MAPTELLIGENT, INC. You should read the following discussion and analysis of our financial condition and results of our operations together with our financial statements and the notes thereto appearing elsewhere in this Annual Report. This discussion contains forward-looking statements reflecting our current expectations, whose actual outcomes involve risks and uncertainties. Actual results and the timing of events may differ materially from those stated in or implied by these forward-looking statements due to a number of factors, including those discussed in the section entitled "Cautionary Statement regarding Forward-Looking Statements" and elsewhere in this Annual Report. Please see the notes to our Financial Statements for information about our Critical Accounting Policies and Recently Issued Accounting Pronouncements.
Management's Discussion and Analysis
The Company has had no revenues from operations in each of the last two fiscal years, and in the current fiscal year.
Business Overview
Digital twin technology is a critical component of Industry 4.0, the ongoing
automation of traditional manufacturing and industrial practices, using modern
smart technology. In simple terms, digital twin is the virtual replica of
real-world objects, including physical objects, processes, relationships, and
behaviours. These models of real-world objects, through the use of
Results of Operations
The following are the results of our continuing operations for the year ended
Years Ended
December 31,
2022 2021 Change %
Revenue $ - $ - $ - -
Operating expense 651,170 1,196,811 (545,641 ) (46 %)
Other income (expense) 2,833,270 91,959,692 (89,126,422 ) (97 %)
Net income (loss) $ 2,182,100 $ 90,762,881 $ (88,580,781 ) (98 %)
Revenue
During the years ended December 31, 2022 and 2021, the Company did not generate
any revenue.
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Operating Expenses
Years Ended
December 31,
2022 2021 Change %
General and administrative $ 144,786 $ 386,504 $ (241,718 ) (63 %)
Professional fee 177,530 130,434 47,096 36 %
Compensation and payroll taxes 328,854 679,873 (351,019 ) (52 %)
Total operating expenses
Compensation and payroll taxes decreased by
Other Income (Expense)
Years Ended
December 31,
2022 2021 Change %
Interest expense $ (442,394 ) $ (546,062 ) $ 103,668 (19 %)
Gain on settlement of debt 87,062 907 86,155 9499 %
Change in fair value of (97 %)
derivative liability 3,188,602 92,504,847 (89,316,245 )
Total other income (expense) $ 2,833,270 $ 91,959,692 $ (89,126,422 ) (97 %)
The decrease in other income was primarily due to the change in fair value of derivative liability, from an accounting estimate primarily from the conversion feature of one convertible promissory note.
Liquidity and Capital Resources
December 31, December 31,
2022 2021 Change %
Cash $ 210,508 $ 966,682 $ (756,174 ) (78 %)
Current assets $ 404,696 $ 1,159,724 $ (755,028 ) (65 %)
Current liabilities
Liquidity is the ability of a company to generate funds to support asset growth, satisfy disbursement needs, maintain reserve requirements, and otherwise operate on an ongoing basis. The Company has insufficient operating revenues so is currently dependent on debt financing and sale of equity to fund operations.
As shown in the accompanying financial statements, the Company has net income of
As of
Management believes that it will need additional equity or debt financing to be able to implement its business plan. Given the lack of revenue, capital deficiency and negative working capital, there is substantial doubt about the Company's ability to continue as a going concern.
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We believe that the successful growth and operation of our business is dependent upon our ability to do the following:
· obtain adequate sources of debt or equity financing to pay unfunded
operating expenses and fund long-term business operations; and
· manage or control working capital requirements by controlling operating
expenses.
Management is attempting to raise additional capital via equity and debt
offerings to sustain operations until it can market its services and achieve
profitability. The successful outcome of future activities cannot be determined
at this time and there are no assurances that, if achieved, the Company will
have sufficient funds to execute its intended business plan or generate positive
operating results.
Cash Flows
Years Ended
December 31,
2022 2021 Change %
Cash used in operating (27
activities $ (659,746 ) $ (900,934 ) $ 241,188 %)
Cash used in investing
activities $ (54,428 ) $ (7,500 ) $ (46,928 ) 626 %
Cash (used in) provided by (102
financing activities $ (42,000 ) $ 1,813,544 $ (1,855,544 ) %)
Cash and cash equivalents on (78
hand $ 210,508 $ 966,682 $ (756,174 ) %)
Operating activities
Net cash used in operating activities for the years ended
Investing activities
During the year ended
During the year ended
Financing activities
During the year ended
Net cash provided by financing activities for the year ended
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations
are based on our financial statements, which have been prepared in accordance
with accounting principles generally accepted in
Critical accounting policies are those policies that, in management's view, are
most important in the portrayal of our financial condition and results of
operations. The methods, estimates and judgments that we use in applying our
accounting policies have a significant impact on the results that we report in
our financial statements. These critical accounting policies require us to make
difficult and subjective judgments, often as a result of the need to make
estimates regarding matters that are inherently uncertain. Critical accounting
estimates are those estimates made in accordance with
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While our estimates and assumptions are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions. For a discussion of the Company's significant accounting policies, refer to Note 2 of Notes to the Financial Statements.
Derivative Liability
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company used a Black Scholes valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The valuation of derivative liabilities involves assumptions and estimates that are subject to uncertainty, such as the calculation of the Black Scholes volatility input. Volatility is primarily a function of the Company's fluctuating common stock price, which is readily available. The Company cannot predict the extent to which the historical volatility of the Company's common stock is indicative of future performance or valuation.
Stock-based Compensation
The Company issues stock, options and warrants as share-based compensation to employees and non-employees.
The Company accounts for its share-based compensation to employees and non-employees in accordance ASC 718. Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. Options and warrants issued as compensation are often subject to Black Scholes pricing, which embodies the estimates and uncertainties mentioned under 'Derivative Liability' above.
Income Taxes
Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carryforwards for federal income tax purposes. A full valuation allowance for deferred tax assets has been provided because the Company believes it is not more likely than not that the deferred tax asset will be realized. Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods, the estimation of which is subject to uncertainties regarding the Company's ability to successfully implement its business plan and generate sufficient revenues.
Off-Balance Sheet Arrangements
We have no 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 is material to stockholders.
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