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 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

 

For the quarterly period ended June 30, 2017

 

 

For the transition period from _____________ to _____________

 

Commission File Number: 000-55353

 

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

(Registrant’s Telephone Number, Including Area Code)

 

 

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

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. ☐

 

As of August 29, 2017, there were 82,447,881 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

 

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CLICKSTREAM CORP.

FORM 10-Q

 

For the Quarterly Period Ended June 30, 2017

 

Table of Contents

 

 

 

PART I - FINANCIAL INFORMATION

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 

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

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 

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

 

 

CLICKSTREAM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended June 30, 2017 and 2016

 

Note 1: Organization and Business

 

 

The Company was incorporated in the state of Nevada on September 30, 2005 and previously operated under the name Peak Resources Incorporated. In August 2008, we changed our name to “Mine Clearing Corporation” (MCCO). The Company had been operating as an exploration division in the mining sector until May 2014.

 

On May 2, 2014, the Company acquired all the outstanding shares of ClickStream Corporation, a Delaware corporation (“CS Delaware”), pursuant to a merger into a wholly-owned subsidiary of the Company.  Subsequent to the merger, we have been operating as a data analytics tool developer and have sought to further develop and exploit our data analytics technology and proprietary algorithms.

 

 

ClickStream is a technology based data analytics company focused on development of analytical tools for high volume data analysis and related internet trends and associations.  We are currently in late-stage development of a fantasy sports analytical service platform, DraftClick.

 

DraftClick is designed to assist in the fantasy sport player’s ability to monitor changes in betting lines, breaking news releases, injury reports, real-time discussions in sports forums, fan sentiment, historical matchup data and other sources of data by incorporating all of this information into prediction results.  These results are then presented using a tailored version of DraftClick's user interface which has been designed to enable seamless transition of player selections to fantasy game sites such as DraftKingsTM and FanDuelTM.  We plan to launch DraftClick in the Fall of 2017.

NOTE 2 – Basis of Presentation and Going Concern

 

The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting.

Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016 filed with the SEC. The condensed consolidated balance sheet as of September 30, 2016 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including notes, required by GAAP.

The results of operations for the nine months ended June 30, 2017 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending September 30, 2017.

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going concern.  The Company has not yet generated any revenues, has incurred recurring net losses since inception and has a working capital deficiency.  During the nine months ended June 30, 2017, the Company incurred a net loss of $279,000 and as of June 30, 2017, the Company had a working capital deficiency and stockholders’ deficit of $736,000.  These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. In addition, our independent registered public accounting firm, in their report on our audited financial statements for the fiscal year ended September 30, 2016 expressed substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from an inability of the Company to continue as a going concern.

  

We are an early-stage company with a limited operating history, which makes it difficult to evaluate our current business and future prospects.  As a result, the Company has limited operating history upon which an evaluation of the ClickStream’s performance can be made.  There have been no revenues generated from our business operations and we expect to incur further losses in the foreseeable future due to significant costs associated with our business development.  There can be no assurance that our operations will ever generate sufficient revenues to fund our continuing operations, or that we will ever generate positive cash flow from our operations, or that we will attain or thereafter sustain profitability in any future period.

 

 

We will also attempt to raise additional debt and/or equity financing to fund operations and to provide additional working capital.  There is no assurance that such financing will be available in the future or obtained in sufficient amounts necessary to meet the Company's needs, that the Company will be able to achieve profitable operations or that the Company will be able to meet its future contractual obligations. Should management fail to obtain such financing, the Company may curtail its operations. 

   

NOTE 3- Summary of Significant Accounting Policies

 

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 certain reported amounts and disclosures. Significant estimates for the years reported include certain assumptions used in deriving the fair value of derivative liabilities and share-based compensation. Assumptions and estimates used in these areas are material to our reported financial condition and results of our operations. Actual results will differ from those estimates. 

 

 

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete.

 

Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

 

The fair value of the Company's common stock option and warrant grants is estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.

 

 

Our computation of earnings per share (“EPS”) includes basic and diluted EPS.  Basic EPS is measured as the income available to common stockholders divided by the weighted average common shares outstanding for the period.  Diluted income per share reflects the potential dilution, using the treasury stock method, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company as if they had been converted at the beginning of the periods presented, or issuance date, if later. In computing diluted income per share, the treasury stock method assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options and warrants may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

 

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers.  ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition.  ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract.  The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.  ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017.   Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein.  Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption.  The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures.

 

 

In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases.  ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months.  ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018.  Early adoption is permitted.  A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available.  The Company is in the process of evaluating the impact of ASU 2016-02 on the Company’s financial statements and disclosures.

In July 2017, the FASB issued Accounting Standards Update No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815):  (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”).  ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock.  As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities.  A company will recognize the value of a down round feature only when it is triggered and the strike price has been adjusted downward.   For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share.  For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings.  ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.  Early adoption is permitted.  The guidance in ASU 2017-11 is to be applied using a full or modified retrospective approach.  The adoption of ASU 2017-11 is not currently expected to have any impact on the Company’s financial statement presentation or disclosures.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. 

 

NOTE 4 –Notes Payable

On June 20, 2016, the Company issued a promissory note for $10,000 in exchange for cash.  The note is unsecured and bears interest at 8% per annum and matured in September 2016.

During the period ended June 30, 2017, the Company issued similar notes payable in the aggregate of $45,000 in exchange for cash.  The notes are unsecured and bears interest at 10% and 20% per annum.  Two notes amounting to $15,000 matured in  March 2017 and one note amounting to $30,000 will mature in January 2018.  As part of the note issuance, the Company issued 1 million shares of its common stock with a fair value of $8,000 as an inducement to a note holder.  The Company accounted the fair value as a debt discount and is amortizing it over the term of the note.  In addition, the Company also accrued interest of $2,000 pursuant to the terms of the notes, and amortized $1,000 of the debt discount.

As of June 30, 2017, total outstanding balance of notes payable amounted to $55,000, accrued interest of $2,000 and unamortized debt discount of $7,000.  In addition, three notes payable totaling $25,000 are past due.  The Company is currently in negotiations with the note holders to settle the past due notes payable.

NOTE 5 –Loan Payable –Stockholder

On September 17, 2014, the Company issued a promissory note to a stockholder for $45,000.  The note is unsecured and is due within ten days upon on the completion of an initial financing by the Company which is expected to be completed before the end of 2017.

NOTE 6 – Stockholders’ Deficit

During the nine months ended June 30, 2017, the Company issued 2,129,195 shares of common stock with a fair value of $64,000 to settle accounts payable and accrued expense totaling $53,000.  As a result, the Company recognized a gain of $11,000 to account the difference between the fair value of the common shares issued and the accounts payable and accrued expenses settled.  The shares were valued at the respective dates of settlement.

During the nine months ended June 30, 2017, the Company issued 6,721,333 shares of common stock with a fair value of $202,000 to settle accounts payable to related parties totaling $202,000.  The shares were valued at the respective date of settlement.

 

 

During the period ended June 30, 2017, the Company issued 1,750,000 shares of common stock to officers of the Company and 250,000 shares of common stock to a consultant for a total of 2,000,000 shares of common stock with a fair value of $15,000.  The shares were issued for services rendered and was valued at the date of issuance.

During the period ended June 30, 2017, the Company issued 1,000,000 shares of common stock with a fair value of $8,000 as part of issuance of note payable (see Note 4).  The shares were valued at the date of issuance and recorded as a note discount.

NOTE 7 – Warrants

The following schedule summarizes the changes in the Company’s outstanding warrants during the nine months ended June 30, 2017: 

 

 

(1)

In October 2015, the Company granted a financial consultant fully vested warrants to purchase up to 10,000,000 shares of common stock at an exercise price of $0.05 per share for a period of five years.

 

NOTE 8 – Related Party Transactions

 

Pursuant to a consulting agreement with a major stockholder of the Company, during the nine months ended June 30, 2017 and 2016, the Company incurred $90,000 and $65,000 for services rendered and reported as part of Consulting and professional fees - Related Party in the accompanying Statement of Operations.

During the nine months ended June 30, 2017 and 2016, the Company incurred $20,000 and $20,000, respectively for legal services rendered by a stockholder and officer of the Company and reported as part of Consulting and professional fees - Related Party in the accompanying Statement of Operations.

      

During the nine months ended June 30, 2017 and 2016, the Company incurred an aggregate of $94,000 and $100,000, respectively for services rendered by the two officers of the Company and was reported as part of Consulting and professional fees - Related Party in the accompanying Statement of Operations.

During the nine months ended June 30, 2017, the Company issued 1,750,000 shares of common stock with a fair value of $14,000 to officers and a major stockholder of the Company for services rendered and was reported as part of Consulting and professional fees - Related Party in the accompanying Statement of Operations.

During the period ended June 30, 2017, the Company issued 6,721,333 shares of common stock with a fair value of $202,000 to settle amount due to these officers and major stockholder totaling $202,000.  In addition, a total of $47,000 in unpaid fees to a consultant that were recorded in prior period as part of Accounts Payable and accrued expenses was reclassified as part of Accounts Payable – Related Party pursuant to the appointment of the consultant as an officer of the Company in June 2017.

As of June 30, 2017 and September 30, 2016, the Company had accounts payable to our officers and the major stockholders in the amount of $378,000 and $338,000, respectively for unpaid consulting and professional fees.   These amounts are unsecured, non-interest bearing and due upon demand.

 

 

During the periods ended June 30, 2017 and 2016, the Company’s office facility has been provided without charge by one of the Company’s major stockholders. Such cost was not material to the financial statements and accordingly, have not been reflected therein.  

NOTE 9 – Commitments and Contingencies

We are involved in certain legal proceedings that arise from time to time in the ordinary course of our business. Except for income tax contingencies, we record accruals for contingencies to the extent that our management concludes that the occurrence is probable and that the related amounts of loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. Legal proceeding that is currently pending is as follows:

 

 

b. The holder of two promissory notes of the Company in the principal amounts of $10,000 issued in June 2016 (see Note 4) and $7,500 issued in December 2016, respectively, has demanded payment, together with interest at the rate of 8% per annum from June 20, 2016 and 10% per annum from December 16, 2016, respectively, in each case together with costs of collection. The holder has not commenced or threatened litigation. The Company intends to pay these notes upon completion of a pending financing.

     

 

 

The following discussion and analysis of our results of operations, financial condition and liquidity and capital resources should be read in conjunction with our unaudited financial statements and related notes for the three months ended June 30, 2017. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.

 

Overview

 

The MD&A is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make certain estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under 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 under different assumptions and conditions.

 

Organization

 

We were incorporated in the state of Nevada on December 30, 2005 and previously operated under the name Peak Resources Incorporated. Effective August 18, 2008, we changed our name to “Mine Clearing Corporation” (MCCO). The Company had been operating as an exploration division in the mining sector until May 2014.

 

On April 25, 2014, the Company’s stockholders adopted Amended and Re-Stated Articles of Incorporation, (the “New Articles”). The New Articles provided for a one for 300 reverse split of all outstanding shares of common stock, authorization of 5 million shares of “blank check” preferred stock, an increase in the authorized shares of common stock to 300,000,000 shares and changing the name of the Company to ClickStream Corporation. All share and per share amounts have been adjusted to reflect the one for 300 reverse split of the common stock as of the earliest period presented.

 

On May 2, 2014, the Company acquired all of the outstanding shares of ClickStream Corporation, a Delaware corporation (“CS Delaware”), pursuant to a merger into a wholly-owned subsidiary of the Company.  As part of the merger agreement, the Company issued a total of 600,798 shares of common stock in exchange for the entire issued and outstanding shares of MCCO of 600,798 shares of common stock.

 

Since former holders of Clickstream common stock owned, after the Merger, substantially all of MCCO’s shares of common stock, and as a result of certain other factors, including that all members of the Company’s executive management are members of Clickstream management, Clickstream is deemed to be the acquiring company for accounting purposes and the merger was accounted for as a reverse merger and a recapitalization in accordance with generally accepted accounting principles in the United States (“GAAP”).  

 

Subsequent to the merger, we have been operating as a data analytics tool developer and have sought to further develop and exploit our data analytics technology and proprietary algorithms.

Our Business

 

ClickStream is a technology based data analytics company focused on development of analytical tools for high volume data analysis and related internet trends and associations.  We are currently in late-stage development of a fantasy sports analytical service platform, DraftClick.

 

DraftClick is designed to assist in the fantasy sport player’s ability to monitor changes in betting lines, breaking news releases, injury reports, real-time discussions in sports forums, fan sentiment, historical matchup data and other sources of data by incorporating all of this information into prediction results.  These results are then presented using a tailored version of DraftClick's user interface which has been designed to enable seamless transition of player selections to fantasy game sites such as DraftKingsTM and FanDuelTM.  DraftClick uses over 40 types of algorithms and it uses over 100 player specific variables as input data points. The specific algorithms to use for each player each day is selected by the system based on the training data. The training data consists of thousands of historical contests where the outcome is known and the values of the data points are known before and after each contest. This so-called historical “back testing” is also used to establish proper confidence levels. As each day goes by, the set of training data increases by the outcomes for that day. We plan to launch DraftClick in the Fall of 2017.

 

 

Results of Operations

  

Comparison of Results of Operations for the Three months Ended June 30, 2017 and 2016

Below is a discussion of our operating results for the three months ended June 30, 2017, compared to our operating results during the comparable period in 2016. Net loss for the three months ended June 30, 2017, was $86,000 compared to net income of $6,885,000 for the three months ended June 30, 2016. The increase in net loss resulted from a decrease in operating expenses, net of a decrease in other (income) expense as described below.

  

Operating Expenses.

 

 

For the three months ended June 30, 2017, Consulting and professional fees decreased by $11,000 as compared to the prior period as  the Company did not incur finance and legal fees due to the Company not having the capital required and slowed down operations.

For the three months ended June 30, 2017, Consulting – related party increased by $8,000 as compared to the prior period as additional consulting fees were incurred by the Company.

For the three months ended June 30, 2017, Research and development decreased by $31,000 as compared to the prior period as the Company did not have the resources to perform additional work on the Company’s technology.

For the three months ended June 30, 2017 General and administrative expenses decreased by $9,000 as compared to the prior period  as the Company did not have the capital required and slowed down operations.

 

Other (Income) Expense.

 

Interest expense increased by $3,000 as compared to the prior period as the Company issued new notes payable during the nine months ended June 30, 2017.

Change in fair value of derivative liability decreased by $7,011,000 as compared to the prior period as there was no derivative liability at June 30, 2017.

Comparison of Results of Operations for the Nine months Ended June 30, 2017 and 2016

Below is a discussion of our operating results for the nine months ended June 30, 2017, compared to our operating results during the comparable period in 2016. Net loss for the nine months ended June 30, 2017, was $279,000 compared to net loss of $1,702,000 for the nine months ended June 30, 2016. The decrease in net loss resulted from a decrease in operating expenses, as described below.

  

Operating Expenses.

 

 

 

For the nine months ended June 30, 2017, Consulting and professional fees decreased by $1,174,000 as compared to the prior period as the majority of the June 30, 2016 consulting fees related to the grant of fully vested warrants to a financial consultant to purchase up to 10,000,000 shares of common stock at an exercise price of $0.05 per share for a period of five years.  The warrant exercise price is subject to certain reset provisions in case the Company will sell or issue similar instrument in the future at a price lower than $0.05 per share.  As result, these warrants were accounted for as a derivative liability with a fair value of $938,000 at the date of grant.  In addition, the Company also issued shares of common stock for services with a fair value of $138,000 during the period ended June 30, 2016. There were no shares of common stock issued for services or warrants granted in the current period.

For the nine months ended June 30, 2017, Consulting – related party increased by $33,000 as compared to the prior period as additional consulting fees were incurred by the Company.

For the nine months ended June 30, 2017, Research and development increased by $5,000 as compared to the prior period as the Company used resources to perform additional work on the Company’s technology

For the nine months ended June 30, 2017 General and administrative expenses decreased by $12,000 as compared to the prior period  as the Company did not have the capital required and slowed down operations.

Other (Income) Expense.

 

Gain on settlement of debt increased by $11,000 as compared to the prior period as the Company issued common shares for settlement of accounts payable and recorded a gain on the transaction. There was no such transaction in the prior period.

Interest expense increased by $3,000 as compared to the prior period as the Company issued new promissory notes during the nine months ended June 30, 2017.

Change in fair value of derivative liability decreased by $267,000 as compared to the prior period as there was no derivative liability at June 30, 2017.

 

Liquidity

 

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going concern.  The Company has not yet generated any revenues, has incurred recurring net losses since inception and has a working capital deficiency.  During the nine months ended June 30, 2017, the Company incurred a net loss of $279,000 and as of June 30, 2017, the Company had a working capital deficiency and stockholders’ deficit of $736,000.  These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. In addition, our independent auditors, in their report on our audited financial statements for the fiscal year ended September 30, 2016 expressed substantial doubt about our ability to continue as a going concern.  The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from an inability of the Company to continue as a going concern.

 

We are an early-stage company with a limited operating history, which makes it difficult to evaluate our current business and future prospects.  As a result the company has limited operating history upon which an evaluation of the ClickStream’s performance can be made.  There have been no revenues generated from our business operations and we expect to incur further losses in the foreseeable future due to significant costs associated with our business development.  There can be no assurance that our operations will ever generate sufficient revenues to fund our continuing operations, or that we will ever generate positive cash flow from our operations, or that we will attain or thereafter sustain profitability in any future period.

 

We will also attempt to raise additional debt and/or equity financing to fund operations and to provide additional working capital.  There is no assurance that such financing will be available in the future or obtained in sufficient amounts necessary to meet the Company's needs, that the Company will be able to achieve profitable operations or that the Company will be able to meet its future contractual obligations. Should management fail to obtain such financing, the Company may curtail its operations.  

Management believes it will take approximately $1 million for operations and to launch DraftClick in the Fall of 2017. In October 2015, the Company hired a consultant to assist in raising the capital required.

 

 

Comparison of Cash Flows for the Nine months Ended June 30, 2017 and 2016

 

 Cash totaled $0 at June 30, 2017 and 2016, respectively. The change in cash is as follows:

 

   

Operating Activities

 

Cash used in operating activities in the nine months ended June 30, 2017 was $45,000 as compared to cash used of $10,000 during the prior period, representing an increase in cash used in operating activities of $35,000 based on the operating results discussed above. 

Financing Activities

 

Cash generated from financing activities during the nine months ended June 30, 2017 was $45,000 as compared to $10,000 generated in the comparable period in 2016 representing an increase of $35,000. During the period ended June 30, 2017, the Company received proceeds from the issuance of notes payable of $45,000. During the period ended June 30, 2016, the Company received proceeds from the issuance of notes payable of $10,000.

Capital Resources

 

As of June 30, 2017, the Company does not have any material commitments for capital expenditures.

 

Critical Accounting Policies

 

The Company’s accounting policies are described in Note 3 in the accompanying financial statements. Below is a summary of the critical accounting policies, among others, that management believes involve significant judgments and estimates used in the preparation of its financial statements. 

 

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 certain reported amounts and disclosures. Significant estimates for the years reported include certain assumptions used in deriving the fair value of share-based compensation. Assumptions and estimates used in these areas are material to our reported financial condition and results of our operations. Actual results will differ from those estimates. 

 

 

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete.

 

Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

 

The fair value of the Company's common stock option and warrant grants is estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.

 

There were no stock options granted or issued during the nine months ended June 30, 2017 and 2016.  There were no stock options outstanding as of June 30, 2017 and September 30, 2016.

 

 

 

The Company adopted FASB ASC Topic 260, Earnings Per Share. Basic earnings per share is based on the weighted effect of common shares issued and outstanding and is calculated by dividing net income (loss) available to common stockholders by the weighted average shares outstanding during the period. Diluted earnings per share is calculated by dividing net income available to common stockholders by the weighted average number of common shares used in the basic earnings per share calculation plus the number of common shares, if any, that would be issued assuming conversion of potentially dilutive securities outstanding. For all periods, potentially issuable securities are anti-dilutive.

 

As of June 30, 2017, the Company had 10 million stock warrants outstanding to purchase shares of common stock that were not included in the diluted net loss per common share because their effect would be anti-dilutive.

 

Recent Accounting Pronouncements

 

Recent Accounting Pronouncements applicable to the Company are discussed in notes the Financial Statements included elsewhere in this Form 10Q. 

 

Off Balance Sheet Arrangements

 

As of June 30, 2017, the Company has no off-balance sheet arrangements.

 

 

Not applicable.

 

 

Disclosure Controls and Procedures

 

Our principal executive officer and principal financial officer evaluated the effectiveness of our “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the United States Securities Exchange Act of 1934, as amended), as of June 30, 2017.  Based on that evaluation we have concluded that our disclosure controls and procedures were not effective as of June 30, 2017.

 

Management’s Report on Internal Control over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

 

·

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

 

·

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

 

·

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

 

All internal control systems, no matter how well designed, have inherent limitations and can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 

 

As of June 30, 2017, management of the company conducted an assessment of the effectiveness of the company’s internal control over financial reporting.  In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework.  In the course of the assessment, material weaknesses were identified in the company’s internal control over financial reporting.

 

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

 

 

 

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Inherent Limitations Over Internal Controls

 

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of controls. Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

 

   

PART II - OTHER INFORMATION

There are presently no material 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.

Not applicable.

None.

There were no reportable events under this Item 3 during the three months ended June 30, 2017.

Not applicable.

None.

 

 

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.