WEBSTAR TECHNOLOGY GROUP INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (form 10-Q)
https://www.ispeech.org/text.to.speech
The following discussion of our financial condition and results of operations
should be read in conjunction with the unaudited condensed financial statements
and the notes to those financial statements that are included elsewhere in this
report and in conjunction with the audited financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
forward-looking statements based upon current expectations that involve risks
and uncertainties, such as our plans, objectives, expectations and intentions.
Actual results and the timing of events could differ materially from those
anticipated in these forward-looking statements as a result of a number of
factors, including those set forth under the Risk Factors, Cautionary Statement
Regarding Forward-Looking Statements and Business sections in the audited
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended
Background and Overview
licensed and purchased software solutions. Since inception, the Company signed
two letters of intent with a related party to license proprietary software
technology solutions, i.e., Gigabyte Slayer and WARP-G.
focused in large part on organizational activities and the development of its
business plans to license the Gigabyte Slayer software application that is
designed to deliver live video streams, video downloads and large data files
more efficiently by using new proprietary data compression technology and to
license the WARP-G software solution that is designed to enable enterprise
customers that transmit live video streams, video downloads and large data files
to push such data over existing pipelines at higher speeds in less time also by
using new proprietary data compression technology. The Company completed the
license of Gigabyte Slayer and WARP-G software on
Company is taking a three-pronged approach to commercialize its business: 1)
sub-license the Gigabyte Slayer and WARP-G software; 2) acquire rights to
additional technology; 3) sell the right to sublicense the software.
COVID-19
While the Company's operations have not been materially affected by the COVID-19
outbreak to date, the ultimate duration and severity of the outbreak and its
impact on the economic environment and business is uncertain. Accordingly, while
the Company does not anticipate an impact on its operations, the duration of the
pandemic and potential impact on the business cannot be estimated. The spread of
the coronavirus, which has caused a broad impact globally, including
restrictions on travel and quarantine policies put into place by businesses and
governments, may have a material economic effect on our business. While the
potential economic impact brought on by and the duration of the pandemic may be
difficult to assess or predict, it has already caused, and is likely to result
in further, significant disruptions of global financial markets, which may
reduce the Company's future ability to access capital either at all or on
favorable terms. In addition, a recession, depression or other sustained adverse
market events resulting from the spread of the coronavirus could materially and
adversely affect our business and the value of our common stock. In addition, a
severe or prolonged economic downturn could result in a variety of risks to the
business, including a possible delay in implementing our business plan. At this
time, the Company is unable to estimate the impact of this event on its
operations.
Recent Developments
2nd Amended and Restated Technology Marketing and License Agreement
On
agreement with
agreement are as follows:
Change Item 1., License
- to make the license exclusive
- to grant the Company a Right-of-First Refusal to acquire future exclusive
marketing license for new technologies
- to remove Company's option to broker and split proceeds on sale of Soft Tech's
technology
Change Item 12, Termination
-to give Licensor (Soft Tech) right to terminate the agreement upon:
- change in executive management of Company
- sale of majority interest in Company to 3rd party
- there is a Change of Control in the Company
Plan of Operations Marketing the Products
Management has decided that the fastest way to get the Company's technologies to
market is to not bear the burden ourselves. Numerous third parties already have
the requisite infrastructure in place and there is no need for the Company to
re-build those elements. Additionally, the third parties we seek to align
ourselves with, are better positioned to handle the retail, business and
governmental marketing sectors worldwide. They will be experienced, globally
well-known entities with everything already in place for a quick
launch/utilization of the Company's technology.
There are three main paths that the Company is pursuing: 1) Licensing the
technology to third parties; 2) Selling the technology via Permanent License to
a third-party; 3) Acquisition of the Company by a third party via a change of
control of the Company; all of which would generate up-front and residual
revenues for the Company.
16Gigabyte Slayer Software
Gigabyte Slayer is a distinct mobile application created to enable users to
transmit more data over existing data streams to optimize data usage across
mobile devices including smartphones and tablets. The application is designed to
eliminate video streaming delays and reduce customers' data plan bandwidth usage
from any 3G or 4G LTE cell phone network provider. The application is designed
to deliver live video streams, video downloads and large data files more
efficiently by using new proprietary data compression technology. This
technology significantly reduces the data package size and enhances the data
traffic control between cell phone provider data downloads and uploads to
customers' mobile devices.
Web browsers perform various levels of caching data, the practice of storing
data in and retrieving data from a memory device. Unfortunately, many use
unsophisticated cache control capabilities. In comparison, Gigabyte Slayer data
compression is capable of optimizing the high bandwidth downloads and returns
the data to users' mobile devices. This process is expected to dramatically
reduce the data bandwidth needed when watching online videos, playing online
games, or simply downloading large data files. The service is targeted to enter
the mobile device market by offering application downloads with a monthly
service fee. A smartphone and tablet user utilizing the Gigabyte Slayer
application is expected to be able to decrease their data usage on their current
data plan, at no additional cost, from their cell phone provider. Further,
Gigabyte Slayer is designed to eliminate downloads "buffering" currently
experienced by many current applications.
WARP-G Software
WARP-G is a business-to-business software solution that companies can use on an
enterprise wide basis to transmit more data over existing data streams to
optimize their data usage. The software is designed to enable enterprise users
to deliver faster data streams, experience shorter download/upload times and
increase the volume and speed of the data. The software is designed to create
less congestion and increase the speed of packets being delivered more
efficiently by using new proprietary data compression technology. This
technology is expected to allow the enterprise users to push more data through
existing pipelines meeting increasing consumer video demands and other large
files.
Results of Operations for the three and nine months ended
2021
Revenue
Revenue was
2021. In
software thereby causing the drop in revenue. Cost of sales was
and nine months ended
three and nine months ended
gross profit declines were also due to the loss of the eCampus customer.
Operating Expenses
Total operating expenses which are comprised of salaries and related expenses,
and general and administrative expenses were
months ended
resulted from the decrease in salaries and related expense due to the salary
reduction in
respectively. The increase is primarily attributable to the settlement agreement
with
and additionally, increases in stock exchange and audit fees partially offset by
decreases in internet cable fees, insurance, and repairs and maintenance.
Net Loss
The net loss was
2022
attributable to the decrease in
increase in interest expense resulting from the Owens' settlement agreement. The
net loss was
2022
settlement agreement with
extinguishment of liabilities and stock based compensation expense and increases
in exchange fees, audit fees, and interest expense partially offset by decreases
in internet cable fees, insurance, and repairs and maintenance.
17
Liquidity, Going Concern and Uncertainties
Liquidity is the ability of an enterprise to generate adequate amounts of cash
to meet its needs for cash requirements. As of
capital deficit amounted to
working capital deficit of
working capital deficit is primarily a result of the decrease in accrued
salaries and related expenses related to the amending of
agreement and decreases in accounts payable and amounts due to stockholder and
an increase in prepaid expenses and partially offset by an increase in accrued
interest.
Net cash used in operating activities was
2021
attributable to decreases in accounts payable and accrued salaries and related
expenses, and an increase in prepaid expenses and accrued interest.
Net cash provided by financing activities was
ended
30, 2021
increase in cash advances received from our controlling stockholder.
The unaudited condensed financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. To date, the Company's commercial operations
have not generated adequate revenues to enable profitability. Based on the
current business plans and the Company's operating requirements, management
believes that the current cash balance will not be sufficient to fund operations
for at least the next twelve months following the issuance of these financial
statements. These factors raise substantial doubt regarding the Company's
ability to continue as a going concern.
The Company's continued operations will depend on its ability to raise
additional capital through various potential sources, such as equity offerings
and/or debt financings, strategic relationships, and to successfully execute its
business plans. Management is actively pursuing financing, but can provide no
assurances that such financing will be available on acceptable terms, or at all.
Without this funding, the Company could be required to delay, scale back or
eliminate some or all of its business plans which would likely have a material
adverse effect on the Company.
The unaudited condensed financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts or
the amount and classification of liabilities that might result should the
Company be unable to continue as a going concern.
Generally, the Company's operations are subject to a number of factors that can
affect its operating result and financial condition. Such factors include, but
are not limited to, the results of our marketing efforts to promote users for
our software solutions, successful launch and acceptance of our software
solutions in the marketplace, competition of our software solutions, attraction
of talented and skilled employees to support the business and the ability to
raise capital to support its operations.
Since our inception, we have been funded by loans from our controlling
shareholder,
agreement, are non-interest bearing and payable upon demand by
Owens
we have sufficient capital resources to repay such loans. We currently have no
agreements, arrangements or understandings with any person to obtain funds
through bank loans, lines of credit or any other sources. There can be no
assurance that additional capital will be available to us. Since we have no
other such arrangements or plans currently in effect, our inability to raise
funds for the above purposes that exceed our current working capital will have a
severe negative impact on our ability to remain a viable company.
18
We have incurred significant losses since our inception on
had a net loss for the nine-month period ended
and an accumulated deficit as of
we are unable to secure a line of credit from a related company, we will
continue to seek sub-license agreements for our Gigabyte Slayer and WARP-G
products but delay, scale back or eliminate some or all of our additional
business plans until we raise additional capital. Since we have no agreement or
arrangements for any future funding from
how long we will be able to operate our business. This raises substantial doubt
about our ability to continue as a going concern.
Management's plan is to obtain such resources for our capital needs by obtaining
capital from management and significant shareholders sufficient to meet its
operating expenses. However, management cannot provide any assurances that we
will be successful in accomplishing any of our plans.
Our ability to continue as a going concern is dependent upon our ability to
successfully accomplish the plans described in the preceding paragraph and
eventually secure other sources of financing and attain profitable operations.
The accompanying financial statements do not include any adjustments that might
be necessary if we were unable to continue as a going concern.
Critical Accounting Policies and Estimates
Our significant accounting policies are more fully described in the notes to our
unaudited condensed financial statements included herein for the nine-month
period ended
includes audited financial statements for the years ended
2020. We believe that the accounting policies below are critical for one to
fully understand and evaluate our financial condition and results of operations.
Use of Estimates
The preparation of the unaudited condensed financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the unaudited condensed financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from these estimates. Certain of our estimates, including
evaluating the collectability of accounts receivable, could be affected by
external conditions, including those unique to our industry, and general
economic conditions. It is possible that these external factors could have an
effect on our estimates that could cause actual results to differ from our
estimates. We re-evaluate all of our accounting estimates at least quarterly
based on these conditions and record adjustments when necessary. Significant
estimates made by management include the valuation of deferred tax assets, fair
value of preferred stock, and stock based compensation.
Revenue Recognition
The Company recognizes revenue when control of the promised goods or services
are transferred to its customers in an amount that reflects the consideration
the Company expects to be entitled to in exchange for those goods or services.
For student fees, the Company generates student fee revenue by registering each
student that participates in an on-line classroom utilizing our eCampus
platform. This revenue is earned at the time the on-line class takes place and
is accrued during the period whether or not actually billed. The student fees
are billed to the college conducting the classes during the period the classes
are conducted. There are no prepayments for student fees so there is no deferred
revenue related to student fees. The annual fee charged to the college is billed
in the first quarter of the year and the income is recognized over the entire
year.
The Company lost its only customer in
customer level. The Company will maintain its eCampus platform for future
customers and the Company's revenue policies and procedures described above
remain unchanged.
The Company recognized no revenue from student and annual fees during the three
and nine month periods ended
19 Leases
The Company accounts for leases under ASU 2016-02. Operating leases are included
in operating lease right-of-use ("ROU") assets and operating lease liabilities
on the condensed balance sheets. The Company leases office equipment used to
conduct our business.
Operating lease ROU assets represent the right to use the leased asset for the
lease term and operating lease liabilities are recognized based on the present
value of the future minimum lease payments over the lease term at commencement
date. As most leases do not provide an implicit rate, the Company uses an
incremental borrowing rate based on the information available at the adoption
date in determining the present value of future payments. Operating lease
expense is recognized on a straight-line basis over the lease term and is
included in general and administrative expenses in the unaudited condensed
statements of operations. During the three and nine months ended
2022
respectively, for the three and nine months ended
lease expense which is included in general and administrative expenses on the
unaudited condensed statements of operations. As of
was
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
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