Readers are urged to carefully review and consider the various disclosures made
by us in this report and in our other reports filed with the Securities and
Exchange Commission. Important factors currently known to management could cause
actual results to differ materially from those in forward-looking statements. We
undertake no obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events or changes
in the future operating results over time. We believe that our assumptions are
based upon reasonable data derived from and known about our business and
operations. No assurances are made that actual results of operations or the
results of our future activities will not differ materially from our
assumptions. Factors that could cause differences include, but are not limited
to, expected market demand for our products, fluctuations in pricing for our
products, and competition. Readers are cautioned not to place undue reliance on
these forward-looking statements, which are only predictions and speak only as
of the date hereof. When used in the Filings, the words "may", "will",
"anticipate", "believe", "estimate", "expect", "future", "intend", "plan", or
the negative of these terms and similar expressions as they relate to the
Company or the Company's management are intended to identify forward-looking
statements. Such statements reflect the current view of the Company with respect
to future events and we caution you that these statements are not guarantees of
future performance or events and are subject to risks, assumptions, and other
factors.
The following discussion provides information that management believes is
relevant to an assessment and understanding of our past financial condition and
plan of operations. The discussion below should be read in conjunction with the
consolidated financial statements and related notes thereto included elsewhere
in this annual report.
About Beyond Commerce
Beyond Commerce, Inc. was formed in the State of Nevada on January 12, 2006.
We plan to operate within two markets: (1) the Business-to-Business Internet
Marketing Technology and Services market and (2) the Information Management
market. Our goal is to develop proprietary software for digital transformation
of clients' existing content. We believe our planned platform, strategy, and
suite of software products and services will provide secure and scalable
information control solutions for global companies. We believe our planned
software will assist organizations in finding, utilizing, and sharing business
information between devices in ways that are intuitive, efficient and
productive. We believe that our business model will ensure that information will
remain secure and private, as necessitated by the current market climate.
In addition, we plan to provide solutions which facilitate the exchange of
information and data transactions between supply chain participants, such as
manufacturers, retailers, distributors and financial institutions. The goal is
to automate potential client internal processes thereby increasing productivity
and lowering costs. We plan to develop proprietary algorithms which it will
embed in the planned software to enable clients to access data and gain insight
into their business, through that data, leading to improved internal decision
making.
We plan to offer the proposed software through traditional on-premise solutions,
SaaS as a cloud based solution, or a combination of on-premise, SaaS or cloud
based solutions. We plan to work with our clients and their needs as to which
delivery method they prefer. We believe giving clients a choice and flexibility
will help us to obtain long-term client value.
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RESULTS OF OPERATIONS FOR THE THREE- AND SIX-MONTH PERIODS
Through our Service 800 Inc subsidiary many of our clients; GE Healthcare,
Audiology System, Inc 3M Healthcare, Johnson & Johnson Vision Care, Albany
Molecular Research Inc., Sakura Finetek, Abbott Diagnostics, Biosense Webster, a
Johnson & Johnson Company and Medtronic to name a few took the time during
pandemic to begin strategic planning with Service 800 to grow their business
with the company by renewals, expansion, and better ways to grow our programs
with each and every one of them for the future. This select market segment
continues to be a major source of revenue for the Company as we expand our
services within this business segment. Renewals have been strong during the last
three months and we anticipate revenue getting back in line with exceeding our
expectations as we progress further into the year. All renewals that have taken
place are on a minimum of a one to two-year term with an auto renewal taking
place when the contract expires. During the pandemic, it made our customers
realize the value that Service 800 brings to the clients in the form of
providing valuable information to not only help their growth within their own
companies, it also helps them be better providers to their customers as well. We
continue to look forward to growth into each division of these companies and
expansion to exceed expectations that have been set. We value these customers
and are looking for all of the positive growth we have set for the remainder of
the year and moving onwards to future years to come.
Three months ended June 30, 2020 and June 30, 2019.
Revenue
Revenue generated for the three months ended June 30, 2020 was $782,009 as we
began reporting revenue being created from both the Service 800 acquisition and
Customer Centered Strategies which were include for the entire quarter, however,
our customer based growth was paused momentarily in response to the Covid-19
situation. This compares to compared to $1,213,928 revenue from the comparable
three-month period in 2019.
Operating Expenses
For three months end June 30, 2020, operating expenses were $1,521,979 and for
the three months ended June 30,2019, operating expenses were $1,857,487. This
significant decrease is mainly attributable to cost reduced in reaction to the
Covid-19 issues, reduction in office rent and related expenses as many of our
employees preferred to work from home and the reduction of certain officers'
salaries. There was a $95,013 decrease in cost of goods sold compared to
$343,030 in the comparable period attributable to the decrease in revenue.
Payroll decreased to $588,057 from $665,647 during the three months ended June
30, 2020 and 2019, respectively, due to the Service 800 employee right sizing,
and general and administrative costs increased to $348,117 from $324,643 due to
the Service expenses related to our office relation in Minnesota.
Non-operating income (expense)
The Company reported non-operating expense of $1,403,254 during the three months
ended June 30, 2020, as compared to a loss of $4,535,643 during the three months
ended June 30, 2019, attributable to the changes in the derivative liability and
debt fees associated with our convertible notes.
Net Income (loss)
For three months end June 30, 2020, the Company incurred a net loss of
$2,136,009 as compared to a net loss of $5,168,008 for three months end June 30
2019, which was primarily due to derivative-related income from the changes in
liability and debt fees associated with our convertible notes.
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Six months ended June 30, 2020 and June 30, 2019.
Revenue
Revenue generated for the six months ended June 30, 2020 was $2,029,599 as we
began reporting revenue being created from both the Service 800 and Customer
Centered Strategies acquisition which was closed in 2019 for the full six
months, compared to $1,677,842 revenue from the comparable six month period in
2019.
Operating Expenses
For six months end June 30, 2020, operating expenses were $3,291,142 and for the
six months ended June 30, 2019, operating expenses were $2,550,187. This
significant increase is mainly attributable to the Service 800 and Customer
Centered Strategies acquisitions and the related costs associated with these
operations. There was a $215,353 increase in cost of goods sold compared to
$455,084 in the comparable period. Payroll increased $314,798 from $942,368 to
$1,257,166 during the six months ended June 30, 2020 and 2019, respectively, due
to the Service 800 and PathUX employee addition, and general and administrative
costs increased $108,332 once again due to the Service 800 and Customer Centered
Strategies additions. The decrease in professional fees as the Company reduced
these types of expenditures by $33,759 due to less utilization.
Non-operating income (expense)
The Company reported non-operating expense of $1,677,165 during the six months
ended June 30, 2020, a decrease of $6,383,694 compared to $8,060,859 during the
six months ended June 30, 2019, mainly attributable to the changes in the
derivative liability and debt fees associated with our convertible notes, along
with an increase in interest expense of $498,173 due to the increase in debt
level.
Net Income (loss)
For six months end June 30, 2020, the Company incurred a net loss of $2,560,593
as compared to a net loss of $8,922,010 for six months end June 30, 2019, which
was primarily due to a loss on derivative related income from the changes in
liability and debt fees associated with our convertible notes. As of June 30,
2020, the Company had an accumulated deficit of $50,787,793 and as of December
31, 2019, the Company had an accumulated deficit of $48,227,200.
Purchase of Significant Equipment
We do not anticipate the purchase or sale of any plant or significant equipment
during the next twelve (12) months.
Going Concern
There is substantial doubt about our ability to continue as a going concern.
As of June 30, 2020, we had an accumulated deficit of $50,787,793. Since we
discontinued operations in 2012 the continuity of our future operations is
dependent upon our ability to increase sales and brand awareness. These
conditions raise substantial doubt about our ability to continue as a going
concern. We intend to continue relying upon the issuance of debt and equity
securities to finance our operations. In this regard, we are restricted by the
number of shares available for issuance in an equity financing, and we will
likely need to increase our authorized capital in order to take advantage of
such financing. However, there can be no assurance that we will be successful
in obtaining shareholder approval to increase our authorized capital, that there
can be no assurance we will be successful in raising the funds necessary to
maintain operations, or that a self-supporting level of operations will ever be
achieved. The likely outcome of these future events is indeterminable. Our
financial statements do not include any adjustment to reflect the possible
future effect on the recoverability and classification of the assets or the
amounts and classification of liabilities that may result should we cease to
continue as a going concern.
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Liquidity and Capital Resources
Our ability to continue as a going concern is dependent on our ability to raise
additional capital and implement our business plan. Since inception, we have
been funded by related parties through capital investment and borrowing of
funds.
We had total current assets of $1,513,807 and $2,070,851 as of June 30, 2020 and
December 31, 2019, respectively. Current assets would consist primarily of
cash, accounts receivable and current assets held for sale of $0 and $113,470 as
of June 30, 2020 and December 31, 2019, respectively. The Company had a $50,787,
793 accumulated deficit on its balance sheet as of June 30, 2020.
We had total current liabilities of $5,920,998 and $8,074,845 as of June 30,
2020 and December 31, 2019, respectively. Current liabilities consisted
primarily of the derivative liability, accounts payable, accrued payroll and
payroll taxes, contingent acquisition liabilities, related party debt,
convertible debt and interest, and the accrued interest, and current liabilities
associated with the sale of PathUX of $0 and $2,109,850, respectively as of June
30, 2020 and December 31, 2019. The increase in our current liabilities is
attributable to accrued interest, salary accruals and short-term debt incurred
as part of the Service 800 and Customer Centered Strategies.
We had a working capital deficit of $4,407,191 and $6,003,994 as of June 30,
2020 and December 31, 2019, respectively. The decrease of $1,596,803 for the
period as of June 30, 2020 compared to December 31, 2019 was due to an increase
in short term borrowings and disposal of discontinued operations.
Cash Flow from Operating Activities
For the six months ended June 30, 2020 and 2019, cash used in operating
activities was $746,188 and cash provided by operations of $41,144 respectively.
This decrease is attributable to the Service 800 and Customer Centered
Strategies acquisitions.
Cash Flow from Investing Activities
For the six months ended June 30, 2020 and 2019, cash provided used in investing
activities was $16,230 and $2,014,035 respectively, which represents cash used
in the Service 800 and Customer Centered Strategies acquisition transactions.
Cash Flow from Financing Activities
For the six months ended June 30, 2020 and 2019, cash provided by financing
activities was $479,781 and $2,000,000, respectively, which represents cash from
the Discover Growth Fund LLC.
Contractual Obligations
As a "smaller reporting company," we are not required to provide tabular
disclosure of contractual obligations.
Inflation
Inflation and changing prices have not had a material effect on our business and
we do not expect that inflation or changing prices will materially affect our
business in the foreseeable future.
Off-Balance Sheet Arrangements
We do 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 or
capital expenditures or capital resources that is material to an investor in our
securities.
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Seasonality
In the past, our operating results and operating cash flows historically have
not been subject to seasonal variations. This pattern may change, however, in
the event that we succeed in bringing our planned products to market.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations
is based on our unaudited condensed consolidated financial statements, which
have been prepared in accordance with U.S. generally accepted accounting
principles. The preparation of these unaudited condensed consolidated financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent liabilities. On an on-going basis, we evaluate past judgments and our
estimates, including those related to allowance for doubtful, allowance for
inventory write-downs and write offs, deferred income taxes, provision for
contractual obligations and our ability to continue as a going concern. We base
our estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
Note 2 to the consolidated financial statements, presented in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2019, describe the
significant accounting estimates and policies used in preparation of our
consolidated financial statements. There were no significant changes in our
critical accounting estimates during the six months ended June 30, 2020.
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