Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our Financial Statements and Notes thereto appearing elsewhere in this Report on Form 10-Q as well as our other SEC filings.
Overview
The Company was incorporated on February 23, 2005 under the laws of the state of Nevada. Effective July 15, 2015, Mr. Terence Robinson was appointed as the Chairman of the Board of directors and is also the Chief Executive Officer and Chief Financial officer of the Company.
On June 28, 2013, the Company changed its name from Webtradex International Corporation to ZD Ventures Corporation (ZDV, the Company).
The Company has no subsidiaries. The Company has no formal lease commitments. Its operations are handled by the CEO from his residence in Barcelona, Spain but its administrative matters are handled from the Toronto office of Current Capital Corp. at 47 Avenue Road, Suite 200, Toronto, ON M5R 2G3 Canada. Current Capital Corp. is owned by one of the shareholders related to the CEO. Our telephone number is (416) 840-0211. Our fiscal year end is March 31.
The following discussion and analysis should be read in conjunction with the financial statements and accompanying notes of the Company for the three and six months ended September 30, 2016 and the audited financial statements and notes for the year ended March 31, 2016.
Business Plan and Strategy
ZDVs business strategy until March 2015 involved developing a social website, B Wished, however, at the end of March 31, 2015, the Management concluded that this was not a commercially viable business and decided to expense all the costs related to this project. The Company continues to review new business opportunities but has been unable to successfully negotiate any closure on any of these deal and is currently continuing its efforts at finding a suitable business proposal that would meet with its business model and attract the investors. The Company currently has no business activities.
Results of operations
The Company did not have any operating income since its inception on February 23, 2005 through September 30, 2016. For the six months ended September 30, 2016, the Company had an operating income of $9,870 after reversal of a liability of $ 36,000 no longer payable compared to the operating loss of $41,755 for the six months ended September 30, 2015.
On September 30, 2016, interest expense of $1,003 (September 30, 2015: $44,408) charged against the operating income(loss) resulted in a net income of $8,867 for the six months ended September 30, 2016 compared to the net loss of $ 86,163 for the same period in the previous year.
Overall operating expenses declined significantly during the six months ended September 30, 2016 compared to the same period in 2015 mainly due to lack of any business activities resulting in no travel costs and reduced overheads.
Professional Fees
Professional fees for the three and six months ended September 30, 2016 were $1,100 and $2,200 respectively compared to $1,300 and $7,300 respectively for the three and six months ended September 30, 2015. The fees for the six months ended September 30, 2015 included annual audit fee for fiscal 2015 of $ 4,500. The balance of the professional fees represents fees charged for the review of the quarterly financials by the independent accountant.
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Consulting fees
Consulting fees for the three and six months to September 30, 2016 includes accrual of $6,250 and $12,500 respectively as fee for the CEO based on an annual estimate of $ 25,000, $nil and $ 7,000 respectively for fees charged by a shareholder holding over 5% equity and $ 1,000 and $ 2,000 respectively for fees by former CFO.
Consulting fees for the three and six months to September 30, 2015 includes $2,000 and $4,255 respectively charged by the former CFO and no fee was charged by the CEO. Approximately$2,000 and $14,500 was charged by three other consultants. These consultants are not currently providing any services except for the ex-CFO who provides accounting services as a consultant for a monthly fee of $2,000. $15,000 fee for the previous quarter charged by the CEO was forgiven and as a result was reversed to additional paid in capital.
General and administrative expenses
General and administrative costs comprise mainly of corporate costs - transfer agent fees, press releases, regulatory filing fees etc.
The levels of these costs were reduced significantly during the three and six months ended September 30, 2016 due to lack of any business activities.
The costs for the three and six months ended September 30, 2015 include rent of approximately $1,807 and $12,808 respectively, furniture written off of $4,673 due to closure of Barcelona office, reversal of fee of $2,800 previously provided for annual renewal of the Companys membership to hedge fund which the management decided to cancel effective January 1, 2015, reversal of fee charged by Current Capital Corp (CCC) for investor relations of $6,000 in the previous period, which CCC decided to forgive and agreed for cancelation of their contract without any further charges.
Interest Expense
During the three and six months ended September 30, 2016, there was only one loan of $ 8,000 outstanding and interest cost thereon was $444 and $1,003 respectively.
Interest expense, which also included amortization of BCF value of convertible loans for the three and six months ended September 30, 2015 totalled
$22,454 and $44,408 respectively.
Financial Condition, Liquidity and Capital Resources
For the six months ended September 30, 2016, the Company generated a negative cash flow from operations of approximately $4,700 (six months to September 30, 2015: negative cash flow of approximately $33,900) , which was primarily met from existing cash. In absence of any potential revenue in the near future, the Company will continue to be dependent upon
its shareholders and associates to fund its cash requirements.
Our present material commitments are professional and administrative fees and expenses associated with the preparation of our filings with the U.S. Securities and Exchange Commission (SEC) and other regulatory requirements
As of September 30, 2016, the Company had cash of $1,228 (as at March 31, 2016: $8,488). The Company's total assets decreased from $9,071 as at March 31, 2016 to $1,461 as at September 30, 2016 mainly due to use of cash on operations. Total liabilities also reduced from $123,052 as of March 31, 2016 to $82,158 as of September 30, 2016, mainly due to reversal of a liability of $ 36,000 considered no longer payable.
The Company is seeking to raise capital to implement the Company's business strategy. In the event additional capital is not raised or alternatively debt financing is not available from our shareholders, the Company may seek a merger or outright sale.
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Going Concern
The accompanying financial statements have been prepared assuming that we will continue as a going concern. We have an accumulated deficit of approximately $ 3.2 million. The Company realized a net loss from operations of $9,083 and $26,130, respectively, for the three and six months ended September 30 2016 prior to reversal of a liability of $ 36,000. These conditions raise substantial doubt about our ability to continue as a going concern. The Company continued to secure additional convertible loans and is currently negotiating with others to raise equity funding needed. However, there is no guarantee that such negotiations will success or result in the availability of the required funding. Particularly, if the Company is unable to negotiate a viable business, it may fail to attract further funding. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
Off-balance sheet arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Companys financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.