FORWARD-LOOKING STATEMENTS
The information set forth in this Management's Discussion and Analysis of
Financial Condition and Results of Operations ("MD&A") contains certain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995, including,
among others (i) expected changes in 3AM Technologies, Inc. (referred to herein
as the "Company", or, "we", "our", "ours" and "us") revenues and profitability,
(ii) prospective business opportunities and (iii) our strategy for financing its
business. Forward-looking statements are statements other than historical
information or statements of current condition. Some forward-looking statements
may be identified by use of terms such as "believes", "anticipates", "intends"
or "expects". These forward-looking statements relate to our plans, objectives
and expectations for future operations. Although we believe that our
expectations with respect to the forward-looking statements are based upon
reasonable assumptions within the bounds of our knowledge of our business and
operations, in light of the risks and uncertainties inherent in all future
projections, the inclusion of forward-looking statements in this Annual
Report should not be regarded as a representation by us or any other person that
our objectives or plans will be achieved.
We assume no obligation to update these forward-looking statements to reflect
actual results or changes in factors or assumptions affecting forward-looking
statements.
You should read the following discussion and analysis in conjunction with the
Financial Statements and Notes attached hereto, and the other financial data
appearing elsewhere in this Annual Report.
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Our revenues and results of operations could differ materially from those
projected in the forward-looking statements as a result of numerous factors,
including, but not limited to, the following: the risk of significant natural
disaster, the inability of the Company to insure against certain risks,
inflationary and deflationary conditions and cycles, currency exchange rates,
and changing government regulations domestically and internationally affecting
our products and businesses.
Overview
3AM TECHNOLOGIES, INC. ("3AM Technologies", "we", or "the Company") was
incorporated in the State of Nevada as a for-profit Company on March 13, 2014.
We are a development-stage Company which intends to be in the business of
sourcing products, design and manufacturing services for North American
retailers, distributors and OEM (original equipment manufacturing) of products
that include cables and printed circuit boards. We have signed a letter of
intent to acquire 3AM Enterprises Inc. which currently operates in that space.
The completion of the acquisition is subject to us obtaining our trading symbol
and having working capital satisfactory to the 3AM Enterprises.
We intend to continue and grow the existing operations of 3AM Enterprises Inc.
Our President is a former employee of 3AM Enterprises Inc. and has extensive
knowledge of the business operations. 3AM Enterprises currently provides its
products and services to a wide range of manufacturers and retailers including
manufacturers of satellite TV receivers and retailers of audio cables. If, for
any reason, we are unable to complete our acquisition of 3AM Enterprises, we
intend to develop a competing business.
We intend to generate revenue by assisting technology manufacturers and
retailers reduce their costs by sourcing their product design, development and
manufacturing
The Company intends to compete with other similar companies, but aims to develop
a website to promote its services and engage in a more comprehensive marketing
program. 3AM Technologies does not currently have a website. That company
currently relies on direct selling and referrals to source new clients. However,
there can be no assurances that our efforts to expand the marketing effort of
3AM Technologies will succeed, or that we will be able to successfully market
the proposed website, if developed. We believe that there is significant growth
potential in 3AM Enterprises that can be achieved by expanding the company's
marketing efforts.
While the Company has enough funds to operate now through financial support from
its President, Simon Gee, management believes the Company's best chance for long
term growth is to complete the acquisition of 3AM Enterprises Inc. and put
significant investment into additional marketing.
Plan of Operation
Our goal is to acquire 3AM Enterprises Inc., which is in the business of
sourcing products, design and manufacturing services for North American
retailers, distributors and OEM (original equipment manufacturing) of products
that includes cables and printed circuit boards. We have signed a letter of
intent to acquire 3AM Enterprises Inc. We intend to generate revenue through the
sale, design and manufacturing sourcing of components and products for North
American retailers and OEM technology products. The initial focus of our
business will service retailers of cables and printed circuit boards.
The Company intends to compete with other similar companies, but aims to develop
a website to promote its services and engage in a more comprehensive marketing
program. 3AM Technologies does not currently have a website. That company
currently relies on direct selling and referrals to source new clients. However,
there can be no assurances that our efforts to expand the marketing effort of
3AM Technologies will succeed, or that we will be able to successfully market
the proposed website, if developed. We believe that there is significant growth
potential in 3AM Enterprises that can be achieved by expanding the company's
marketing efforts.
Management expects to have to invest in ongoing development and expansion of the
Company's services in order to remain competitive.
If we are unable to complete our acquisition of 3AM Enterprises, this may
prevent us from accomplishing our business plan.
Critical Accounting Estimates
Below the Company will provide a discussion of its more subjective accounting
estimation processes for purposes of (i) explaining the methodology used in
calculating the estimates, (ii) the inherent uncertainties pertaining to such
estimates, and (iii) the possible effects of a significant variance in actual
experience, from that of the estimate, on the Company's financial condition.
Estimates involve the employ of numerous assumptions that, if incorrect, could
create a material adverse impact on the Company's results of operations and
financial condition.
Basis of Presentation: These financial statements and notes are presented in
accordance with accounting principles generally accepted in the United States.
The Company's fiscal year end is May 31.
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Use of Estimates: The preparation of financial statements in conformity with
U.S. 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 amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
The Company regularly evaluates estimates and assumptions related to the
recoverability of long-lived assets, donated expenses and deferred income tax
asset valuation allowances. The Company bases its estimates and assumptions on
current facts, historical experience and various other factors that it believes
to be reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and liabilities and the
accrual of costs and expenses that are not readily apparent from other sources.
The actual results experienced by the Company may differ materially and
adversely from the Company's estimates. To the extent there are material
differences between the estimates and the actual results, future results of
operations will be affected.
Cash and Cash Equivalents: The Company considers all highly liquid instruments
with a maturity of three months or less at the time of issuance to be cash
equivalents.
Related Parties: The Company follows ASC 850, Related Party Disclosures, for the
identification of related parties and disclosure of related party transactions.
Financial Instruments: The fair values of financial instruments which include
cash, prepaid expense, accounts payable and accrued liabilities were estimated
to approximate their carrying values due to the immediate or relatively short
maturity of these instruments. Transactions involving related parties cannot be
presumed to be carried out on an arm's-length basis, as the requisite conditions
of competitive, free market dealings may not exist. Representations about
transactions with related parties, if made, shall not imply that the related
party transactions were consummated on terms equivalent to those that prevail in
arm's-length transactions unless such representations can be substantiated. It
is not, however, practical to determine the fair value of amounts due to related
parties due to their related party nature. The Company's operations and
financing activities are conducted primarily in United States dollars, and as a
result the Company is not subject to significant exposure to market risks from
changes in foreign currency rates. Management has determined that the Company is
not exposed to significant credit risk.
Results of Operations
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto included elsewhere in this form 10-K.
For the Fiscal Year Ended May 31, 2020 compared to the Fiscal Year Ended May 31,
2019
Revenue
For the years ended May 31, 2020 and 2019, we generated no revenue.
Operating Expense
Operating expense increased to $38,142 for the year ended May 31, 2020 as
compared with $34,311 for the year ended May 31, 2019. This increase is
primarily attributable to an increase in service expense relating to the
application of DTC eligibility, offset by the decrease in filing expenses.
Net loss
Net loss increased to $38,142 for the year ended May 31, 2020 as compared with
$34,311 for the year ended May 31, 2019. The increase is entirely attributable
to an increase in operating expenses of approximately $3,831.
Liquidity and Capital Resources
For the Year Ended
May 31,
2020 2019
Net cash used in operating activities $ (22,008) $ (25,386)
Net cash provided by financing activities $ 10,500 $ 37,500Net cash used in operations was $22,008 for the fiscal year ended May 31, 2020
compared to $25,386 for the year ended May 31, 2019. This decrease was primarily
attributable to an increase in net loss of approximately $3,831, a decrease in
prepaid expenses of $1,871 and an increase in accounts payable of $14,263.
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Cash flows provided by financing activities for the fiscal year ended May 31,
2020 were $10,500 compared to $37,500 for the year ended May 31, 2019.
We have substantial capital resource requirements and have incurred significant
losses since inception. As of May 31, 2020, we had $1,434 in cash. Based upon
our current business plans, we will need considerable cash investments to be
successful. Such capital requirements are in excess of what we have in available
cash and what we currently have commitment for. Therefore, we do not have enough
available cash to meet our obligations over the next twelve months.
Related Party Transactions
Since inception, we have conducted transactions with directors and director
related entities. These transactions included the following:
As of May 31, 2020 and 2019, the Company was indebted to the President of the
Company in the amount of $37,512 and $17,512, respectively, which is
non-interest bearing, unsecured, and due on demand.
The business' operational facility was provided by the president of the Company
free of charge.
Going Concern Qualification
We did not generate any revenue for the year ended May 31, 2020 or the year
ended May 31, 2019 and have incurred significant losses and cash used in
operations, and such losses and use of cash are expected to continue. As of May
31, 2020, the Company has an accumulated deficit of $142,841. Our Independent
Registered Public Accounting Firm has included a "Going Concern Qualification"
in their report for the years ended May 31, 2020 and 2019. In addition, we have
negative working capital. The foregoing raises substantial doubt about the
Company's ability to continue as a going concern. Management's plans include
seeking additional capital or debt financing. There is no guarantee that
additional capital or debt financing will be available when and to the extent
required, or that if available, it will be on terms acceptable to us. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. The "Going Concern Qualification" might make it
substantially more difficult to raise capital.
Off-Balance Sheet Arrangements
We do not have any 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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3AM TECHNOLOGIES, INC.