WSFT Wikisoft Corporation (QB)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Business Overview

Wikisoft Corp. has a vision to become one of the largest portals of information for businesses. Our portal, which initially launched in January 2018, is called wikiprofile.com and seeks to provide profiles on companies, business people and corporate influencers. Information contained on, or accessible through, the foregoing website is not a part of, and is not incorporated by reference into, this Quarterly Report.

Although our website portal is currently operational in its beta form launched June 1, 2021. At this time we are solely focused on developing the website. From its initial launch in 2018 to September 2020, we worked on developing the website in its initial form, beginning in September 2020 we began working to launch our updated website portal, which was launched in its beta form June 1, 2021. Our developers are based in Brazil and Denmark and our IT operations are based in Denmark.

Users are able to freely search the portal and all content will be collected and updated in real-time. Our platform is developed on multiple Postgres databases that provides the foundation for our Wikiprofile platform. The scalable Jamstack microservice architecture aims to remove the load pressure from a server-oriented focus and utilizes the resources on various browsers to deliver a user experience with modern well performing page speed due to architecture. The architecture is designed to make the web faster, more secure, and easier to scale. Using proprietary crawler technology, the databases automatically collect information on newly found entities, seeking to have a complete database.

We plan to generate revenues primarily from premium profiles and recruiting on our website. We also further plan to generate revenues by charging users of our website platform for access to certain information and features on our platform.

Plan of Operations

For the 2021 fiscal year, we expect to require a minimum of $500,000 in operating funds. The source of such funds is anticipated to be from capital raised from third parties. The founder Rasmus Refer, who owns 7.7% of the Company’s issued and outstanding common stock as of the date of this report, pursuant to a Revolving Credit Facility Agreement (the “Credit Agreement”) between him and the Company, dated December 30, 2020, has agreed to make unsecured loans and extensions of credit available to the Company of up to $1,000,000, as requested by the Company under the Credit Agreement, to implement the Company’s plan of operations if we are unable to raise sufficient funds from other sources.

The Purchase Agreement between the Company and White Lion has been signed dated June 8, 2021. Under the agreement, the Company may require White Lion to acquire shares of the Company’s common stock, up to a maximum amount of $20,000,000.

If we are able to raise funds from third parties exceeding $500,000, we plan to accelerate our plan of operations as much as possible consistent with the amount of funds raised and the Company’s strategy.

During the months of 2021, the Company has completed the following:

Form-10 effectiveness

The Company filed a Registration Statement on Form 10 with the SEC on January 6, 2021 to register its common stock under the Exchange Act. The Company’s Registration Statement on Form 10 went effective on February 12, 2021, and the Company is now subject to reporting obligations with the SEC. The Company’s management sees this as an important and essential step in our commitment to provide our investors with transparency and accountability.

Redemption Agreement

On February 18, 2021, the Company entered into a Stock Redemption Agreement (the “Redemption Agreement”) with Saqoia, Inc. (“SI”), an entity which is owned and controlled by Rasmus Refer. Pursuant to the Redemption Agreement, the Company agreed to purchase, and SI agreed to sell, 14,000,000 shares (the “Shares”) of the Company’s common stock held by SI to the Company in exchange for $1.00, with the Shares then being returned to the Company’s authorized, but unissued shares of common stock. Rasmus Refer was previously the Chief Executive Officer of the Company from April 2019 to August 2020 and Director of the Company from April 2019 to November 2020. Prior to the Redemption Agreement, SI held 86,895,078 shares of the Company’s common stock, and after the Redemption Agreement, SI held 72,895,078 shares of the Company’s common stock of which Mr. Refer has voting and dipositive power.

On July 8, 2021, SI agreed to donate its 72,895,078 shares of common stock in our company to Modern Art Foundation Inc. Mr. Refer now currently holds 3,500,000 shares of our common stock in his own name, and 3,500,000 shares held by Wikisoft Holdings, of which he has voting and dipositive power.

Amendment to Consulting Agreement

On February 18, 2021, the Company entered into a second Amendment to the Consulting Agreement (the “Second Amendment”) with Milestone Management Services, a limited liability company organized under the laws of the state of Nevada (“Milestone”) to amend the consulting agreement between the Company and Milestone effective as of August 1, 2020, as amended (the “Original Agreement”). Pursuant to the Original Agreement, Milestone agreed to provide strategic advisory services to the Company. Pursuant to a first amendment to the Original Agreement, which was entered into on September 21, 2020, the start date of the Original Agreement was delayed until March 1, 2021. Pursuant to the Second Amendment, the start date of the Original Agreement was delayed until June 1, 2022, however the Company in their sole discretion can elect to move up the start date of the Original Agreement to an earlier date. Other than the foregoing, no other material changes were made to the Original Agreement in the Second Amendment.

New Investor Website

The Company launched a new investor relations Website on February 22, 2021. The investor site on www.wikisoft.com intends to provide transparency and disclosure about our Company consistent with the information disclosed in our filings with the Securities and Exchange Commission. The information on our website is not made part of this Quarterly Report.

Signed Purchase Agreement with White Lion Capital, LLC

The Purchase Agreement signed on May 10^th provides that the Company has the right, but not the obligation to cause White Lion Capital to purchase up to $20,000,000 (the "Commitment Amount") of the Company's common stock, from time to time, during the commitment period, which starts on the date of execution of the Purchase Agreement and terminates on the earlier of, the date where the Commitment Amount is purchased or December 31, 2022, at a purchase price as set forth in the Purchase Agreement. The Company intends to use the net proceeds from the Purchase Agreement for the expansion of working capital and other general corporate purposes in accordance with its business strategy. The Company filed an S-1 on July 30, 2021. The SEC declared it effective on Aug 5, 2021.

Signed Purchase Agreement with Triton funds LP

On June 8, 2021, the Company entered into a Common Stock Purchase Agreement (the “CSPA”) with Triton Funds, LP, a Delaware limited partnership (“Triton Funds”), an unrelated third party. Subject to the terms and conditions set forth in the CSPA, the Company agreed to sell Common Stock of the Company to Triton Funds having an aggregate value of $750,000 at a fixed price of $1.50 per share (the “Investment Amount”).

The CSPA requires that the Company issue to Triton Funds an Administrative Fee of 25,000 shares of Common Stock and a deduction of $10,000 from the Investment Amount at Closing.

Triton Funds’ obligation to purchase securities is conditioned on an effective registration statement for the shares being purchased and Triton Funds’ ownership not exceeding 4.99% of the issued and outstanding shares of the Company giving effect to such purchase.

In connection with the CSPA, the Company also executed a Common Stock Purchase Warrant (the “Warrant”) under which Triton Funds is granted a three-year right to purchase up to 500,000 common shares of the Company (the “Warrant Shares”) subject to the terms and conditions of the Warrant.

On June 15, 2021, the Company filed a registration statement concerning the investment with Triton Funds. Shortly thereafter, the Company received comments from the SEC on the registration statement. The Company intends to respond to the comments and amend the registration statement, and to any other action necessary to work through the issued raised by the SEC as soon as possible.

Relaunch of Wikiprofile 

Launched redesign and a beta version of our flagship website wikiprofile.com on June 1, 2021. Test of beta site has been commenced and following a stabilization period marketing activities seeking to generate users and sign ups to our website platform will be commenced. The main drivers will be email, search engine marketing and Search Engine Optimization.

Third Quarter of 2021

In this quarter we plan to hire a marketing manager or outsource marketing. The main responsibilities will be to optimize and ensure KPI driven email and search engine marketing and Search Engine Optimization and execute on our marketing strategy and drive users and sign ups to our website. Furthermore, a customer care manager is expected to be hired to handle support and ensure customer satisfaction. IT development will utilize existing developers and additional developers will be hired if needed for crawling and frontend development of business logic and products. We expect that the total cost for the foregoing activities will be an estimated amount of $150,000.

Fourth Quarter of 2021

In this quarter we plan to continue to hire additional developers. We also expect to: (i) hire additional customer care and/or marketing managers to support business needs; and (ii) further develop of our platform with new features like Jobs and Job Postings is expected to be developed. We anticipate that our primary source of acquiring customers will be through Email Marketing, Search Engine Optimization & Search Engine Marketing. We also anticipate to hire a CFO to streamline financial reporting, compliance, Investor Relations and to improve corporate governance. We expect that the total cost for the foregoing activities will be an estimated amount of $150,000.

First Quarter of 2022

In this quarter we plan to continue to further develop of our platform with new features. By further leveraging artificial intelligence (“AI”) and machine learning techniques (“ML”), we expect that we will be able to process raw data and refine them into unique and actionable insights in the wiki universe. We anticipate that our primary source of acquiring customers will be through Email Marketing, Search Engine Optimization & Search Engine Marketing. We expect that the total cost for the foregoing activities will be an estimated amount of $200,000.

If we are able to raise funds from third parties exceeding $500,000, we plan to accelerate our plan of operations as much as possible consistent with the amount of funds raised and the Company’s strategy.

 Achievement of the foregoing plan of operations will depend highly on our funds and the availability of those funds and accordingly there can be no assurance that we can implement the foregoing as planned or at all.

 Results of Operation for Three and Six Months Ended June 30, 2021 and 2020

Revenues

We earned no revenues for the three and six months ended June 30, 2021 or 2020. We hope to generate revenues in the remainder 2021, but we will need financing to maximize our earning potential.

Operating Expenses

Operating expenses decreased from $1,544,136 for the quarter ended June 30, 2020 to $221,050 for the quarter ended June 30, 2021. Operating expenses decreased from $1,566,113 for the six months ended June 30, 2020 to $409,745 for the six months ended June 30, 2021. The main reason for the decrease in operating expenses for the 2021 periods was considerably less spent on professional fees over the same periods in 2020.

We anticipate our operating expenses will increase as we undertake our plan of operations. The increase will be attributable to administrative and operating costs associated with our business activities and the professional fees associated with our reporting obligations.

Other Expenses

We incurred insignificant amounts as interest expense for the three and six months ended June 30, 2021 and 2020.

Net Loss

We incurred a net loss of $222,160 for the quarter ended June 30, 2021, compared to a net loss of $1,549,381 for the quarter ended June 30, 2020. We incurred a net loss of $411,957 for the six months ended June 30, 2021, compared to a net loss of $1,571,358 for the six months ended June 30, 2020.

Liquidity and Capital Resources

As of June 30, 2021, we had total current assets of $30,950 and total current liabilities of $499,325. We had working capital deficit of $468,375 as of June 30, 2021.

 
Net cash used in operating activities was $234,857 for the six months ended June 30, 2021, as compared with $70,876 in cash for the same period ended 2020. Our net losses were the main contributing factor to our negative operating cash flows.

Financing activities provided $244,999 in cash for the six months ended June 30, 2021, as compared with $28,226 in cash provided for the same period ended 2020. The majority of cash provided in 2021 was from a related party line of credit.

Going Concern

We have evaluated all relevant conditions and events that are reasonably known or reasonably knowable, in the aggregate, as of the date the consolidated financial statements are issued and determined that substantial doubt exists about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on the Company’s ability to generate revenues and raise capital. The Company has not generated sufficient revenues from product sales to provide sufficient cash flows to enable the Company to finance its operations internally. As of June 30, 2021, the Company had $29,706 cash on hand. At June 30, 2021 the Company has an accumulated deficit of $7,995,495. For the six months ended June 30, 2021, the Company had a net loss of $411,957, and net cash used in operations of $234,857. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date of filing.

Over the next twelve months management plans to use borrowings and security sales to mitigate the effects of cash flow deficits; however, no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue existence.

Future Financings.

Because of our limited operating history, it is difficult to predict our capital needs on a monthly, quarterly or annual basis. We will have no capital available to us if we are unable to raise money or find alternate forms of financing, which we do not have in place at this time other than the “Credit Agreement” with Rasmus Refer. Pursuant to the Credit Agreement dated December 30, 2020, Mr. Refer has agreed to make unsecured loans and extensions of credit available to the Company of up to $1,000,000, as requested by the Company under the Credit Agreement, to implement the Company’s plan of operations if we are unable to raise sufficient funds from other sources. The funds extended to the Company under the Credit Agreement will have a maturity date of 24 months and will carry interest at 0.01% per annum. The Company may prepay the funds at any time without penalty. To date $120,000 has been provided to the Company under the Credit Agreement.

There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all. If we are unable to raise this money, our growth plans will be frustrated. There can be no assurance that our attempts to raise funds will be successful. You may lose your entire investment.

Critical Accounting Policies.

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies are disclosed Note 2 of our unaudited financial statements included in this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

We have no significant 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 that are material to stockholders.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.