The following information should be read in conjunction with our financial
statements and related notes thereto included in Part I, Item 1, above.
Forward Looking Statements
Certain matters discussed herein are forward-looking statements. Such
forward-looking statements contained in this Form 10-Q involve risks and
uncertainties, including statements as to:
·our future strategic plans
·our future operating results;
·our business prospects;
·our contractual arrangements and relationships with third parties;
·the dependence of our future success on the general economy;
·our possible future financings; and
·the adequacy of our cash resources and working capital.
These forward-looking statements can generally be identified as such because the
context of the statement will include words such as we "believe," "anticipate,"
"expect," "estimate" or words of similar meaning. Similarly, statements that
describe our future plans, objectives or goals are also forward-looking
statements. Such forward-looking statements are subject to certain risks and
uncertainties which are described in close proximity to such statements and
which could cause actual results to differ materially from those anticipated.
Shareholders, potential investors and other readers are urged to consider these
factors in evaluating the forward-looking statements and are cautioned not to
place undue reliance on such forward-looking statements. The forward-looking
statements included herein are only made as of the date of this Form 10-Q, and
we undertake no obligation to publicly update such forward-looking statements to
reflect subsequent events or circumstances.
Executive Overview
Electronic Servitor Publication Network, Inc. (formerly CannAssist International
Corporation) (the "Company") was incorporated on May 17, 2017, under the laws of
the State of Delaware. The Company's corporate offices are located at 400 1st
Ave N. Ste. 100, Minneapolis, MN 55401, its telephone phone number is (833)
991-0800 and the URL of its website is https://www.electronicservitor.com/.
As initially reported on the Company's Current Form 8-K filed on July 28, 2021,
CannAssist International Corp. (the "Company") entered into a Technology License
Agreement dated July 23, 2021 (the "License Agreement") with Phitech Management,
LLC, an entity now controlled by Peter Hager ("Licensor"), whereby the Licensor
shall grant to the Company an exclusive worldwide license (the "License") to
use, market, promote and distribute certain technology related to Electronic
Sports Gaming, related patent applications, related trade-secrets and associated
knowhow, including methods, techniques, specifications, procedures, information,
systems, knowledge and business processes required to practice and carry on
business in the field of data collection, security and management (the
"Technology") at Closing (as defined in the License Agreement, which is
incorporated herein by reference). The initial term of the License is 10-years
(the "Initial Term") and shall automatically be renewed for successive 1-year
terms (each, a "Renewal Term") unless the Company elects to terminate the
License by giving 30 days' written notice prior to commencement of a Renewal
Term. In exchange for the License of the Technology, the Company shall issue to
the Licensor 10,000,000 restricted shares of its common stock (which is an
amount equal to $2,500,000 divided by $0.25, which was the closing market price
of the Company's common stock on the trading day prior to the effective date of
the License Agreement).
On October 9, 2021, the Closing of the Technology License Agreement occurred
whereby the Company received the License to the Technology (as defined in the
Technology License Agreement described infra) and the Licensor shall be issued
10,000,000 restricted shares of the Company's common stock, at a cost basis of
$0.25 per share (which shall be issued at or around the time FINRA announces the
change in the Company's corporate name and trading symbol).
As initially reported on the Company's Current Form 8-K filed on July 28, 2021,
the Company and Mark Palumbo entered into a Spin-Off Agreement dated July 23,
2021 (the "Spin-Off Agreement") whereby, at the Closing (as defined in the
Spin-Off Agreement, which is incorporated by reference), the Company shall
transfer 100% of the issued and outstanding membership units of Xceptor LLC, an
entity that was a wholly-owned subsidiary of the Company, to Mark Palumbo for
nominal consideration as a condition of the Change-in-Control of the Company
(the "Spin-Off"). Furthermore, at the Closing, that certain Technology License
Agreement entered into by and between the Company and Mark Palumbo dated April
29, 2019 (the "Palumbo License Agreement") shall be terminated and the Company
shall assign all rights to the underlying Intellectual Property (as defined in
the Palumbo License Agreement) to Mark Palumbo.
13
On October 9, 2021, the Closing of the Spin-Off Agreement occurred whereby 100%
of the issued and outstanding membership units of Xceptor LLC was transferred to
Mark Palumbo in exchange for nominal consideration and the Palumbo License
Agreement was terminated.
Effective on October 9, 2021, as a result of the transactions described above,
the business of the Company changed to focus on Electronic Sports Gaming
technology and the development of related infrastructure, specifically the
development and commercialization of a technology platform specifically designed
for the Electronic Sports and Electronic Gaming markets. The platform will
provide an omni-channel publishing tool, with talent identity protection and
monetization tools provided in line with interaction and media creation
services. Further publication and monetization products and services will be
developed and acquired to support these efforts.
Prior to its change in business focus which occurred after the end of the period
covered by this report, the Company produced and sold the cannabidiol ("CBD")
product, "Cibidinol," which was formulated based on a process developed by its
former CEO Mark Palumbo. CBD is a non-psychoactive compound found in hemp. The
Company's initial research and development work, aimed at enhancing the
bioavailability of desired molecular structures, resulted in the creation of a
line of CBD products, most notably its CBD product, Cibidinol. Cibidinol was
available in a line of consumable and topical products that the Company believes
will make enhanced CBD products more available and accessible to consumers. The
financial results reported in this periodic report reflect the business and
operations of the Company's prior business since the change in business focus
occurred after the end of the period covered by this report.
The Company's independent auditors have issued a report raising substantial
doubt about the Company's ability to continue as a going concern. At present,
the Company has no operations and the continuation of the Company as a going
concern is dependent upon financial support from its stockholders, its ability
to obtain necessary equity financing to continue operations and/or to
successfully locate and negotiate with a business entity for the combination of
that target company with it.
Results of Operation for the Three Months Ended September 30, 2022 and 2021
Revenues
For the three months ended September 30, 2022, the Company had revenues of $0.
In comparison, for the three months ended September 30, 2021, all of revenue and
cost of revenue have been included in the loss from discontinued operations
(Refer to Note 9, above).
General and administrative expenses
General and administrative expenses ("G&A") were $1,304 for the three months
ended September 30, 2022, compared to $0 for the three months ended September
30, 2021.
Professional fees
Professional fees were $12,000 for the three months ended September 30, 2022
compared to $0 for the three months ended September 30, 2021. Professional fees
consist of audit, accounting, consulting, and legal fees.
Stock based compensation
During the three months ended September 30, 2022, we recognized $71,123 of
non-cash stock-based compensation expense for options issued in a prior period,
for which the expense is being recognized over the term of the agreements for
which they were granted.
Other expense
For the three months ended September 30, 2022, we incurred $1,823 of interest
expense compared to $0 for three months ended September 30, 2021.
All operating and other expenses for the three months ended September 30, 2021,
have been included in the loss from discontinued operations (Refer to Note 9,
above).
Net Income
For the three months ended September 30, 2022, we realized a net loss of $86,250
from continuing operations as compared to a net loss of $93,558 from
discontinued operations for three months ended September 30, 2021.
14
Results of Operation for the Nine Months Ended September 30, 2022 and 2021
Revenues
For the nine months ended September 30, 2022, the Company had revenues of $0. In
comparison, for the nine months ended September 30, 2021, all of revenue and
cost of revenue have been included in the loss from discontinued operations
(Refer to Note 9, above).
General and administrative expenses
General and administrative expenses were $14,851 for the nine months ended
September 30, 2022, compared to $0 for the nine months ended September 30, 2021.
Professional fees
Professional fees were $61,000 for the nine months ended September 30, 2022,
compared to $0 for the nine months ended September 30, 2021. Professional fees
consist of audit, accounting, consulting and legal fees.
Other expense
For the nine months ended September 30, 2022, we incurred $3,261 of interest
expense compared to $0 for nine months ended September 30, 2021.
All operating and other expenses for the three months ended September 30, 2021,
have been included in the loss from discontinued operations (Refer to Note 9,
above).
Net Loss
For the nine months ended September 30, 2022, we realized a net loss of $352,534
from continuing operations as compared to net loss of $172,812 from discontinued
operations for the nine months ended September 30, 2021.
Liquidity and Capital Resources
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company had a net loss of
$(352,534) for the nine months ended September 30, 2022, and has an accumulated
deficit of $6,267,766 as of September 30, 2022. The Company requires capital for
its contemplated operational and marketing activities. The obtainment of
additional financing, through an initial capital raise, the successful
development of the Company's contemplated plan of operations, and its transition
to the attainment of continued profitable operations are necessary for the
Company to continue operations. There is no guarantee that the Company will be
able to obtain the necessary financing or profitable operations. These
conditions and the ability to successfully resolve these factors raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements of the Company do not include any adjustments that may
result from the outcome of these aforementioned uncertainties.
The Company used $46,704 of cash from operations for the nine months ended
September 30, 2022. Net cash provided by financing activities for the nine
months ended September 30, 2022 was $55,273.
As of September 30, 2022, the Company had $8,569 in cash.
Critical Accounting Estimates and Policies
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities of the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Note 2 to the Financial Statements describes the
significant accounting policies and methods used in the preparation of the
Financial Statements. Estimates are used for, but not limited to, contingencies
and taxes. Actual results could differ materially from those estimates. The
following critical accounting policies are impacted significantly by judgments,
assumptions, and estimates used in the preparation of the Financial Statements.
We are subject to various loss contingencies arising in the ordinary course of
business. We consider the likelihood of loss or impairment of an asset or the
incurrence of a liability, as well as our ability to reasonably estimate the
amount of loss in determining loss contingencies. An estimated loss contingency
is accrued when management concludes that it is probable that an asset has been
impaired, or a liability has been incurred and the amount of the loss can be
reasonably estimated. We regularly evaluate current information available to us
to determine whether such accruals should be adjusted.
15
Off-Balance Sheet Arrangements
We have not entered into 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 and would be considered
material to investors.
Recent 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.
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ELECTRONIC SERVITOR PUBLICATION NETWORK, INC. 
