Quality Industrial Corp 10-Q for FY2021 Q3
Quality Industrial Corp. (QIND)
About this 10-Q
Quality Industrial Corp filed this 10-Q on November 10, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).
Headline figures
Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $4.62M
- compared with a net loss of $150.15K a year earlier
25
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
| Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from __________ to__________
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number)
(Former name, former address and former fiscal year, if changed since last report)
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 and posted 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 and post such files).
[X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.
| ☐ Large accelerated filer | ☐ Accelerated filer |
| ☒
|
|
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]
Securities registered pursuant to Section 12(b) of the Act: None
State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: common shares as of November 1, 2021
| 1 |
TABLE OF CONTENTS
| Page | ||
| PART I – FINANCIAL INFORMATION | ||
| Item 1: | Financial Statements | 3 |
| Item 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 |
| Item 3: | Quantitative and Qualitative Disclosures About Market Risk | 8 |
| Item 4: | Controls and Procedures | 8 |
| PART II – OTHER INFORMATION | ||
| Item 1: | Legal Proceedings | 10 |
| Item 1A: | Risk Factors | 10 |
| Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | 10 |
| Item 3: | Defaults Upon Senior Securities | 10 |
| Item 4: | Mine Safety Disclosures | 10 |
| Item 5: | Other Information | 10 |
| Item 6: | Exhibits | 11 |
| 2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Our consolidated financial statements included in this Form 10-Q are as follows:
| F-1 | Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020; | |
| F-2 | Statements of Operations for the for the three and nine months ended September 30, 2021 and 2020 (unaudited); | |
| F-3 | Consolidated Statement of Stockholders’ Equity (Deficit) for the periods ended September 30, 2021 and 2020 (unaudited); | |
| F-4 | Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (unaudited); and | |
| F-5 | Notes to Consolidated Financial Statements. |
These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended September 30, 2021 are not necessarily indicative of the results that can be expected for the full year.
| 3 |
WIKISOFT CORP.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| September 30, 2021 | December 31, 2020 | ||||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash | $ | $ | |||||
| Prepaid and other current assets | |||||||
| Total current assets | |||||||
| Other assets | |||||||
| Prepaid expenses - long term | |||||||
| Total other assets | |||||||
| Total assets | $ | $ | |||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||
| Current liabilities | |||||||
| Accounts payable and accrued liabilities | |||||||
| Line of credit - related party | |||||||
| Related party advances | |||||||
| Loans payable - related party | |||||||
| Total current liabilities | |||||||
| Total liabilities | |||||||
| Stockholders' deficit | |||||||
| Preferred stock; par value; shares authorized; and shares issued and outstanding as of as of September 30, 2021 and December 31, 2020, respectively | |||||||
| Common stock; par value; shares authorized; and shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively | |||||||
| Additional paid-in capital | |||||||
| Stock payable | |||||||
| Stock Receivable | ( | ) | |||||
| Accumulated deficit | ( | ) | ( | ||||
| Total stockholders' deficit | ( | ) | ( | ||||
| Total liabilities and stockholders' deficit | $ | $ | |||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-1 |
WIKISOFT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
| September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | ||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||
| Cost of revenues | |||||||||||||||
| Gross profit | |||||||||||||||
| Operating expenses | |||||||||||||||
| Professional fees | |||||||||||||||
| Product development | |||||||||||||||
| General and administrative | |||||||||||||||
| Total operating expenses | |||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ||||||||
| Other expense | |||||||||||||||
| Loss on foreign currency translation | ( | ) | |||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ||||||||
| Total other expense | ( | ) | ( | ) | ( | ) | ( | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ||||
| Net loss per common share - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ||||
| Weighted average common shares outstanding | |||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-2 |
WIKISOFT CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(UNAUDITED)
| For the Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Additional Paid-in Capital | Stock Payable | Stock Receivable | Accumulated Deficit | Total Stockholders' Equity | |||||||||||||||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | |||||||||||||||||||||||||
| Common stock issued for services | |||||||||||||||||||||||||||||||||||
| Redemption of common stock for cash | ( | ) | ( | ) | ( | ||||||||||||||||||||||||||||||
| Imputed interest | |||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ||||||||||||||||||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | |||||||||||||||||||||||||
| Common stock issued for services | |||||||||||||||||||||||||||||||||||
| Imputed interest | |||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ||||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | |||||||||||||||||||||||||
| Common stock issued for services | |||||||||||||||||||||||||||||||||||
| Imputed interest | |||||||||||||||||||||||||||||||||||
| Common stock issued for cash | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ||||||||||||||||||||||||||||||||
| Balance, September 30, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | |||||||||||||||||||||||
| For the Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Additional Paid-in Capital | Stock Payable | Stock Receivable | Accumulated Deficit | Total Stockholders' Equity | |||||||||||||||||||||||||||
| Balance, December 31, 2019 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Cash received for stock payable | |||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ||||||||||||||||||||||||||||||||
| Balance, March 31, 2020 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Common stock issued for cash | ( | ) | |||||||||||||||||||||||||||||||||
| Common stock issued for services | |||||||||||||||||||||||||||||||||||
| Imputed Interest | |||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ||||||||||||||||||||||||||||||||
| Balance, June 30, 2020 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Common stock issued for cash | |||||||||||||||||||||||||||||||||||
| Common stock issued for services | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Imputed Interest | |||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ||||||||||||||||||||||||||||||||
| Balance, September 30, 2020 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-3 |
WIKISOFT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Nine Months Ended | |||||||
| September 30, 2021 | September 30, 2020 | ||||||
| Cash Flows from Operating Activities | |||||||
| Net loss | $ | ( | ) | $ | ( | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
| Stock based compensation | |||||||
| Imputed interest | |||||||
| Changes in assets and liabilities | |||||||
| Decrease in prepaid assets | ( | ) | |||||
| Increase in accounts payable | |||||||
| Net cash used in operating activities | ( | ) | ( | ||||
| Cash Flows from Investing Activities | |||||||
| Net cash used in investing activities | |||||||
| Cash Flows from Financing Activities | |||||||
| Proceeds from Loans payable - related party | |||||||
| Payment of Loans payable - related party | ( | ||||||
| Proceeds from related party advances | |||||||
| Payment of related party advances | ( | ) | |||||
| Stock redemption for cash | ( | ) | |||||
| Related party line of credit | |||||||
| Proceeds from sale of common stock | |||||||
| Net cash from financing activities | |||||||
| Net increase (decrease) in Cash | ( | ) | ( | ||||
| Beginning cash balance | |||||||
| Ending cash balance | $ | $ | |||||
| Supplemental disclosure of cash flow information | |||||||
| Cash paid for interest | $ | $ | |||||
| Cash paid for tax | $ | $ | |||||
| SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||
| Shares issued for prepaid services | $ | $ | |||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-4 |
WIKISOFT CORP.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF BUSINESS
Organization
WikiSoft Corp. (“we”, “our”, the "Company") was incorporated in the state of Nevada in May 1998 as Sensor Technologies Inc.
Nature of operations
The Company is a wiki portal for businesses. Built on MediaWiki software, the new portal, called wikiprofile.com, is expected to eventually be the largest in the wiki platform with over 328 million published articles and profiles on companies, top brands, and corporate influencers. Users will be able to freely search the portal and all content will eventually be collected, updated and fact-checked in real-time. The Company will generate revenue through paid advertisement placements imbedded in the webpages associated with wikiprofile.com.
2. SUMMARY OF SIGNIFICANT POLICIES
Basis of Presentation and Principles of consolidation
The accompanying consolidated financial statements represent the results of operations, financial position and cash flows of the Company prepared on the accrual basis of accounting and conform to accounting principles generally accepted in the United States of America. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. – On March 31, 2019, the Company, a Nevada corporation, entered into an Agreement and Plan of Merger with WikiSoft DE, a Delaware corporation, and WikiSoft Acquisition, Inc., a Delaware corporation. WikiSoft Acquisition, Inc. merged with and into WikiSoft DE (the “Merger”) on April 30, 2019, with the filing of Articles of Merger with the Delaware Secretary of State. All significant inter-company transactions and balances have been eliminated.
Use of estimates
The preparation of consolidated 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, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to review the Company’s, impairments and estimations of long-lived assets, revenue recognition of Contract based revenue, allowances for uncollectible accounts, and the valuations of non-cash capital stock issuances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Fair value of financial instruments
The carrying value of cash, accounts payable and accrued expenses, and debt approximate their fair values because of the short-term nature of these instruments. Management believes the Company is not exposed to significant interest or credit risks arising from these financial instruments.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.
| F-5 |
| • | Level 1 - |
Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets.
|
| • | Level 2 - |
Quoted prices for similar assets and liabilities in active markets; quoted prices included for identical or similar assets and liabilities that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. These are typically obtained from readily-available pricing sources for comparable instruments.
|
| • | Level 3 - | Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own beliefs about the assumptions that market participants would use in pricing the asset or liability, based on the best information available in the circumstances. |
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606. The accounting policy on revenue recognition is provided below.
Service Contracts
The company recognizes service contract revenue over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer. Service contracts are generally accounted for as a single unit of account (a single performance obligation) and are not segmented between types of services. The company recognizes revenue based primarily on contract cost incurred to date compared to total estimated contract cost (an input method). The input method is the most faithful depiction of the company’s performance because it directly measures the value of the services transferred to the customer. Changes to total estimated contract cost or losses, if any, are recognized in the period in which they are determined as assessed at the contract level. Pre-contract costs are expensed as incurred unless they are expected to be recovered from the client. Project mobilization costs are generally charged to project costs as incurred when they are an integrated part of the performance obligation being transferred to the client. Customer payments on service contracts are typically due in advance, depending on the contract.
For service contracts in which the company has the right to consideration from the customer in an amount that corresponds directly with the value to the customer of the company’s performance completed to date, revenue is recognized when services are performed and contractually billable. Service contracts that include multiple performance obligations are segmented between types of services. For contracts with multiple performance obligations, the company allocates the transaction price to each performance obligation using an estimate of the stand-alone selling price of each distinct service in the contract. Revenue recognized on service contracts that have not been billed to clients is classified as a current asset under contract assets on the Consolidated Balance Sheet. Amounts billed to clients in excess of revenue recognized on service contracts to date are classified as a current liability under contract liabilities. Customer payments on service contracts are typically due within 30 days of billing, depending on the contract.
Cash and cash equivalents
For purposes of the statements of cash flows, the
Company considers all highly liquid investments and short-term debt instruments with original maturities of six months or less to be cash
equivalents. There was $
The Company follows the guidelines in FASB Codification Topic ASC 718-10 “Compensation-Stock Compensation,” which requires companies to measure the cost of employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period. The Company accounts for non-employee share-based awards in accordance with FASB ASC 505-50 under which the awards are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments, and are recognized as expense over the service period.
| F-6 |
The Company reports earnings (loss) per share in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 260-10 “Earnings Per Share,” which provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive.
Long-lived Assets
In accordance with the Financial Accounting Standards Board ("FASB") Accounts Standard Codification (ASC) ASC 360-10, "Property, Plant and Equipment," the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.
Income taxes
The Company accounts for its income taxes in accordance with FASB Codification Topic ASC 740-10, “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Recently issued accounting pronouncements
The Company has evaluated all other recent accounting pronouncements and believes that none of them are expected to have a material effect on the Company's financial position, results of operations or cash flows.
3. GOING CONCERN
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.
Management
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 $
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.
| F-7 |
4. RELATED PARTY TRANSACTIONS
Related party advances
As
of September 30, 2021 and December 31, 2020, the Company had amounts due to Fastbase
Inc, a company controlled by a prior board member of the Company, of $
Loans payable - related party
On June 1, 2020 the company entered into a loan agreement
with Fastbase Inc, a company controlled by a prior board member of the Company, in the amount of $
On September 1, 2020 the company entered into a loan
agreement with Fastbase Inc, a company controlled by a prior board member of the Company, in the amount of $
On October 24, 2020 the company entered into a loan
agreement with Fastbase Inc, a company controlled by a prior board member of the Company, in the amount of $
On December 3, 2020 the company entered into a loan
agreement with Fastbase Inc, a company controlled by a prior board member of the Company, in the amount of $
As
of September 30, 2021 and December 31, 2020, the Company had loans due to related parties of $
Line of credit – related party
On December 30, 2020 the company entered into a $
5. STOCKHOLDERS’ EQUITY
The Company’s authorized capital stock consists of shares of common stock and shares of preferred stock, par value per share. As of September 30, 2021 and December 31, 2020, there were and shares of common stock issued and outstanding, respectively.
As of September 30, 2021 and December 31, 2020, there were and shares of preferred stock of the Company issued and outstanding, respectively.
Common Stock issuances during the nine months ending September 30, 2021
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,
shares (the “Shares”) of the Company’s common stock held by SI to the Company in exchange for $
| F-8 |
On May 10, 2021 the Company entered into a
Common Stock Purchase agreement to sell up to of the Company’s common stock. Per the agreement the Company may deliver
purchase notices to the investor, requiring the purchase of a number of shares.
On
June 8, 2021 the Company issued shares of the Company’s par value common stock for services. The shares
were valued on the date of issuance at per share or $
On June 8, 2021 the Company entered into a Common
Stock Purchase agreement to sell shares of its common stock for cash proceeds of or per share, pending a Registration
Statement being declared effective. On August 17, 2021 the agreement was amended to change the purchase amount to and the
On August 6, 2021 the Company issued shares
of the Company’s par value common stock for services. The shares were valued on the date of issuance at per share or
$
On August 19, 2021 the Company issued shares
of the Company’s par value common stock for services. The shares were valued on the date of issuance at per share or
$
On September 10, 2021, the Company issued shares of the Company’s par value common stock for services . The shares
were valued on the date of issuance at per share or $
On September 14, 2021 the Company issued shares
of the Company’s par value common stock for services. The shares were valued on the date of issuance at per share or
$
During the nine months ended September 30, 2021, the
Company entered into an employment agreement in which it granted shares of common stock. The shares were valued on the date of
issuance at per share valued at $
6. SUBSEQUENT EVENTS
In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to September 30, 2021 to the date these financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements.
| F-9 |
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.
| 4 |
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.
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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.
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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.
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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 3. Quantitative and Qualitative Disclosures About Market Risk
A smaller reporting company is not required to provide the information required by this Item.
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.
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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. | 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. |
| 2. | 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. |
| 3. | 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. |
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.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.
Item 1A: Risk Factors
See risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed on March 29, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The information set forth below relates to our issuances of securities without registration under the Securities Act of 1933.
During the nine months ended September 30, 2021, the Company entered into an employment agreement in which it granted 100,000 shares of common stock. As of September 30, 2021, the shares have not been issued and have been included in stock payable.
On September 10, 2021, the Company issued 1,500,000 shares of common stock for services . The shares were valued on the date of issuance at $2.75 per share or $4,125,000.
On September 10, 2021 the Company issued 111,111 shares of the Company’s $0.001 par value common stock for services. The shares were valued on the date of issuance at $1.70 per share or $188,889.
These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.
Item 3. Defaults upon Senior Securities
None
Item 4. Mine Safety Disclosures
None
Item 5. Other Information
On October 3, 2021, the Company and White Lion amended the Purchase Agreement (the “Amended 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 when the price of the Company’s common stock falls below $0.25 or any other amount.
The foregoing description of the Amended Purchase Agreement Amendment does not purport to be complete and is qualified in its entirety by reference to such agreement, which is filed as Exhibit 2.1 hereto and is incorporated herein by reference.
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Item 6. Exhibits
| Exhibit Number | Description of Exhibit | |
| 2.1 | Amendment No. 1 to Common Stock Purchase Agreement | |
| 31.1** | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2** | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101** | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 formatted in Extensible Business Reporting Language (XBRL). | |
| **Provided herewith |
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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.
| Wikisoft Corp. | ||
| Date: | November 10, 2021 | |
| By: | /s/ Carsten Falk | |
| Carsten Falk | ||
| Title: | Chief Executive Officer (principal executive, accounting, and financial officer) | |
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