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 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.
In December 2016, the Company incorporated a wholly owned subsidiary in the State of Delaware, Plyzer Corporation. Plyzer hired Lupama, as a consultant to manage and develop for Plyzer a unique web portal providing solutions for price comparison as discussed elsewhere in this report.
The following discussion and analysis should be read in conjunction with the financial statements and accompanying notes of the Company for the three and nine months ended December 31, 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 continued to review new business opportunities but none met with the Managements expectations until recently, when the CEO met with the management of Lupama , a Spanish private company and discussed the possibility of developing a new project of Lupama in a newly formed subsidiary , Plyzer. This resulted in signing a consulting agreement with Lupama. As per the terms of the agreement, Lupamas chief executive Officer, Mr. Luis Pallares became the CEO of Plyzer. Plyzer will develop, manage and commercialize a unique web portal providing solutions for price comparison using Artificial Intelligence and machine learning technology in several niche markets.
Results of operations
The Company did not have any operating income since its inception on February 23, 2005 through December 31, 2016. For the nine months ended December 31, 2016, the Company had an operating gain of $268 after reversal of a liability of $ 36,000 no longer payable compared to the operating loss of $155,783 for the nine months ended December 31, 2015.
On December 31, 2016, interest expense of $1,447 (December 31, 2015: $66,737) charged against the operating gain resulted in a net loss of $1,179 for the nine months ended December 31, 2016 compared to the net loss of $222,520 for the same period in the previous year.
Overall operating expenses declined significantly during the nine months ended December 31, 2016 compared to the same period in 2015 mainly due to lack of any business activities resulting in no travel costs and reduced overheads, reduced interest cost by approximately $65,000 and absence of one time costs bade debt and investment written off totalling to $84,000 in the 2015 period. In addition, reversal of a liability of $36,000 also offs et costs for the period ended December 31, 2016.
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Professional Fees
Professional fees for the three and nine months ended December 31, 2016 were $1,100 and $3,300 respectively compared to $1,100 and $8,400 respectively for the three and nine months ended December 31, 2015.
Professional fees consist of fee for the review of the quarterly financials by an independent accountant.
The fees for the nine months ended December 31, 2015 included annual audit fee for fiscal 2015 of $4,500 in addition to the fees charged for the review of the quarterly financials by the independent accountant.
Consulting fees
Consulting fees for the three and nine months to December 31, 2016 included accrual of $6,250 and $18,750 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 $3,000 fee charged by the former CFO for accounting services.
Consulting fees for the three and nine months to December 31, 2015 includes $2,000 and $12,000 respectively charged by the ex-CFO and $ 25,000 and $ 25,000 respectively by the CEO. Approximately nil and $14,500 was charged by three other consultants. These consultants are not currently providing any services. The ex-CFO continues to provide accounting and other corporate services as an independent consultant for a fee of $1,000 per quarter. $15,000 fee for the previous year charged by 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 nine months ended December 31, 2016 due to lack of any business activities. Major reduction was in the travel cost which was nil for the three and nine months ended December 31, 2016 compared to $6,000 during the same period in the previous year.
These costs for the three and nine months ended December 31, 2015 included rent of approximately $nil and $12,808 respectively , reversal of fee of $nil and $2,800 respectively, previously provided for annual renewal of the Companys membership to hedge fund which the management decided to cancel effective January 1, 2015, and reversal of fee charged by Current Capital Corp. (CCC) for investor relations of $nil and $6,000 respectively, 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 nine months ended December 31, 2016, there was only one loan of $ 8,000 outstanding and interest cost thereon was $444 and $1,447 respectively.
Interest expense, which also included amortization of BCF value of convertible loans for the three and nine months ended December 31, 2015 totalled $22,329 and $66,737 respectively. Interest expense for the period to December 31, 2015 comprised interest of approximately $3,133 at 5% and 8% on three convertible debts and amortized amount of approximately $63,600 representing the convertible feature of the convertible debts and unamortized value of the converted debts.
Financial Condition, Liquidity and Capital Resources
For the nine months ended December 31, 2016, the Company generated a negative cash flow from operations of approximately $12,700 (nine months to December 31, 2015: negative cash flow of approximately $40,000) , which was primarily met from existing cash and advances from the director. 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.
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Our present minimum 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. We are also pursuing additional financing to further advance the Plyzer project discussed in this report.
As of December 31, 2016, the Company had cash of $657 (as at March 31, 2016: $8,488). The Company's total assets decreased from $9,071 as at March 31, 2016 to $715 as at December 31, 2016 mainly due to use of cash on operations. Total liabilities also reduced from $123,052 as of March 31, 2016 to $87,423 as of December 31, 2016, mainly due to reversal of a liability of $36,000 considered no longer payable and conversion of loan of $20,000 into equity.
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.
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 had negative operating cash flows for the nine months ended December 31, 2016. These conditions raise substantial doubt about our ability to continue as a going concern. The Company 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. 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.