Overview of the Company’s Financial Performance

The financial report provides an overview of the key financial developments and performance of the company over the past year. Some of the key points include:

• The company experienced inflationary pressures and supply chain disruptions in 2021 and 2022 due to global events, which resulted in increased operating costs. The company is unable to predict future trends in inflation and how it may continue to impact the business.

• The company entered into several new strategic partnerships and agreements in 2022, including a Memorandum of Understanding and a License and Distributor Agreement with Nugen Universe, LLC. These agreements provide the company with upfront payments as well as ongoing royalties for licensing its mobile banking technology.

• The company also entered into an exclusive distribution agreement with Encore Sales and Marketing LLC in 2024 to sell and market the company’s products to the gaming industry.

• For the three months ended September 30, 2024, the company reported total revenues of $39,000, down 32.8% from the same period in the prior year. This was driven by a decline in management fee revenue from a related party.

• The company incurred a net loss of $390,000 for the three months ended September 30, 2024, compared to a net loss of $306,000 in the same period of the prior year. The increased loss was primarily due to higher selling, general and administrative expenses.

• As of September 30, 2024, the company had a cash balance of $64,000 and a stockholders’ deficit of $10,118,000. The company has substantial doubt about its ability to continue as a going concern within the next year without additional external investment or significant cost reductions.

Revenue and Profit Trends

The company’s revenue is primarily generated from two sources:

1. Mobile banking technology revenue: This includes revenue from the company’s Blinx On-Off prepaid card, open/close loop system, and Bio ID card platform. Mobile banking technology revenue was flat at $21,000 for the three months ended September 30, 2024 and 2023.

2. Management fee revenue from a related party: The company earns a 35% management fee on revenues from a barcode technology business it sold in 2015. This revenue declined 51.4% to $18,000 for the three months ended September 30, 2024 compared to the prior year period.

Overall, the company’s total revenues declined 32.8% to $39,000 for the three months ended September 30, 2024, driven by the drop in management fee revenue.

On the expense side, the company’s cost of revenue increased to $57,000 in the three months ended September 30, 2024 from $42,000 in the prior year period. Selling, general and administrative expenses also rose to $223,000 from $191,000, primarily due to higher legal and professional fees.

These increased expenses, combined with the revenue decline, resulted in a net loss of $390,000 for the three months ended September 30, 2024, compared to a net loss of $306,000 in the same period of the prior year.

Strengths and Weaknesses

Strengths:

• The company has developed innovative mobile banking technology products like the Blinx On-Off prepaid card and Bio ID verification system.
• The company has established strategic partnerships with Nugen Universe and Encore Sales and Marketing that provide upfront payments and ongoing royalties.
• The company has a long-standing management services agreement with a related party that provides a steady stream of revenue, albeit declining.

Weaknesses:

• The company is heavily reliant on external financing and has a substantial stockholders’ deficit, raising substantial doubt about its ability to continue as a going concern.
• The company has a high level of convertible notes and other debt, much of which is in default, putting financial strain on the business.
• The company’s revenue is highly concentrated, with the management services agreement accounting for a large portion of total revenue.
• The company has experienced declining revenue and increasing expenses, resulting in significant net losses.

Outlook and Future Prospects

The company’s future outlook is uncertain given its current financial position and reliance on external financing. The company will need to secure additional investment or implement significant cost reductions to continue operations through fiscal 2025 and beyond.

The company’s strategic partnerships with Nugen Universe and Encore Sales and Marketing provide some potential for future revenue growth, but it remains to be seen whether these agreements will generate meaningful royalties and income. The company’s ability to develop and commercialize its mobile banking technology products will also be critical to its long-term success.

Overall, the company faces significant challenges in the near-term due to its financial constraints and the need to find a sustainable path forward. Investors and stakeholders will be closely watching the company’s ability to secure additional funding, reduce costs, and generate revenue from its strategic partnerships and product offerings.