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Blender Bites Limited — Management Reports 2020
Aug 26, 2020
45010_rns_2020-08-25_6a3e8816-0678-467f-b44d-66dcd7550406.pdf
Management Reports
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MANAGEMENT DISCUSSION AND ANALYSIS
RewardStream Solutions Inc. (“RewardStream” or the “Company”)
For the nine months ended June 30, 2020
Dated – August 25, 2020
This management’s discussion and analysis (MD&A) was prepared in accordance with National Instrument 51-102, Continuous Disclosure Obligations, and should be read in conjunction with the unaudited condensed interim financial statements and accompanying notes for the nine months ended June 30, 2020 and the annual audited financial statements for the year ended September 30, 2019 and related notes. These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and are reported in Canadian dollars.
Certain information included in this MD&A contains forward-looking statements or forward-looking information within the meaning of applicable Canadian securities laws, including, without limitation, in respect of the Company’s priorities, plans and strategies and the Company’s anticipated financial and operating performance and prospects. All statements and information, other than statements of historical fact, included in or incorporated by reference into this MD&A are forward-looking statements and forward-looking information, including, without limitation, statements regarding activities, events or developments that we expect or anticipate may occur in the future. Such forward-looking statements and information can be identified by the use of forward-looking words such as "will", "expect", "intend", "plan", "estimate", "anticipate", "believe" or "continue" or similar words and expressions or the negative thereof. There can be no assurance that the plans, intentions or expectations upon which such forwardlooking statements and information are based will occur or, even if they do occur, will result in the performance, events or results expected.
We caution readers of this MD&A not to place undue reliance on forward-looking statements and information contained herein, which are not a guarantee of performance, events or results and are subject to a number of risks, uncertainties and other factors that could cause actual performance, events or results to differ materially from those expressed or implied by such forward-looking statements and information. These factors include: the Company’s ability to raise additional financing through debt, equity or other form of financing; the ability to retain or add customers, complete product development plans, retain key staff; changes in priorities, plans, strategies and prospects; general economic, industry, business and market conditions; changes in law; the ability to implement business plans and strategies, and to pursue business opportunities; rulings by courts or arbitrators, proceedings and investigations; disruptions or changes in the credit or securities markets; inflationary pressures; challenges such as lawsuits, to the intellectual property of the Company; and various other events, conditions or circumstances that could disrupt RewardStream’s priorities, plans, strategies and prospects. Readers are cautioned that all forward-looking statements and information involve risks and uncertainties. RewardStream undertakes no obligation to publicly release the results of any revisions to forward-looking statements and information that may be made to reflect events or circumstances after the above-stated date or to reflect the occurrence of unanticipated events.
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OVERVIEW
The Company was incorporated under the laws of British Columbia on March 23, 1999 and continued under the Canada Business Corporations Act on December 22, 1999. RewardStream continued to a British Columbia Corporation under the Business Corporations Act (British Columbia) and changed its name to RewardStream Solutions Inc. on October 21, 2015. The head office and records are located at Suite 1000, 409 Granville Street Vancouver, British Columbia, V6C 1T2.
On February 20, 2020, the Company’s listing was transferred to the NEX and on March 30, 2020, the Company was reinstated for trading on the NEX board under the trading symbol REW.H.
The Company continues with its search for other business opportunities.
During the period ended June 30, 2020, there was a global pandemic outbreak of COVID-19. The actual and threatened spread of the virus globally has had a material adverse effect on the global economy and, specifically, the regional economies in which the Company operates. The pandemic could continue to have a negative impact on the stock market, including trading prices of the Company’s shares and its ability to raise new capital. These factors, amongst others, could have a significant impact on the Company’s operations.
On April 7, 2020, the Company completed a share consolidation on the basis of 10 old shares for 1 new share. The share consolidation has been retroactively presented in the financial statements and MD&A and all share amounts, including per share amounts, reflect the share consolidations.
SELECTED ANNUAL INFORMATION
| SELECTED ANNUAL INFORMATION | |||
|---|---|---|---|
| For the twelve months ended | |||
| September 30, | September 30, | September 30, | |
| 2019 | 2018 | 2017 | |
| $ | $ | $ | |
| Revenue | - | - | - |
| Loss from continuing operations | (888,357) | (1,738,901) | (1,120,394) |
| Loss from discontinued operations | - | (453,389) | (1,237,006) |
| Net loss and comprehensive loss | (888,357) | (2,192,290) | (2,357,400) |
| Basic and diluted loss per share from continuing | |||
| operations | (0.51) | (1.59) | (2.64) |
| Basic and diluted loss per share from discontinued | |||
| operations | - | (0.42) | (2.92) |
| Basic and diluted lossper share | (0.51) | (2.01) | (5.56) |
| Weighted average number of common shares | 1,748,312 | 1,090,778 | 423,815 |
| Total assets | 118,742 | 945,945 | 349,325 |
| Long-term financial liabilities | - | - | 67,565 |
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During the year ended September 30, 2018, the Company disposed of its referral and reward business to Buyapowa Ltd. Accordingly, the Company reclassified the operation as discontinued operations in its financial statements. Total net loss for 2018 amounted to $2,192,290, which is lower than the $2,357,400 for 2017, can be attributed to the recognition of a gain on sale of subsidiary of $125,708. During the year ended September 30, 2019, the Company recorded a net loss of from continuing operations of $888,357 as compared to the net loss of $1,738,901 from continuing operations for 2018. The decrease can be attributed to the reduced operations and to the sale of the referral and reward business.
INTERIM QUARTERLY HIGHLIGHTS
| INTERIM QUARTERLY HIGHLIGHTS | ||||
|---|---|---|---|---|
| For thequarter ended: | June 30,2020 | March 31,2020 | December 31,2019 | September30, 2019 |
| Revenue | $- | $- | $- | $- |
| Loss from continuingoperations | (137,596) | (38,361) | (52,450) | (232,101) |
| Loss from discontinued operations | - | - | - | - |
| Net and comprehensive loss | (137,596) | (38,361) | (52,450) | (232,101) |
| Lossper share from continuingoperations | (0.08) | (0.02) | (0.03) | (0.13) |
| Loss per share from discontinuedoperations | 0.00 | 0.00 | 0.00 | 0.00 |
| Comprehensive lossper share | $ (0.08) | $ (0.02) | $ (0.03) | $ (0.13) |
| Weighted average number of shares | 1,748,312 | 1,748,312 | 1,748,312 | 1,748,312 |
| For thequarter ended: | June 30,2019 | March 31,2019 | December 31,2018 | September30, 2018 |
| Revenue | $- | $- | $- | $- |
| Loss from continuingoperations | (119,230) | (206,336) | (330,690) | (798,451) |
| Income(loss)from discontinued operations | - | - | - | 125,708 |
| Net and comprehensive loss | (119,230) | (206,336) | (330,690) | (672,743) |
| Lossper share from continuingoperations | (0.07) | (0.12) | (0.19) | (0.46) |
| Income (loss) per share from discontinuedoperations | 0.00 | 0.00 | 0.00 | 0.07 |
| Comprehensive lossper share | $ (0.07) | $ (0.12) | $ (0.19) | $ (0.39) |
| Weighted average number of shares | 1,748,312 | 1,748,312 | 1,748,312 | 1,748,312 |
RESULTS OF OPERATIONS
During the three months ended June 30, 2020:
During the three months ended June 30, 2020, the Company reported a net loss of $137,596 as compared to $119,230 net loss for the previous period ended June 30, 2019.
Total expenses for the current period amounted to $137,596 as compared to $119,230 for the previous period. The majority of the expenses incurred in the current period relates to cost associated with the
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reinstatement of the Company on the NEX board of the TSX Venture Exchange and maintaining the Company’s reporting issuer status and its continuous search for new business opportunities. Total expenses for the previous period related to consulting fees paid to numerous consultants that were engaged by previous management to help find new business opportunities for the Company.
During the nine months ended June 30, 2020:
During the nine months ended June 30, 2020, the Company reported a net loss of $228,407 as compared to $656,256 net loss for the previous nine month period ended June 30, 2019.
Total expenses for the nine months ended June 30, 2020 amounted to $229,714 as compared to $656,256 for the comparable period. The majority of the expenses incurred in 2020 relates to cost associated with the reinstatement of the Company on the NEX board of the TSX venture exchange and maintaining the Company’s reporting issuer status and its continuous search for new business opportunities. Total expenses for the previous period related to consulting fees paid to numerous consultants that were engaged by previous management to help find new business opportunities for the Company.
LIQUIDITY
Liquidity is the risk of the Company not being able to meet its financial obligations as they become due. The Company manages its liquidity risk through budgeting, ongoing management and forecasting of operating cash flows, reviews of trade receivables, management of cash, and use of equity financings when appropriate.
During the nine months ended June 30, 2020, the Company’s used $17,776 in operating activities as compared to $739,671 used in operating activities for the previous period ended June 30, 2019. There were few transactions in the current period as compared to the prior period.
During the nine months ended June 30, 2020, the Company received $30,000 in financing activities which was provided by a loan payable which bears interest at 6% per annum, unsecured and is due by July 9, 2020.
There was no investing activity during the nine months ended June 30, 2020 and 2019.
As at June 30, 2020, the Company had cash of $13,445, accounts receivable of $6,287 and prepaid expenses of $28,069 as compared to a cash balance of $1,221, accounts receivable of $74,452 and prepaid expenses of $43,069 at September 30, 2019. The Company’s current liabilities at June 30, 2020 were $290,785 and at September 30, 2019 were $133,319. At June 30, 2020, the Company’s working capital deficit was $242,984 as compared to a working deficit of $14,577 for September 30, 2019.
The Company believes that the current capital resources are not sufficient to pay overhead expenses for the next twelve months and will need to seek additional funding to fund its overhead expenses and its continuous search for other business opportunities. The Company will continue to monitor the current economic and financial market conditions and evaluate their impact on the Company’s liquidity and future prospects.
Since the Company will not be able to generate cash from its operations, it will be dependent on outside financing to continue operations until it is able to achieve positive cash flow. The Company has historically
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been able to secure financing from outside parties. However, there is no guarantee that cash generated from external financing or operations will be sufficient to sustain the Company’s operations for the foreseeable future. In order to maintain sufficient liquidity, the Company may be required to issue additional shares, incur more debt or further reduce operating costs.
On January 9, 2020, the Company received a promissory note of $30,000 from a third party which bears interest at 6% per annum, unsecured and repayable by July 9, 2020. During the period ended June 30, 2020, the Company accrued $858 in interest payable.
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off balance sheet arrangements.
RELATED PARTY TRANSACTIONS
Related party transactions not otherwise described in these financial statements are shown below.
The remuneration of the Company’s directors and other members of key management, individuals who have the authority and responsibility for planning, directing and controlling the activities of the Company, for the nine months ended June 30, 2020 and 2019 are as follows:
| Nine months | ended | June 30, | ||
|---|---|---|---|---|
| 2020 | 2019 | |||
| Consulting fees | ||||
| Enermetal Ventures Inc. (controlled by former CEO) | $ | 50,000 | $ | 60,000 |
| HarmonyCorporate Services Ltd(controlled byCFO) | 39,200 | 16,000 | ||
| $ | 89,200 | $ | 76,000 |
Prepaid expenses at June 30, 2020, includes $28,069 (September 30, 2019 - $43,069) in advances to a company controlled by the CEO for travel expenses and consulting fees.
Accounts payable and accrued liabilities at June 30, 2020 includes $11,274 (September 30, 2019 - $7,230) owing to a company controlled by the CFO for unpaid fees and expense reimbursements.
FINANCIAL INSTRUMENTS
The type and nature of financial instruments are disclosed in the financial statements of the Company. All of these financial instruments are currently reported at their carrying value as the Company believes that this approximates their fair value due to their short-term nature. As discussed in the financial statements, the Company is exposed to certain risks associated with these financial instruments. These include credit, liquidity and market risk. The Company does not anticipate any significant credit risk at June 30, 2020 as the Company had no accounts receivable related to customers. Liquidity risk and its management has been previously discussed above (see Liquidity). Market risk includes interest rate and foreign currency risk. Due to the short-term nature of its borrowing, the Company does not believe that it is exposed to significant interest rate risk and has therefore, not undertaken any action to mitigate this risk. The Company exposed to foreign currency risk to the extent of expenditures incurred or funds received, and
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balances maintained by the Company are denominated in currencies other than the Canadian dollar (primarily United States dollars (“USD”)). To mitigate this risk, the Company has not historically used or entered into any foreign currency contracts. However, should the need arise, the Company will consider the use of such contracts. The changes in foreign currency with respects to the financial instruments are recorded in the Company’s statement of comprehensive loss under foreign exchange gain. The Company does not have significant exposure to foreign currency rate fluctuations.
ACCOUNTING STANDARD AND AMENDMENTS ADOPTED
The following new standard and interpretation was adopted on October 1, 2019.
IFRS 16 Leases replaces IAS 17, Leases and its associated interpretative guidance. IFRS 16 applies a control model to the identification of leases, distinguishing between a lease and a services contract on the basis of whether the customer controls the assets begin leased. For those assets determined to meet the definition of a lease, IFRS 16 introduces significant changes to the accounting by lessees, introducing a single, on-balance sheet accounting model that is similar to current finance lease accounting, with limited exceptions for short-term leases or leases of low value assets. Lessor accounting remains similar to current accounting practice. The standard is effective for annual periods beginning on or after January 1, 2019, with early application permitted for entities that have also adopted IFRS 15.
The adoption of IFRS 16 has not had a significant impact on the Company’s financial statements.
DISCLOSURE OF OUTSTANDING SHARE DATA
As at June 30, 2020, the Company had 1,748,312 common shares.
As at the date of this MD&A, the Company had 1,748,312 common shares.
MANAGEMENT AND BOARD OF DIRECTORS
In March 2020, Joel Shacker and Adam Cegielski were appointed to the Board of Directors of the Company. Following the appointments, the board of directors consists of Patrick Morris, Geoff Balderson, Joel Shacker and Adam Cegielski. Joel Shacker has been appointed as Chief Executive Officer of the Company, and replaces Patrick Morris who will remain with the Company as an independent director. Geoff Balderson will continue to serve as Chief Financial Officer of the Company.
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL INFORMATION
The Company's financial statements and the other financial information included in this management report are the responsibility of the Company's management and have been examined and approved by the Board of Directors. The financial statements were prepared by management in accordance with generally accepted Canadian accounting principles and include certain amounts based on management’s best estimates using careful judgment. The selection of accounting principles and methods is management’s responsibility.
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Management recognizes its responsibility for conducting the Company’s affairs in a manner to comply with the requirements of applicable laws and established financial standards and principles, and for maintaining proper standards of conduct in its activities.
The Board of Directors supervises the financial statements and other financial information through its audit committee, which is comprised of a majority of non-management directors.
This committee’s role is to examine the financial statements and recommend that the Board of Directors approve them, to examine the internal control and information protection systems and all other matters relating to the Company’s accounting and finances. In order to do so, the audit committee meets annually with the external auditors, with or without the Company’s management, to review their respective audit plans and discuss the results of their examination. This committee is responsible for recommending the appointment of the external auditors or the renewal of their engagement.
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