The following discussion should be read in conjunction with the financial
information included elsewhere in this Quarterly Report on Form 10-Q (this
"Quarterly Report"), including our unaudited condensed consolidated financial
statements as of
We caution you that these statements are not guarantees of future performance or
events and are subject to a number of uncertainties, risks and other influences,
many of which are beyond our control, which may influence the accuracy of the
statements and the projections upon which the statements are based. Factors that
may affect our results include, but are not limited to, the risk factors in Item
2.01 in our Annual Report on Form 10-K for the year ended
Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.
Business Overview
On
On
14 Fund Closure
On
Our Products
Our mission is to build a sustainable and well recognized brand focused on unlocking the growing purchasing power of the LGTBQ community globally by offering a robust LGBTQ Index and core ETF portfolio that attracts key institutional investors and corporations.
At the nucleus of our LGBTQ Loyalty Preference Index is our partner-driven Crowd Preference Index Methodology (CPIM) which we believe disrupts ESG investing. This is achieved through an elevated screening process of financial performance data and ESG standards and practices, whereby LGBTQ community data on diversity and inclusion compliance directly impacts corporate financial results and transparently identifies and recognizes high performance companies who have consistently outperformed the S&P 500 index or equivalent sector standards and norms.
We intend to extend the LGBTQ Loyalty Index brand with future plans to develop indices with a focus on the 'Social' component of ESG utilizing our proprietary financial slogan of "Advancing Equality" within other gender, minority interest groups.
Revenue
The Company focus over the past few years was to create and launch our first of
many financial Index products through an equality driven thematic ESG screened
and alpha performance benchmark. The Company achieved this through its LGBTQ100
ESG Index listing and performance on the NYSE starting on
We intend to introduce a new key partnered revenue source derived from Direct
Index Licensing Fees generated by financial institutions and asset management
companies for creating a product (e.g., Index Funds, Structured Financial
Products, Turnkey Asset Management Providers) based on or linked to the LGBTQ100
index. This includes fees to use the LGBTQ100 index to track the performance of
funds or as benchmarks for actively managed portfolios. We plan to capture Data
Subscriptions which could provide recurring subscription revenue from our LGBTQ
Index. This includes ongoing and historical data and information generated by
our wholly owned division
New initiatives in 2022 include a plan to create ancillary revenue streams to complement and support this unique platform for the top 100 Equality driven Corporations in America represented in the LGBTQ100 Index. We believe our index will reward and elevate the status of those corporations that have adopted diversity and inclusion best practices, cared for their employees and positively impacted LGBTQ communities. Expert LGBTQ economists have repeatedly stressed the value of the LGBTQ brand loyalty to corporations. We consider the companies that best capture the spending trends and loyalty of the LGBTQ consumer will be better positioned for financial growth and success. Given the opportunity to link to the power and status generated between the LGBTQ community, these companies and their own workforce, we will launch a Partner Loyalty Program which includes benefits afforded to defined sponsorship tiers.
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Our initial investments in creating a high performing product with a well-recognized brand have been established. As we begin to move into planning for the post-COVID-19 world, we will now shift our efforts to cultivate new revenue stream opportunities while building AUM as we construct a profitable business platform.
We have achieved no revenues to date from our LGBTQ related operations and have been focused on building our product and achieving performance results and media branding over the course of the past twelve months. There are no assurances that can be given that we will achieve revenues or profitability in the future.
Business Strategy
Our business strategy is targeted to the estimated
We believe that the LGBTQ demographic is one of the most highly sought-after economic groups in the world from corporate America down to the local business owner because of their higher median income and brand loyalty. What makes targeting and supporting this dynamic demographic even more extraordinary and rewarding is that friends, family, employers, employees, teachers, coaches and fans of our community so loyally support the brands, products and services that in turn support us. We further believe that this loyalty across the board is time tested, proven, growing and expanding and ultimately extremely rewarding to all that are embraced by the LGBTQ community. Connecting the world's most supportive LGBTQ companies to the dynamic, loyal and ever-increasing spending power of the LGBTQ community is a consequential step forward for the LGBTQ movement and investment community.
Many Fortune 500 companies are directing more of their consumer advertising and promotional spend towards celebrating diversity and equality. Our long-term goal is to reinforce the financial performance of those Corporations as they foster and integrate LGBTQ equality practices through their Diversity and Inclusion policies as a cornerstone of their corporate culture. Our LGBTQ100 Index of the top 100 corporate constituents have already embraced and enacted this standard of Equality excellence. See our top LGBTQ100 Index constituents on our website.
Critical Accounting Policies and Estimates
Going Concern
The accompanying unaudited condensed consolidated financial statements have been
prepared in conformity with GAAP, which contemplates our continuation as a going
concern. We have incurred losses to date of
16 Use of Estimates
The preparation of financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.
Derivative Financial Instruments:
The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company's balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. The Company has a sequencing policy regarding share settlement wherein instruments with a fixed conversion price or floor would be settled first, and interest payable in shares settle next. Thereafter, share settlement order is based on instrument issuance date - earlier dated instruments settling before later dated. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares. The policy includes all shares issuable pursuant to debenture and preferred stock instruments as well as shares issuable under service and employment contracts and interest on short term loans.
Results of Operations
Three months ended
There were no revenues during the three months ended
The following is a breakdown of our operating expenses for the three months
ended
Three Months Ended March 31, 2022 2021 Change $ Change % Personnel costs$ 113,994 $ 1,295,998 $ (1,182,004 ) -91 % Consulting fees 15,250 33,000 (17,750 ) -54 % Legal and professional fees 156,793 105,123 51,670 49 % Fund expenses 100,000 - 100,000 100 % Sales and marketing 27,702 - 27,702 100 % General and administrative 36,317 28,123 8,194 29 % Depreciation and amortization 6,448 6,448 - 0 %$ 456,504 $ 1,468,692 $ (1,012,188 ) -69 %
Personnel costs include officer salaries and directors' compensation. The
decrease in personnel costs is primarily due to
Consulting fees decreased by
Legal and professional fees increased by
Sales and marketing costs increased by
General and administrative expenses increased by
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Depreciation and amortization expense was
The following is a breakdown of our other income (expenses) for the three months
ended
Three Months Ended March 31, 2021 2020 Change $ Change % Interest expense$ (106,127 ) $ (561,687 ) $ 455,560 -81 %
Change in derivative liability (359,188 ) 412,974 (772,162 ) -187 %
$ (465,315 ) $ (148,713 ) $ (316,602 ) 213 %
Interest expense is primarily attributable to origination interest and amortization of debt discount.
Change in derivative liability includes the mark-to-market adjustment of the derivative liability in connection with our convertible debenture.
Net loss was
Liquidity and Capital Resources
Historically, we have been financed through advances from related parties,
issuances of convertible debt, and the sale of our common and preferred stock.
Our existing sources of liquidity will not be sufficient for us to implement our
business plans. There are no assurances that we will be able to raise additional
capital as and when needed. As of
As of
During the three months ended
In 2022, we received
In 2021, we received
We will continue to seek out additional capital in the form of debt or equity under the most favorable terms we can find.
The Company is currently, and has for some time, been in financial distress. It has no cash resources or current assets, and has no ongoing source of revenue. Management is continuing to address numerous aspects of the Company's operations and obligations, including, without limitation, debt obligations, financing requirements, and regulatory compliance, and has taken steps to continue to raise new debt and equity capital to fund the Company's business activities.
The Company is continuing its efforts to raise additional capital in order to be able to pay its liabilities and fund its business activities on a going forward basis and regularly evaluates various measures to satisfy the Company's liquidity needs. Though the Company actively pursues opportunities to finance its operations through external sources of debt and equity financing, there can be no assurance that such financing will be available on terms acceptable to the Company, or at all.
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Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
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