U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended: March 31, 2021
For the quarterly period ended: September 30, 2020
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from ________ to _________
Commission file number: 333-206764
APPSOFT TECHNOLOGIES, INC. |
(Name of Small Business Issuer in its charter) |
Nevada |
| 47-3427919 |
(State or other jurisdiction of Identification No.) |
| (I.R.S. Employer incorporation or organization) |
1225 Franklin Avenue, Suite 325, Garden City, NY 11530
Address of registrant'sregistrant’s principal executive offices
(516) 224-7717
(516) 224-7717 | ||
Issuer’s telephone number |
(Former
(Former name, former address and former |
fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
|
| ASFT |
| OTCQB |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months. ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||
Non-accelerated filer |
| ☐ | Smaller reporting company | ☒ | |
|
| (Do not check if a smaller reporting company) | Emerging Growth Company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:
At January 27,June 7, 2021, there were 4,145,103 shares of common stock outstanding.
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
APPSOFT TECHNOLOGIES, INC. | ||||||||
BALANCE SHEETS | ||||||||
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| As of |
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| As of |
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| March 31, 2021 |
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| December 31, 2020 |
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CURRENT ASSETS |
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Cash |
| $ | 816 |
|
| $ | 6 |
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TOTAL CURRENT ASSETS |
|
| 816 |
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|
| 6 |
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FIXED ASSETS |
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Computer Equipment, net |
|
| 103 |
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|
| 207 |
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TOTAL FIXED ASSETS |
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| 103 |
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|
| 207 |
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TOTAL ASSETS |
| $ | 919 |
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| $ | 213 |
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LIABILITIES |
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CURRENT LIABILITIES |
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Accounts Payable and Accruals |
|
| 38,232 |
|
|
| 38,232 |
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Accrued Interest |
|
| 10,699 |
|
|
| 8,400 |
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TOTAL CURRENT LIABILITIES |
|
| 48,931 |
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|
| 46,632 |
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Note Payable |
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| 252,268 |
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|
| 241,220 |
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TOTAL LIABILITIES |
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| 301,199 |
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|
| 287,852 |
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COMMITMENTS AND CONTINGENCIES |
| $ | - |
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| $ | - |
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STOCKHOLDER'S EQUITY |
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Series A Cumulative, Convertible Preferred stock ($0.0001 par value; 10,000,000 shares authorized; 1,937,400 and 1,937,400 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively) |
| $ | 194 |
|
| $ | 194 |
|
Common stock ($0.0001 par value; 1,000,000,000 shares authorized; 4,145,103 and 4,145,103 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively) |
|
| 414 |
|
|
| 414 |
|
Additional Paid in Capital |
|
| 491,492 |
|
|
| 491,492 |
|
Additional Paid in Capital - Stock Warrants |
|
| 42,400 |
|
|
| 42,400 |
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Accumulated Deficit |
|
| (834,780 | ) |
|
| (822,139 | ) |
TOTAL STOCKHOLDER'S EQUITY (DEFICIT) |
|
| (300,280 | ) |
|
| (287,639 | ) |
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY/(DEFICIT) |
| $ | 919 |
|
| $ | 213 |
|
AppSoft Technologies, Inc.Financial Statements prepared by company management
Balance SheetsSee Notes to Financial Statements
|
| As of |
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| As of |
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| September 30, 2020 (Unaudited) |
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| December 31, 2019 (Audited) |
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CURRENT ASSETS |
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Cash |
| $ | 6 |
|
| $ | 6 |
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TOTAL CURRENT ASSETS |
|
| 6 |
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|
| 6 |
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FIXED ASSETS |
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Computer Equipment, net |
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| 311 |
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|
| 623 |
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TOTAL FIXED ASSETS |
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| 311 |
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|
| 623 |
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TOTAL ASSETS |
| $ | 317 |
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| $ | 629 |
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LIABILITIES |
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CURRENT LIABILITIES |
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Accounts Payable and Accruals |
|
| 38,232 |
|
|
| 35,046 |
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Accrued Interest |
|
| 7,199 |
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|
| 3,995 |
|
TOTAL CURRENT LIABILITIES |
|
| 45,431 |
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|
| 39,041 |
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Note Payable |
|
| 218,581 |
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|
| 202,420 |
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TOTAL LIABILITIES |
|
| 264,012 |
|
|
| 241,461 |
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COMMITMENTS AND CONTINGENCIES |
| $ | - |
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| $ | - |
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STOCKHOLDER'S EQUITY |
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Series A Cumulative, Convertible Preferred stock ($0.0001 par value; 10,000,000 shares authorized; 1,937,400 and 1,937,900 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively) |
| $ | 194 |
|
| $ | 194 |
|
Common stock ($0.0001 par value; 1,000,000,000 shares authorized; 4,145,103 and 4,145,103 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively) |
|
| 414 |
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|
| 414 |
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Additional Paid in Capital |
|
| 491,492 |
|
|
| 491,492 |
|
Additional Paid in Capital - Stock Warrants |
|
| 42,400 |
|
|
| 42,400 |
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Accumulated Deficit |
|
| (798,195 | ) |
|
| (775,332 | ) |
TOTAL STOCKHOLDER'S EQUITY (DEFICIT) |
|
| (263,695 | ) |
|
| (240,832 | ) |
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY/(DEFICIT) |
| $ | 317 |
|
| $ | 629 |
|
The accompanying notes are an integral part of these financial statements.
2 |
APPSOFT TECHNOLOGIES, INC. | ||||||||
STATEMENT OF OPERATIONS (UNAUDITED) | ||||||||
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| For the three months ended March 31, |
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| 2021 |
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| 2020 |
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Sales |
| $ | - |
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| $ | - |
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Total Revenue |
| $ | - |
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| $ | - |
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EXPENSES: |
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Selling, General and Administrative |
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| 3,763 | �� |
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| 2,321 |
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Amortization/Depreciation Expense |
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| 104 |
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| 104 |
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Interest Expense |
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| 2,298 |
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|
| 1,037 |
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Outside Services |
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| 6,226 |
|
|
| - |
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Professional Fees |
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| 250 |
|
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| - |
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Total Expense |
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| 12,641 |
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| 3,462 |
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Loss from operations |
| $ | (12,641 | ) |
| $ | (3,462 | ) |
Provision for Income Taxes |
| $ | - |
|
| $ | - |
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NET LOSS |
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| (12,641 | ) |
|
| (3,462 | ) |
Weighted average common shares outstanding, basic and fully diluted |
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| 4,145,103 |
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| 4,145,103 |
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Basic and fully diluted net loss per common share: |
| $ | (0.00 | ) |
| $ | (0.00 | ) |
AppSoft Technologies, Inc.Financial Statements prepared by company management
See Notes to Financial Statements of Operations
3 |
APPSOFT TECHNOLOGIES, INC.
See Notes to Financial Statements
APPSOFT TECHNOLOGIES NOTES TO THE AS OF
NOTE A—BUSINESS ACTIVITY AppSoft Technologies (the "Company”) was organized under the laws of the State of Nevada March 24, 2015. The Company’s fiscal year end is December 31st. The Company develops, publishes and markets mobile software applications for smartphones and tablet devices (“Apps”). We currently own a portfolio comprising over 400 Apps titles including games designed to appeal to a broad cross section of consumers and legal-related Apps that provide compilations of federal and state laws and regulations across a variety of legal disciplines and digests of court decisions rendered by federal courts. Consumers download our Apps through direct-to-consumer digital storefronts, such as the Apple App Store and Google Play Store.
We currently generate revenue from sales, or downloads, of our Apps and from advertisements published on our ad supported game titles.
NOTE B—GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business. As reflected in the accompanying financial statements, the Company has a deficit accumulated of
The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern for the 12 months from the date when these financial statements were issued. The accompanying financial statements do not include any adjustments that might arise because of this uncertainty.
To address these aforementioned, management has undertaken the following initiatives: 1) enter into discussions to secure additional equity funding from current or new shareholders; 2) undertake a program to continue to monitor the Company’s ongoing working capital requirements and minimum expenditure commitments; 3) continue their focus on maintaining an appropriate level of corporate overhead in line with the Company’s available cash resources.
NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation- The financial statements included herein were prepared under Generally Accepted Accounting Principles (GAAP).
All adjustments have been made which in the opinion of management are necessary, normal, and recurring in nature for presentation.
Interim filings should be read in conjunction with the Company’s annual report as of December 31,
Cash and Cash Equivalents- For purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be cash equivalents.
Management’s Use of Estimates- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The financial statements above reflect all of the costs of doing business.
Revenue Recognition- On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
APPSOFT TECHNOLOGIES NOTES TO THE AS OF
NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONT’D
Comprehensive Income (Loss) - The Company reports Comprehensive income and its components following guidance set forth by section 220-10 of the FASB Accounting Standards Codification which establishes standards for the reporting and display of comprehensive income and its components in the financial statements. There were no items of comprehensive income (loss) applicable to the Company during the period covered in the financial statements.
Net Income per Common Share- Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There was a total of 1,937,400 upon conversion of preferred stock as
Deferred Taxes- The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when 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 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 statements of operations in the period that includes the enactment date.
Fair Value of Financial Instruments- The carrying amounts reported in the balance sheet for cash, accounts receivable and payable approximate fair value based on the short-term maturity of these instruments.
Accounts Receivable- Accounts deemed uncollectible are written off in the year they become uncollectible. As of
Impairment of Long-Lived Assets- The Company evaluates the recoverability of its fixed assets and other assets in accordance with section 360-10-15 of the FASB Accounting Standards Codification for disclosures about Impairment or Disposal of Long-Lived Assets. Disclosure requires recognition of impairment of long-lived assets in the event the net book value of such assets exceeds its expected cash flows. If so, it is impaired and is written down to fair value, which is determined based on either discounted future cash flows or appraised values. The Company adopted the statement on inception. No impairments of these types of assets were recognized during the periods ended
Stock-Based Compensation- The Company accounts for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.
Fair Value for Financial Assets and Financial Liabilities- The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. 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. The three levels of fair value hierarchy defined by
APPSOFT TECHNOLOGIES NOTES TO THE AS OF
NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONT’D Paragraph 820-10-35-37 are described below:
The carrying amounts of the Company’s financial assets and liabilities, such as cash and accrued expenses, approximate their fair values because of the short maturity of these instruments. The Company’s note payable approximates the fair value of such instrument based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangement at the periods ended
The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at
Recently Issued Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to the Company’s financial position, results of operations or cash flows.
NOTE D-SEGMENT REPORTING
The Company follows the guidance set forth by section 280-10 of the FASB Accounting Standards Codification for reporting and disclosure on operating segments of the Company. It also requires segment disclosures about products and services, geographic areas, and major customers. The Company determined that it did not have any separately reportable operating segments as of
APPSOFT TECHNOLOGIES NOTES TO THE AS OF
NOTE E-CAPITAL STOCK
The Company is authorized to issue 1,000,000,000 Common Shares at $.0001 par value per share.
Total issued and outstanding shares of common stock is 4,145,103 and 4,145,103 as of
Total issued and outstanding shares of preferred stock is 1,937,400 and 1,937,400 as of
The Company is authorized to issue 10,000,000 Series A Cumulative, Convertible Preferred Shares (Preferred Stock) at $.0001 par value per share. During the period from inception (March 24, 2015) through December 31, 2016, the Company issued 2,000,000 shares of preferred stock at $.05 per share to Ventureo, LLC in exchange for $50,000 in cash and Phone Apps with a fair market value of $50,000 for a total of $100,000. The shares of “Preferred Stock” are convertible, at the option of the holder, into shares of common stock at a conversion price of $0.005 per share. The holder of the “Preferred Stock” may not convert any portion of the “Preferred Stock” if, after giving effect to such conversion, the holder would beneficially own in excess of 4.99%, except that the holder may, by written notice to the Company, increase or decrease this percentage up to a maximum of 9.99%, provided that any such increase will not be effective until the 61st day after such notice is delivered to the Company. Upon a liquidation event, the Company shall first pay to the holders of the “Preferred Stock” an amount per share equal to the Original Issue Price (i.e., $0.05 per share of Series A Preferred Stock), plus all accrued and unpaid dividends on each share of Series A Preferred Stock (the “Series A Preference Amount”). After full payment of the liquidation preference amount to the holders of the “Preferred Stock”, the Company will then distribute the remaining assets to holders of common stock, other junior preferred shares (if any) and the “Preferred Stock” on an as-if-converted-basis. The Series A Preferred Stock ranks senior to the Company’s common stock and senior to any other shares of preferred stock the Company may issue in the future.
The Company agreed to reduce the price at which each share of Series A Preferred Stock, of which Ventureo is the sole holder, converts into Common Stock from $0.005 per share to $0.0002 per share. The Company filed an amendment to its Articles of Incorporation reflecting the change of the conversion price. The Company’s Board approved the Agreement by unanimous written consent to action on November 30, 2018, and the Majority Holders approved the Agreement by the Stockholder Consent on December 4, 2018.
Capital Contributions
Brian Kupchik, President and CEO made no capital contributions during the
NOTE F
The Company provides for income taxes under (now included under Accounting Standards Codification (ASC), 740), Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.
ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all the deferred tax assets will not be realized. For Federal income tax purposes, the Company has net operating loss carry forwards that expire through 2030. The net operating loss carry forward as of
APPSOFT TECHNOLOGIES NOTES TO THE (UNAUDITED) FINANCIAL STATEMENTS AS OF MARCH 31, 2021 NOTE F – INCOME TAX—CONT’D
No tax benefit has been reported in the financial statements because after evaluating our own potential tax uncertainties, the Company has determined that there are no material uncertain tax positions that have a greater than 50% likelihood of reversal if the Company were to be audited. The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 21% to the net loss before provision for income taxes for the following reasons:
The Company is not obligated to pay State Income Taxes because it is a Nevada corporation. The Company does not currently have any tax returns open for examination.
NOTE
On November 30, 2018, the Company entered into an Exchange Agreement with its Creditors under which each Creditor agreed to cancel the Original Notes issued and accept a new promissory note in the amount of $160,314 from the Company evidencing the amount of principal and accrued interest thereon through such date owed to the Creditor that mature on December 31, 2021 in exchange for the Original Notes. In consideration for the exchange of the Original Notes for the New Notes, the Company agreed to reduce the price at which each share of Series A Preferred Stock, of which Ventureo is the sole holder, converts into Common Stock from $0.005 per share to $0.0002 per share. The Company filed an amendment to its Articles of Incorporation reflecting the change of the conversion price. The Company’s Board approved the Agreement by unanimous written consent to action on November 30, 2018 and the Majority Holders approved the Agreement by the Stockholder Consent on December 4, 2018.
Although new borrowings are not yet formalized into a note agreement, the Company and the lender agree that the new loans have the same terms and conditions for the formalized notes.
The total amount of the Notes Payable is Detail of the
As of March 31, 2020, the Company executed a Drawdown Promissory Note in favor of Bryan Glass Securities, Inc. (“BSG”) under which the Company is entitled to borrow up to an aggregate of $50,000 during the 2020 calendar year (the “Drawdown Note”). Under the Drawdown Note, the Company must request a drawdown against the instrument not less than three days prior to the date on which it requires the proceeds, stating the amount of the drawdown and the purposes to which the proceeds will be applied. BSG is entitled to approve or decline an advance of all or a portion of the drawdown request. The unpaid principal amount of the Drawdown Note bears interest at the rate of 2% per year. During the period January 1, 2020 through
NOTE
In July 2016, the Company purchased computer equipment for $2,079. The computer equipment will be depreciated over its estimated useful life of 5 years. Annual depreciation is $416. Depreciation expense was
NOTE
Since the close of the period covered by the financial statements of which these notes form a part, the following material transactions have occurred:
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q, or Report.
The information in this discussion and elsewhere in this Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, the words “may,” “will,” “believe,” “anticipate,” “plan,” “expect,” “intend,” “could,” “estimate,” “continue” and similar expressions or variations identify forward-looking statements.
Although we believe that we have a reasonable basis for each forward-looking statement contained in this Report, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Report. Factors that might cause such a discrepancy include, but are not limited to:
We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of the Securities and Exchange Commission, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.
Overview
AppSoft Technologies, Inc., a Nevada corporation organized on March 24, 2015 (“we,” “us,” or the “Company”), develops, publishes and markets mobile software applications for smartphones and tablet devices (“Apps”). Our Apps titles include games designed to appeal to a broad cross section of consumers and legal-related Apps that provide (i) compilations of federal and state laws and regulations across a variety of legal disciplines and (ii) digests of court decisions rendered by federal courts that are directed to legal professionals. We offer all of our game titles in both a free advertisement-supported version and a paid version that does not display ads. We believe that the ad supported versions allow for wider dissemination of our titles to consumers who might not otherwise spend money for an App without first playing the game.
We market, sell and distribute our games through direct-to-consumer digital storefronts, which currently comprises Apple’s App Store and the Google Play Store. We currently or expect to advertise our Apps through the digital storefronts, our own website, social media, such as Facebook and LinkedIn, through mobile ad networks and search engine optimization, or SEO, tools. We derive our revenue primarily from sales, or downloads, of our Apps and from advertisements published on our ad supported game titles.
We are seeking to develop and acquire new Apps to expand our existing product offerings. We rely on third party designers, developers and programs to develop new Apps. We also solicit ideas for new titles from unrelated parties. We evaluate prospects based on a variety of factors. If we conclude that a particular prospect is worth pursuing, we may fund the development of the App through launch and beyond.
Over the last decade, mobile devices, including smartphone and tablets, have proliferated extensively around the world across a wide range of demographic groups. The Apps industry has experienced corresponding growth in the number of downloads, the number and types of Apps published. We believe that there will continue to be an increase in the number of smartphones and tablets sold. In addition, technological advances to these devices, including more powerful smartphones and tablets with larger screens provide a platform for more diverse Apps and make games more fun and visually appealing. We believe that technological developments will continue to drive growth in our industry for the foreseeable future.
Growth Strategies and Outlook
Our principal growth strategy entails developing and acquiring new Apps to supplement our existing Apps portfolio. Our primary focus will be to release new game titles. We
cash. Our ability to pursue and achieve our objectives is predicated on our receipt of meaningful revenue from sales of our existing Apps and those we may release in the future and from our ability to raise capital from outside sources.
Our revenues will depend significantly on growth in the mobile games market and our ability to develop or acquire and publish Apps that are
Our revenues
Our ability to achieve and sustain profitability will depend not only on our ability to
Results of Operations for the Three Months Ended
The following table presents our results of operations for the three months ended
Business Activity
During the quarter ended
Net Loss
During the
Liquidity and Capital Resources
Liquidity is the ability of a company to generate adequate amounts of cash to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, the availability of credit facilities, levels of accounts receivable and accounts payable and capital expenditures.
As of
Since our inception, we have financed our operations through the sale of equity securities, from third party loans and from internally generated revenue from operations.
Over the last two years, we have been borrowing funds from ESFI and its related parties to fund our operations in part. As of March 31, 2021, we owed ESFI and its related parties an aggregate of $252,268, which loans are evidenced by promissory notes that mature on December 31, 2021.
Our primary requirements for liquidity and capital are to fund the development and acquisition of new Apps and for sales and marketing initiatives in connection with the launch and promotion of our games, as well as for working capital to fund our general corporate needs, including filing reports under the federal securities laws. We work with independent game designers, developers and programmers who provide us with new ideas and titles to publish. We also are soliciting new games and concepts that we may acquire from third parties. When we receive an idea for a new App, we research the commercial viability of the concept, undertaking an analysis of the cost to develop the App against its potential economic return. If we determine that the App is commercially viable, we may fund the cost of development, publication and marketing. Upon completion of development we will own the App title. Developing and publishing free-to-play games will require considerable capital to develop, maintain and update, particularly games we may seek to develop around popular movie, television, toy other cultural phenomena that lend themselves to gamification.
Since our customers pay for their purchases by credit or debit card at the time of sale, neither inventories nor receivables are relevant to our business.
Cash Flows:
We used net cash used in operating activities for the nine months ended March 31, 2021 of $10,238 compared to $5,135 for the 2020 period, in each case consisting principally of payments to outside consultants, developers and programmers and payments to web hosting and email hosting providers. The decrease in cash used in operating activities was the result of our limited cash resources to deploy to our operations. Investing Activities We did not utilize and cash in investing activities for the nine months ended March 31, 2021 or 2020. Financing Activities During the three months ended March 31, 2021, net cash provided by financing activities was $11,048 compared to $5,135 during the 2020 period. In each year, financing was provided by loans to the Company. We utilized all of the proceeds that we received from the borrowings for working capital.
Contractual Commitments as of
As of
Going Concern
The notes to our financial statements for the quarter ended
The presence of the going concern explanatory paragraph suggests that we may not have sufficient liquidity, or minimum cash levels, to operate our business. Since our inception, we have incurred losses and anticipate that we will continue to incur losses until such time as our Apps generate sufficient revenue to offset our research and development, general and administrative and sales and marketing expenses. We will need to raise additional capital to fund our near-term operational plans described elsewhere in this report. We cannot assure you that we will be successful in our operational plans. We cannot be sure that the additional capital we require will be available on acceptable terms or at all. If adequate funds are not available on acceptable terms or at all, we may be unable to develop or enhance our services and products, take advantage of future opportunities, repay debt obligations as they become due, or respond to competitive pressures, any of which would have a material adverse effect on our business, prospects, financial condition, and results of operations.
Off-Balance Sheet and Other Arrangements
We do not engage in any activities involving variable interest entities or off-balance sheet arrangements.
Inflation
We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we might not be able to fully offset these higher costs through price increases. Our inability or failure to do so could harm our business, operating results and financial condition.
Critical Accounting Policies and Use of Estimates
The discussion and analysis of financial condition and results of operations are based upon the Company’s financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these condensed consolidated financial statements requires estimates and assumptions that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, our management evaluates its estimates based upon historical experience and various other assumptions that it believes to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The Company believes that its significant accounting policies affect its more significant estimates and judgments used in the preparation of its consolidated financial statements. Our significant accounting policies are described in Note C to our audited financial statements included in our annual report on Form 10-K for the period ended December 31,
Recent Accounting Pronouncements
Emerging Growth Company Critical Accounting Policy Disclosure: We qualify as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.
See Note C to the financial statements furnished with this report for a discussion of recent accounting pronouncements that had a material effect on the financial statements presented herein.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. However, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all controls systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving its objectives.
Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company’s management performed an evaluation, under the supervision and with the participation of the Company’s Chief Executive Officer, who is the Company’s principal executive officer and principal financial officer and who we refer to herein as our PEO, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the quarter ended
Management is in the process of determining how best to address this condition and implement a more effective system to ensure that information required to be disclosed in this quarterly report on Form 10-Q has been recorded, processed, summarized and reported accurately. Our management acknowledges the existence of this problem, and intends to developed procedures to address them to the extent possible given limitations in financial and manpower resources. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.
Changes in Internal Controls
There have been no changes in our internal control over financial reporting during the quarter ended
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are presently no pending legal proceedings to which the Company is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information required under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Since the date on which the Company filed its last quarterly report on Form 10-Q and through the date of this report, the Company did not sell any securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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