Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words "expects," "anticipates," "intends," "believes" and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed herein as well as in the "Description of Business – Risk Factors" section in our Annual Report, Form 10-K, as filed on October 29, 2013. You should carefully review the risks described in our Prospectus and in other documents we file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.
Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
All references in this Form 10-Q to the "Company," "3D Pioneer Systems," "we," "us," or "our" are to 3D Pioneer Systems, Inc.
Corporate Overview
We were incorporated in the State of Nevada on April 22, 2008 and our fiscal year end is July 31. Effective October 14, 2013 we changed our name from Mobile Gaming International Corp. to 3D Pioneer Systems, Inc. The Company's administrative address is 22, Hanover Square, West Central, London, United Kingdom, W1S 1JP. The telephone number is 0044-203-700-8925.
3D Pioneer Systems, Inc. has no revenues, and has only limited cash on hand. We have sustained losses since inception and have relied solely upon the sale of our securities and loans from our corporate officers and directors for funding.
3D Pioneer has never declared bankruptcy, been in receivership, or involved in any kind of legal proceeding.
Effective October 14, 2013, the Company increased the number of authorized common shares to 200,000,000 shares, with par value $0.01 per share.
Effective October 14, 2013, the Company affected a 16 for 1 forward split of its common stock, under which each shareholder of record received sixteen (16) new shares of the Corporation's common stock for every one (1) old share outstanding.
Results of Operations
We have generated no revenues since inception (April 22, 2008) and have incurred $393,291 in expenses through April 30, 2014.
The following table provides selected financial data about our company for the period ended April 30, 2014 and the year ended July 31, 2013.
Balance Sheet Date
|
|
04/30/14
|
|
|
7/31/13
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
257,491
|
|
|
$
|
2,231
|
|
Total Assets
|
|
$
|
334,047
|
|
|
$
|
2,231
|
|
Total Liabilities
|
|
$
|
212,475
|
|
|
$
|
3,335
|
|
Stockholders' Equity (Deficit)
|
|
$
|
121,572
|
|
|
$
|
(1,104
|
)
|
Three and Nine Month Periods Ended April 30, 2014 Compared to the Three and Nine Month Periods Ended April 30, 2013.
|
|
Three Months Ended
April 30,
|
|
|
Nine Months Ended
April 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
General and administrative expenses
|
|
$
|
142,030
|
|
|
$
|
223
|
|
|
$
|
188,783
|
|
|
$
|
1,285
|
|
Professional fees
|
|
|
83,034
|
|
|
|
18,451
|
|
|
|
113,483
|
|
|
|
40,513
|
|
Software development expenses
|
|
|
42,401
|
|
|
|
-
|
|
|
|
42,401
|
|
|
|
|
|
Interest expense
|
|
|
1,463
|
|
|
|
-
|
|
|
|
30,474
|
|
|
|
-
|
|
Foreign exchange loss
|
|
|
2,183
|
|
|
|
-
|
|
|
|
2,183
|
|
|
|
-
|
|
Net Loss
|
|
$
|
271,111
|
|
|
$
|
18,674
|
|
|
$
|
377,324
|
|
|
$
|
41,798
|
|
Our net loss for the three and nine months ended April 30, 2014 was $271,111 and 377,324, as compared to a net loss of $18,674 and 41,798 during the comparable periods ended April 30, 2013. Our increase in net loss, for the three months ended April 30, 2014 was due primarily to an increase in general and administrative fees of $141,807 due to management fees commenced in November 2013, software development costs of $42,401 for development of mobile games and 3D printer software, and increase general expenses in Malta subsidiaries. Our increase in net loss, for the nine months ended April 30, 2014 was due primarily to an increase in general and administrative expenses of $187,498, from the $70,500 in management fees that commenced in November 2013, $30,474 in interest expense from a convertible feature on a note payable and increase in general expenses in Malta subsidiaries.
Plan of Operation
Our auditors have issued a going concern opinion on our audited financial statements for the year ended July 31, 2013. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay for our expenses. This is because we have not generated any revenues and no sales are yet possible. There is no assurance we will ever reach this point. Accordingly, we must raise sufficient capital from sources. Our only other source for cash at this time is investments by others. We must raise cash to stay in business. In response to these problems, management intends to raise additional funds through public or private placement offerings, and to make drawdowns pursuant to the Financing Agreement as described below.
On September 26, 2013, the Company issued a note payable to an unrelated party for $50,000. The note bears interest at 12%, is unsecured, and matures on September 26, 2016. The note holder has the right to immediately convert the note at any time and from time-to-time, in whole or in part, before the maturity date. The note is convertible into shares of the Company's common stock at 65% of the average closing prices for the previous five trading days prior to the conversion.
During the period ended April 30, 2014, the Company issued 1,504,256 to non-U.S. person for $500,000, which was exempt from registration under Regulation S of the Securities Act of 1933 (the "Act").
As of April 30, 2014, the Company had $257,491 in cash on hand.
3D Pioneer Systems is a development stage company that has limited active operations, no revenue, no financial backing and limited assets.
3D Pioneer intents to be a diversified technology company focused on delivering true plug and play 3d printers and printer applications that are designed to simplify the creative process and be accessible to a broad audience of consumers around the world. The Company is also intent on being a marketer and developer of cutting edge mobile games developed on 2.5D and 3D application environments, as well software applications that consumers can download and use on a variety of operating systems as iOS, android, windows, and other platforms, generating a creativity bridge for the mobile phone user between the mobile gaming world with the 3D printing world.
For entering into that market, our plans during the next 12 months, we plan to further our research and development on 3D printing hardware and software, to introduce to the market our first prototype 3D printer with the brand name Wyatt, our web enable printer controller with the brand name Whip, and 3D Pioneer Systems' innovative Appaloza Cloud Platform, a simple web-enabled platform that allows users to log in, upload designs, and print objects on demand, with both the Wyatt and the Whip being capable of integrating into our Cloud Platform.
To supplement our printing products and diversify our operations, we are also intending on entering into the mobile gaming market. The Company's first mobile game acquisition, Tangled Tut, is anticipated to launch in the summer of 2014 across all common mobile platforms. After the anticipated Tangled Tut release, the Company intends on creating additional mobile games based on 2.5 environment technology.
We anticipate hiring staff during the next 12 months of operations. As of January 15, 2014, we entered into a three year consulting agreement with Alexandros Tsingos, our CEO and President, in which he will receive $7,500 per month for the first six months for the term of his consulting agreement, $8,000 per month for the next six months thereafter, and then $10,000 per month for the balance of the term of the consulting agreement. On April 10, 2014, the Company
hired Joshua O'Cock as the Corporation's Chief Marketing Officer and Vice President of Business Development.
Limited Operating History; Need for Additional Capital
There is no historical financial information about us on which to base an evaluation of our performance. We are a development stage company and have not generated revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in developing our products or services and possible cost overruns due to the price and cost increases in supplies and services.
We will require additional funds to operate for the next year and to develop our planned business development. We feel we will need at least $300,000 for professional fees for the next 12-months related to your regulatory filing requirements.
We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.
We have plans, dependent upon our current financing, to undertake product research and development during the next twelve months, including but not limited to further developing
mobile games developed on 2.5 D and 3D application environments, as well software applications that consumers can download and use on a variety of operating systems as iOS, android, windows, and other platforms.
We also plan and expect to acquire intellectual property, and will further seek to protect the Company's intellectual property and add value to our assets through further research and development.
Liquidity and Capital Resources
Working Capital
|
|
April 30, 2014
|
|
|
July 31, 2013
|
|
|
|
|
|
|
|
|
Current Assets
|
|
$
|
283,371
|
|
|
$
|
2,231
|
|
Current Liabilities
|
|
$
|
135,552
|
|
|
$
|
3,335
|
|
Working Capital (Deficiency)
|
|
$
|
147,819
|
|
|
$
|
(1,104
|
)
|
Cash Flows
|
|
Nine Months Ended April 30, 2014
|
|
|
Nine Months Ended April 30, 2013
|
|
|
|
|
|
|
|
|
Cash Flows used in Operating Activities
|
|
$
|
(247,080
|
)
|
|
$
|
(41,161
|
)
|
Cash Flows used in Investing Activities
|
|
$
|
(51,720
|
)
|
|
$
|
-
|
|
Cash Flows provided by Financing Activities
|
|
$
|
554,060
|
|
|
$
|
27,500
|
|
Net Increase (decrease) in Cash During Period
|
|
$
|
255,260
|
|
|
$
|
(13,661
|
)
|
As at April 30, 2014 Compared to July 31, 2013
As at April 30, 2014, our company's cash balance was $257,491 compared to $2,231 as at July 31, 2013 and our total assets at April 30, 2014 were $334,047 compared with $2,231 as at July 31, 2013. The increase in cash was primarily due to the sales of our common equity as fully described in Note 4 to the financial statements.
As at April 30, 2014, our company had total liabilities of $212,475 compared with total liabilities of $3,335 as at July 31, 2013. The increase in total liabilities was primarily attributed to financing the commencement of our operations during the period ended April 30, 2014.
As at April 30, 2014, our company had a working capital surplus of $147,819 compared with working capital deficiency of $1,104 as at July 31, 2013. The increase in working capital surplus was primarily due to the current assets increasing by $281,140 and slightly offset by our increase in current liabilities of $132,217 from July 31, 2013. Our current liabilities increased, as compared to July 31, 203, primarily from an increase in trade accounts payable, accrued interest, and related party loans increasing by $124,606, $3,551, and $4,060, respectively.
Cash Flow from Operating Activities
During the period ended April 30, 2014, cash used in operating activities was $247,080 compared to cash used in operating activities of $41,616 during the comparable period ended April 30, 2013. The increase in cash used in operating activities was attributed to a focused program of developing the company's brand, facilities, and the commencement of operations during the period.
Cash Flow from Investing Activities
During the period ended April 30, 2014, the Company purchased equipment of $51,720.
Cash Flow from Financing Activities
During the period ended April 30, 2014, cash provided by financing activities was $554,060 compared to $27,500 for the same period in 2013. The increase in 2014 is attributable to $500,000 from the issuance of common stock, $4,060 from related parties and $50,000 from a convertible note payable, respectively. From inception (April 22, 2008) through April 30, 2014 cash flows from financing activities was $604,815, $547,520 from the issuance of common stock, $7,295 from a related party and $50,000 from a convertible note payable.
We received our initial funding of $20,020 through the sale of common stock to Francis Ciganek, who purchased 2,000 and 1,000,000 shares of common stock at $0.01 on April 25, 2008 and May 15, 2012 respectively; and, Iris Hill, who purchased 1,000,000 shares of common stock on June 22, 2012 at $0.01.
To meet our need for cash, we raised money from our public offering. We raised $27,500 from the sale of 2,750,000 registered shares pursuant to our S-1 Registration Statement filed with the SEC under file number 333-184026, which became effective on December 7, 2012. The offering was closed on February 28, 2013.
During the period ended April 30, 2014, the Company issued 1,504,256 to non-U.S. person for $500,000, which was exempt from registration under Regulation S of the Act.
On September 26, 2013, the Company issued a note payable to an unrelated party for $50,000. The note bears interest at 12%, is unsecured, and matures on September 26, 2016. The note holder has the right to immediately convert the Note at any time and from time-to-time, in whole or in part, before the maturity date. The note is convertible into shares of the Company's common stock at 65% of the average closing prices for the previous five trading days prior to the conversion.
Our financial statements from inception (April 22, 2008) through the period ended April 30, 2014, reported no revenues and a net loss of $425,948.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.