Item
7. Managements Discussion and Analysis of Financial Condition and Results of Operations
The
discussion and analysis of our financial condition and results of operations are based on our financial statements, which we have prepared
in accordance with accounting principles generally accepted in the United States of America. This discussion should be read in conjunction
with the other sections of this Form 10-K, including Risk Factors, and the Financial Statements. The various sections of
this discussion contain a number of forward-looking statements, all of which are based on our current expectations and could be affected
by the uncertainties and risk factors described throughout this Annual Report on Form 10-K. See Forward-Looking Statements.
Our actual results may differ materially. The preparation of these financial statements requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the
financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate estimates
and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other
factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under
different assumptions or conditions.
As
used in this Managements Discussion and Analysis of Financial Condition and Results of Operation, except where the
context otherwise requires, the term we, us, our, or the Company, refers to the
business of Specificity, Inc.
Organizational
Overview
Specificity,
Inc. (Specificity or the Company) was incorporated in the State of Nevada on November 25, 2020, and our fiscal
year end is December 31. The Companys administrative address is 410 S. Ware Blvd., Suite 508, Tampa, Florida 33619. Our telephone
number is (813)364-4744.
At
our core, we are a digital marketing firm. However, through our diversified holdings, we provide various solutions that combine our marketing
expertise to provide support for other segments of our portfolio. Ultimately, Specificity is a tech incubator. We identify technology-based
marketing solution entities, take an equity share position in return for utilizing our internal resources to complete the buildout of
these technology based solutions. Specificity then uses our marketing prowess to draw clients to these businesses. We have the internal
personnel to complete these projects and the marketing capability to deliver lower advertising costs with high conversion campaigns to
launch these companies into success.
Currently,
our operations are focused on 4 lines of business.
SPECIFICITY
is a full-service digital marketing firm that delivers cutting-edge marketing solutions to business to business clients as well as business
to consumer clients and currently generates all of our revenue. Weve gone to painstaking lengths to develop tools that allow us
to identify and market to people who are actively in the buying cycle. We take advantage of the real-time messaging opportunities digital
marketing offers to give small and medium-sized businesses a fair chance at online traffic.
BULLSEYE
will help businesses revolutionize their direct mail marketing initiatives. With Bullseye, by combining our digital approach along with
traditional print marketing, clients can send direct mail to targeted people who are visiting the competition and searching for their
products online. In short, we will use behavior to identify and market to people who are already in the buying cycle, increasing conversions
and driving sales. BULLSEYE has no remaining build-out and awaits capital to support marketing activities.
THRU
THE FUNNEL is a sales engagement platform designed to create qualified leads that help clients sales reps do what they were hired
to do: Sell! Our platform targets, engages, illuminates and connects interested prospects with our clients sales team, all in
real time. THRU THE FUNNEL development is 60% complete and awaits capital to support marketing activities.
PICK
POCKET is a do-it-yourself digital marketing platform for smaller business owners. We will use
behavior-based device ID technology to help clients discover their ideal customers and market directly to their mobile devices. With
no contracts, middlemen, or hidden fees, Pick Pocket lets clients control their digital marketing without worrying about agency markups
making Fortune 1000 marketing capabilities available to companies with $500 thousand to $5 million in sales. The PICK POCKET build-out
is complete and awaits capital to support marketing activities.
BULLSEYE,
THRU THE FUNNEL and PICK POCKET illuminate our ability to identify smart technology to undertake and support our incubation model as
we build-out new, innovative ideas.
In
addition to Device ID extraction and programmatic display, Specificity offers a whole host of marketing services including:
| ● | Social
Media Content Creation |
| ● | Digital
Production Marketing |
| ● | Creating
Brand Standards |
| ● | Targeted
Print Campaigns |
| ● | Google
and Bing Display Ads |
| ● | Google
and Bing Pay per Click Campaigns |
| ● | Google
Local Service Ads |
| ● | Search
Engine Optimization |
| ● | Radio
Commercial Creation |
| ● | Influencer
Marketing Collaboration |
Strategic
Vision
Specificity,
Inc. is a technology company with 2 core missions:
|
1) |
First,
we endeavor to deliver the latest digital marketing technology to companies of all sizes making them nationally, regionally and locally
competitive. In this capacity, we come to the table already vertically integrated and capable of executing any size campaign flawlessly. |
|
2) |
Secondarily,
Specificity is a tech incubator. We identify technology-based marketing solutions, take an equity share position in return for utilizing
our internal resources to complete the buildout of technology-based solutions, and then using our marketing prowess to draw clients
to these businesses. We have the internal personnel to successfully complete these projects and our marketing capabilities will deliver
lower advertising costs to launch new projects making growth faster to attain. |
Digital
Marketing
As
a digital marketing agency, Specificity is an early adopter of innovative digital marketing tools. Our team keeps our clients ahead of
the technology curve instead of chasing it. Our ability to identify audiences in granular ways other tech companies have given up on,
positions us well to deliver better results at lower costs. By delivering ads to more targeted audiences, our clients enjoy the benefit
of focusing 100% of their digital spend on audiences that make sense for their products and services. While the large social media/tech
companies are eliminating or limiting access to targeting tools, we continue to add better targeting tools all the time.
As
digital marketing continues to evolve, Specificity finds itself with an incredibly unique opportunity. While the large tech companies
and social media firms are removing targeting mechanisms from their platforms, businesses are waking up to the fact that more targeted
audiences lower their CPA (cost per acquisition) and dramatically improve their ROI. As each day goes by, business owners have learned
that the less targeted their campaigns are the more money and time they waste. Reaching the audiences they were easily able to reach
just a few years back is made more expensive with the removal of targeting mechanisms. It is all done in the name of political correctness,
but it is obvious to most, that their true motivation is to drive ad spend up to drive revenue for themselves.
All
of these events put Specificity in a great position to acquire new clients in mass. Our capital raise will in large part be used to grow
our sales team in two regions initially and then expand quickly thereafter. The two regions we are starting with are the Tampa and New
England markets and will be targeting clients with revenues between$5,000,000 and $25,000,000. The revenue target speaks to both retainer
and retention. We know that clients with this type of revenue typically have internal marketing teams that are more suited to understand
analytics and can more easily track results. When this is the case, these clients stay longer and are more active in running the campaign
making it far easier to produce new creative and get it approved more quickly, a critical component for campaign optimization.
We
also know that clients with these revenues spend on average, $5,100 per month. This is important because this retainer level ensures
profitability after accounting for sales expense and the overhead required to execute a campaign. While Specificity welcomes smaller
businesses as well as larger businesses, targeting these size companies through our sales efforts will ensure both long-term retention
and profitability. Both Tampa and the New England region have a plethora of companies that fall into this category. Tampa has 9,991 companies
with annual revenue between 5 and 25 million. (insert breakdown provided here for Tampa as well as New England here) The New England
market boasts far more in our targeted range.
In
addition to being home to many companies we seek to engage, there is another reason these two regions were selected. Kevin Frisbie is
an investor in Specificity and possesses a long track record for running highly productive sales teams. He will be recruiting, training
and managing the sales team in the New England market and clearly has a vested interest in its success. Our CEO, Jason Wood, similarly
possesses a long track record for managing sales teams and will be recruiting, training and managing the team in the Tampa market. Between
the two of these seasoned pros, growing their respective markets should be accomplished in the timeline provided in the projections.
While
we project strong revenue growth in 2023, our other mission is to buildout internal capacity to facilitate growth. A portion of our capital
raise will go towards that end. Having a well-trained staff in place will not only allow for the expeditious on-boarding of new clients
but will also go a long way in retaining clients we bring on. Strong client retention is foundational to long-term success in our business.
We have already automated much of what we do so the length of time required to properly train people is drastically reduced.
Tech
Incubator
In
the digital marketing space, there are numerous opportunities for project completion. Men and women across the country have great ideas
but not the resources to finish their projects. Our model is simple, once we identify these opportunities, we will negotiate an equity
share position in return for using our resources to complete the buildout. These resources include our website design team, programmers,
graphic designers, digital marketers and management.
Due to the nature of what we do, we welcome these projects with both the ability to help complete them and the ability to market them.
We can identify the audience most likely to use them and then aggressively advertise to that audience. Our goal in doing so is to spin
them off into their own company and then take our profit when the time is right.
PickPocket
This
model is being proven now. Specificity acquired, then completed a digital marketing platform called PickPocket. It offers its users location-based
device ID extraction in a self-serve platform wherein users can define the parameters of their own campaign. It aims to compete with
the marketing mechanisms in social media companies. Just as they are removing targeting capabilities, PickPocket will hit the market
offering very granular targeting. Users on PickPocket are in total control of their campaign and can dictate spend level, locations to
target, and the duration of the campaign. Forty-eight hours after the campaign is complete, PickPocket clients get an email containing
detailed analytics, including foot traffic attribution reporting. This reporting tells the client how many people physically visited
their location out of all the device IDs that were marketed to during the campaign. The report also contains tracking for impressions,
clicks, form fills, and ecommerce conversions where appropriate. We have launched PickPocket and will be fully capitalizing the marketing
through fiscal year 2023.
The Investor Center
Another
project we have brought in-house is the Investor Center. This is an online portal allowing investors to completely customize their own
user experience. They can choose what news feeds to populate on their home screen, which stocks to follow, what industries to track,
which OTC companies to follow, which companies seeking private investment to keep track of and much, much more. This service is subscription
based.
In
addition to providing users with a customized experience, The Investor Center brings together companies seeking investment with brokers,
investors and private equity firms. Paid advertising on the platform is available for companies seeking to garner investor attention
or for brokers seeking to offer their services to investors. There are many revenue streams available, and our sales team will investigate
every available opportunity.
Currently,
we have completed the website buildout with full functionality and will be launching very soon. The future goal for the investor center
is to utilize a full stack developer to turn this into a native app for iPhone and Android.
Going
Concern
As
reflected in the accompanying financial statements, during the year ended December 31, 2022, the Company incurred a net loss of $4,344,532
and used cash of $2,036,911 in operating activities. These factors raise substantial doubt regarding the Companys ability to continue
as a going concern. We have evaluated the conditions or events that raise substantial doubt about the Companys ability as a going
concern within one year of issuance of the financial statements.
While
the Company is continuing operations and generating revenues, the Companys cash position is not significant enough to support
the Companys daily operations. To fund operations and reduce the working capital deficit, the Company has raised capital through
the sale of common and preferred stock. While the Company believes in the viability of its strategy to generate revenues and in its ability
to raise additional funds, there can be no assurances to that effect, nor can there be assurance that such funds will be at acceptable
terms. See Note 7 for additional fund received during the year ended December 31, 2022, and subsequent. The ability of the Company to
continue as a going concern is dependent upon our ability to further implement its business plan and generate revenues and cash flows.
The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Critical
Accounting Policies and Estimates
Our
significant accounting policies are more fully described in the notes to our consolidated financial statements. Those material accounting
estimates that we believe are the most critical to an investors understanding of our financial results and condition are discussed
immediately below and are particularly important to the portrayal of our financial position and results of operations and require the
application of significant judgment by our management to determine the appropriate assumptions to be used in the determination of certain
estimates.
Use
of Estimates
The
preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Concentration
of Credit Risk
Cash
and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $250,000
per institution that pays Federal Deposit Insurance Corporation (FDIC) insurance premiums. The Company has never experienced
any losses related to these balances.
Cash
and Cash Equivalents
The
Company classifies its highly liquid investments with maturities of three months or less at the date of purchase as cash equivalents.
Management determines the appropriate classification of its investments at the time of purchase and reevaluates the designations of each
investment as of the balance sheet date for each reporting period. The Company classifies its investments as either short-term or long-term
based on each instruments underlying contractual maturity date. Investments with maturities of less than 12 months are classified
as short-term and those with maturities greater than 12 months are classified as long-term. The cost of investments sold is based upon
the specific identification method.
Accounts
Receivable and Allowance for Doubtful Accounts
Accounts
receivable is recorded net of an allowance for doubtful accounts, if needed. The Company considers any changes to the financial condition
of its financial institutions used and any other external market factors that could impact the collectability of its receivables in the
determination of its allowance for doubtful accounts. The Company does not expect to have write-offs or adjustments to accounts receivable
which could have a material adverse effect on its financial position, results of operations or cash flows as the portion which is deemed
uncollectible is already taken into account when the revenue is recognized.
Revenue
Recognition
The
Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, codified
as Accounting Standards Codification (ASC) 606 Revenue from Contracts with Customers, which provides a single comprehensive
model for entities to use in accounting for revenue arising from contracts with customers. The Company adopted ASC 606 upon Inception.
The
Company provides online marketing services. The Companys revenue is generated on services priced at fixed rates. Revenue is recorded
as services are performed which typically all occurs within a calendar month.
Right
of Use Assets and Liabilities
The
Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement
conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in
exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct
the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company has lease
agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component
for all classes of underlying assets. Lease expense for variable lease components are recognized when the obligation is probable.
Operating lease right of use (ROU) assets and lease liabilities are recognized at commencement date based on the present
value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over
the lease term. The Company primarily leases buildings (real estate) which are classified as operating leases. ASC 842 requires a
lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily
determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Companys leases,
the incremental borrowing rate is used based on the information available at commencement date in determining the present value of
lease payments.
The
lease term for all of the Companys leases includes the non-cancellable period of the lease plus any additional periods covered
by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option
to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term
(and lease liability) for the majority of the Companys leases as the reasonably certain threshold is not met.
Lease
payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or
rate, and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset if reasonably certain.
Variable
lease payments not dependent on a rate or index associated with the Companys leases are recognized when the event, activity, or
circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented as operating
expenses in the Companys statement of operations in the same line as expense arising from fixed lease payments. As of September
30, 2022, management determined that there were no variable lease costs.
Fair
Value Measurements
The
Company follows FASB ASC 820, Fair Value Measurements and Disclosures (ASC 820) to measure and disclosure the fair
value of its financial instruments. ASC 820 establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about
fair value measurements and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair
value into three broad levels. The three levels of fair value hierarchy defined by ASC 820 are described below:
Level
1 |
|
Quoted
market prices available in active markets for identical assets or liabilities as of the reporting date. |
|
|
|
Level
2 |
|
Pricing
inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the
reporting date. |
|
|
|
Level
3 |
|
Pricing
inputs that are generally unobservable inputs and not corroborated by market data. |
Financial
assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar
techniques and at least one significant model assumption or input is unobservable.
The
fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and
the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than
one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of
the instrument.
The
carrying amounts reported in the Companys financial statements for cash, accounts receivable, prepaids and other current assets,
accounts payable, etc. approximate their fair value because of the immediate or short-term mature of these financial instruments.
Property
and Equipment
Property
and equipment is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged
to operations as incurred. Depreciation of property and equipment is computed by the straight-line method (after taking into account
their respective estimated residual values) over the assets estimated useful life of five (5) years. Upon sale or retirement of equipment,
the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statement of operations.
Impairment
of Long-Lived Assets
Long-lived
assets are reviewed for impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of
an asset or asset group may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount
of an asset or asset group to estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying
amount of an asset or asset group exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which
the carrying amount of the asset or asset group exceeds the estimated fair value of the asset or asset group. Long-lived assets to be
disposed of by sale are reported at the lower of their carrying amounts or their estimated fair values less costs to sell and are not
depreciated. As of December 31, 2022 and 2021, there were no asset impairments.
Income
Taxes
The
Company recognizes deferred tax assets and liabilities 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 based on the differences between
the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences
are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely
than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment
date.
The
Companys income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue
Service and other tax authorities. In addition, the calculation of the Companys tax liabilities involves dealing with uncertainties
in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process.
The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is
more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if
any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon
settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses
the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company
continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable and
deferred taxes in the period in which the facts that give rise to a revision become known. As of September 30, the Company does not believe
any provisions are required in connection with uncertain tax positions as there are none.
Per
Share Information
Basic
net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock
outstanding during the year. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average
number of shares of common stock outstanding during the year, increased by the potentially dilutive common shares that were outstanding
during the year. As of December 31, 2022 and 2021, the Company does not have any dilutive shares.
Stock
Based Compensation
The
Company recognizes as compensation expense all share-based payment awards made to employees, directors, and consultants including grants
of stock, stock options and warrants, based on estimated fair values. Fair value is generally determined based on the closing price of
the Companys common stock on the date of grant and is recognized over the service period.
New
Accounting Pronouncements
In
July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provided an alternative transition
method when initially applying ASU 2016-02. Companies may elect to apply ASU 2016-02 at the beginning of the earliest period presented
or recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. The ASU is effective
for annual and interim periods beginning after December 15, 2021. Management adopted this standard on January 1, 2022, which a right
of use asset and liability were recorded in connection with the Companys lease.
The
FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text
of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are
not applicable to the Company or (iv) are not expected to have a significant impact on the Company.
Results
of Operations for the Year Ended December 31, 2022 as Compared to the Year Ended December 31, 2021
Revenues
During
the year ended December 31, 2022, revenues increased by $399,234, from $749,012 for the year ended December 31, 2021, to 1,148,246 in
2022 as a result of the expansion of our operations.
Cost
of Revenues
During
the year ended December 31, 2022, cost of revenues increased by $219,647 from $372,455 for the year ended December 31, 2021, to $592,102
in 2022. Costs of revenues may shift dramatically depending upon how the Companys comparative revenue profile of the products
and services shift in the future.
Operating
Expenses
During
the year ended December 31, 2022, operating expenses increased by $2,142,172, from $2,707,962 for the year ended December 31, 2021, to
$4,850,134 in 2022 due materially to an increase in sales and marketing, and increase in general and administrative expenses including
stock based compensation of $2,264,081, with a decrease in officer compensation. The Companys Operating Expenses may vary quarter
to quarter as a result of changes to sales and marketing costs, general and administrative expenses, and other costs associated with
the Companys new and existing projects as well as other projects that it is currently reviewing.
Other
Expenses
During
the year ended December 31, 2022, Other Expenses increased by $542 from $50,000 for the year ended December 31, 2021 to $50,542 in 2022
as a result of interest expense. Given the Companys financing requirements in developing its new business models, the Companys
other (income) expenses may increase over time as the Company explores the use of additional debt financing.
Net
Loss
As
a result of the above, Net Loss increased by $1,963,127 from $2,381,405 for the year ended December 31, 2021 to $4,344,532 in 2022.
Liquidity
and Capital Resources
Net
Working Capital
We
have, since inception, financed operations and capital expenditures through the sale of stock and convertible notes and debt. Our immediate
sources of liquidity include cash and cash equivalents, accounts receivable, and unbilled receivables.
At
December 31, 2022, we had a net working capital deficit of approximately $988,337 compared to a net working capital deficit of $379,819
at December 31, 2021. We relied on proceeds from prepaid expenses and financing activities from the sale of preferred and common stock
throughout fiscal year 2022. We relied on proceeds from the sale of common stock, the sale of preferred stock, and accounts payable throughout
fiscal year 2021.
We
must successfully execute our business plan to increase profitability in order to achieve positive cash flows to sustain adequate liquidity
without requiring additional funds from external sources to meet minimum operating requirements. We may need to raise additional capital
to fund our operations and there can be no assurance that additional capital will be available on acceptable terms or at all.
Generally,
the Company has insufficient capital to maintain operations. Cashflows from operations of the Company and all its subsidiary holdings
will not sustain the Companys operations, let alone its filing requirements, unless there is substantial influx of cash flow through
either debt and/or equity financing.
Cash
Flows from Operating Activities
Cash
provided by operating activities provides an indication of our ability to generate sufficient cash flow from our recurring business activities.
For
the year ended December 31, 2022, net cash used in operations was approximately $2,036,911 driven primarily by current year operating
loss and accrued liabilities, offset primarily by stock-based compensation and accounts payable.
For
the year ended December 31, 2021, net cash used in operations was approximately $1,106,374 driven by current year operating loss, offset
primarily by the acquisition of Pick Pocket and subscription payable treated as officer compensation.
Cash
Flows from Investing Activities
For
the year ended December 31, 2022, the Company had a net loss of $10,281 in cash flows from investing activities, primarily due to the
purchase of property and equipment.
For
the year ended December 31, 2021, the Company had a net loss of $21,142 in cash flows from investing activities, primarily due to the
purchase of property and equipment.
Cash
Flows from Financing Activities
Cash
provided by (used in) financing activities provides an indication of our debt financing and proceeds from capital raise transactions.
For
the year ended December 31, 2022, cash provided by financing activities was approximately $1,432,169, primarily due to the proceeds from
sale of common stock and proceeds from advances from a related party.
For
the year ended December 31, 2021, cash provided by financing activities was approximately $1,548,249, primarily due to the proceeds from
sale of common stock and proceeds from subscription receivables.
In
the short term, we must raise additional capital through debt or equity financing to support our business operations and grow our business.
Over the long term, we must successfully execute our growth plans to increase profitable revenue and income streams to generate positive
cash flows to sustain adequate liquidity without impairing growth initiatives or requiring the infusion of additional funds from external
sources to meet minimum operating requirements. We may need to raise additional capital to fund our operations and there can be no assurance
that additional capital will be available on acceptable terms or at all.
Off-Balance
Sheet Arrangements
We
have no off-balance sheet financing arrangements.
Contractual
Obligations
Not
required of smaller reporting companies.
Item
8. Financial Statements and Supplementary Data
Our
consolidated financial statements and notes thereto and the report of our independent registered public accounting firm, are set forth
on pages F-1 through F-18 of this report.