PLYZ Plyzer Technologies Inc (CE)

PART I. FINANCIAL INFORMATION

Item 1 - Financial Statements

INDEX TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

4

Plyzer Technologies Inc.

Condensed Consolidated Balance Sheets

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-4

Plyzer Technologies Inc.

Nine months ended December 31, 2019

Notes to Unaudited Condensed Financial Statements

NOTE 1 - BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A)Business Description 

Plyzer Technologies Inc. (the “Company”), incorporated on February 23, 2005 under the laws of the state of Nevada, and through its subsidiaries, is a provider of custom, real-time, cloud-based business intelligence solutions for brands to analyze critical online price and market data.

Plyzer Spain, a wholly owned subsidiary, commenced its operations in April 2019 and signed its first customer on June 20, 2019.

(B)Basis of Presentation 

The unaudited interim financial statements as of December 31, 2019 and for the three and nine months ended December 31, 2019 and 2018 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the balance sheet, operating results and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America. Operating results for the three and nine months ended December31, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2020. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted in accordance with the SEC’s rules and regulations for interim reporting.

(C)Consolidation 

The unaudited consolidated interim financial statements include the accounts of the Company and,

a.)Plyzer Corporation, a wholly owned subsidiary incorporated in the State of Delaware on December 9, 2016. 

b.)Plyzer Technologies (Canada) Inc., a wholly owned subsidiary incorporated in Ontario, Canada on April 11, 2017. 

c.)Plyzer Technologies Spain s.l., a wholly owned subsidiary incorporated in Spain in April 2019 

d.)PlyzerCan Intelligence Ltd., a wholly owned subsidiary incorporated in Ontario, Canada in June 2019. The subsidiary has not yet commenced any operations. 

e.)Plyzer Blockchain Technologies Inc., a wholly owned subsidiary incorporated in Ontario, Canada on November 3, 2017. The subsidiary has not yet commenced any operations. 

The unaudited interim financial statements should be read in conjunction with the Company’s Annual Report filed on Form 10-K for the year ended March 31, 2019. The significant accounting policies followed are the same as those detailed in the said Annual Report except for the following new policies which were effective April 1, 2019:

Revenue Recognition

We adopted ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”).

We recognize revenues when we satisfy a performance obligation by transferring a promised good or service (that is, an asset) to a customer. An asset is transferred when the customer obtains control of that asset.

F-6

Plyzer Technologies Inc.

Nine months ended December 31, 2019

Notes to Unaudited Condensed Financial Statements

To achieve that core principle, we apply the five steps defined under Topic 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We assess our revenue arrangements against specific criteria in order to determine if we are acting as principal or agent. Revenue arrangements with multiple performance obligations are divided into separate distinct goods or services. We allocate the transaction price to each performance obligation based on the relative standalone selling price of the goods or services provided. Revenue is recognized upon the transfer of control of promised goods or services to a customer.

Revenue is recorded net of value-added tax.

Accounts Receivable and Allowances

Accounts receivable are recognized and carried at the original invoice amounts less an allowance for any uncollectible amount. We have a policy of reserving for uncollectible accounts based on our best estimate of the amount of probable credit losses in our existing accounts receivable. We extend credit to our customers based on an evaluation of their financial condition and other factors. We generally do not require collateral or other security to support accounts receivable. We perform ongoing credit evaluations of our customers and maintain an allowance for potential bad debts if required.

We determine whether an allowance for doubtful accounts is required by evaluating specific accounts where information indicates the customers may have an inability to meet financial obligations. In these cases, we use assumptions and judgment, based on the best available facts and circumstances, to record a specific allowance for those customers against amounts due to reduce the receivable to the amount expected to be collected. These specific allowances are re-evaluated and adjusted as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance. We may also record a general allowance as necessary.

Direct write-offs are taken in the period when we have exhausted our efforts to collect overdue and unpaid receivable or otherwise evaluate other circumstances that indicate that we should abandon such efforts.

Leases

The Company adopted the new lease accounting standard ASC 842 effective April 1, 2019. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The Company does not currently have any leases over twelve months.

Use of Estimates

The financial statements have been prepared in conformity with generally accepted accounting principles (GAAP). In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statement of financial position and revenues and expenses for the year then ended. Actual results may differ significantly from those estimates.

F-7

Plyzer Technologies Inc.

Six months ended December 31, 2019

Notes to Unaudited Condensed Financial Statements

Basic and Diluted Loss Per Share

In accordance with ASC Topic 280 - "Earnings Per Share," the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common stock outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential common stock had been issued and if the additional shares of common stock were dilutive.

Potential common stock consists of the incremental common stock issuable upon the exercise of common stock warrants (using the if-converted method). The computation of basic loss per share for the period ended December 31, 2019 excludes potentially dilutive securities of 43,708,709 shares underlying share purchase warrants and convertible notes, because their inclusion would be antidilutive. As a result, the computations of net loss per share for each period presented is the same for both basic and fully diluted.

Potentially dilutive securities outlined in the table below have been excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive.

NOTE 2 - GOING CONCERN

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has recently begun commercializing its products but has not yet established an ongoing source of revenues sufficient to cover its operating costs.  The ability of the Company to continue as a going concern is dependent on the Company’s success in securing more revenue and obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital or sale its services, it could be forced to cease operations, which raises doubt about the Company’s ability to continue as a going concern.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by seeking equity and/or debt financing. While the Company has so far been successful in raising the required capital through debt and equity financing, management cannot provide any assurances that the Company will continue to be able to raise the funding required to complete its development work and commercial launch of the portal successfully in future.

NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS

In January 2017, the Financial Accounting Standards Board ("FASB") issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, and ASU No. 2017-04, Intangibles- Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment. ASU No. 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. ASU No. 2017-04 eliminates Step 2 of the goodwill impairment test and requires a goodwill impairment to be measured as the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of its goodwill. The ASU is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company has determined that the adoption of this accounting pronouncement will not have an impact on the financial statements.

F-8

Plyzer Technologies Inc.

Nine months ended December 31, 2019

Notes to Unaudited Condensed Financial Statements

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements in Topic 820, with a particular focus on Level 3 investments, by eliminating certain required disclosures and incorporating others. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

In August 2018, the FASB issued authoritative guidance regarding Intangibles - Goodwill and Other - Internal-Use Software, which aligns the requirements for a customer to capitalize implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for the Company for its fiscal year beginning April 1, 2020, including interim periods within that fiscal year, with early adoption permitted. The Company has determined that the adoption of this accounting pronouncement will not have an impact on the financial statements. We are currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments. The amendments in this update provide financial statement users with more useful information about expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. These amendments clarify and improve areas of guidance related to recently issued standards on the topics of credit losses, hedging and recognition and measurements. In May 2019, the FASB issued ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, which provides entities that have certain instruments an option to irrevocably elect the fair value option in Subtopic 825-10. In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326 - Financial Instruments - Credit Losses, which clarifies guidance on how to report expected recoveries. The amendments in these updates are effective for us for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update eliminate the need for an organization to analyze whether certain exceptions apply for tax purposes. It also simplifies GAAP for certain taxes. The amendments in these updates are effective for us for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements.

The Company evaluates new pronouncements as issued and evaluates the effect of adoption on the Company at the time.

(i)includes $104,409 relating to tax, subsidy and other government benefits receivable by Plyzer Spain 

(ii)includes fee of $27,281 paid in advance to a consultant 

F-9

Plyzer Technologies Inc.

Nine months ended December 31, 2019

Notes to Unaudited Condensed Financial Statements

NOTE 6 - INVESTMENT

On April 10, 2019, the Company invested $86,443 (€ 76,641) in a private company in Spain, Auxistencia SL. The Company’s investment is less than 10% of the equity of Auxistencia SL and is accounted for at fair market, which is considered equivalent to its cost. The investment was translated to US dollar at $86,098 at December 31, 2019 based on the exchange rate of €1 = $1.1234, and the difference of $345 was transferred to other comprehensive income.

i.During the nine months ended December 31, 2019, the Company paid off twenty-two (Seven during the nine months to December 31, 2018) loans in cash for a total amount of $2,107,851 ($410,432 for the nine months to December 31, 2018) as follows: 

F-10

Plyzer Technologies Inc.

Nine months ended December 31, 2019

Notes to Unaudited Condensed Financial Statements

ii.During the nine months ended December 31, 2019, the Company entered into convertible note agreements with independent lenders totaling to $2,593,700. The following is a summary of the main terms of these agreements: 

The convertible loan notes issued during the period have a conversion feature in which, number of shares issuable on conversion is contingent upon future market price of shares. The Company has ability to raise authorized share capital, and had done so from time to time (see Note 13 (3)), when needed to provide shares issuable on such conversion.  As a result, the embedded conversion feature is considered equity and is included in additional paid in capital.

The fair value of the derivative was estimated on the issue date and subsequently re-measured on December 31, 2019 using the Black-Scholes valuation technique, using the following assumptions:

F-11

Plyzer Technologies Inc.

Nine months ended December 31, 2019

Notes to Unaudited Condensed Financial Statements

NOTE 9 - COMMON STOCK

Common stock activities during the nine months ended December 31, 2019

(a)Five convertible notes plus accrued interest were converted into 2,507,889 shares for a total value of $254,788. 

(b)The Company raised $951,800 under a private placement, of which $931,800 subscribed by twenty six subscribers who were issued 4,959,000 shares at an average price of $0.20 per share and equal number of warrants convertible into equal number of shares at an exercise price of $0.50 per share within two years of their issuance and one subscriber subscribed $20,000 for which 100,000 shares were not issued as at December 31, 2019. 

(c)1,614,275 shares were issued to fourteen consultants valued at $431,087 

(d)250,000 shares were issued to a warrant holder who exercised his warrants for $50,000. 

Common stock activities during the nine months ended December 31, 2018 were as follows:

(a)On August 10, 2018, Lupama exercised 29,843,335 warrants to convert into equal number of shares at an exercise price of $.0025 for a total of $74,608 ,On September 6, 2018, exercised an additional 156,665 warrants to convert into an equal number of shares at an exercise price of $.0025 for a total of $392 and on October 2, 2018, Lupama exercised 4 million warrants to convert into equal number of shares at an exercise price of $.0025 for a total of $10,000. Exercise of warrants was off set against amounts payable to Lupama in lieu of cash payment. 

(b)On September 6, 2018, Lupama was issued 843,335 shares and on September 27, issued further 999,999 shares. These shares were valued at $0.45 per share, being the market price prevailing on the dates of their issues for a total of $829,500, which was off set against amounts payable to Lupama. 

(c)During the nine months ended December 31, 2018 thirty-one convertible notes plus accrued interest were converted into 3,160,605 shares for a total value of $642,411. 

(d)Up to December 31, 2018, the Company received three subscriptions totaling to $250,000 subscribing to 833,333 Units under a private placement. The subscriptions were approved, and shares were issued in January 2019. $833 was included under common stock subscribed and the balance $249,167 was included under additional paid in capital. 

At December 31, 2019, the Company had 300,000,000 common shares (200,000,000 common shares at March 31, 2019) of par value $0.001 common stock authorized.

NOTE 10 - WARRANTS

During nine months ended December 31, 2019, the Company issued 4,959,000 warrants in connection with the private placement. The relative fair value of these warrants issued was estimated at $1,666,136 using the Black-Scholes valuation technique. The warrants are convertible into equal number of shares at an exercise price of $0.50 per share within two years of their issuance.

The expiry date of 5,650,000 warrants issued in prior year expiring between July 2019 and September 2019 was extended to March 31, 2020. These warrants were revalued at $1,580,000 using the Black-Scholes valuation technique due to the extended expiry date. The additional cost was expensed. These warrants are convertible into equal number of shares at an exercise price of $0.24 per share.

F-12

Plyzer Technologies Inc.

Nine months ended December 31, 2019

Notes to Unaudited Condensed Financial Statements

The following assumptions were used in the valuation of these warrants:

The value of warrants has been included in paid in capital.

The following are the movements in warrants during the six months ended December 31, 2019:

The aforementioned warrants have an average remaining life of approximately 0.87 year as at December 31, 2019 (0.57 year as at March 31, 2019).

Funds were advanced from time to time by Mr. Terence Robinson, the CEO and the sole director and by Current Capital Corp., a company owned by a brother of the CEO and a shareholder.

PAYABLE TO A RELATED PARTY

$176,738 was payable to Lupama, a company controlled by the CEO of the Company’s subsidiary, as at December 31, 2019 ($nil as at March 31, 2019). The amount related to furniture and equipment acquired from Lupama and services provided by Lupama to Plyzer Spain.

F-13

Plyzer Technologies Inc.

Nine months ended December 31, 2019

Notes to Unaudited Condensed Financial Statements

CONSULTING FEES

Consulting fees include fees charged by the CEO of $9,000 and $27,000 respectively for the three and nine months ended December 31, 2019 and 2018.

DEVELOPMENT COSTS

Development costs include fee of $ nil and $123,308 respectively for three and nine months ended December 31, 2019 ($9,000 and $18,000 respectively for the three and six months ended September 30, 2018.) charged by Lupama, a company controlled by the CEO of the Company’s subsidiary.

SELLING AND MARKETING

Includes expenses of $ nil and $165,326 respectively for the three months and nine months ended December 31, 2019 charged by Lupama. (Three and nine months ended December 31, 2018: $ nil).

TRAVEL, MEALS AND PROMOTION

Comprises expenses of $ 1,673 and $23,248 respectively charged by the CEO for the three and nine months ended December 31, 2019. ($7,286 and 28,760 respectively for the three and nine months ended December 31, 2018).

FURNITURE AND EQUIPMENT ACQUIRED

Furniture and equipment includes equipment valued at $41,833 acquired from Lupama on May 1, 2019.

Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations

Key development during the period ended December 31, 2019:

In April 2019, Plyzer Spain, the Company’s wholly owned subsidiary, became fully operational. It currently rents, on a month to month basis office space from Lupama, and hired the following teams:

Core product improvements

·On going improvements in the three IP platforms 

·Include new filtering process based on the algorithm Locality Sensitive Hashing that improves in number the detection of true positives during the product matching. 

·Detects continuously the creation of new products. 

·Detects new crawling items. 

·Script for converting created products predictions to clusters ready for validation 

·Market Analysis 

·Creation of initial dataset 

·Implementation of code that extract items and relations from the SQL and convert them into a graph 

·Added text preprocessing functionalities to the project 

·Implementation of the New Customers protocol, 

·Optimization of Product Matching Tool 

Sales and Marketing

Press and communication

·Meet and networking events with Barcelona City Tech 

·Update the communication plan and offline and online media strategy 

·Create of communication supports and brochures for Plyzer Intelligence 

·Create of sales supports and brochures for Plyzer Intelligence 

·Create video supports for sales team. 

Sales

·Preparation of sales documents 

·Creation of demonstrations by sectors 

·Generate specific demonstrations for meetings of potential clients 

·Development of weekly events: 12 workshops completed 

·17 new clients including 4 converted clients 

Results of operations

For the three and nine months ended December 31, 2019, the Company had a net loss of approximately $2.9 million and $8.2 million respectively, while its operating loss was approximately $0.7 million and $2.5 million respectively compared to the operating loss of $1.8 million and $22.5 million respectively  for the three and nine months ended December 31, 2018.

Substantial increase in operating costs during the nine months ended December 31, 2018 related to the 34 million warrants issued to Lupama on August 1, 2018 and fully vested on that date. These warrants were valued at $20.4 million. The entire amount was expensed as stock compensation. Operating costs net of the value of warrants for the nine months ended December 31, 2018 was $2 million, of which $1.7 million related to the development costs.

Overall increase in operating costs for the nine months ended December 31, 2019 compared to the same period in 2018( net of value of warrants) was entirely due to Plyzer Spain which began operations since April 2019 and incurred approximately $1.4 million in operating costs.

6

Revenues

The Company generated 17 new clients since the commencement of its operations in April 2019 to December 31, 2019 generating gross billing net of taxes of $66,547.  For the three months ended December 31, 2019, the Company generated 5 new clients and had total revenue of $30,035.

There was no revenue for the three and nine months ended December 31, 2018.

Professional Fees

Professional fees for the three and nine months ended December 31, 2019 included review fee of $3,500 and $10,500 respectively charged by the auditors and legal fees of $61,600 and $245,440 respectively comprising due diligence and processing fees charged in connection with the new convertible loan notes. Increase in legal costs was in line with the increase in the number and value of new loan notes from 21 during the nine months to December 31, 2018 to 35 during the nine months to December 31, 2019. Spanish subsidiary incurred legal fees of $6,566 and $30,311 respectively for the three and nine months ended December 31, 2019. There was no such fee during the corresponding period for  the fiscal 2018.

Professional fees for the three and nine months ended December 31, 2018 were $57,300 and $145,700 respectively.

Professional fees for the three and nine months ended December 31, 2018 included legal fees of $55,550 and $136,500, respectively, and the remaining balance of the fees related to audit fees relating to reviews of the interim financials and 10-Q reports.

Consulting fees

Consulting fee for the three and nine months ended December 31, 2019 included fee charged by the CEO of $9,000 and $27,000 respectively. Consultants who provided accounting, administrative, business strategy and financial services charged $23,499 and $129,929 respectively for the three and nine months ended December 31, 2019. Overall increase in fee from the prior period was due to consultants hired by offices in Canada and Spain which has been operational since April 2019.

Consulting fees for three and nine months ended December 31, 2018 were $48,319 and $90,675, respectively. The fees for the three and nine months ended December 31, 2018 included fees of $9,000 and $18,000 charged by the CEO, respectively, and the remaining balance of the fees were charged by third parties for accounting, administrative and financial services. A new consultant was appointed in the Toronto office in September 2018 at a cost of CDN$4,000 per month. Further, in December 2018, this consultant was paid extra fee of $27,000 for additional work - which increased the overall consulting fees.

Stock compensation

Stock compensation cost was $27,281 and $403,806 respectively for the three and nine months ended December 31, 2019 and included stock valued at $162,800 issued to Spanish office staff as a joining bonus and stock valued at $171,287 issued to a consultant at the Toronto office for services provided.

Stock compensation cost was approximately $1.3 million and $20.5 million for the three and nine months ended December 31, 2018.  On August 1, 2018, the Company revised the terms of the consulting agreement with Lupama. As a result, 5 million shares issued to Lupama and 25 million shares issuable to Lupama on completion of certain milestones were cancelled and replaced by 30 million warrants, which vested immediately on issuance, valid for three years and convertible into equal number of common shares at an exercise price of $0.0025 per share. On October 1, 2018, Lupama was awarded additional 4 million fully vested warrants which were exercised for equal number of common shares on October 2, 2018 at an exercise price of $0.0025 per share. The warrants were valued at $20.5 million using Black-Sholes valuation method. Since all warrants were vested, the entire value was expensed.

7

Development costs

Development costs for the three and nine months ended December 31, 2019 were $19,692 and $233,048 respectively compared to $347,729 and $1.7million respectively for the three and nine months ended December 31, 2018. The development costs reduced significantly from the similar costs  during the same period last year. Main reasons for the reduction were completion of most of the development work during the fiscal 2019 and discontinuation of outsourcing to Lupama and bringing all development work in -house in the Spanish subsidiary.

Much of the development work related to collection of data (crawling) from the web and making qualitative and quantitative improvements in the three platforms described elsewhere in this report.

Development costs for the three and nine months to December 31, 2018 includes fee charged by Lupama of $257,072 and 1.6 million respectively.

Salaries and benefits

Salaries and benefits for the three and nine months ended December 31, 2019 were $355,141 and $832,488 respectively and consisted entirely of the payroll for the Spanish office staff.  Payroll costs include salaries and social security costs relating to the employees.

Spanish subsidiary became fully operational in April 2019. It currently has 37 full time and freelance workers.

There were no employees during the three and nine months ended December 31, 2018.

Selling and marketing

Selling and marketing costs for the three and nine months ended December 31, 2019 were $117,566 and $399,482 respectively and were related to marketing efforts at Spanish office and included approximately $165,000 charged by Lupama for various marketing campaigns carried out for Player Spain.

Key marketing efforts are detailed elsewhere in this report.

There were no such expenses for the three and nine months ended December 31, 2018 as the Company was still in development stage.

Travel, meals and promotions

Travel meals and promotion costs for the three and nine months ended December 31, 2019 were $46,001 and $95,680 respectively. These costs included $44,238 and $71,179 costs incurred by the Spanish office for business development including participation in seminars, trade shows and presentations to prospective clients for three and nine months ended December 31, 2019 respectively. The balance of the costs were charged by the CEO for travelling to Europe and North America to seek new financing and promotion.

General and administrative expenses

General and administrative costs for the three and nine months ended December 31, 2019 were $63,322 and $180,388 respectively. Plyzer Spain subsidiary, which was incorporated in April 2019, incurred $8,059 and $87,764 respectively for the three and nine months ended December 31, 2019. Other costs which included rent for the Toronto office, transfer agent fees etc. remained more or less consistent.

Significant items included in the general and administrative costs for the three and nine months ended December 31, 2018 were rent and utilities of respectively $8,085 and $24,463 for the Toronto office, filing fee for upgrades to the OTCQB listing of, respectively, $3,250 and $5,750 and transfer agent fees of respectively $3,420 and $9,930. The transfer agent fees increased significantly mainly due to increase in issuance and conversion of convertible notes. Exchange gain for the three and nine months ended December 31, 2018 was $5,081 and $5,699, respectively.

8

Interest and amortization Expense

Interest and amortization expense during the three and nine months ended December 31, 2019 was approximately $1 million and $2.5 million respectively. Amortization cost was approximately $2.3 million and related to approximately 40 convertible unsecured loans, including 22 loans prepaid during the period and 35 new loan notes issued. Interest ranged from 8% to 12% per annum.

Interest expense during the three and nine months ended December 31, 2018 related to nine and twenty-one convertible unsecured loans issued, respectively, and four and seven loans prepaid respectively during the period. Interest ranged from 5% to 12% per annum. Interest included amortization of debt discount of $11,563 and $612,849, respectively for the three and nine months ended December 31, 2018.

Financial Condition, Liquidity and Capital Resources

For the nine months ended December 31, 2019, the Company generated a negative cash flow from operations of approximately $2.6 million (nine months to December 31, 2018: negative cash flow of approximately $1.2 million) , which was primarily met from existing cash, proceeds from the convertible loans and advances from the director and shareholder. As of December 31, 2019, the Company had cash of $60,675 (as at March 31, 2019:  $183,439).

The Company has started generating revenue from its three platforms; however, revenue currently is not sufficient to meet all its operating needs and thus the Company will continue to be dependent upon financing raised through equity and debts and advances from its director and shareholders.

Our present material commitments is to maintain offices of our subsidiaries and increasing our efforts in securing more customers and increase revenues and professional and administrative fees and expenses associated with the preparation of our filings and other regulatory requirements.

The Company is seeking to raise capital to implement the Company's business strategy. In the event additional capital is not raised or alternatively debt financing is not available, the Company may seek a merger or outright sale.

Investing activities

For nine months ended December 31, 2019, Plyzer Spain purchased furniture and equipment of approximately $84,000 and the Company invested approximately $86,000 in a private company in Spain.

There was no new investment during the nine months ended December 31, 2018.

Financing activities

During the nine months ended December 31, 2019, the Company raised approximately $1 million through private placement including $50,000 on exercise of warrants (see Note 8 of the unaudited consolidated footnotes for the period), approximately $2.6 million through convertible notes and settled convertible notes of approximately $1.4 million in cash (see Note 6 of the unaudited consolidated footnotes for the period) and borrowed net of $451,455 from the director and a shareholder ( see Note 10 of the unaudited consolidated financials for the period).

The Company raised net $1.2 million of which approximately $0.9 million from debt financing net of debts settled in cash and $250,000 in subscription received under a private equity financing during the nine months ended December 31, 2018.

9

Going Concern

The accompanying financial statements have been prepared assuming that we will continue as a going concern. We have an accumulated deficit of approximately $39 million. The Company realized a net loss of approximately $8.2 million and $23 million, respectively, for the nine months ended December 31, 2019 and 2018. These conditions raise substantial doubt about our ability to continue as a going concern. The Company’s subsidiary, Plyzer Spain has enrolled some customers and generated a small revenue for the nine months ended December 31, 2019. It has also made extensive efforts in securing more customers and increasing its revenues. The Company continued to secure additional convertible loans and equity financing and has raised net of approximately $307,000 to date through debt and equity financing and continue to secure new clients. However, there is no guarantee that efforts to raise further financing  will success or result in the availability of the required funding.  The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Off-balance sheet arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Item 4 - Controls and Procedures