This Annual Report Form 10-K contains forward-looking statements. Our actual
results could differ materially from those set forth as a result of general
economic conditions and changes in the assumptions used in making such
forward-looking statements. The following discussion and analysis of our
financial condition and results of operations should be read together with the
audited financial statements and accompanying notes and the other financial
information appearing elsewhere in this report. The analysis set forth below is
provided pursuant to applicable Securities and Exchange Commission regulations
and is not intended to serve as a basis for projections of future events.
The Company has completed the Condor FX Pro Trading Platform. The Company
currently has four (4) licensing agreements for its Condor FX Trading Platform.
The Company is continuously negotiating additional licensing agreements with
several retail FX brokers to use Condor FX Pro Trading Platform. At the time of
this report’s release, the Company has developed two versions of each of the
Condor FX Pro Web and Mobile Trading Platform.
The Company has upgraded its Condor Back Office (Risk Management) to meet the
regulatory requirements under various jurisdictions. Condor Back Office meets
the directives under Markets in Financial Instruments Directive (MiFID
II/MiFIR), legislation by European Securities and Market Authority (ESMA)
implemented across the European Union on January 3rd, 2018. In the second
quarter of the fiscal year ending December 31, 2019, the Company released,
marketed, and distributed its Condor FX Pro Trading Terminal, allowing traders
to trade on Condor FX Pro Trading front-end and other industry trading platforms
via a single wallet. The Company has developed the Condor Back Office API to
integrate any third-party CRM and banking systems to Condor Back Office.
The Company completed the basic version of its Crypto Web Trader in December
2018. The Company is currently evaluating the demand for its Crypto Web Trader
and expects to launch its crypto exchange platform by the first quarter of the
fiscal year ended December 31, 2021.
The Company has prepared consolidated financial statements on a going concern
basis, which contemplates the realization of assets and the settlement of
liabilities and commitments in the ordinary business course. The Company has
earned $1,783,772 in revenues from January 21, 2016 (inception) to December 31,
2020. For the fiscal year ending December 31, 2020, and 2019, the Company earned
revenues of $215,409 and $415,162, respectively.
As of December 31, 2020, the Company has issued four convertible notes
collectively known as FRH Group Note (“Note for net cash proceeds of $1,000,000.
The Company has extended the maturity date of the FRH Group Note to June 30,
The Company secures and earns revenues by signing an agreement with its
customers. The Company considers a signed agreement with its customers, a
binding contract with the customer, or other similar documentation reflecting
the terms and conditions under which the Company will provide products or
services as persuasive evidence of an arrangement. Each agreement is specific to
the customer and clearly defines each party’s fee schedule, duties and
responsibilities, renewal and termination terms, confidentiality agreement,
dispute resolution, and other clauses necessary for such agreement. The material
terms of agreements with customers depend on the nature of services and
solutions. Each agreement is specific to the customer and clearly defines each
party’s fee schedule, duties and responsibilities, renewal and termination
terms, confidentiality agreement, dispute resolution, and other clauses
necessary for such agreement.
Financial Condition at December 31, 2020
At December 31, 2020, the current portion of convertible notes payable and
accrued interest was $1,000,000 and $256,908, respectively. There was no
non-current portion of convertible notes payable and accrued interest. On
December 31, 2020, the accumulated deficit was $1,493,984. The Company received
$50,632 from Cares Act’s Paycheck Protection Program. No principal or interest
payments will be due ten (10) months after the covered period. The Company
received proceeds for one hundred and forty-four thousand nine hundred and
00/100 Dollars ($144,900.00) from U.S. Small Business Administration (SBA). The
installment payments will include the principal and interest of $707 monthly and
begin Twelve (12) months from the promissory note date. The balance of principal
and interest will be payable Thirty (30) years from the promissory Note date.
Interest will accrue at the rate of 3.75% per annum and will accrue only on
$144,900 funds advanced from May 22, 2020, the advance date.
Our cash balance is $22,467 as of December 31, 2020. We do not believe that our
cash balance is sufficient to fund our operations.
The Company intends to continue its efforts to enhance its revenue from its
diversified portfolio of technological solutions, become cash flow positive, and
raise funds through private placement offering and debt financing. In the
future, as the Company increases its customer base across the globe, the Company
intends to acquire long-lived assets that will provide a future economic benefit
beyond fiscal 2020.
Financial Condition at December 31, 2019
At December 31, 2019, the current portion of convertible notes payable and
accrued interest was $1,000,000 and $196,908, respectively. There was no
non-current portion of convertible notes payable and accrued interest.
On December 31, 2019, the accumulated deficit was $1,035,494.
Our cash balance was $27,884 as of December 31, 2019. We do not believe that our
cash balance is sufficient to fund our operations.
RESULTS OF OPERATIONS
For the Fiscal Year Ended December 31, 2020, compared to the Fiscal Year Ended
December 31, 2019
For the fiscal year ended December 31, 2020, and 2019, the Company had eight (8)
and ten (10) active customers, respectively. Revenues generated from the top
three (3) customers represented approximately 83.30% and 93.73% of total revenue
for the fiscal year ended December 31, 2020, and 2019, respectively. The
revenues generated for the fiscal year ended December 31, 2020, and 2019 were
$215,409 and $415,162, respectively. During the fiscal year ended December 31,
2020, and 2019, the Company incurred a net loss of $458,490 and $255,690,
The total revenue breakdown for the fiscal year ended December 31, 2020, and
2019 is below:
Fiscal Ended December 31, 2020 December 31, 2019
% of Total % of Total
Technology Solutions 97.65 % 74.75 %
Software Development 0.95 % 25.25 %
Consulting 1.40 % 0.00 %
Total 100.00 % 100.00 %
During the fiscal years ended December 31, 2020, and 2019, the Company incurred
general and administrative costs (“G and A”) of $337,634 and $470,087,
respectively. The reduced G and A costs for the fiscal year ended December 31,
2020, mainly due to lower professional & consulting fees and unpaid payroll
taxes. The G and A expenses were 156.74% and 113.23% of the fiscal revenue for
the period ended December 31, 2020, and 2019 respectively. Amortization expense
was $251,959 and $117,554 for the fiscal year ended December 31, 2020, and 2019
respectively, and the Company has included in the Cost of sales expense. The
increase in amortization expense for the fiscal year ended December 2020 is due
to the cumulative amortization expense of Condor Back Office, Condor Crypto
Trading Platform, Condor FX Trading Platform (Desktop), and Condor Web Trader.
The rental expense was $30,893 and $36,157 for the fiscal year ended December
31, 2020, and 2019, respectively. The decrease in rent expense is due to reduce
rent rate for WeWork Office for the fiscal year ended December 31, 2020.
Effective October 29, 2019, the Company rents its servers, computers, and data
center from an unrelated third party. The lessor provides furniture and fixtures
and any leasehold improvements at 200 Spectrum Drive, Suite 300, Irvine, CA
92618 under the rent Agreement, as discussed in Note 2. Effective February 2019,
the Company leases office space at Suite 205, Building 9, Potamos Germasogeia,
4047, Limassol District, Cyprus, from an unrelated party for a year. The
office’s rent payment is $1,750 per month, and we have included it in the
General and administrative expenses. From February 2020, this agreement is
extended for one year period at $1,750 per month. The Company uses the office
for sales and marketing in Europe and Asia. Effective April 2019, the Company
leases office space at Suite 512, 83 Plan, Chelyabinsk, Russia, from an
unrelated party for an eleven months term. The office’s rent payment is $500 per
month, and we have included it in the General and administrative expenses. From
March 2020, this agreement continues on a month-to-month basis until the Company
or the lessor chooses to terminate by the agreement’s terms by giving thirty
days’ notice. The Company uses the office for software development and technical
The Company incurred $24,526 and $23,223 in sales, marketing, and advertising
costs (“sales and marketing”) for the year ended December 31, 2020, and 2019,
respectively. The sales and marketing cost mainly included travel costs for
tradeshows, customer meet and greet, online marketing on industry websites,
press releases, and public relations activities. The sales, marketing, and
advertising expenses represented 11.39% and 5.59% of the sales for the years
ended December 31, 2020, and 2019, respectively.
In April 2016, the Company established its wholly-owned subsidiary – FRH Prime
Ltd. (“FRH Prime”), a company incorporated under section 14 of Bermuda’s
Companies Act 1981. In January 2017, FRH Prime established its wholly-owned
subsidiary – FXClients Limited (“FXClients”), under the United Kingdom Companies
Act 2006 as a private company. The Company established FRH Prime and FXClients
to conduct financial technology service activities. For the fiscal year ended
December 31, 2020, and 2019, FRH Prime has generated volume rebates of $1,861
and $1,281, respectively, from Condor Risk Management Back Office Platform.
There have been no significant operating activities in FXClients.
LIQUIDITY AND CAPITAL RESOURCES
On December 31, 2020, and December 31, 2019, we had a cash balance of $22,467
and $27,884, respectively.
In the next twelve (12) months, the Company will continue to invest in sales,
marketing, product support, new technology solutions, and enhancement of
existing technology to serve our customers. We expect capital expenditures to
increase to up to $100,000 in the next twelve (12) months to support the growth,
which mainly includes software development and purchase of computers and
servers. Also, the Company estimates additional expenditure needed to be
$200,000, which provides for $50,000 and $150,000 for sales and marketing and
working capital, respectively.
We expect that the combination of existing cash, cash equivalents, cash flows
from operations, and access to private equity and capital markets to be
sufficient for at least the next twelve (12) months. The availability of funds
will fund our operating activities, meet the need for investing and financing
activities, such as debt maturities and material capital expenditures. However,
we may need additional funds to achieve a sustainable sales level to fund our
ongoing operations out of revenues. There is no assurance that any additional
financing will be available or, if available, on terms that will be acceptable
Should we require additional capital, the Company’s operations are not
sufficient to fund its capital requirements. The Company may attempt to enter
the restructuring of Notes, or refinance existing Notes with financial
institutions or attempt to raise capital by selling additional capital stock or
debt issuance. The Company intends to continue its efforts in growing its
operations and raising funds through private equity and debt financing.
Between February 22, 2016, and April 24, 2017, the Company borrowed $1,000,000
from FRH Group, a founder and principal shareholder of the Company. Effective
June 1, 2017, we raised an aggregate of $98,000 through our common stock’s
private placement to our officers, directors, friends, relatives, and business
From January 29, 2019, to February 15, 2019, the Company issued 33,000
registered shares under the Securities Act of 1933 for a cash amount of $4,950.
The Company closed its offering effective February 26, 2019.
On May 01, 2020, the Company received proceeds of Fifty-Thousand Six Hundred and
Thirty-Two ($50,632) from the Promissory Note (“PPP Note”) under the Paycheck
Protection Program under the Coronavirus Aid, Relief, and Economic Security Act
(the “CARES Act”).
On May 22, 2020, the Company received proceeds of one hundred and forty-four
thousand nine hundred and 00/100 Dollars ($144,900.00).
On July 15, 2020, the Company engaged Kingswood Capital Markets, a Benchmark
Investments division, Inc., to act as its exclusive general financial advisor
for strategic corporate planning and investment banking services. On August 25,
2020, the Company and Broker-Dealer terminated all obligations other than
maintaining confidentiality, with no fees due by the Company to the
Broker-Dealer. The Broker-Dealer agreed to return the 2,745,053 shares of the
Company’s common stock.
On September 02, 2020, the Company engaged Garden State Securities Inc. (GSS) to
act as its exclusive advisor for the private placement of debt or equity
securities to fulfill the Company’s business plan and an offering of debt
securities to assist in the Company’s acquisition strategy.
GOING CONCERN CONSIDERATION
We have not generated significant revenues since inception to December 31, 2020.
As of December 31, 2020, and December 31, 2019, the Company had an accumulated
deficit of $1,493,984 and $1,035,494, respectively. Our independent auditors
included an explanatory paragraph in their report on the audited financial
statements for the fiscal year ended December 31, 2020, and 2019, and the period
from January 21, 2016 (inception) to December 31, 2016, regarding concerns about
our ability to continue as a going concern. Our financial statements contain
additional note disclosures describing the circumstances that lead to this
disclosure by our independent auditors. Our financial statements do not include
any adjustments related to the recoverability or classification of asset
carrying amounts or the amounts and classifications of liabilities that may
result should the Company be unable to continue as a going concern.
Critical Accounting Policies and Significant Judgments and Estimates
We have based our management’s discussion and analysis of our financial
condition and operations results on our financial statements, which we have
prepared following the U.S. generally accepted accounting principles. In
preparing our financial statements, we are required 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. Our actual results could differ from these estimates, and
such differences could be material.
In more detail, we have described significant accounting policies in Note 2 of
our annual financial statements included in our 10-K for the fiscal year ended
December 31, 2019, filed with the SEC on March 3, 2021. We evaluate our critical
accounting estimates and judgments required by our policies on an ongoing basis
and update them as appropriate based on changing conditions.
JOBS Act Accounting Election
We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS
Act, emerging growth companies can delay adopting new or revised accounting
standards after enacting the JOBS Act until those standards apply to private
companies. As an emerging growth company, we have applied for exemption; thus,
the Company may delay adopting certain accounting standards until the standards
would otherwise apply to private companies.
Off-Balance Sheet Arrangements and Contractual Obligations
We have not engaged in any off-balance sheet arrangements as defined in Item
303(c) of the SEC’s Regulation S-B. We did not have any relationships with
unconsolidated organizations or financial partnerships, such as structured
finance or special purpose entities that would have been established to
facilitate off-balance sheet arrangements or other contractually narrow or
Recent Accounting Pronouncements
The ASU amendments are effective for fiscal years beginning after December 15,
2019, including interim periods therein. Early adoption of the standard is
permitted, including adoption in interim or annual periods for which financial
statements have not yet been issued. We have adopted ASC 606 – Revenue
Recognition from January 1, 2019, and Amended ASU 2016-02, Leases (Topic 840)
from January 1, 2020. The ASU is currently not expected to have a material
impact on our consolidated financial statements. We believe the accounting
policies described in Note 2 are critical to the judgments and estimates used in
the preparation of our financial statements. As a result, we have described
significant accounting policies in more detail in Note 2 of our annual financial
statements included in our 10-K for the fiscal year ended December 31, 2020,
filed with the SEC on March 3, 2021.
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