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 and business people. 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
relaunched in its beta form launched June 1, 2021. At this time we are focused on developing the website with new features and functionalities.
Our developers are based in India and Denmark.
Users are able to freely search the portal and all
content are 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 Agreements between the Company and White
Lion Capital and Triton Funds has been declared effective by the SEC.
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.
Through the third quarter of 2021, the Company has
completed the following:
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.
Investor Website
The Company investor relations website www.wikisoft.com
launched on February 22, 2021 intends to provide transparency and disclosure about our Company consistent with the information disclosed
in our filings with the Securities and Exchange Commission. The company has started to collect permissions and subscribers to communicate
company updates with interested parties. The information on our website is not made part of this Quarterly Report.
Purchase Agreement with White Lion Capital, LLC
The Purchase Agreement signed on May 10th provides
that the Company has the right, but not the obligation to cause White Lion Capital, LLC 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 a Form S-1 with the SEC on July 30th. The SEC declared it effective on Aug 6th 2021. The first
purchase notice has been sent to White Lion Capital and cash for the shares received.
Subsequently, on November 4, 2021, the Company and
White Lion amended the Purchase Agreement to remove the Floor Price of $0.25, such that the Company may put amounts to White Lion in accordance
with the Purchase Agreement even where the price of the Company’s common stock falls below $0.25.
As a result of the amendment, the Company plans to
file an amendment of its Form S-1with the SEC.
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 amended CSPA.
The Company and TRITON FUNDS previously entered
into the Original Agreement, pursuant to which, TRITON FUNDS agreed to purchase Seven Hundred and Fifty Thousand Dollars ($750,000) worth
of shares of the Company’s common stock after a Registration Statement is declared effective by the Securities and Exchange Commission
(the “SEC”) at a fixed price of $1.50 per share.
Pursuant to the Amended Purchase Agreement,
TRITON FUNDS agreed to purchase One Million Dollars ($1,000,000) worth of shares of the Company’s common stock, in tranches of up
to $100,000, after a Registration Statement is declared effective by the SEC at purchase price equal to 85% of the lowest daily Volume
Weighted Average Price of the Company’s common stock five (5) business days prior to each closing.
The SEC declared it effective on Aug 27th
2021. The first purchase notice has been sent to Triton Funds and cash for the shares received.
Wikiprofile
Wikisoft’s flagship website wikiprofile.com
was redesigned and launched in a beta version on June 1st. Test of the beta site and a stabilization period has commenced.
New features and improvements have been implemented in Q3 which include but are not limited to:
Improved sign-up process with an automatic look-up to make it easy to join the platform free of charge, Advanced filtering options
and search algorithm to give more relevant results. During the quarter we have had continuous growth
of business profiles and the total number of profiles exceeds 175 million. The number include claimed and unclaimed company and people
profiles.
Fourth Quarter of 2021
In this quarter we plan to further develop wikiprofile.com
with new features and functionalities. IT development will utilize existing developers and additional developers will be hired if needed
for crawling and frontend development of business logic and products. 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. 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 accelerate marketing activities
seeking to generate users and sign ups to our website platform. The main drivers will be email, search engine marketing and Search Engine
Optimization. We anticipate to: (i) hire additional developers and/or a marketing manager to support business needs; and (ii) further
develop of our platform with new features. We expect that the total cost for the foregoing activities will be an estimated amount of $150,000.
Second 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 Nine Months
Ended September 30, 2021 and 2020
Revenues
We earned no revenues for the three and nine months
ended September 30, 2021 or 2020. We hope to generate revenues in the remainder 2021 and into 2022, but we will need financing to maximize
our earning potential.
Operating Expenses
Operating expenses increased from $149,341 for the
quarter ended September 30, 2020 to $4,619,129 for the quarter ended September 30, 2021. Operating increased from $1,715,454 for the nine
months ended September 30, 2020 to $5,028,874 for the nine months ended September 30, 2021. The main reason for the increase in operating
expenses for the 2021 periods was considerably more spent on professional fees over the same periods in 2020. We issued stock for services
in the amount of $4,646,389, and that resulted in the bulk of the increased operating expenses. Also, general and administrative expenses
increased for the 2021 periods over the 2020 periods.
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 nine months ended September 30, 2021 and 2020.
Net Loss
We incurred
a net loss of $4,620,252 for the quarter ended September 30, 2021, compared to a net
loss of $150,154 for the quarter ended September 30, 2020. We incurred a net loss of
$5,032,209 for the nine months ended September 30, 2021, compared to a net loss of $1,721,512 for
the nine months ended September 30, 2020.
Liquidity and Capital Resources
As of September 30, 2021, we had total current assets
of $6,037 and total current liabilities of $580,139. We had working capital deficit of $574,102 as of September 30, 2021.
Net cash used in operating activities was $329,237
for the nine months ended September 30, 2021, as compared with $110,881 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 $314,999 in cash for
the nine months ended September 30, 2021, as compared with $43,226 in cash provided for the same period ended 2020. The majority of cash
provided in 2021 was from a related party line of credit. The majority of cash provided in 2020 was proceeds from related party advances.
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 September 30, 2021, the Company had $5,326 cash on hand. At September 30, 2021 the Company
has an accumulated deficit of $12,615,747. For the nine months ended September 30, 2021, the Company had a net loss of $5,032,209, and
net cash used in operations of $329,239. 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.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
We conducted an evaluation, with the
participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended, or the Exchange Act, as of September 30, 2020, to ensure that information required to be disclosed by us in the reports
filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified
in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us
in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our
principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that as of September 30, 2021, our disclosure controls and procedures were not effective at the reasonable assurance level
due to the material weaknesses identified and described below.
Our principal executive officers do not expect
that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures
were designed to provide reasonable assurance of achieving their objectives and our principal executive officers have determined that
our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide
only reasonable, not absolute assurance that the objectives of the 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 the
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 simple error or mistake. Additionally, controls can be circumvented if there exists
in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions.
Remediation Plan to Address the Material Weaknesses
in Internal Control over Financial Reporting
A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented or detected on a timely basis. Management identified the following
three material weaknesses that have caused management to conclude that, as of September 30, 2021, our disclosure controls and procedures,
and our internal control over financial reporting, were not effective at the reasonable assurance level:
1.
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We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act as of the period ending September 30, 2021. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
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2.
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We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
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3.
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Effective controls over the control environment were not maintained. Specifically, a formally adopted written code of business conduct and ethics that governs our employees, officers, and directors was not in place. Additionally, management has not developed and effectively communicated to employees its accounting policies and procedures. This has resulted in inconsistent practices. Further, our Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.
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To address these material weaknesses, management performed
additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects,
our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the financial statements
included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the
periods presented.
We intend to remedy our material weakness with regard
to insufficient segregation of duties by hiring additional employees in order to segregate duties in a manner that establishes effective
internal controls once resources become available.
Changes in Internal Control over Financial
Reporting
No change in our system of internal control over financial
reporting occurred during the period covered by this report, the period ended September 30, 2021, that has materially affected, or is
reasonably likely to materially affect, our internal control over financial reporting.