Item
2. MANAGEMENT
’
S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This
section and other parts of this Quarterly Report on Form 10-Q (“Form 10-Q”) contain forward-looking statements, within
the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements
provide current expectations of future events based on certain assumptions and include any statement that does not directly relate
to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,”
“believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,”
“will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking
statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results
discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those
discussed in Part II, Item 1A of this Form 10-Q under the heading “Risk Factors,” which are incorporated herein by
reference. The following discussion should be read in conjunction with the Company’s Annual Report on Form 10-K for the
year ended February 28, 2018 (the “2018 Form 10-K”) filed with the U.S. Securities and Exchange Commission (the “SEC”)
and the condensed financial statements and notes thereto included in Part I, Item 1 of this Form 10-Q. All information presented
herein is based on the Company’s fiscal calendar. Unless otherwise stated, references to particular years, quarters, months
or periods refer to the Company’s fiscal years ended in February and the associated quarters, months and periods of those
fiscal years. Each of the terms the “Company” and “Toucan” as used herein refers collectively to Toucan
Interactive Corp., unless otherwise stated. The Company assumes no obligation to revise or update any forward-looking statements
for any reason, except as required by law.
GENERAL
Toucan
Interactive Corp. was incorporated in the state of Nevada on January 24, 2014 and maintained its official business address at
Sabanilla de Montes de Oca, Urbanizacion Carmiol, Casa 254, San Jose, Costa Rica.
From
inception until April 2016, the Company’s principal business consisted of developing a website, www.NEEDforCREDIT.com, to
provide credit option services to users primarily in Costa Rica, Canada, the United States and South and Central America and to
market context advertising services to banks and financial institutions in these countries and regions.
In
April 2016, pursuant to the transactions described in the Current Report on Form 8-K filed on April 22, 2016, the Company experienced
a change in control (the “Change of Control”) and ceased operations as a provider of credit option services. The Company
also changed the address of its principal executive offices to 25 E. Foothill Blvd., Arcadia, California 91006.
The
Company currently serves as a vehicle to investigate and, if such investigation warrants, acquire a target company or business
seeking the perceived advantages of being a publicly held corporation. Management does not intend to undertake any efforts to
cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination.
The Company will not restrict its potential candidate target companies to any industry, specific business or geographical location
and, thus, may acquire any type of business.
The
Company does not currently engage in any business activities that generate cash flow. During the next twelve months we anticipate
incurring costs related to:
|
(a)
|
filing Exchange Act reports, and
|
|
(b)
|
investigating, analyzing and consummating a
business combination.
|
We
believe we will be able to meet these costs through use of funds in our treasury and additional amounts, as necessary, to be loaned
to or invested in us by our controlling stockholder, management or other investors. As of the date of the period covered by this
report, the Company has $35,625 in its bank account. There are no assurances that the Company will be able to secure any additional
funding as needed.
As
of the date of this Quarterly Report, the Company has not entered into any definitive agreement with any party, nor have there
been any specific discussions with any potential business combination candidate regarding business opportunities for the Company.
The Company has unrestricted flexibility in seeking, analyzing and participating in potential business opportunities. The analysis
of new business opportunities will be undertaken by or under the supervision of the Company’s officers and directors. In
its efforts to analyze potential acquisition targets, the Company will consider the following factors:
|
(a)
|
Potential for growth,
indicated by new technology, anticipated market expansion or new products;
|
|
(b)
|
Competitive position
as compared to other firms of similar size and experience within the industry segment as well as within the industry as a
whole;
|
|
(c)
|
Strength and diversity
of management, either in place or scheduled for recruitment;
|
|
(d)
|
Capital requirements
and anticipated availability of required funds, to be provided by the Company or from operations, through the sale of additional
securities, through joint ventures or similar arrangements or from other sources;
|
|
(e)
|
The cost of participation
by the Company as compared to the perceived tangible and intangible values and potentials to be acquired;
|
|
(f)
|
The extent to which
the business opportunity can be advanced.
|
In
applying the foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances
and make a determination based upon reasonable investigative measures and available data. In evaluating a prospective business
combination, the Company will conduct as extensive a due diligence review of potential targets as reasonably possible.
We
anticipate that the selection of a business combination will be complex and extremely risky. Potentially available business combinations
may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation
and analysis of such business opportunities difficult and complex. We cannot assure investors that our choice of a business combination
will result in profitable operations.
CRITICAL
ACCOUNTING POLICIES
There
have been no significant changes during the three and nine month periods ended November 30, 2018 to the critical accounting policies
disclosed in our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended February 28,
2018.
RESULTS
OF OPERATIONS
We
are a development stage company and have generated minimal revenue since its inception. We have incurred recurring losses to date.
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include
adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary
should we be unable to continue in operation. We expect we will require additional capital to meet our long-term operating requirements.
We expect to raise additional capital through, among other things, loans from our controlling stockholder and the sale of equity
or debt securities. We have no committed source of financing and we cannot guarantee that we will be able to raise funds as and
when we need them.
Three
and Nine Month Periods Ended November 30, 2018 Compared to Three and Nine Month Periods Ended November 30, 2017.
We
earned no revenue during the three and nine month periods ended November 30, 2018 and 2017. We have earned minimal revenue since
the date of inception.
Our
net loss for the three month period ended November 30, 2018 was $9.953 compared to a net loss of $1,910 for the three month period
ended November 30, 2017. Our net loss for the nine month period ended November 30, 2018 was $13,383 compared to a net loss of
$9,165 for the nine month period ended November 30, 2017.
During
the three month period ended November 30, 2018, we incurred general and administrative expenses of $9.953 as compared to $1,910
incurred for the three month period ended November 30, 2017. During the nine month period ended November 30, 2018, we incurred
general and administrative expenses of $13,383 as compared to $9,165 incurred for the nine month period ended November 30, 2017.
General and administrative expenses incurred during the three and nine month periods ended November 30, 2018 and 2017 were generally
related to corporate overhead and administrative contracted services.
LIQUIDITY
AND CAPITAL RESOURCES
Nine
Month Period Ended November 30, 2018
As
of November 30, 2018, we had cash of $35,625, prepaid expenses of $4,965, liabilities of $79,356, and an accumulated deficit of
$83,444. As of February 28, 2018, we had cash of $39,720, liabilities of $76,838, and an accumulated deficit of $70,061. We expect
to incur continued losses until we acquire a company with operations and those operations are profitable.
Cash
Flows from Operating Activities
For
the nine month periods ended November 30, 2018 and 2017, net cash used in operating activities amounted to $5,760 and $7,705,
respectively.
Cash
Flows from Investing Activities
For
the nine month periods ended November 30, 2018 and 2017, the Company has not generated any cash flows from investing activities.
Cash
Flows from Financing Activities
We
have financed our operations primarily from either loans or the issuance of equity. For the nine month periods ended November
30, 2018 and 2017, net cash provided by financing activities amounted to $1,665 and $57,705, respectively.
We
have generated minimal revenues from operations to date. It is not likely that we will generate any further revenues until a business
combination has been consummated. Even following a business combination, there is no guarantee that any revenues will be generated,
that any revenues will be sufficient to meet our expenses or that we will ever become profitable. We may consider a business combination
with a target company which itself has recently commenced operations, is a developing company in need of additional funds for
expansion into new products or markets, is seeking to develop one or more new products or services, or is an established business
which may be experiencing financial or operating difficulties and is in need of additional capital.
Moreover,
any target business that is selected may be financially unstable or in the early stages of development or growth, including businesses
without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business
and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business
combination with a target company in an industry characterized by a high level of risk, and although our management will endeavor
to evaluate the risks inherent in a particular target company, there can be no assurance that we will properly ascertain or assess
all significant risks.
The
foregoing considerations raise substantial doubt about our ability to continue as a going concern. We are currently planning on
devoting the vast majority of our efforts to identifying, investigating and conducting due diligence on target companies; and
negotiating, structuring, documenting and consummating a business combination. Our long-term ability to continue as a going concern
is dependent upon our ability to complete a business combination and, thereafter, achieve profitable operations.
We
believe that we will be able to meet these costs through cash on hand and additional amounts, as may be necessary, to be loaned
by or invested in us by our controlling stockholder, management and/or others. Currently, however, our ability to continue as
a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing
to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our ability to continue
as a going concern is also dependent on our ability to find a suitable target company and enter into a business combination. Management’s
plan includes obtaining additional funds through a combination of sales of our equity securities before, contemporaneously with,
or following, the consummation of a business combination and borrowings, although we do not believe that we will be eligible to
borrow funds from a bank until at least a business combination is consummated. However, there is no assurance that any additional
funding will be available on terms that are favorable to us or at all.
On
April 22, 2016, all the loans made by the Company’s then sole director were repaid in full. Since the Change of Control
in April 2016, we rely on loans from our controlling stockholder to meet our expenses. There is no guarantee that our controlling
stockholder will continue to lend us funds to meet our expense in the future. Currently, we do not have any other arrangements
for financing. During the three and nine month periods ended November 30, 2018, the controlling stockholder loaned $1,665 and
$1,665, respectively, to the Company for working capital.
We
have no assurance that future financing will be available to us on acceptable terms, or at all. If financing is not available
to us on satisfactory terms or at all, we may be unable to develop operations or meet our expenses. Additionally, any equity financing
in which we might engage would result in dilution to our existing stockholders.
GOING
CONCERN
The
independent auditors’ audit report accompanying our financial statements dated February 28, 2018 contained an explanatory
paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared
assuming that we will continue as a going concern, which contemplates that we will realize our assets and satisfy our liabilities
and commitments in the ordinary course of business.
OFF-BALANCE
SHEET ARRANGEMENTS
As
of the date of this Quarterly Report, 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 are material to investors.
