salter, whose resignation was accepted by the shareholders on that same date as part of reorganizing leadership with a stronger emphasis on US markets. Mr. Salter continues with the Company heading business development and operations in Europe.

  

 
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The largest shareholder of Boatim Inc. with a holding of 32,766,667 shares of common stocks is JTT Global Ventures Ltd. That position represents 63.44% of the Company’s voting rights.

 

Boatim, Inc. established Boatim Europe S.L. (“Boatim Europe”) as a private limited company pursuant to the laws of Spain on December 18, 2019, with the Company having indirect control of one hundred percent of the issued and outstanding membership interests of Boatim Europe. Boatim Europe commenced operations in February 2020 and is engaged in the business of providing software development, marketing, and selling services for Boatim Inc.

 

In December 2020, the Company finalized the process of collecting and submitting all required paperwork to the Spanish authorities to enter Boatim Inc. as direct owner on public records in Spain, making Boatim Europe a wholly owned subsidiary of the Company.

 

On February 27, 2020 the Company received OTC approval on its up listing to the OTCQB venture market exchange, which is a well recognized trading market for smaller fast-growing companies which meet certain reporting and transparency procedures, which are a prerequisite to be admitted to this market. The Company trades under the ticker symbol “BTIM”.

 

On May 29, 2020, the up listing was followed by DTC´s confirmation of the Company´s DWAC capability, a technical back-end feature allowing brokers to clear the Company´s stocks directly broker to broker, fast and seamless settlements. 

 

Recent developments

 

In early 2020, the World Health Organization declared the rapidly spreading coronavirus disease (COVID-19) outbreak a pandemic. This pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. Due to the outbreak and spread of COVID-19, the Company’s management and advisors responsible for financial reporting have experienced administrative delays, include travel restrictions and reduced work hours. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impacts on the Company’s results of operations and financial position at February 28, 2021. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Quarter Report on Form 10-Q. These estimates may change, as new events occur, and additional information is obtained.

 

Results of operations 

 

The following comparative analysis on results of operations was based primarily on the comparative financial statements, footnotes and related information for the periods identified below and should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report.

   

 
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Results of Operations for the Six Months Ended February 28, 2021 and February 29, 2020

 

Operating expenses

 

Operating expenses comprised of selling and marketing, and general and administrative expenses were $1,609,124 for the six months ended February 28, 2021, compared to $242,689 for the six months ended February 29 2020, an increase of $1,366,435. The increase is due to increased operating expenses associated with an increased investment of resources into marketing, sales, and software maintenance.

  

Net Loss

 

Net loss for the six months ended February 28, 2021 was $2,445,563 compared to $242,689 for the six months ended February 29 2020. As well as the reasons discussed above, other income (expenses) comprised interest expense of $645,948, and loss on derivative of $191,208.

 

Liquidity and capital resources 

 

At February 28, 2021, we had $28,936 in cash and there were outstanding liabilities of $1,833,823 (cash of $38,427 and liabilities of $1,537,436 as of August 31, 2020, respectively). The stockholders’ deficit was $1,151,829 as of February 28, 2021 and $1,027,147 as of August 31, 2020.

  

There was $872,521 cash used by operations in the six months ended February 28, 2021 ($250,800 net cash used in operating activities during the six months ended February 29, 2020, respectively), $219,620 used in cash for investing activities for the six months ended February 28, 2021 ($0 used in cash for investing for the six months ended February 29, 2020) and $1,058,644 cash provided through financing activities during the six months ended February 28, 2021 ($264,388 for the six months ended February 29, 2020). This resulted a reduction of $9,491 in net cash during the six months ended February 28, 2021 ($12,975 increase in net cash during the six months ended February 29, 2020, respectively).

  

Cayo Ventures GmbH has verbally agreed to continue to loan the company funds for operating expenses in a limited scenario, but it has no legal obligation to do so.

 

There is limited historical financial information about us upon which to base an evaluation of our performance. We have meaningfully commenced business operations based upon the amount of revenue we have been able to generate. We are in start-up stage of operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.

 

We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.

 

Off-balance sheet arrangements

 

We have no 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, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

   

 
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

 

This item is not applicable as we are currently considered a smaller reporting company.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Our CEO and CFO have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this document. Based on the evaluation, they have concluded that our disclosure controls and procedures are not effective in timely alerting them to material information relating to us that is required to be included in our periodic SEC filings and ensuring that information required to be disclosed by us in the reports we file or submit under the Act is accumulated and communicated to our management, including our chief financial officer, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures were not effective as of February 28, 2021 due to the material weaknesses as disclosed in the Company’s Annual Report on Form 10-K filed with the SEC.

 

Limitations of the Effectiveness of Disclosure Controls and Internal Controls

 

Our management, including our Principal Executive Officer and Principal Financial Officer, does not expect that our disclosure controls and internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.

 

The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions; over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal control over financial reporting subsequent to February 28, 2021, which were identified in connection with our management’s evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

   

 
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PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

THE EFFECTS OF THE RECENT COVID-19 CORONAVIRUS PANDEMIC ARE NOT IMMEDIATELY KNOWN, BUT MAY ADVERSELY AFFECT OUR BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION, LIQUIDITY, AND CASH FLOW.

 

Presently, the impact of COVID-19 has not shown any imminent adverse effects on our business. This notwithstanding, it is still unknown and difficult to predict what adverse effects, if any, COVID-19 can have on our business, or against the various aspects of same, or how COVID-19 will continue to effect the world as the virus case numbers rise and fall.

 

As of the date of this Annual Report, COVID-19 coronavirus has been declared a pandemic by the World Health Organization, has been declared a National Emergency by the United States Government. COVID-19 coronavirus caused significant volatility in global markets. The spread of COVID-19 coronavirus has caused public health officials to recommend precautions to mitigate the spread of the virus, especially as to travel and congregating in large numbers. In addition, certain countries, states and municipalities have enacted, quarantining and “shelter-in-place” regulations which severely limit the ability of people to move and travel and require non-essential businesses and organizations to close. While some places have lessened their “shelter-in-place” restrictions and travel bans, as they are removed there is no certainty that an outbreak will not occur, and additional restrictions imposed again in response.

 

It is unclear how such restrictions, which will contribute to a general slowdown in the global economy, will affect our business, results of operations, financial condition and our future strategic plans. Shelter-in-place and essential-only travel regulations could negatively impact us. The current status of COVID-19 coronavirus closures and restrictions could negatively impact our ability to receive funding from our existing capital sources as each business is and has been affected uniquely.

 

If any of our employees, consultant, customers, or visitors were to become infected we could be forced to close our operations temporarily as a preventative measure to prevent the risk of spread which could also negatively impact our ability to receive funding from our existing capital sources as each business is and has been affected uniquely

 

In addition, our headquarters are located in Miami, Florida which experienced restrictions on individuals and business shutdowns as the result of COVID-19. It is unclear at this time how these restrictions will be continued and/or amended as the pandemic evolves. We are hopeful that COVID-19 closures will have only a limited effect on our operations.

 

GENERAL SECURITIES MARKET UNCERTAINTIES RESULTING FROM THE COVID-19 PANDEMIC.

 

Since the outset of the pandemic the United States and worldwide national securities markets have undergone unprecedented stress due to the uncertainties of the pandemic and the resulting reactions and outcomes of government, business and the general population. These uncertainties have resulted in declines in all market sectors, increases in volumes due to flight to safety and governmental actions to support the markets. As a result, until the pandemic has stabilized, the markets may not be available to the Company for purposes of raising required capital. Should we not be able to obtain financing when required, in the amounts necessary to execute on our plans in full, or on terms which are economically feasible we may be unable to sustain the necessary capital to pursue our strategic plan and may have to reduce the planned future growth and/or scope of our operations.

    

 
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None

 

ITEM 3. DEFAULTS UPON SENIOR SECURITES

 

None

 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

 

None

 

ITEM 5. OTHER INFORMATION

 

None

   

 
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ITEM 6. EXHIBITS

 

The following exhibits are included as part of this report by reference:

 

Exhibit Number

 

Exhibit Description

31.1

 

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

 

Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

 

Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

 

Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

01.INS*

 

XBRL Instance Document

 

Filed herewith.

101.SCH*

 

XBRL Taxonomy Extension Schema Document

 

Filed herewith.

101.CAL*

 

XBRL Taxonomy Extension Calculation Linkbase Document

 

Filed herewith.

101.LAB*

 

XBRL Taxonomy Extension Labels Linkbase Document

 

Filed herewith.

101.PRE*

 

XBRL Taxonomy Extension Presentation Linkbase Document

 

Filed herewith.

101.DEF*

 

XBRL Taxonomy Extension Definition Linkbase Document

 

Filed herewith.

 

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

   

 
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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

Boatim Inc.

 

 

Date: April 19, 2021

By:

/s/ Wolfgang Tippner

 

Wolfgang Tippner

 

Chief Executive Officer (Principal Executive Officer)

 

Date: April 19, 2021

By:

/s/ Mario Beckles

 

 

Mario Beckles

 

 

Chief Financial Officer (Principal Financial and Principal Accounting Officer)

 

  

 
25

 

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