This discussion summarizes the significant factors affecting the results of
operations and financial condition of the Company during the fiscal years ended
Financial Statements
The audited consolidated financial statements form a part of this Report include
results for our fiscal years ended
Following is management's discussion and analysis of those financial statements.
This discussion and analysis should be read in conjunction with our financial
statements and notes thereto included elsewhere in Report on Form 10-K for the
fiscal years ended
RESULTS OF OPERATIONS
Results of Operations from Continuing Operations
The Company shifted its focus to the FinTech sector during the current fiscal
year and acquired an operating, revenue generating subsidiary,
During the fiscal year ended, 2020, the Resort at Lake Selmac generated reduced
revenues as compared to fiscal 2019, as we took several months to re-brand the
site as a resort destination location and attend to minor repairs and site
upgrades during January and
Fiscal Year ended
Revenue and costs of revenue
During the fiscal year ended
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Operating expenses Our operating expenses for the fiscal years endedJune 30, 2020 and 2019 were as follows: Fiscal Years Ended June 30 2020 2019 Revenue$ 317,149 $ 277,294 Revenue, related parties 2,051,355 787,919 Total revenues 2,368,504 1,065,213 Cost of sales, nonrelated parties 1,081,350 267,180 Cost of sale, related parties 186,354 294,613 Total cost of sales 1,267,704 561,793 Gross profit 1,100,800 503,420 Operating expenses General and administrative 2,499,094 1,828,643
General and administrative, related parties 223,957 82,470 Professional fees
1,233,071 749,998 Depreciation, amortization and impairment 14,624 121,345 Total operating expenses 3,970,746 2,782,456 Loss from operations (2,869,946) (2,279,036)
Fiscal Years ended
Our general and administrative expenses consist of stock-based compensation, rent, telephone, internet services, banking charges, salaries, consulting fees and miscellaneous office costs.
The Company experienced a substantial increase to operating expenses from
during the current fiscal year ended
We expect operating expenses to increase in future periods as we continue to expand our holdings seeking additional areas of operation to further enhance our existing revenue base.
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Other Expenses
Other income/expenses recorded in the fiscal ended
Net losses from continuing operations in the fiscal years ended
Discontinued operations
The Company sold its' wholly owned subsidiary WCS effective
Net losses from continuing and discontinued operations for the fiscal years
ended
Liquidity and Financial Condition
Liquidity and Capital Resources
At At June 30, 2020 June 30, 2019 Current Assets$ 774,537 $ 2,950,256 Current Liabilities 1,044,113 1,183,995 Working Capital$ (269,576) $ 1,766,261
As of
During the fiscal ended
Unearned revenue also decreased in the current period. In the fiscal year
ended
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Net cash provided by investing activities in the fiscal year ended
Net cash provided by financing activities was
Net cash used by discontinued activities totaled
Going Concern
During the fiscal year ended
Covid-19 Pandemic
The recent COVID-19 pandemic could have an adverse impact on our ongoing
operations. To date the Company's primary operating segment, Bombshell, has not
experienced a decline in sales as a result of the impact of COVID 19. The
Company's operations in the FinTech sector are carried out with a limited amount
of person to person contact and we do not expect an impact on these operations
as a result of COVID 19, however, the full effect of the COVID-19 outbreak
continues to evolve as of the date of this report, is highly uncertain and
subject to change. Operations of the Company's Resort at Lake Selmac property
were delayed until
Management does not expect the delay in opening the resort for the 2020-2021 season to substantially impact profitable operations for this business in the long term. Management is actively monitoring the
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situation but given the daily evolution of the COVID-19 outbreak, the Company is not able to estimate the effects of the COVID-19 outbreak on its operations or financial condition in the next 12 months. While significant uncertainty remains, the Company does not believe the COVID-19 outbreak will have a negative impact on its ability to raise additional financing, conclude the acquisition of targeted business operations or reach profitable operations.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in the Notes to our Financial Statements; however, we have identified below certain policies that have substantial impact on our financial reporting:
Accounts Receivable and Allowance for Doubtful Accounts
The Company determines the allowance for doubtful accounts by considering a
number of factors, including the length of time the accounts receivable are
beyond the contractual payment terms, previous loss history, and the customer's
current ability to pay its obligation. When the Company becomes aware of a
specific customer's inability to meet its financial obligations to the Company,
the Company records a charge to the allowance to reduce the customer's related
accounts. At
Leases
In
The Company has elected to apply the short-term scope exception for leases with
terms of 12 months or less at the inception of the lease and will continue to
recognize rent expense on a straight-line basis. As a result of the adoption, on
Share-based compensation
The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. Unregistered stock awards are measured based on the fair market values of the underlying stock on the dates of grant. For service type awards, share-based compensation expense is recognized
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on a straight-line basis over the period during which the employee is required to provide service in exchange for the entire award. For awards that vest or begin vesting upon achievement of a performance condition, the Company estimates the likelihood of satisfaction of the performance condition and recognizes compensation expense when achievement of the performance condition is deemed probable using an accelerated attribution model.
The Company capitalizes the cost of issuance grants that cover a period of
employment or consulting agreement under contract or performance obligation
related to future performance and amortizes the compensation related to these
contracts ratably over the period of employment or at percentage of completion
or other appropriate method for future performance grants. There were no
issuance grants outstanding with a performance term longer than one year at
Revenue Recognition under ASC 606
The Company has adopted accounting standard, ASC 606 "Revenue from Contracts with Customers" and all related amendments to the new accounting standard to contracts.
Revenues from contracts with customers are recognized when control of promised goods and services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
The Company recognizes revenue using the five-step model as prescribed by ASC 606:
1) Identification of the contract, or contracts, with a customer; 2) Identification of the performance obligations in the contract; 3) Determination of the transaction price; 4) Allocation of the transaction price to the performance obligations in the
contract; and 5) Recognition of revenue when or as, the Company satisfies a performance obligation.
When a contract with a customer is signed, the Company assesses whether collection of the fees under the arrangement is probable. The Company estimates the amount to reserve for uncollectible amounts at the end of each reporting period based on the aging of the contract balance, current and historical customer trends, and communications with its customers. These reserves are recorded against the related accounts receivable.
The transaction price is the consideration that the Company expects to receive from its customers in exchange for its products or services. In determining the allocation of the transaction price, the Company identifies performance obligations in contracts with customers, which may include subscriptions to software and services, support, professional services and customization. In the case of the Company's software contracts and support services prices are predetermined based on the specific terms of the contract either in flat fee customization/license fee charges or as hourly support and/or software customization charges. Charges relative to license fees are amortized over the term of the license. Charges relative to customization of the software are charged over the term of the scope of work on a percentage of completion basis. Charges relative to support and ongoing services and professional fees are charged when incurred and control has been transferred or the work has been completed.
License fees and customization of software
License and implementation fees are charged as flat fees which are amortized over the term of the contract. For contracts with elements related to customized software solutions and certain build-outs or software systems that require significant modification or customization, the Company will recognize revenue using the percentage-of-completion method. In using the percentage-of-completion method, revenues are generally recorded based on completion of milestones under a scope of work or based on total estimated cost of work and percentage completion as at the balance sheet date.
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Software Revenue
The Company generates software revenue monthly on a single fee per subscribed user basis. The Company recognizes software revenue monthly on a per user for each user that is able to deploy software and provided all revenue recognition criteria have been met. If the revenue recognition criteria has not been met, the revenue is deferred or not recognized.
Customization, support and maintenance
Revenue from the Company's customization of software to meet a particular client's needs is recognized on a percentage of completion basis over the term of the customization work and until control of the goods or services is transferred to the customer or such date the customer agrees the scope of work has been completed and the intended functionality of the software is complete and able to perform the desired service. Support and maintenance revenue is generated from recurring monthly support and is invoiced monthly based on hourly fees at predetermined rates based on each customer contract.
The Customer is credited a certain number of services hours monthly based on the numbers of users actively subscribed to the software which amounts offset any monthly user fees.
Support and maintenance services include e-mail and telephone support, unspecified rights to software fixes and product updates and upgrades and enhancements available on a when-and-if available basis.
Professional services and other
Professional services and other revenue is generated through services including onsite training, product implementation and other similar services. Professional services are generally flat fee services based on a number of hours or scope of work for each specific service. Depending on the services to be provided, revenue from professional services and other is generally recognized at the time of delivery when the services have been completed and control has been transferred.
Unearned Revenue
Unearned revenue represents billings or payments received in advance of revenue recognition and is recognized upon transfer of control. Balances consist primarily of license fees being amortized over the term of the customer contract and customization services which have not yet been concluded and are being deferred using the percentage-of-completion method.
Campground space rentals and concession sales
Revenues from our campsite operations from the sales of concession items, equipment rentals or campsite locations are recoded on the cash basis due to the nature of collection of campsite fees and concession items, which occur daily as the site is rented and sundry items are purchased.
Recent Accounting Pronouncements
There were various accounting standards and interpretations issued recently, none of which are expected to have a material effect on the Company's operations, financial position or cash flows. Refer to Note 2 - Summary of Significant Accounting Policies in the Audited yearend financial statements included herein.
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