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 throughout, 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 as a Nevada corporation 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.
RESULTS OF OPERATIONS FOR THE THREE AND SIX - MONTH PERIOD
Through our Service 800 Inc subsidiary, many of our clients, such as 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 the pandemic to begin strategic planning with Service 800 to grow their
business with the Company through renewals, expansion, and developing 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 six months and we anticipate
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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. The pandemic helped our customers recognize the value that Service 800
brings to its clients in the form of providing valuable information to not
only help their growth within their own companies, but also help 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 seek to achieve positive growth we have
set for the remainder of the year and moving onwards for future years to come.
Three months ended June 30, 2021 and June 30, 2020.
Revenue
Revenue generated for the three months ended June 30, 2021 was $1,120,599
compared to $782,009 from the comparable three-month period in 2020.
Operating Expenses
For three months ended June 30, 2021, operating expenses were $1,977,496 and for
the three months ended June 30, 2020, operating expenses were $1,512,979. This
increase is in part attributable to an increase in payroll expense of $192,662
due to Service 800 increasing the organization structure and changing the mix of
employees, and professional fees increased by $365,301. General and
administrative costs decreased by $168,283 during the three months ended June
30, 2021 compared to the same period ending June 30, 2020.
Non-Operating Income (Expense)
The Company reported non-operating expense of $194,420 for the three months
ended June 30, 2021, as compared to $1,403,254 for the three months ended June
30, 2020, attributable principally to the reduction in derivative liability
related expenses. There was an increase in non-operating income of $505,111 due
to the forgiveness of the first Paycheck Protection Program loan.
Net Income (loss)
For three months ended June 30, 2021, the Company incurred a net loss of
$1,051,317 as compared to a net loss of $2,143,224 for three months end June 30,
2020, which was primarily due to the reduction in derivative related expenses.
Six months ended June 30, 2021 and June 30, 2020.
Revenue
Revenue generated for the six months ended June 30, 2021 was $2,234,118 compared
to $2,029,599 for the comparable six-month period in 2020.
Operating Expenses
For six months ended June 30, 2021, operating expenses were $3,595,255 and for
the six months ended June 30, 2020, operating expenses were $3,291,142. This
increase is in part attributable to an increase in payroll expenses of $245,964
from $1,257,166 to $1,503,130 for the six months ended June 30, 2020 and 2021,
respectively, due to the Service 800 increasing the organizational structure and
changing the mix of employees. There was a $50,627 increase in cost of revenue
of $721,064 for the six months ended June 30, 2021 compared to $652,152 in the
comparable period attributable to the increase in revenue, and an increase in
professional fees of $312,439 during the six months ended June 30, 2021 compared
to the same period ending June 30, 2020. General and administrative expenses
were lower in the current period compared to the prior year in the amount of
$268,089.
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Non-Operating Income (Expense)
The Company reported non-operating expense of $5,985,225 for the six months
ended June 30, 2021, as compared to $1,667,165 for the six months ended June 30,
2020, attributable to the recognition of derivative related expenses of
$2,944,750 and a loss on the extinguishment of debt in the amount of $3,956,699
recognized during the six months ended June 30, 2021. For the six months ended
June 30, 2020 changes in the derivative liability expense was $1,027,308 with
derivative related expenses of $1,252,075.
Net Income (loss)
For six months ended June 30, 2021, the Company incurred a net loss of
$7,346,362 as compared to a net loss of $2,588,008 for six months end June 30,
2020, which was primarily due to the reduction in changes to the derivative
liability and derivative related expenses during the current period ended June
30, 2021 compared to the prior year comparative period.
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, 2021, we had an accumulated deficit of $65,983,079 and a working
capital deficit of $5,149,463. 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 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.
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 $1,635,684 and $1,276,871 as of June 30, 2021 and
December 31, 2020, respectively. Current assets would consist primarily of cash
and accounts receivable. The Company had a $65,983,079 accumulated deficit on
its balance sheet as of June 30, 2021.
We had total current liabilities of $6,785,147 and $7,025,541 as of June 30,
2021 and December 31, 2020, respectively. Current liabilities consisted
primarily of the derivative liability, accounts payable, accrued payroll and
payroll taxes, related party debt, conventional and convertible debt, and
accrued interest. There was an increase of $564,851 attributable to accrued
interest, salary accruals, accounts payable, and short-term debt incurred as
part of the Service 800 and Customer Centered Strategies and a decrease of
$805,245 attributed to our derivative liability.
We had a working capital deficit of $5,149,463 and $5,748,670 as of June 30,
2021 and December 31, 2020, respectively.
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Cash Flow from Operating Activities
For the six months ended June 30, 2021 and 2020, cash used in operating
activities was $1,315,873 and $746,188, respectively. This increase of cash used
is attributable to the reduction in accounts payable and other current
liabilities.
Cash Flow from Investing Activities
For the six months ended June 30, 2021 and 2020, cash used in investing
activities was $0 and $16,230, respectively.
Cash Flow from Financing Activities
For the three months ended June 30, 2021 and 2020, cash provided by financing
activities was $1,702,342 and $479,781, respectively.
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.
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. GAAP. 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 accounts, 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, 2020, describes the critical
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, 2021.
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