Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q contains forward-looking statements and involves risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows, and business prospects. These statements include, among other things, statements regarding:
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our ability to diversify our operations;
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inability to raise additional financing for working capital;
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the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require our management to make estimates about matters that are inherently uncertain;
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our ability to attract key personnel;
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our ability to operate profitably;
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our ability to generate sufficient funds to operate the Bigfoot Project Investments, Inc. operations, upon completion of our acquisition;
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deterioration in general or regional economic conditions;
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adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;
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changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;
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the inability of management to effectively implement our strategies and business plan;
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inability to achieve future sales levels or other operating results;
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the unavailability of funds for capital expenditures;
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other risks and uncertainties detailed in this report;
as well as other statements regarding our future operations, financial condition and prospects, and business strategies. These forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, and in particular, the risks discussed under the heading Risk Factors in Part II, Item 1A and those discussed in other documents we file with the Securities and Exchange Commission. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
References in the following discussion and throughout this quarterly report to we, our, us, Bigfoot Project, the Company, and similar terms refer to Bigfoot Project Investments, Inc. unless otherwise expressly stated or the context otherwise requires.
OVERVIEW AND OUTLOOK
Background
In January 2013, Bigfoot Project Investments Inc. acquired all the assets of Searching for Bigfoot Inc. Since the majority shareholder of Searching for Bigfoot, Inc. is also the majority shareholder in Bigfoot Project Investments Inc. the asset acquisition was treated as a related party transaction and was not considered an arms length transaction under Generally Accepted Accounting Principles.
The assets acquired were transferred over at the existing book value listed on the balance sheet of Searching for Bigfoot, Inc. at the time of transfer. The transfer agreement called for the issuance of 4,400,000 shares of common stock which were valued at $.10 per share and the issuance of a promissory note in the amount of $484,029. The Company recorded a deemed distribution related to this transaction in the amount of $924,029. In August 2013, the Company increased the promissory note by $489 to add an asset that was not included in the original transfer. The Company paid $12,148 toward the principle of the note during the period ended January 31, 2017.
As part of the asset transfer agreement Bigfoot Project Investments, Inc. received the following assets:
Footprint cast of Bigfoot 73 original casts
Photographs of Dead Creature from Strickler, Arkansas 1994 Dear Creature Incident
109-inch Skeleton
Various Media Artifacts Video TV News Media 52 news stories
Contract to sell Dinosaur fossil most recent estimate by Paleontologist $1.2 million dollars
Rubber suit from 2008 hoax
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Various DNA samples Hair, and nails
License to use 6 dinosaur displays
Exclusive rights to the Bigfoot Website
Exclusive rights to the Bigfoot Live Radio Show
Exclusive rights to the Bigfoot Live Radio Show Website
360 hours of raw footage from expeditions for movie development
Various DVD Movies and Documentary film projects
Exclusive rights to all current contracts negotiated under Searching For Bigfoot, Inc.
The above list is a complete list of the fixed assets for Bigfoot Project Investments, Inc.
We are a company who has, over the past year, developed nine DVD Movies; eight of which have been completed for distribution and one which is currently in the final stages of completion for distribution. We have established a contract with a Media Marketing Distribution Company (The Bosko Group), who has contracted six of the nine DVD movies to their distribution agents. We are a company with only minimal revenues to date: we have minimal assets, and have incurred losses since inception.
Bigfoot Project Investments Inc. plans to establish itself as the most reliable and dependable source for materials including documentaries, physical evidence, and eye witness accounts for the purpose of documenting the evidence of the existence of Bigfoot. Our major source of revenue will be the sale of documentaries and specials that follow our progress. We have found that there is a market for these films and have started selling them on a semi-regular basis. In addition to the film sales we plan on having expeditions to locations where there have been multiple eye witness accounts as well as periodic exhibitions of the physical evidence that has been accumulated. We plan on focusing our efforts on expeditions to locations that have had multiple eye witness reports to maximize the chances of locating the creature and producing films that will be marketable to the public.
RESULTS OF OPERATIONS
During the three months ended January 31, 2017, we generated revenue of $269. During the three months ended January 31, 2016, we generated revenue of $256.
During the six months ended January 31, 2017, we generated revenue of $1,570. During the six months ended January 31, 2016, we generated revenue of $1,616.
Operating expenses during the three months ended January 31, 2017 were $779,452. Operating expenses during the three months ended January 31, 2016 were $4,331.
Operating expenses during the six months ended January 31, 2017 were $1,035,239. Operating expenses during the six months ended January 31, 2016 were $17,244. Operating expenses for the six months ended January 31, 2017 consisted of consulting fees of $1,000,000, professional fees of $21,235, Expedition expenses of $10,222 and general and administrative fees of $3,782. Operating expenses for the six months ended January 31, 2016 consisted of professional fees of $12,615 and general and administrative fees of $4,629. Expenses increased during 2017 mainly due to the consulting agreements and Companys reporting requirements, having become fully reporting under the 1934 Act on March 16, 2015 and on the over the counter market in August 2016.
There is significant uncertainty projecting future profitability due to our history of losses and lack of revenues. In our current state we have no recurring or guaranteed source of revenues and cannot predict when, if ever, we will become profitable. There is significant uncertainty projecting future profitability due to our minimal operating history and lack of guaranteed ongoing revenue streams.
Liquidity and Capital Resources
As of January 31, 2017, we had $29,231 in cash and did not have any other cash equivalents. The following table provides detailed information about our net cash flow for all financial statement periods presented in this Quarterly Report. To date, we have financed our operations through the issuance of stock and borrowings.
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The following table sets forth a summary of our cash flows for the six months ended January 31, 2017 and 2016:
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Period
Ended
January 31,
2017
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Period
Ended
January 31,
2016
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Net cash used in operating activities
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$
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(24,783)
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$
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(14,354)
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Net cash used in investing activities
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-
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-
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Net cash provided by financing activities
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53,362
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14,326
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Net increase (decrease) in Cash
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28,579
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(28)
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Cash, beginning
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652
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221
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Cash, ending
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$
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29,231
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$
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193
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Since inception, we have financed our cash flow requirements through issuance of common stock and debt financing. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations, pending receipt of listings or some form of advertising revenues. We anticipate obtaining additional financing to fund operations through additional common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital.
We anticipate that we will incur operating losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks, we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, continually develop and upgrade our website, provide national and regional industry participants with an effective, efficient and accessible website on which to promote their products and services through the Internet, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.
Operating activities
Net cash used in operating activities was $24,783 for the period ended January 31, 2017, as compared to $14,354 used in operating activities for the period ended January 31, 2016.
Investing activities
Net cash used in investing activities was $0 for the period ended January 31, 2017, as compared to $0 used in investing activities for the same period in 2016.
Financing activities
Net cash provided by financing activities for the period ended January 31, 2017 was $53,362 as compared to $14,326 for the same period of 2016.
We believe that cash flow from operations will not meet our present and near-term cash needs and thus we will require additional cash resources, including the sale of equity or debt securities, to meet our planned capital expenditures and working capital requirements for the next 12 months. We will require additional cash resources due to changed business conditions, implementation of our strategy to expand our sales and marketing initiatives, increase brand awareness, or acquisitions we may decide to pursue. If our own financial resources and then current cash-flows from operations are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict our operations or modify our plans to grow the business. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, will limit our ability to expand our business operations and could harm our overall business prospects.
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Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.