Pacific Sports Exchange Inc 10-Q for FY2020 Q2
Pacific Sports Exchange Inc. (PSPX)
About this 10-Q
Pacific Sports Exchange Inc filed this 10-Q on April 14, 2020, covering the quarter ended February 29, 2020 (FY2020 Q2).
Headline figures
Quarter ended February 29, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $481
- down 56.4% from $1103 a year earlier
- Net income
- $4861
- down 15.6% from net income of $5758 a year earlier
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||
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(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
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(Address of principal executive offices) |
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(877) 571-5562
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
None | None | None |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated Filer | ☐ | Accelerated Filer | ☐ | ||||
x | Smaller reporting company | ||||||
Emerging growth company | |||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐ Yes x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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TABLE OF CONTENTS
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Management's Discussion and Analysis of Financial Condition or Plan of Operation |
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PACIFIC SPORTS EXCHANGE INC.
INTERIM CONDENSED FINANCIAL STATEMENTS
For the Six Months Ended February 29, 2020
INDEX TO UNAUDITED FINANCIAL STATEMENTS
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Balance Sheets as of February 29, 2020 and August 31, 2019 (Unaudited) | F-2 | ||
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PACIFIC SPORTS EXCHANGE INC.
Balance Sheets
(Unaudited)
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
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Inventory |
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Total Current Assets |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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Current Liabilities |
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Accounts payable and accrued liabilities |
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Total Current Liabilities |
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Stockholders' Equity (Deficit) |
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Common stock: |
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Additional paid-in capital |
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Accumulated deficit |
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Total Stockholders' Equity (Deficit) |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
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PACIFIC SPORTS EXCHANGE INC.
Statements of Operations
(Unaudited)
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Revenues |
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Cost of goods sold |
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Gross Profit |
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Operating Expenses |
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General and administrative |
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Professional fees |
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Total operating expenses |
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Operating loss |
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Net loss before income taxes |
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Provision for income taxes |
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Net loss |
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Basic and Diluted Loss per Common Share |
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Basic and Diluted Weighted Average Common Shares Outstanding |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
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PACIFIC SPORTS EXCHANGE INC.
Statement of Changes in Stockholders’ Equity (Deficit)
(Unaudited)
For the Six Months Ended February 29, 2020
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Balance - August 31, 2019 |
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Net loss |
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Balance - November 30, 2019 |
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Net loss |
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Balance - February 29, 2020 |
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For the Six Months Ended February 28, 2019
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Balance - August 31, 2018 |
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Net loss |
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Balance - November 30, 2018 |
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Common shares issued at $0.01 per share |
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Net loss |
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Balance - February 28, 2019 |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
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| Table of Contents |
PACIFIC SPORTS EXCHANGE INC.
Statements of Cash Flows
(Unaudited)
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss |
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Changes in current assets and liabilities: |
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Inventory |
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Accounts payable and accrued liabilities |
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Net cash used in operating activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Issuance of common stock |
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Net cash provided by financing activities |
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Net change in cash for the period |
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Cash at beginning of period |
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Cash at end of period |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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Cash paid for income taxes |
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Cash paid for interest |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
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| Table of Contents |
PACIFIC SPORTS EXCHANGE INC.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
February 29, 2020
NOTE 1 - ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN
Pacific Sports Exchange Inc., “Pacific Sports Exchange,” “the Company,” “we” or “us”) was incorporated in the state of Delaware on July 2, 2018. It is based in Punta Gorda, Florida. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America, and the Company’s fiscal year end is August 31.
The Company operates as a sports equipment vendor, specializing in tennis and golf. The Company sources highvalue new and used equipment and sells it online. The target market is an avid domestic or international customer that is serious about his/her golf or tennis game and will return to the Company for future purchases.
To date, the Company’s activities have been limited to generating revenue via www.ebay.com, as well as developing initial business contacts and services.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of February 29, 2020, the Company has an accumulated deficit and has earned nominal revenues.
The ability of the Company to obtain profitability is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. In response to these problems, management intends to raise additional operating funds through equity and/or debt offerings. However, there can be no assurance management will be successful in its endeavors.
There are no assurances that the Company will be able to either 1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or 2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support its working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available to the Company, it may be required to curtail or cease its operations.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10Q and Article 8 of Regulation SX of the United States Securities and Exchange Commission “SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited financial statements contain all the adjustments necessary consisting only of normal recurring accruals) to present the financial position of the Company as of February 29, 2020 and the results of operations and cash flows for the periods presented. The results of operations for the period ended February 29, 2020 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10K for the year ended August 31, 2019 filed with the SEC on November 27, 2019.
F6 |
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| Table of Contents |
Revenue Recognition
Revenue is earned from the reselling of new and used sports equipment. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations pursuant to each of its equipment sales transactions:
| · | identify the contract with a customer; |
| · | identify the performance obligations in the contract; |
| · | determine the transaction price; |
| · | allocate the transaction price to performance obligations in the contract; and |
| · | recognize revenue as the performance obligation is satisfied. |
The Company operates as an online only retailer and utilizes eBay Inc. “eBay”) as its prime marketing channel. The Company currently relies on eBay, a thirdparty marketplace, to facilitate its sales. Such reliance on any thirdparty platform to generate revenues carries with it certain risks, including but not necessarily limited to: the Company could violate the terms of service and lose its selling privileges, or the sites themselves could experience technical issues and/or fail. The Company always strives to abide by the policies of any thirdparty platform and endeavors to provide superior customer service.
Typical sales transactions are usually fulfilled within twentyfour hours of completing the transaction online. Contracts stating the transaction price and our performance obligation to deliver the ordered products are deemed to be entered into on eBay at the time the customer submits payment, which is conducted through the PayPal payment platform. Due to the instantaneous nature of a customer submitting an order online at a stated price and the same or next) business day shipment of product, the Company does not anticipate that variable consideration or contract assets or liabilities will arise in the normal course of business.
Revenues are recognized based on the sales contract price, net of sales taxes, when control of the promised goods are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods. Our contracted prices primarily include cost of inventory, shipping and handling, eBay commission fee and our margin, which varies depending on each item. We may provide incentives to our customers from timetotime, including discounts, coupons and rewards, which are treated as a reduction in revenue. We may provide sales under a consignment for a client. When acting as an agent, where we do not take delivery of the inventory, we record all costs of sales as a reduction in revenue. The Company does not accept returns and clearly indicates this in our listings. However, if a customer receives an item that is not as described in the eBay listing, we must follow the eBay moneyback guarantee policy which obligates us to issue a full refund within three 3) business days. We do not provide an estimate for returns as we do not anticipate any returns in the normal course of business.
Cost of Goods Sold
Cost of goods sold includes the following expenses; inventory costs and expenses related to eBay fees, repair and shipping services.
Recent Accounting Pronouncements
The Company adopts new pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued, which may be in advance of their effective date. Management does not believe that any recently issued, but not yet effective accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.
NOTE 3 - SUBSEQUENT EVENTS
Subsequent to February 29, 2020, and through the date these financial statements were issued, the Company did not have any events to report.
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| Table of Contents |
Item 2. Management's Discussion and Analysis of Financial Condition or Plan of Operation
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States Dollars (USD) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.
Unless otherwise specified in this quarterly report, all dollar amounts are expressed in USD and all references to “common stock” refer to shares of our common stock.
As used in this quarterly report, the terms “we,” “us,” “our,” “Pacific Sports,” and the “Company”, mean Pacific Sports Exchange, Inc., unless otherwise indicated.
General Overview
We were incorporated in Delaware on July 2, 2018, to engage in the business of re-selling new and used tennis and golf equipment. The concept is to source top-quality, in-demand equipment, and resell it to both domestic and international customers. Our Company has identified popular brands and models that retain value, in new and used condition, across the various markets in which we plan to sell.
We will operate as an on-line only entity and intend to utilize eBay Inc. (“eBay”) as our primary marketing channel. We will also optimize our own website for ‘global’ search terms and internally vend equipment through an expanding referral network of repeat customers.
On January 15, 2019, we issued 3,100,000 shares of common stock to 14 individuals pursuant to the provisions of Section 4(a)(2) of the Securities Act of 1933 (the "Act") and Rule 506(b) of Regulation D promulgated by the Securities and Exchange Commission ("SEC").
Our principal executive office is located at 25188 Marion Ave, Unit B108 Punta Gorda, FL 33950 and our telephone number is (877) 571-5562. Our corporate website is www.pacificsportsexchange.com.
We have not been subject to any bankruptcy, receivership or similar proceeding. We do not have any subsidiaries.
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| Table of Contents |
Our Current Business
We specialize in the re-selling of new and used tennis and golf equipment. The concept is to source top-quality, in-demand equipment and resell it to both domestic and international customers. We have identified popular brands and models that retain their value in new and used condition.
To source in-demand equipment, our Company has established relationships with local Southwest Florida sports retailers to purchase their surplus end-of-season inventory and trade-ins. The Company also attends golf and tennis trade shows and monitors re-seller equipment events to pin-point trends in high-demand used equipment. Both Florida and California have been identified as premium geographic locations to search for and secure the desired supply of top-end equipment.
We will operate as an on-line only entity and utilize eBay as our primary marketing channel. We will also optimize our own website for ‘global’ search terms and internally vend equipment to a worldwide market. Because the Company relies on third-party websites such as eBay to make its sales, such reliance on any third-party platform to generate revenues carries with it certain risks including but not necessarily limited to: the Company could violate the terms of service and lose its selling privileges, or the sites themselves could experience technical issues and/or fail. The Company will always strive to abide by the policies of any third-party platform and will endeavor to provide superior customer service. The Company will also look to improve the marketing and functionality of its own website, to act as a hedge against the risk of relying on third-party partners.
The principals of our Company have experience in both the sports of tennis and golf, and through this experience have identified high-value, high-margin equipment that re-sells profitably to both international and domestic customers. The goal is to create a unique supply chain that targets niche, valued products and their buyers. Serious golfers and tennis players are very particular about their equipment and will go to considerable lengths to secure what they are looking for in a quest to improve their game. This customer is our prime target market and our marketing approach will be to create a relationship (wherever possible) with this customer and become their ongoing equipment supplier through social media and electronic outreach.
Results of Operations
The following summary of our results of operations should be read in conjunction with our financial statements for the three and six months ended February 29, 2020 and February 28, 2019, which are included herein.
Three months ended February 29, 2020, compared to three months ended February 28, 2019.
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| Change |
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Revenue |
| $ | 481 |
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| $ | 1,103 |
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| $ | (622 | ) |
Cost of goods sold |
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| 315 |
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| 988 |
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Gross profit |
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| 115 |
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| 51 |
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Operating expenses |
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| 5,027 |
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| 5,873 |
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Net loss |
| $ | (4,861 | ) |
| $ | (5,758 | ) |
| $ | 897 |
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Net loss was $4,861 for the three months ended February 29, 2020, and $5,758 for the three months ended February 28, 2019. The decrease in net loss was primarily due to decreased operating expenses.
Operating expenses during the three months ended February 29, 2020 and February 28, 2019 were primarily attributed to general and administration expenses of $705 and $1,835 and professional fees of $4,322 and $4,038, respectively. The decrease in general and administrative expenses during the three months ended February 29, 2020, is primarily due to decreased travel and regulatory fees.
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| Table of Contents |
Six months ended February 29, 2020, compared to six months ended February 28, 2019.
|
| Six Months Ended |
|
|
|
| ||||||
|
| February 29, |
|
| February 28, |
|
|
|
| |||
|
| 2020 |
|
| 2019 |
|
| Change |
| |||
Revenue |
| $ | 1,708 |
|
| $ | 3,684 |
|
| $ | (1,976 | ) |
Cost of goods sold |
|
| 1,452 |
|
|
| 3,067 |
|
|
| (1,615 | ) |
Gross profit |
|
| 256 |
|
|
| 617 |
|
|
| (361 | ) |
Operating expenses |
|
| 24,417 |
|
|
| 13,802 |
|
|
| 10,615 |
|
Net loss |
| $ | (24,161 | ) |
| $ | (13,185 | ) |
| $ | 10,976 |
|
Net loss was $24,161 for the six months ended February 29, 2020, and $13,185 for the six months ended February 28, 2019. The increase in net loss was primarily due to increased operating expenses.
Operating expenses during the six months ended February 29, 2020 and February 28, 2019 were primarily attributed to general and administration expenses of $1,260 and $4,254 and professional fees of $23,157 and $9,548, respectively. The increase in professional fees paid during the six months ended February 29, 2020, is primarily due to legal, audit and accounting fees.
Liquidity and Capital
As of February 29, 2020, we had $4,030 in cash, $6,880 in total assets, $11,453 in liabilities and $4,573 in working capital deficit.
Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business for the foreseeable future. There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support its working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, our company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to our company. If adequate working capital is not available to our company, it may be required to curtail or cease its operations.
Working Capital
The following table presents our working capital (deficit) position as at February 29, 2020 and August 31, 2019:
|
| February 29, |
|
| August 31, |
| ||
|
| 2020 |
|
| 2019 |
| ||
Current Assets |
| $ | 6,880 |
|
| $ | 25,919 |
|
Current Liabilities |
| $ | 11,453 |
|
| $ | 6,331 |
|
Working Capital (Deficit) |
| $ | (4,573 | ) |
| $ | 19,588 |
|
As of February 29, 2020, we had a working capital deficit of $4,573 compared to working capital of $19,588 as of August 31, 2019. As of February 29, 2020, we had current assets of $6,880 (August 31, 2019 - $25,919) and current liabilities of $11,453 (August 31, 2019 - $6,331). The decrease in working capital is primarily due to the decrease in cash to fund operating expenses and increase in accounts payable as of February 29, 2020.
Cash Flow
We fund our operations with cash generated from sales, capital contributions, debt, and issuances of common stock.
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| Table of Contents |
The following table presents our cash flow for the six months ended February 29, 2020 and February 28, 2019:
|
| Six Months Ended |
| |||||
|
| February 29, |
|
| February 28, |
| ||
|
| 2020 |
|
| 2019 |
| ||
Cash used in operating activities |
| $ | (18,055 | ) |
| $ | (15,508 | ) |
Cash provided by financing activities |
|
| - |
|
|
| 31,000 |
|
Net Change in Cash for period |
| $ | (18,055 | ) |
| $ | 15,492 |
|
Cash Flows from Operating Activities
For the six months ended February 29, 2020, net cash used in operating activities was $18,055 compared to $15,508 used during the six months ended February 28, 2019. For the six months ended February 29, 2020 we had a net loss of $24,161, which was reduced by a change in working capital of $6,106. For the six months ended February 28, 2019, we had a net loss of $13,185, which was increased by a change in working capital of $2,323.
Cash Flows from Financing Activities
For the six months ended February 29, 2020 and February 28, 2019, we received $0 and $31,000 from the issuance of common stock, respectively.
Off-Balance Sheet Arrangements
We have no 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 is material to stockholders.
Critical Accounting Policies
We prepare our financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) of the United States, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our financial statements.
While we believe that the historical experience, current trends and other factors considered support the preparation of our financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.
Revenue recognition
Revenue is earned from the re-selling of new and used sports equipment. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations pursuant to each of its equipment sales transactions:
· | identify the contract with a customer; | |
· | identify the performance obligations in the contract; | |
· | determine the transaction price; | |
· | allocate the transaction price to performance obligations in the contract; and | |
· | recognize revenue as the performance obligation is satisfied. |
The Company operates as an on-line only retailer and utilizes eBay as its prime marketing channel. The Company currently relies on eBay, a third-party marketplace, to facilitate its sales. Such reliance on any third-party platform to generate revenues carries with it certain risks, including but not necessarily limited to: the Company could violate the terms of service and lose its selling privileges, or the sites themselves could experience technical issues and/or fail. The Company always strives to abide by the policies of any third-party platform and endeavors to provide superior customer service.
6 |
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| Table of Contents |
Typical sales transactions are usually fulfilled within twenty-four hours of completing the transaction online. Contracts stating the transaction price and our performance obligation to deliver the ordered products are deemed to be entered into on eBay at the time the customer submits payment, which is conducted through the PayPal payment platform. Due to the instantaneous nature of a customer submitting an order online at a stated price and the same (or next)-day shipment of product, the Company does not anticipate that variable consideration or contract assets or liabilities will arise in the normal course of business.
Revenues are recognized based on the sales contract price, net of sales taxes, when control of the promised goods are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods. Our contracted prices primarily include cost of inventory, shipping and handling, eBay commission fee and our margin, which varies depending on each item. We may provide incentives to our customers from time-to-time, including discounts, coupons and rewards, which are treated as a reduction in revenue. The Company does not accept returns and clearly indicates this in our listings. However, if a customer receives an item that is not as described in the eBay listing, we must follow the eBay money-back guarantee policy which obligates us to issue a full refund within three (3) business days. We do not provide an estimate for returns as we do not anticipate any returns in the normal course of business.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of February 29, 2020. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the period ended February 29, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
The specific material weakness identified by our management was ineffective controls over certain aspects of the financial reporting process because of a lack of a sufficient complement of personnel with a level of accounting expertise and an adequate supervisory review structure that is commensurate with our financial reporting requirements and inadequate segregation of duties. A “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our Company’s annual or interim financial statements would not be prevented or detected on a timely basis.
We expect to be materially dependent upon a third party to provide us with accounting consulting services for the foreseeable future. Until such time as we have a chief financial officer with the requisite expertise in U.S. GAAP, there are no assurances that the material weaknesses in our disclosure controls and procedures and internal control over financial reporting will not result in errors in our financial statements which could lead to a restatement of those financial statements.
Changes in Internal Controls
There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the quarter ended February 29, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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| Table of Contents |
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we area party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on us.
Item 1A. Risk Factors
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
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| Table of Contents |
Item 6. Exhibits
Exhibit |
| INCORPORATED BY REFERENCE |
| |||||
Number |
| Exhibit Description |
| Form |
| Exhibit |
| Filing Date |
| ||||||||
|
| S-1/A |
| 3.1 |
| September 30, 2019 | ||
|
| S-1/A |
| 3.2 |
| September 30, 2019 | ||
|
| POS AM |
| 3.3 |
| December 11, 2019 | ||
|
| POS AM |
| 3.4 |
| December 11, 2019 | ||
|
| |||||||
|
| |||||||
101.INS* |
| XBRL Instance Document |
| |||||
101.SCH* |
| XBRL Taxonomy Extension Schema Document |
| |||||
101.CAL* |
| XBRL Taxonomy Extension Calculation Linkbase Document |
| |||||
101.DEF* |
| XBRL Taxonomy Extension Definition Linkbase Document |
| |||||
101.LAB* |
| XBRL Taxonomy Extension Label Linkbase Document |
| |||||
101.PRE* |
| XBRL Taxonomy Extension Presentation Linkbase Document | ||||||
______________
* | Filed herewith |
** | Furnished herewith |
| 9 |
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| Table of Contents |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| PACIFIC SPORTS EXCHANGE INC. |
| |
| (Registrant) |
| |
|
| ||
Dated: April 14, 2020 |
| /s/ Timothy Conte |
|
| Timothy Conte |
| |
| Chief Executive Officer, President, Chief Financial Officer and Director |
| |
| (Principal Executive Officer and Principal Financial Officer) |
|
| 10 |
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. ss 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Timothy Conte, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Pacific Sports Exchange Inc.; |
|
|
|
| 2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
|
| 4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
|
| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| (d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
|
|
|
|
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: April 14, 2020
| /s/ Timothy Conte |
|
| Timothy Conte |
|
| Chief Executive Officer, President, Chief Financial Officer and Director |
|
| (Principal Executive Officer and Principal Financial Officer) |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Timothy Conte, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | the Quarterly Report on Form 10-Q of Pacific Sports Exchange Inc. for the period ended February 29, 2020 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
|
|
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Pacific Sports Exchange Inc. |
| Dated: April 14, 2020 |
| /s/ Timothy Conte | |
|
| Timothy Conte | ||
|
| Chief Executive Officer, President, Chief Financial Officer and Director | ||
|
| (Principal Executive Officer and Principal Financial Officer) | ||
|
| Pacific Sports Exchange Inc. | ||
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Pacific Sports Exchange Inc. and will be retained by Pacific Sports Exchange Inc. and furnished to the Securities and Exchange Commission or its staff upon request.