ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following information should be read in conjunction with (i) the financial statements of Viabuilt Ventures Inc., a Nevada corporation (the “Company”) and the notes thereto appearing elsewhere in this Form 10-Q together with (ii) the more detailed business information and the March 31, 2019 audited financial statements and related notes included in the Company’s Form 10-K (File No. 333-188753; the “Form 10-K”), as filed with the Securities and Exchange Commission on August 16, 2019. Statements in this section and elsewhere in this Form 10-Q that are not statements of historical or current fact constitute “forward-looking” statements
CORPORATE OVERVIEW
We were incorporated in the state of Nevada on September 14, 2009. From inception until early 2015, we were engaged in the mineral exploration business.
Prior Operations
During early 2015, we decided to abandon our mineral exploration properties and on February 27, 2015, we entered into a letter of intent with Ocure Ltd. ( “Ocure” ), pursuant to which we agreed to exclusively license certain technology from Ocure related to the development of products and devices for the treatment of wounds under terms of a license agreement to be negotiated between us and Ocure.
On July 9, 2015, we incorporated Viabuilt-IL Ltd. as our wholly-owned subsidiary under the laws of Israel.
On August 5, 2015, as amended on February 25, 2016, we entered into an exclusive license agreement (the “License Agreement” ) with Ocure, an Israeli corporation with a principal address at High-Tech Village, Givat Ram Campus, Hebrew University, P.O. Box 39158, Jerusalem 91391, Israel, and Viabuilt-IL Ltd. (the “Subsidiary” ), our wholly-owned subsidiary, incorporated in Israel. Pursuant to the License Agreement, Ocure granted to the Subsidiary an exclusive, sub-licensable, worldwide, license (the “License” ) to Ocure’s semi-occlusive wound dressing for ambulatory treatment of acute and chronic wounds, pursuant to Ocure’s patents and patent applications (the “Licensed Technology” ) and to its production, use, import, offer for sale, sell, lease, distribute, or otherwise commercialize the Licensed Technology for uses classified as medical devices, or those otherwise approved ultimately as an OTC (over-the-counter) remedy.
As consideration for the License, we agreed to provide the initial round of $250,000 to the Subsidiary for commercialization of the technology, payable as follows:
|
·
|
$10,000 (paid to Ocure at the signing of the letter of intent dated February 27, 2015);
|
|
|
|
|
·
|
$90,000 at the later of May 11, 2015 or the final signing date of the License Agreement (the “Effective Date”);
|
|
|
|
|
·
|
$50,000 on or before March 4, 2016; and
|
|
|
|
|
·
|
$100,000 on or before April 8, 2016.
|
In addition, we agreed to make the second round of an additional $250,000 available to the Subsidiary, provided that Ocure has delivered on its applicable commitments and milestones as set out in the License Agreement, the License will and have continued to be held in force, and that at such time and date, ownership and right to any additional assets (not including the Licensed Technology) then existing in Ocure will be fully transferred to the Subsidiary. We did not pay these amounts.
As we elected not to pay the entire amount of the first round payment and did not make any of the second round payment, the License Agreement and the License are now terminated. We have no operating business or interests in that business.
On April 1, 2017, the Company negotiated the sale of Viabuilt-IL, following the termination of the Ocure License, to Pompeii Finance for $100 which was deducted from the funds owed to Pompeii for prior loan advances. The Company obtained shareholder approval for the sale and has closed and we have since transferred the shares of Viabuilt IL to Pompeii Finance.
PLAN OF OPERATIONS
On June 29, 2018, Firetainment Inc., an unaffiliated company, advanced the Company $10,000 to pay operating costs. Subsequently, between July 24, 2018, and August 17, 2018, Firetainment Inc. advanced the Company a total of $14,208 to pay operating costs.
On April 23, 2018, the Company entered into a Plan of Reorganization and Agreement of Securities Exchange (the “Agreement”) with Firetainment Inc. (“Firetainment”), a Florida Corporation. Under the Agreement, upon execution, Firetainment received the immediate right to the appointment of the directors and officers of the Company.
On April 23, 2018, the Board of Directors appointed William Shawn Clark as our Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer as well as our Sole Director. Concurrent with Mr. Clarks’ appointment, Eugenio Gregorio resigned as Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer as well as our Sole Director.
The April 23, 2018 Agreement was terminated by the Company on March 26, 2019, and replaced on March 26, 2019 by a Share Exchange Agreement, and which was further amended on September 1, 2019, whereby upon closing the shareholder of Firetainment, Inc. will be issued a total of 7,000,000 shares of Common Stock of the Company in exchange for 100% of the capital stock of Firetainment, Inc. The closing of this transaction will be completed upon the completion of the audit of the Financial Statements of Firetainment, Inc. for the year ended December 31, 2018, and upon the closing Firetainment, Inc. will become a wholly-owned subsidiary of the Company.
At the present time, the Company has no business operations. Upon completion of the Firetainment, Inc. acquisition, the company’s sole business operations will be conducted through Firetainment, Inc., a wholly-owned subsidiary. Firetainment makes and markets fire pit tables, an outdoor living product which combines the utility of a grill, the entertaining space of a table, and the charm of a fire pit.
FUTURE BUSINESS EXPANSION AND ACQUISITIONS
Following the closing of the Firetainment acquisition, the Company will be seeking to expand its manufacturing facilities in the Orlando metropolitan area, and to potentially acquire or joint-venture with other technologically sophisticated manufacturers. Our emphasis will be on “smart factories” which use technological innovation throughout the design and manufacturing processes. In particular, we will be working with educational institutions in Central Florida- both at the high school and college level- to develop cutting-edge apprenticeship programs to train the next generation of high-tech manufacturers.
THE FIRETAINMENT, INC. ACQUISITION
On March 27, 2019, the Company agreed to acquire 100% of the capital stock of Firetainment, Inc. This acquisition transaction is expected to close on or before November 30, 2019, upon completion of the required two-year audit of the Firetainment, Inc. financial statements.
Firetainment is a manufacturing company located in Central Florida producing luxury hand crafted fire pit tables as well as other outdoor furniture products. Since the founding of the company in 2011, Firetainment has established an extensive distribution network of “Brick & Mortar” retail stores and luxury online retail locations in nearly every state within the continental US, and has also established a presence at the industry’s leading trade shows each year.
Due primarily to the efforts of Mr. William Shawn Clark, the President of the Company, Firetainment has become a staple within the outdoor furnishings market. Firetainment has been recognized within industry publications such as “Casual Living Magazine” numerous times for their love of manufacturing domestically made quality products at competitive prices, and have been featured on many network television shows such as CBS’ “The Price is Right”, DIY channel’s show “Hit Properties” featuring Boyz II Men’s Nate Morris, and have been endorsed by names like Paul LaFrance from HGTV’s show “Decked Out”.
FIRETAINMENT’S PATENTED PRODUCTS
Currently, the Firetainment product line consists of 25 unique products, with thousands of potential design combinations. Each of the all-season fire pit tables are handcrafted in the United States from the finest materials, and are ANSI certified. On April 23, 2019, Firetainment was granted U.S. Patent No. 10,264,920 B2 for its invention of a “Fire Table, Accessories, and Method of Cooking Thereon” which encompasses all of Firetainment’s outdoor fire table designs.
The company is recognized throughout the casual furniture marketplace for being the outdoor fire product innovators, with its principal focus on customer service, quality components, and superior design function. Their sophisticated modern designs complement any outdoor space, and can be specifically designed for a custom fit. A partial sample of the company’s products is attached as Exhibit “B” to this Memorandum, and a complete product catalog is available online at www.firetainment.com/fire-pit-table-collection/.
The Firetainment customer base ranges from Direct- to-Consumer and Internet sales to retail sales through a network of over 175 retail dealers.
Our Mission for our Firetainment subsidiary is simple and based on several key points:
|
·
|
Become an Industry Leader in the high-end outdoor living industry;
|
|
|
|
|
·
|
Build International Brand Awareness for the Firetainment product line;
|
|
|
|
|
·
|
Expand our Nationwide Dealer Network and Online Sales Marketing;
|
|
|
|
|
·
|
Continue to provide Exceptional Customer Service.
|
|
|
|
|
·
|
Actively seek Synergistic Acquisition & Merger Opportunities
|
GROWTH OPPORTUNITIES FOR OUR COMPANY
Our belief is that America needs to rapidly expand the evolution of how we perceive domestic manufacturing, and fast. Generational diversity in the workplace has never been higher, and the conditioning associated with each age group has created an unprecedented need in the re-evaluation of today’s production floor and worker environments.
Vīabuilt is devoted to the rapid infusion of culture, technology, and flexibility among domestic plant operations, paving the way to competitive quality products, innovative leadership skills, and building sustainable communities for all future generations. With recent developments, our education system needs a new platform of businesses in order to reestablish the perceived value of domestic manufacturing among youth, and Vīabuilt’s strategy is to make that happen.
Our Acquisition Strategy
Through our strategic serial acquisition and merger focus, our Company will collaborate with local leaders, deeply commit to community involvement, and implicitly implement positively perceived “cognitive” and “additive” production techniques enhanced by “Artificial Intelligence”.
This strategy, along with progressively identifying and utilizing tailored programs to meet each of the “needs” and/or “desires” in the ‘at work’ experience among generational gaps, will change the way Americans look at Manufacturing forever.
As an organization directly focused on the success of vibrant sustainable manufacturing communities, our philosophy realizes the extreme need in evolving facilities where “environment”, “work”, and “fun” are implemented together in the workplace. VīaBuilt intends to proactively succeed in increasing job fulfillment rates across all manufacturing sectors while becoming a never ending enterprise of growth through creativity and data collection. We will accomplish this goal by working across all manufacturing industries, through carefully strategized acquisitions and joint-venture agreements in becoming a “Viabuilt Company”.
Before, during, and after every business acquisition or merger, we will work with our local team and leading educational advisors on making sure we not only provide educational facilities and their staff with the tools they need to succeed, but each transaction will focus on new age work environments that address the underlying social conditioning being overlooked, or mistaken as “negative” human attributes towards manufacturing.
OUR MARKET FOCUS
Vīabuilt’s “serial acquisition and merger” focus aims to solve and aid in many areas surrounding the manufacturing industry. We will.streamline accessibility to facilities equipped with the technologically advanced operations needed to capture the attention of the students throughout various educational programs. Viabuilt’s strategy will increase local job fulfillment rates through proactively addressing the drastic differences in social, cultural, and environmental conditioning surrounding “Manufacturing”. We will accomplish these goals by targeting acquisitions and mergers with small to mid-size manufacturing facilities who meet strict criteria and share a mutual understanding of the ‘Viabuilt” agenda.
VīaBuilt intends to strategically tailor our acquisition & merger focus within one regional landscape at a time to ensure the successful execution of our plan. Through these acquisitions and mergers with already successful firms having synergistic production capabilities, we will lower operating costs, accumulate data collection points through our value chain, and maximize our supply chain viability leveraging advanced enterprise-wide business data analytics.
We have located our manufacturing and marketing operations in Central Florida to take advantage of its export opportunities and market access points. We have begun to extend our marketing reach throughout the U.S. to fully utilize those access points, and intend to maximize all of our Company’s international export market opportunities.
Prospective business acquisitions or partnerships will go through a rigorous evaluation process by all affiliated team members to ensure each prerequisite is met for VīaBuilt’s success as a corporation. Each prospective facility will have collaboratively established requirements to ensure the success rates of each business. Requirements for the history of the business, net profits, growth rates, asset types, and accurate valuations.
Each of these characteristics must be quantifiable and approved by our Board of Directors for each acquisition, merger, or partnership.
STRATEGIC COMMUNITY ALIGNMENT
Local leaders in each of the required specialized advisory roles will be chosen by VīaBuilt using strict criteria for each type of service needed to facilitate the smoothing of each business transaction ensuring our community success rates. These leading professionals will play a role in progressively implementing each of the facilities newly required processes or plant improvements, which are only a few of the many requirements to obtain the status of being a “Viabuilt” company. From local Associations, leaders & educators, Health Care Providers, Charitable organizations, to young entrepreneurs, Viabuilt’s advisory board will consist of experts surrounding each region’s already agreed upon main objectives.
Each specified business affiliate must have a track record for working within the community, they must satisfy strict credential and resource guidelines, and must serve as an advisory board member. By utilizing community leaders that are active within each region we operate within, Viabuilt ultimately ensures community alignment within each evolving region. One noteworthy requirement of these individuals, is their responsibility of finding their replacement when a new “Viabuilt Ecosystem” is created in a different region
When VīaBuilt enters its next phase of expansion and development, we will perform required due diligence on all prospective advisory board members. Once considered, we will thoroughly research each individual to ensure proper credentials with a clean track record in proving his or her corporate standards, and is properly aligned with our community focused operational plans. This will ultimately ensure that both corporate and community goals are fulfilled creating a win/win ever evolving eco-system of business data.
GOING CONCERN
To date the Company has little operations or revenues and consequently has incurred recurring losses from operations. No revenues are anticipated until we complete the pending acquisition of Firetainment, Inc., as described in this Form 10-Q, and implement our business plan. The ability of the Company to continue as a going concern is dependent on raising capital to fund our business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern.
The Company plans to raise additional funds through debt or equity offerings. There is no guarantee that the Company will be able to raise any capital through this or any other offerings.
The Agreement entered into with Firetainment will result in the merger of Firetainment into the Company with the corporation to survive as Firetainment Inc. Pursuant to the Agreement the Company agreed to issue Firetainment seven million (7,000,000) common shares in exchange for all of the shares of Firetainment. This issuance will result in a change in control of the Company.
Firetainment makes and markets fire pit tables, an outdoor living product which combines the utility of a grill, the entertaining space of a table, and the charm of a fire pit. The closing of the Agreement will take place upon the delivery and completion of Firetainment audited statements for the periods ending December 31, 2017 and 2018, unless another time or date, or both, are agreed to in writing by the parties. When and if the agreement with Firetainment closes, we will have to raise substantial funds in order to operate the Firetainment business, as it is expected to produce losses in the first few months after closing, and possibly for a longer period.
RESULTS OF OPERATIONS
Three Months Ended September 30, 2019 and 2018
We had no operations and recorded no revenues for the three months ended September 30, 2019 and 2018. For the three months ended September 30, 2019, total operating costs were $12,972 consisting entirely of general operating costs for legal, accounting and transfer agent fees. By comparison, for the three months ended September 30, 2018, total operating costs were $30,308, consisting entirely of consulting and professional fees.
We had interest expense of ($41,798) for the three months ended September 30, 2019, compared to interest expense of $- for the three months ended September 30, 2018, and a Change in Derivative Liability of ($39,313), resulting in total other income (expense) of ($68,425) for the three months ended September 30, 2019. This increase in other income (expense) is due to the long-term convertible debt due to related party.
We had net (loss) income of ($81,479) and ($30,308) during the three months ended September 30, 2019 and September 30, 2018, respectively.
Six-Months Ended September 30, 2019 and 2018
We had no operations and recorded no revenues for the six months ended September 30, 2019 and 2018. For the six months ended September 30, 2019, total operating costs were $22,297 consisting of general operating costs for legal, accounting and transfer agent fees of $20,344. By comparison, for the six months ended September 30, 2018, total operating costs were $45,271, consisting entirely of consulting and professional fees.
We had interest expense of $84,848 for the six months ended September 30, 2019, compared to interest expense of $- for the six months ended September 30, 2018, an increase in interest expense of $84,848, due to the long-term convertible debt due to related party.
We had net (loss) income of ($133,772) and ($45,271) during the three months ended September 30, 2019 and September 30, 2018, respectively.
Liquidity and Capital Resources
At September 30, 2019, we had a cash balance of $0, total current liabilities of approximately $125,811 and working capital deficit of ($125,811) and a stockholders’ deficit of approximately ($748,143). We do not have sufficient cash on hand to fund our ongoing operational expenses. We will need to raise funds to commence fund our ongoing operational expenses. Additional funding will likely come from equity financing from the sale of our common stock. We expect that we will need to raise funds to operate the Firetainment business if and when that transaction closes. If we are successful in completing an equity financing, existing shareholders will experience dilution of their interest in our Company. We do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund ongoing operational expenses. In the absence of such financing, our business will likely fail. There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing. If we are unable to achieve the financing necessary to continue our plan of operations, then we will not be able to continue our operations and our business will fail.
Off balance sheet arrangements
We have no off-balance sheet arrangements.