QUARTERLY
REPORT
For
the quarterly period ended March 31, 2021
Doofus
Corporation
021-344061 (Securities
and Exchange Commission File Number) |
|
|
|
Delaware |
37-1836035 |
Hardturmstrasse 161, 8005 Zurich
Switzerland
(Address of Principal Executive
Offices)
+41 44 551 00 05
(Telephone
Number)
The number of shares of
common stock outstanding as of March 31, 2021 was 509,500,000.
TABLE
OF CONTENTS
|
|
Page |
|
PART
I – FINANCIAL INFORMATION |
|
Item 1. |
Financial Statements |
3 |
|
Balance Sheets as of March
31, 2021 and December 31, 2020 |
3 |
|
Statements of Operations for
the Three Months Ended March 31, 2021 and March 31, 2020 |
4 |
|
Statements of
Comprehensive Loss for the Three Months Ended March 31, 2021
and March 31, 2020 |
5 |
|
Statements of
Stockholders’ Equity for the Three Months Ended March 31, 2021
and March 31, 2020 |
6 |
|
Statements of Cash Flows
for the Three Months Ended March 31, 2021 and March
31, 2020 |
7 |
|
Notes to Financial
Statements |
8 |
Item 2. |
Management’s Discussion
and Analysis of Financial Condition and Results of Operations |
12 |
Item 3. |
Quantitative and
Qualitative Disclosures About Market Risk |
16 |
Item 4. |
Controls and Procedures |
17 |
|
|
|
|
PART
II – OTHER INFORMATION |
|
Item 1. |
Legal Proceedings |
18 |
Item 1. A. |
Risk Factors |
18 |
Item 2. |
Sales or Issues of
Unregistered Equity Securities and Use of Proceeds |
32 |
Item 3. |
Signature |
33 |
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly
Report contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, which statements involve substantial risks
and uncertainties. Forward-looking statements generally relate to future events
or our future financial or operating performance. In some cases, you can
identify forward-looking statements because they contain words such as “may,” “will,”
“should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue”
or the negative of these words or other similar terms or expressions that
concern our expectations, strategy, plans or intentions. Forward-looking
statements contained in this Quarterly Report include, but are not limited to,
statements about:
·
our ability to attract and retain users and increase their level of engagement;
·
our plans regarding health and safety and our other top priorities,
including our expectations regarding the impact on our reported metrics,
policies and enforcement;
·
the impact of the COVID-19 pandemic and related responses of businesses
and governments to the pandemic on our operations and personnel, and on
commercial activity and on our operating results;
·
our ability to develop new products, product features and services,
improve our existing products and services, including and increase the value of
our products and services;
·
our business strategies, plans and priorities, including our plans for
growth and hiring, investment in our research and development efforts and our
plans to scale capacity and enhance capability and reliability of our
infrastructure, including capital expenditures relating to infrastructure;
·
our work to increase the stability, performance, development velocity
and scale of our products;
·
our ability to provide content from third parties, including our ability
to secure content on terms that are acceptable to us;
·
our expectations regarding our user growth and growth rates and related opportunities;
·
our ability to increase our revenue and our revenue growth rate;
·
our ability to monetize and improve monetization of our products and services;
·
our future financial performance, including revenue, cost of revenue,
operating expenses, including stock-based compensation and income taxes;
·
our expectations regarding certain deferred tax assets and fluctuations
in our tax expense and cash taxes;
·
the impact of privacy and data protection laws and regulations;
·
the impact of content-related legislation or regulation;
·
our expectations on future litigation or the decisions of the courts;
·
the effects of trends on our results of operations;
·
the impact of our future transactions and corporate structuring on our
income and other taxes;
·
the sufficiency of our cash and cash equivalents together with cash
generated from operations to meet our working capital and capital expenditure requirements;
·
our ability to timely and effectively develop, invest in, scale and
adapt our existing technology and network infrastructure;
·
our ability to successfully acquire and integrate companies and assets;
and
·
our expectations regarding international operations and foreign exchange
gains and losses.
We caution you
that the foregoing list may not contain all of the
forward-looking statements made in this Quarterly Report.
You should not
rely upon forward-looking statements as predictions of future events. We have
based the forward-looking statements contained in this Quarterly Report
primarily on our current expectations and projections about future events and
trends that we believe may affect our business, financial condition, operating
results, cash flows or prospects. The outcome of the events described in these
forward-looking statements is subject to risks, uncertainties and other factors
described in the section titled “Risk Factors” and elsewhere in this Quarterly
Report. Moreover, we operate in a very competitive and rapidly changing
environment. New risks and uncertainties emerge from time to time
and it is not possible for us to predict all risks and uncertainties that could
have an impact on the forward-looking statements contained in this Quarterly
Report. We cannot assure you that the results, events
and circumstances reflected in the forward-looking statements will be achieved
or occur, and actual results, events or circumstances could differ materially
from those described in the forward-looking statements.
The
forward-looking statements made in this Quarterly Report relate only to events
as of the date on which the statements are made. We undertake no obligation to
update any forward-looking statements made in this Quarterly Report to reflect
events or circumstances after the date of this Quarterly Report or to reflect
new information or the occurrence of unanticipated events, except as required
by law. We may not actually achieve the plans, intentions or expectations
disclosed in our forward-looking statements and you should not place undue
reliance on our forward-looking statements. Our forward-looking statements do
not reflect the potential impact of any future acquisitions, mergers, dispositions,
joint ventures or investments we may make.
PART
I – FINANCIAL INFORMATION
Item 1. Financial Statements
DOOFUS
CORPORATION
BALANCE
SHEETS
(Unaudited)
The accompanying notes are an integral part of
these financial statements.
DOOFUS
CORPORATION
STATEMENTS
OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
|
|
|
|
|
|
March 31, |
||||
|
|
|
|
|
|
|
|
2021 |
|
2020 |
||
Revenue |
|
|
|
|
|
|
|
$ |
- |
|
$ |
- |
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenue |
|
|
|
|
|
|
|
|
- |
|
|
- |
Research and Development |
|
|
|
|
|
|
|
|
- |
|
|
- |
Sales and Marketing |
|
|
|
|
|
|
|
|
3,000 |
|
|
- |
General and Administrative |
|
|
|
|
|
|
|
|
30,320 |
|
|
1,929 |
Total Costs and Expenses |
|
|
|
|
|
|
|
|
33,320 |
|
|
1,929 |
Loss from Operations |
|
|
|
|
|
|
|
|
(33,320) |
|
|
(1,929) |
Interest Expense |
|
|
|
|
|
|
|
|
- |
|
|
- |
Interest Income |
|
|
|
|
|
|
|
|
- |
|
|
- |
Other Expense, Net |
|
|
|
|
|
|
|
|
- |
|
|
- |
Income Before Income Taxes |
|
|
|
|
|
|
|
|
(33,320) |
|
|
(1,929) |
(Provision for) Benefit from Income Taxes |
|
|
|
|
|
|
|
|
(110) |
|
|
324 |
Net Loss |
|
|
|
|
|
|
|
$ |
(33,430) |
|
$ |
(1,605) |
Net Loss per Share Attributable to Common Stockholders: |
|
|
|
|
|
|
|
|
|
|
||
Basic |
|
|
|
|
|
|
|
$ |
(0.00007) |
|
$ |
(0.000003) |
Diluted |
|
|
|
|
|
|
|
$ |
(0.00007) |
|
$ |
(0.000003) |
Weighted-Average Shares
Used to Compute Net Loss per Share Attributable to Common Stockholders: |
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
|
|
|
|
|
|
509,500,000 |
|
|
501,500,000 |
Diluted |
|
|
|
|
|
|
|
|
509,500,000 |
|
|
501,500,000 |
The
accompanying notes are an integral part of these financial statements.
DOOFUS
CORPORATION
STATEMENTS
OF COMPREHENSIVE LOSS
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
|
|
|
|
|
|
March 31, |
||||
|
|
|
|
|
|
|
|
2021 |
|
2020 |
||
Net Loss |
|
|
|
|
|
|
|
$ |
(33,430) |
|
$ |
(1,605) |
Other Comprehensive
Income, Net of Tax: |
|
|
|
|
|
|
|
|
|
|
|
|
Change in Foreign Currency
Translation Adjustment |
|
|
|
|
|
|
|
|
11,459 |
|
|
- |
Net
Change in Accumulated Other Comprehensive Income |
|
|
|
|
|
|
|
|
11,459 |
|
|
- |
Comprehensive Loss |
|
|
|
|
|
|
|
$ |
(21,971) |
|
$ |
(1,605) |
The
accompanying notes are an integral part of these financial statements.
DOOFUS
CORPORATION
STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
|
|
|
Three Months Ended |
||||||||
|
|
|
March 31, |
||||||||
|
|
|
2021 |
|
2020 |
||||||
|
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
||
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
Balance, Beginning of Period |
|
|
509,500,000 |
|
$ |
510 |
|
501,500,000 |
|
$ |
502 |
Balance, End of Period |
|
|
509,500,000 |
|
|
510 |
|
501,500,000 |
|
|
502 |
Additional Paid-In Capital |
|
|
|
|
|
|
|
|
|
|
|
Balance, Beginning of
Period |
|
|
- |
|
|
94,990 |
|
- |
|
|
14,998 |
Balance, End of Period |
|
|
- |
|
|
94,990 |
|
- |
|
|
14,998 |
Accumulated Other Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
Balance, Beginning of Period |
|
|
- |
|
|
(4,920) |
|
- |
|
|
- |
Other Comprehensive Income |
|
|
- |
|
|
11,459 |
|
- |
|
|
- |
Balance, End of Period |
|
|
- |
|
|
6,539 |
|
- |
|
|
- |
Accumulated Deficit |
|
|
|
|
|
|
|
|
|
|
|
Balance, Beginning of Period |
|
|
- |
|
|
(142,427) |
|
- |
|
|
(15,140) |
Net Loss |
|
|
- |
|
|
(33,430) |
|
- |
|
|
(1,605) |
Balance, End of Period |
|
|
- |
|
|
(175,857) |
|
- |
|
|
(16,745) |
Total Stockholders' Equity |
|
|
509,500,000 |
|
$ |
(73,818) |
|
501,500,000 |
|
$ |
(1,245) |
The
accompanying notes are an integral part of these financial statements.
DOOFUS
CORPORATION
STATEMENTS
OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
|
|
|
|
|
|
March 31, |
||||
|
|
|
|
|
|
|
|
2021 |
|
2020 |
||
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
|
|
|
|
|
|
$ |
(33,430) |
|
$ |
(1,605) |
Adjustments to Reconcile
Net Income to Net Cash Provided by Operating Activities: |
|
|
|
|
|
|
||||||
Depreciation and Amortization Expense |
|
|
|
|
|
|
|
|
66 |
|
|
91 |
Deferred Income Taxes |
|
|
|
|
|
|
|
|
(307) |
|
|
(324) |
Other Adjustments |
|
|
|
|
|
|
|
|
- |
|
|
(55) |
Changes in Assets and
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid Expenses and Other Assets |
|
|
|
|
|
|
|
|
273 |
|
|
135 |
Accounts Payable |
|
|
|
|
|
|
|
|
17,562 |
|
|
(696) |
Accrued and Other Liabilities |
|
|
|
|
|
|
|
|
12,351 |
|
|
16 |
Net Cash Used in
Operating Activities |
|
|
|
|
|
|
|
|
(3,485) |
|
|
(2,438) |
Cash Flows from Investing
Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of Property and
Equipment |
|
|
|
|
|
|
|
|
- |
|
|
(1,821) |
Net Cash Used in Investing Activities |
|
|
|
|
|
|
|
|
- |
|
|
(1,821) |
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from Debt |
|
|
|
|
|
|
|
|
2,332 |
|
|
4,703 |
Net Cash Provided by
Financing Activities |
|
|
|
|
|
|
|
|
2,332 |
|
|
4,703 |
Net (Decrease) Increase in
Cash, Cash Equivalents and Restricted Cash |
|
|
|
|
|
(1,153) |
|
|
444 |
|||
Foreign Exchange Effect on Cash, Cash Equivalents and Restricted
Cash |
|
|
|
|
|
1,563 |
|
|
- |
|||
Cash, Cash Equivalents and
Restricted Cash at Beginning of Period |
|
|
|
|
|
(94) |
|
|
369 |
|||
Cash, Cash Equivalents and Restricted Cash at End of Period |
|
|
|
|
|
|
|
$ |
316 |
|
$ |
813 |
Supplemental Disclosures
of Non-Cash Investing and Financing Activities |
|
|
|
|
|
|
||||||
Changes in Accrued
Property and Equipment Purchases |
|
|
|
|
|
|
|
$ |
- |
|
$ |
(1,821) |
Reconciliation of Cash,
Cash Equivalents and Restricted Cash as Shown in the Statements of Cash Flows |
|
|
|
|
|
|
|
|||||
Cash and Cash Equivalents |
|
|
|
|
|
|
|
|
316 |
|
|
813 |
Restricted Cash Included in Prepaid Expenses
and Other Current Assets |
|
|
|
|
|
- |
|
|
- |
|||
Restricted Cash Included
in Other Assets |
|
|
|
|
|
|
|
|
255 |
|
|
- |
Total Cash, Cash Equivalents and Restricted
Cash |
|
|
|
|
|
|
|
$ |
571 |
|
$ |
813 |
The
accompanying notes are an integral part of these financial statements.
NOTES
TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. Description of
Business and Summary of Significant Accounting Policies
Description
of Business
Doofus
Corporation (the “Corporation”) was incorporated in
Delaware on August 29, 2016 and is headquartered in
Zurich, Switzerland. The Corporation is engaged in the business of computer and
software services.
Fiscal
Year
The Corporation’s
fiscal year ends on December 31.
Basis of
Presentation
The accompanying
balance sheets as of March 31, 2021 and
December 31, 2020 and the statements of operations, the statements of
comprehensive loss, statements of stockholders’ equity and the statements of
cash flows for the three months ended March 31, 2021 and March
31, 2020, respectively, are unaudited.
The
accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles in the United States (U.S. GAAP).
The unaudited financial statements reflect, in management’s opinion, all
adjustments of a normal, recurring nature that are necessary for the fair
statement of the Corporation’s financial position, results of operations and
cash flows for the interim periods but are not necessarily indicative of the
results expected for the full fiscal year or any other period.
Use of
Estimates
The
preparation of the Corporation’s financial
statements in conformity with U.S. GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses, as well as related disclosure of contingent assets and
liabilities. Actual results could differ materially from the Corporation’s estimates.
To the extent that there are material differences between these estimates and
actual results, the Corporation’s financial condition or operating results will
be affected. The Corporation bases its estimates on past
experience and other assumptions that the Corporation believes are
reasonable under the circumstances, and the Corporation evaluates these
estimates on an ongoing basis.
Recent
Accounting Pronouncements
There have
been no recent accounting pronouncements or changes in accounting pronouncements
during the three months ended March 31, 2021, as compared to the recent
accounting pronouncements described in the Corporation's Financial Statements
for the fiscal year ended December 31, 2020, that are of significance or
potential significance to the Corporation.
Significant
Accounting Policies
There have
been no material changes to the Corporation’s significant accounting policies
from its Financial Statements for the fiscal year ended December 31, 2020.
Note 2. Revenue
Revenue
Recognition
The
Corporation is pre-revenue and will derive its revenues from subscription fees,
which are comprised of once-off and recurring subscription fees.
Note 3. Cash and Cash Equivalents
Cash and cash
equivalents consist of the following:
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
||
|
|
|
|
|
|
|
|
2021 |
|
2020 |
||
Cash |
|
|
|
|
|
|
|
$ |
316 |
|
$ |
225 |
Total |
|
|
|
|
|
|
|
$ |
316 |
|
$ |
225 |
Note 4. Fair Value
Measurements
The Corporation
measures its cash equivalents at fair value.
Note 5. Prepaid Expenses and
Other Current Assets
Prepaid
expenses and other current assets consist of the following:
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
||
|
|
|
|
|
|
|
|
2021 |
|
2020 |
||
Prepaid Expenses |
|
|
|
|
|
|
|
$ |
959 |
|
$ |
871 |
Tax Receivable |
|
|
|
|
|
|
|
|
52 |
|
|
- |
Total |
|
|
|
|
|
|
|
$ |
1,011 |
|
$ |
871 |
Note 6. Depreciation
Property and
equipment are stated at cost. Depreciation is calculated on a straight-line
basis over the estimated useful lives of those assets as follows:
Computer, Equipment and Software |
|
|
|
|
|
3 to 9 years |
Furniture and Fixtures |
|
|
|
|
|
3
to 9 years |
Leasehold Improvements |
|
|
|
|
|
The remaining lease term or up to 10
years |
When assets
are retired or otherwise disposed of, the cost and accumulated depreciation and
amortization are removed from their respective accounts and any loss on such
retirement is reflected in operating expenses.
Note 7. Property and
Equipment, Net
The following
tables set forth property and equipment, net by type and by geographic area for
the periods presented:
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
||
|
|
|
|
|
|
|
|
2021 |
|
2020 |
||
Computers, Equipment and Software |
|
|
|
|
|
|
|
$ |
1,666 |
|
$ |
1,765 |
Total |
|
|
|
|
|
|
|
|
1,666 |
|
|
1,765 |
Less: Accumulated Depreciation and Amortization |
|
|
|
|
|
|
|
|
(681) |
|
|
(652) |
Property and Equipment, Net |
|
|
|
|
|
|
|
$ |
985 |
|
$ |
1,113 |
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
||
|
|
|
|
|
|
|
|
2021 |
|
2020 |
||
Property and Equipment, Net: |
|
|
|
|
|
|
|
|
|
|
|
|
Switzerland |
|
|
|
|
|
|
|
$ |
985 |
|
$ |
1,113 |
United States |
|
|
|
|
|
|
|
|
- |
|
|
- |
Total Property and Equipment, Net |
|
|
|
|
|
|
|
$ |
985 |
|
$ |
1,113 |
Note 8. Other Assets
The following
table presents the detail of other assets for the periods presented:
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
||
|
|
|
|
|
|
|
|
2021 |
|
2020 |
||
Security Deposits |
|
|
|
|
|
|
|
$ |
255 |
|
$ |
270 |
Total |
|
|
|
|
|
|
|
$ |
255 |
|
$ |
270 |
Note 9. Accrued and Other
Current Liabilities
The following
table presents the detail of accrued and other current liabilities for the
periods presented:
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
||
|
|
|
|
|
|
|
|
2021 |
|
2020 |
||
Accrued Compensation |
|
|
|
|
|
|
|
$ |
66,884 |
|
$ |
49,292 |
Accrued Social Security |
|
|
|
|
|
|
|
|
(199) |
|
|
9,088 |
Accrued Tax Liabilities |
|
|
|
|
|
|
|
|
1,076 |
|
|
230 |
Bank Overdraft |
|
|
|
|
|
|
|
|
- |
|
|
308 |
Total |
|
|
|
|
|
|
|
$ |
67,761 |
|
$ |
58,918 |
Note 10. Net Loss per Share
Basic net loss
per share is computed by dividing net loss attributable to common stockholders
by the weighted-average common shares outstanding during the period.
Diluted net
loss per share is computed by dividing the net loss attributable to common
stockholders by the weighted-average number of common shares outstanding during
the period, including potential dilutive common stock instruments.
The following
table presents the calculation of basic and diluted net loss per share for
periods presented:
|
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
|
|
|
|
|
|
March 31, |
||||
|
|
|
|
|
|
|
|
2021 |
|
2020 |
||
Basic Net Loss per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
Numerator |
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
|
|
|
|
|
|
$ |
(33,430) |
|
$ |
(1,605) |
Denominator |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Common
Shares Outstanding |
|
|
|
|
|
|
|
|
509,500,000 |
|
|
501,500,000 |
Weighted-Average Shares Used to Compute
Basic Net Loss per Share |
|
|
|
|
|
509,500,000 |
|
|
501,500,000 |
|||
Basic Net Loss per Share
Attributable to Common Stockholders |
|
|
|
|
$ |
(0.00007) |
|
$ |
(0.000003) |
|||
Diluted Net Loss per
Share: |
|
|
|
|
|
|
|
|
|
|
|
|
Numerator |
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
|
|
|
|
|
|
$ |
(33,430) |
|
$ |
(1,605) |
Denominator |
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares Used in Basic Computation |
|
|
|
|
|
|
|
|
509,500,000 |
|
|
501,500,000 |
Weighted-Average Shares
Used to Compute Diluted Net Loss per Share |
|
|
|
|
|
509,500,000 |
|
|
501,500,000 |
|||
Diluted Net Loss per Share Attributable to
Common Stockholders |
|
|
|
|
$ |
(0.00007) |
|
$ |
(0.000003) |
Note 11. Stockholders'
Equity
2020 Equity
Incentive Plan
The Corporation’s
2020 Equity Incentive Plan was adopted by the Board
of Directors on May 15, 2020 and approved by
shareholders on June 24, 2020. The number of shares of the Corporation’s common
stock available for issuance under the 2020 Equity Incentive Plan is
100,000,000. Under the 2020 Equity Incentive Plan, the Corporation may grant incentive
stock options, non-statutory stock options and restricted stock to directors,
officers, employees, and consultants.
Restricted
Common Stock
The
Corporation has granted restricted common stock to its directors. Vesting of
this stock is dependent on the respective continued service at the Corporation for
a requisite service period, which is generally up to five years from the
issuance date, and the Corporation has the right to repurchase the unvested
shares upon termination of service. The fair value of the restricted common
stock issued to directors is recorded as compensation expense on a
straight-line basis over the requisite service period.
The
Corporation had 16 million shares of unvested restricted common stock as of
March 31, 2021 and December 31, 2020, respectively.
The Corporation's restricted common stock activity was not material during the
three months ended March 31, 2021.
Note 12. Income Taxes
The Corporation’s
tax provision or benefit from income taxes for interim periods is determined
using an estimate of its annual effective tax rate, adjusted for discrete
items, if any. Each quarter, the Corporation updates its estimate of the annual
effective tax rate and makes a year-to-date adjustment to the provision.
The Corporation
recorded an income tax provision of $110 and an income tax benefit $324 for the three months ended March 31, 2021 and March 31, 2020, respectively. The Corporation’s effective
tax rate is based on forecasted annual results which may fluctuate
significantly through the rest of the year.
As of March
31, 2021, the Corporation had $29,633 of deferred tax assets which could result
in a reduction of the Corporation’s effective tax rate, if recognized.
The Corporation
is subject to taxation in the United States and various states and foreign
jurisdictions. Earnings from non-U.S. activities are subject to local country income
tax. The material jurisdictions in which the Corporation is subject to
potential examination by taxing authorities include the United States and Switzerland.
The Corporation believes that adequate amounts have been provided for in these
jurisdictions.
Note 13. Commitments and
Contingencies
Credit
Facility
The Corporation has a revolving credit agreement with certain
directors and stockholders which provides for a $50,000 unsecured revolving credit
facility maturing on August 28, 2021. The Corporation is not obligated to pay
interest on loans under this credit facility or other customary fees for a
credit facility of this size and type, including an upfront fee and an unused
commitment fee. As of March 31, 2021, $15,756 had been drawn under the credit
facility compared to $7,584 for the three months ended March 31, 2020.
Contractual
Obligations
The Corporation
had no contractual commitments for the three months ended March 31, 2021 and March 31, 2020, respectively.
Legal
Proceedings
The Corporation
was not involved in any legal proceedings, claims, investigations, and
government inquiries and investigations for the three months ended March 31, 2021 and March 31, 2020, respectively.
Non-Income
Taxes
The Corporation
was not subject to any non-income tax audits by domestic or foreign tax
authorities for the three months ended March 31, 2021
and March 31, 2020, respectively.
Note 14. Related Party
Transactions
No related
party transactions, other than the revolving credit agreement with certain
directors and stockholders disclosed in Note 13, occurred for the three months
ended March 31, 2021 and March 31, 2020, respectively.
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations
The following
discussion and analysis of our financial condition and results of operations
should be read in conjunction with the financial statements and related notes
thereto included in Item 1 “Financial Statements” in this Quarterly Report.
This discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those discussed
below. Factors that could cause or contribute to such differences include, but
are not limited to, those identified below and those discussed in the section
titled “Risk Factors” included elsewhere in this Quarterly Report.
Overview
and Highlights of Quarterly Results
The
Corporation was pre-revenue for the three months ended March 31, 2021, and for
the three months ended March 31, 2020.
Net loss was $33,430
for the three months ended March 31, 2021, compared to net loss of $1,605 for
the three months ended March 31, 2020.
Loss from operations
was $33,320 for the three months ended March 31, 2021, compared to loss from
operations of $1,929 for the three months ended March 31, 2020.
Cash, cash equivalents
and restricted cash totaled $571 as of March 31, 2021.
COVID-19
Update
The COVID-19
pandemic has resulted in public health responses including travel bans,
restrictions, social distancing requirements, and shelter-in-place orders,
which could negatively impact our operations and financial performance,
including our ability to raise funding.
Our business,
operations and financial performance have been, and may in the future be,
negatively impacted by the COVID-19 pandemic. Our past results may not be
indicative of our future performance, and historical trends in revenue, income
(loss) from operations, net income (loss), and net income (loss) per share may
differ materially. The risks related to the COVID-19 pandemic on our business
are further described in “Part II – Other Information, Item 1A. Risk Factors.”
Results
of Operations
The following
tables set forth our statements of operations data for each of the periods
presented:
|
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
|
|
|
|
|
|
March 31, |
||||
|
|
|
|
|
|
|
|
2021 |
|
2020 |
||
Revenue |
|
|
|
|
|
|
|
$ |
- |
|
$ |
- |
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenue |
|
|
|
|
|
|
|
|
- |
|
|
- |
Research and Development |
|
|
|
|
|
|
|
|
- |
|
|
- |
Sales and Marketing |
|
|
|
|
|
|
|
|
3,000 |
|
|
- |
General and Administrative |
|
|
|
|
|
|
|
|
30,320 |
|
|
1,929 |
Total Costs and Expenses |
|
|
|
|
|
|
|
|
33,320 |
|
|
1,929 |
Loss from Operations |
|
|
|
|
|
|
|
|
(33,320) |
|
|
(1,929) |
Interest Expense |
|
|
|
|
|
|
|
|
- |
|
|
- |
Interest Income |
|
|
|
|
|
|
|
|
- |
|
|
- |
Other Expense, Net |
|
|
|
|
|
|
|
|
- |
|
|
- |
Income Before Income Taxes |
|
|
|
|
|
|
|
|
(33,320) |
|
|
(1,929) |
Benefit for Income Taxes |
|
|
|
|
|
|
|
|
(110) |
|
|
324 |
Net Loss |
|
|
|
|
|
|
|
$ |
(33,430) |
|
$ |
(1,605) |
Net Loss per Share Attributable to Common Stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
$ |
(0.00007) |
|
$ |
(0.000003) |
Diluted |
|
|
|
|
|
|
|
$ |
(0.00007) |
|
$ |
(0.000003) |
Weighted-Average Shares
Used to Compute Net Loss per Share Attributable to Common Stockholders: |
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
|
|
|
|
|
|
509,500,000 |
|
|
501,500,000 |
Diluted |
|
|
|
|
|
|
|
|
509,500,000 |
|
|
501,500,000 |
Revenue
No revenue was
generated for the three months ended March 31, 2021
and March 31, 2020, respectively.
Cost of
Revenue
No cost of
revenue was incurred for the three months ended March 31, 2021
and March 31, 2020, respectively.
Research
and Development
No research
and development costs were incurred for the three months ended March 31, 2021 and March 31, 2020, respectively.
Sales
and Marketing
Sales and
marketing expenses consist primarily of personnel-related costs, including
salaries, commissions, benefits, and stock-based compensation for our employees
engaged in sales, sales support, business development and media, marketing,
corporate communications, and customer service functions. In addition,
marketing and sales-related expenses also include advertising costs, market
research, trade shows, branding, marketing, public relations costs,
amortization of acquired intangible assets, allocated facilities costs, and
other supporting overhead costs.
|
|
|
|
|
Three Months Ended |
|
|
||||
|
|
|
|
|
March 31, |
|
|
||||
|
|
|
|
|
2021 |
|
2020 |
|
% Change |
||
Sales and Marketing |
|
|
|
|
$ |
3,000 |
|
$ |
- |
|
100% |
Sales and Marketing as a Percentage
of Revenue |
|
|
|
|
|
- |
|
|
- |
|
|
In the three
months ended March 31, 2021, sales and marketing expenses increased by $3,000
compared to the three months ended March 31, 2020. The increase was
attributable to a $3,000 increase in personnel-related costs mainly driven by
an increase in employee headcount.
We continue to
evaluate key areas in our business to ensure we have an appropriate level of
sales and marketing expenses to execute on our key priorities and objectives.
We expect that sales and marketing expenses will increase in absolute U.S.
dollar amounts and vary as a percentage of revenue over time.
General
and Administrative
General and
administrative expenses consist primarily of personnel-related costs, including
salaries and benefits for our executive, administrative, finance, human
resources, legal, technology and other employees. In addition, general and administrative
expenses include fees and costs for professional services, including
third-party services and facilities costs and other supporting overhead costs
that are not allocated to other departments.
|
|
|
|
|
Three Months Ended |
|
|
||||
|
|
|
|
|
March 31, |
|
|
||||
|
|
|
|
|
2021 |
|
2020 |
|
% Change |
||
General and Administrative |
|
|
|
|
$ |
30,320 |
|
$ |
1,929 |
|
1,472% |
General and Administrative
as a Percentage of Revenue |
|
|
|
|
|
- |
|
|
- |
|
|
In the three
months ended March 31, 2021, general and administrative expenses increased by $28,391
compared to the three months ended March 31, 2020. The increase was
attributable to an increase in personnel-related costs mainly driven by an
increase in employee headcount, facilities, and other supporting overhead
expenses.
We plan to
continue to invest in general and administrative functions to ensure we have an
appropriate level of support for our key priorities and objectives.
No interest
expense was incurred for the three months ended March 31, 2021
and March 31, 2020, respectively.
Interest
Income
No interest
income was generated for the three months ended March 31, 2021
and March 31, 2020, respectively.
Other
Expense, Net
No other
expense was incurred for the three months ended March 31, 2021
and March 31, 2020, respectively.
(Provision
for) Benefit from Income Taxes
Our provision
for, or benefit from, income taxes consists of federal
and state income taxes in the United States and income taxes in certain foreign
jurisdictions. Our tax provision for, or benefit from, income taxes for interim
periods has generally been determined using an estimate of our annual effective
tax rate, adjusted for discrete items, if any. Under certain circumstances
where we are unable to make a reliable estimate of the annual effective tax
rate, the accounting standard permits the use of the actual effective tax rate
for the year-to-date period. In the first quarter of 2021, we used this
approach because we were unable to reasonably estimate our annual effective
rate due to the variability of the rate as a result of
fluctuations in forecasted income or loss, and the effects of being taxed in
multiple tax jurisdictions.
|
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
|
|
|
|
|
|
March 31, |
||||
|
|
|
|
|
|
|
|
2021 |
|
2020 |
||
(Provision for) Benefit from Income Taxes |
|
|
|
|
|
|
|
$ |
(110) |
|
$ |
|
We recorded a provision
for income taxes of $110 for the three months ended March 31, 2021, and a
benefit from income taxes of $324 for the three months ended March 31, 2020,
respectively. The increased provision for income taxes was primarily due to a foreign
tax accrual.
Our effective
tax rate could be affected by our jurisdictional mix of income or loss before
taxes, including our allocation of centrally-incurred costs to foreign jurisdictions,
changes in tax rates and tax regulations, the impact of tax examinations, the
impact of business combinations, changes in our corporate structure, changes in
the geographic location of business functions or assets, tax effects of
stock-based compensation, and changes in management's assessment of the ability
to realize deferred tax assets. In addition, the provision is impacted by
deferred income taxes reflecting the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
Liquidity
and Capital Resources
|
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
|
|
|
|
|
|
March 31, |
||||
|
|
|
|
|
|
|