The following Management's Discussion and Analysis should be read in conjunction
with Hammer Fiber Optics Holdings Corp., financial statements and the related
notes thereto. The Management's Discussion and Analysis contains forward-looking
statements that involve risks and uncertainties, such as statements of our
plans, objectives, expectations and intentions. Any statements that are not
statements of historical fact are forward-looking statements. When used, the
words "believe," "plan," "intend," "anticipate," "target," "estimate," "expect,"
and the like, and/or future-tense or conditional constructions ("will," "may,"
"could," "should," etc.), or similar expressions, identify certain of these
forward-looking statements. These forward-looking statements are subject to
risks and uncertainties that could cause actual results or events to differ
materially from those expressed or implied by the forward-looking statements in
this Report on Form 10-Q. The Company's actual results and the timing of events
could differ materially from those anticipated in these forward-looking
statements as a result of several factors. The Company does not undertake any
obligation to update forward-looking statements to reflect events or
circumstances occurring after the date of this Report on Form 10-Q.
The following discussion should be read in conjunction with our unaudited
condensed consolidated financial statements and related notes and other
financial data included elsewhere in this report. See also the notes to our
condensed consolidated financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations contained in our
Annual Report on Form 10-K/A for the year ended July 31, 2020, filed with the
SEC on November 13, 2020.
Results of Operations
Three Months Ended April 30, 2022 Compared to the Three Months Ended April 30,
2021
Revenues for the three months ended April 30, 2022 and April 30, 2021 were
$819,131 and $611,237, respectively, an increase of 34.01%. The increase was
primarily due to the expansion of the Company's Over-the-Top ("OTT") business
segment which includes its SMS messaging and hosting business units and
contributions from its fixed wireless operations in Huntsville, AL.
During the three months ended April 30, 2022, the Company incurred total
operating expenses of $1,049,914 compared with $609,606, an increase of 72.23%,
for the comparable period ended April 30, 2021. The increase was primarily due
to the addition of the financial technologies business unit and expenses of
ongoing operations of the HammerPay subsidiary.
Operating loss increased to $230,783 during the three months ended April 30,
2022 as compared with income of $1,631, an increase of 1,4249.79%. The loss was
primarily due to expenses associated with the ongoing operations of the
HammerPay subsidiary.
During the three months ended April 30, 2022 and April 30, 2021 interest and
other expense was $589,937 and $9,908 respectively. The increase was due to
interest and borrowing costs on new facilities.
During the three months ended April 30, 2022 the Company recorded a loss of
$810,720 as compared to a loss of $28,277 for the three months ended April 30,
2021, an increase of 2,767.07%. The increase in loss was primarily due to the
addition of the financial technologies business unit and expenses of ongoing
operations of the HammerPay subsidiary.
.
Nine Months Ended April 30, 2022 Compared to the nine Months Ended April 30,
2021
Revenues for the nine months ended April 30, 2022 and April 30, 2021 were
$2,039,367 and $1,604,927, respectively, an increase of 27.06%. The increase was
primarily due to the expansion of the Company's Over-the-Top ("OTT") business
segment which includes its SMS messaging and hosting business units and
contributions from its fixed wireless operations in Huntsville, AL.
During the nine months ended April 30, 2022, the Company incurred total
operating expenses of $2,424,235 compared with $1,655,232, an increase of
46.46%, for the comparable period ended April 30, 2021. The increase in loss was
primarily due to the addition of the financial technologies business unit and
expenses of ongoing operations of the HammerPay subsidiary and the expansion of
the Company's Over-the-Top ("OTT) business segment which includes its SMS
messaging and hosting business unit.
Operating loss increased to $384,868 during the nine months ended April 30, 2022
as compared with a loss of $50,305, and increase of 665.07%. The increase in
loss was primarily due to the addition of the financial technologies business
unit and expenses of ongoing operations of the HammerPay subsidiary and the
expansion of the Company's Over-the-Top ("OTT) business segment which includes
its SMS messaging and hosting business unit.
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During the nine months ended April 30, 2022 and April 30, 2021 interest and
other expense was $622,134 and $20,942 respectively. The increase was due to
interest and borrowing costs on new facilities.
During the nine months ended April 30, 2022 the Company recorded a net loss of
$1,007,002 as compared to net income of $4,110,749 for the nine months ended
April 30, 2021. The decrease was due to expenses associated with the ongoing
operations of the HammerPay subsidiary and the one-time income adjustments due
to settlement of liabilities associated with discontinued operations.
Liquidity and Capital Resources
The Company is at risk of remaining a going concern. Its ability to remain a
going concern is dependent upon whether the company can raise debt and/or equity
capital from third-party sources for both working capital and business
development needs until such time as the Company may be substantially sustained
as a going concern through cash flow from operations or the Company increases
its cash flow from operations through sale of services in the ongoing business
units, Endstream Communications, 1stPoint Communications, its new markets and
the continuing operations of the HammerPay business.
Cash Flow from Operating Activities
During the nine months ended April 30, 2022 the Company's total cash increased
by $649,369, compared to an increase in cash of $1,447 in the nine months ended
April 30, 2021. Cash flow used in Operating Activities was $156,925, compared to
$340,932 in the nine months ended April 30, 2021. This was primarily due to
improved operational efficiencies and the ongoing operations of the HammerPay
business.
Cash Flow from Investing Activities
During the nine months ended April 30, 2022, the Company's investing activities
used $170,923, compared to $25,535 used in investing activities during the six
months ended April 30, 2021. The decrease was primarily due to the investments
in licenses for Hammer Pay.
Cash Flow from Financing Activities
During the nine months ended April 30, 2022, the Company netted $977,217 in cash
from financing activities compared with $367,944 used during the nine months
ended April 30, 2021. The increase was mainly due to the proceeds from notes
payable.
Going Concern
As of April 30, 2022, doubt existed as to the Company's ability to continue as a
going concern as the Company has no certainty of earning additional revenues in
the future, has a working capital deficit and an overall accumulated deficit
since inception. The Company will require additional financing to continue
operations either from management, existing shareholders, or new shareholders
through equity financing and/or sources of debt financing. These factors raise
substantial doubt regarding the Company's ability to continue as a going
concern. The financial statements do not include any adjustments to the
recoverability and classification of recorded asset amounts and classification
of liabilities that might be necessary should the Company be unable to continue
as a going concern.
Future Financings
We will continue to rely on equity sales of our common shares in order to
continue to fund business operations. Issuances of additional shares may result
in dilution to existing stockholders. There is no assurance that we will achieve
any additional sales of equity securities or arrange for debt or other financing
in amounts sufficient to fund our operations and other development activities.
Off-Balance Sheet Arrangements
We have no significant 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 are material to
stockholders.
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Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance
with accounting principles generally accepted in the United States, applied on a
consistent basis. The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods.
Recently Issued Accounting Pronouncements
The Company has implemented new accounting pronouncements that are relevant to
the company and are in effect. These pronouncements did not have any material
impact on the financial statements unless otherwise disclosed, and the Company
does not believe that there are any other new accounting pronouncements that
have been issued that might have a material impact on its financial position or
results of operations.
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