Forward Looking Statements
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") should be read in conjunction with the interim
consolidated financial statements, and notes thereto, for the quarter ended
August 31, 2020 contained under Item 1 of this Quarterly Report on Form 10-Q
("Form 10-Q") and in conjunction with the annual consolidated financial
statements, and notes thereto, contained in the Annual Report on Form 10-K for
the fiscal year ended November 30, 2019 ("Form 10-K"). Unless otherwise
indicated herein, the discussion and analysis contained in this MD&A includes
information available through October 20, 2020.
Certain statements contained in this MD&A may constitute forward-looking
statements as defined under securities laws. Forward-looking statements may
relate to our future outlook and anticipated events or results and may include
statements regarding our future financial position, business strategy, budgets,
litigation, projected costs, capital expenditures, financial results, taxes,
plans and objectives. In some cases, forward-looking statements can be
identified by terms such as "anticipate", "estimate", "intend", "project",
"potential", "continue", "believe", "expect", "could", "would", "should",
"might", "plan", "will", "may", "predict", the negatives of such terms, and
other similar expressions concerning matters that are not historical facts. To
the extent any forward-looking statements contain future-oriented financial
information or financial outlooks, such information is being provided to enable
a reader to assess our financial condition, material changes in our financial
condition, our results of operations, and our liquidity and capital resources.
Readers are cautioned that this information may not be appropriate for any other
purpose, including investment decisions.
Forward-looking statements contained in this MD&A are based on certain factors
and assumptions regarding expected growth, results of operations, performance,
and business prospects and opportunities. While we consider these assumptions to
be reasonable, based on information currently available, they may prove to be
incorrect. Forward-looking statements are also subject to certain factors,
including risks and uncertainties that could cause actual results to differ
materially from what we currently expect. These factors are more fully described
in the "Risk Factors" section at Item 1A of the Form 10-K.
Forward-looking statements contained in this commentary are based on our current
estimates, expectations and projections, which we believe are reasonable as of
the date of this report. You should not place undue importance on
forward-looking statements and should not rely upon this information as of any
other date. Other than as required under securities laws, we do not undertake to
update any forward-looking information at any particular time.
All dollar amounts in this MD&A are expressed in thousands of U.S. dollars
unless otherwise noted.
Business Developments
Note Amendments
On January 9, 2020 the Company and Fengate Trident LP entered into an Amendment
to Convertible Promissory Notes Agreement to amend the terms of certain
convertible promissory notes issued pursuant to a Securities Purchase Agreement
by and between the Company and the Purchaser dated September 26, 2016 and
previously amended on November 30, 2018 and March 11, 2019. The Amendment
affects the convertible notes issued February 5, 2015 (US$1,800,000), May 14,
2015 (US$500,000), September 26, 2016 (US$4,100,000), May 9, 2017 (US$4,400,000)
and May 16, 2018 (US$1,500,000), respectively (collectively the "2016 Notes").
Pursuant to the Amendment, the Purchaser has agreed to convert all of the 2016
Notes on or before the earlier to occur of (i) the Maturity Date of the 2016
Convertible Notes and (ii) the Company raising new equity investment of not less
than US$2,000,000, on terms mutually acceptable to the Purchaser and the Company
(subject to the Purchaser's regulatory considerations). Conversion of the 2016
Notes will occur in a single conversion transaction at a price that is equal to
a 25% discount to the average closing price of the Company's common stock for
the 10 trading days immediately prior to the conversion date, with the exact
structure of the conversion to be determined by the parties.
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The Amendment also amends the outstanding convertible notes issued to the
Purchaser on November 30, 2018 (US$3,400,780), April 13, 2019 (US$2,804,187) and
November 6, 2019 (US$3,795,033) respectively (collectively the "Amended SPA
Notes"). Maturity of the Amended SPA Notes has been deferred to December 1,
2021. It was further agreed that interest on the Amended SPA Notes will accrue
as at July 1, 2020 and be payable upon maturity.
On March 5, 2020, the Convertible Promissory Note dated November 6, 2019 was
amended to delete the second paragraph in its entirety and replace it with the
following paragraph:
The "Issuance Date" with respect to the Note for the portion of the Principal
Amount equal to US$3,795,033 is (a) November 6, 2019 for the first installment
provided to Company of $2,858,865 and (b) March 12, 2020 for the second
instalment provided to Company of $936,168.
On March 12, 2020, the Company received the second instalment of $936,168 which
represented the interest payments withheld on November 6, 2019 for interest
payments up to and including June 30, 2020.
On June 3, 2020, effective as of May 31, 2020, the Company entered into that
certain Third Amendment to Convertible Promissory Notes ("Third Amendment"),
with Fengate Trident LP, the holder of the Notes (the "Note Holder").
The Third Amendment extended the Maturity Dates (as defined) from August 31,
2020 until December 31, 2020 of the following Convertible Promissory Notes
(aggregate principal amount of $12,300,000) (the "Notes"), as follows:
• Convertible Promissory Note dated February 5, 2015 in the principal amount
of $1,800,000
• Convertible Promissory Note dated May 14, 2015 in the principal amount of
$500,000
• Convertible Promissory Note dated September 26, 2016 in the principal
amount of $4,100,000
• Convertible Promissory Note dated May 9, 2017 in the principal amount of
$4,400,000
• Convertible Promissory Note dated May 16, 2018 in the principal amount of
$1,500,000
Except as modified by the Third Amendment, the Notes, as previously amended,
remain in full force and effect.
Management Changes
On February 29, 2020 Mark R. Holcombe resigned as a director of the company. Mr.
Holcombe will continue to provide business advisory services to the Company,
pursuant to his agreement with the Company. On March 1, 2020 the Company's Board
of Directors appointed Richard Russell to serve on the Company's Board of
Directors, to serve in such capacity until the next annual meeting of
stockholders of the Company, subject to earlier resignation or removal.
In connection with his appointment, the Company's Board of Directors determined
that Mr. Russell would meet the requirements of an "independent director" under
the Nasdaq Stock Market's corporate governance rules. Accordingly, the Board of
Directors has designated Mr. Russell an "independent director" for corporate
governance purposes. The Company intends to expand its Board of Directors and
appoint additional "independent directors," with the objective of enhancing
corporate governance.
On September 16, 2020, Mark Cluett resigned as the Chief Operating Officer of
Trident Brands Incorporated.
On September 24, 2020, Pamela Andrews was appointed as Managing Director of the
Company's Brain Armor brand of neuro-nutrition supplements.
Legal Proceedings
On October 15, 2020, the Court in the Everlast case ordered, adjudged and
decreed that Plaintiff Everlast World's Boxing Headquarters Corporation have
judgment and recover the following sums from the Company:
1. $425,000 representing royalty payments due to Plaintiff;
2. Interest on royalty payments computed to October 15, 2020, in the sum of
$242,920;
3. Costs in the sum of $800; and
4. Attorneys' fees in the sum of $70,226; making in total the sum of $738,946
payable by the Company to Everlast.
The Clerk of Court was directed to close the case. The Company has 30 days from
the date of judgement to appeal the case. Management will review the judgement
and explore all its options. The Company has accrued $425,000 liability as of
August 31, 2020. (See Note 8)
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Results of Operations
The following summary of our results of operations should be read in conjunction
with our unaudited consolidated financial statements for the three month periods
ended August 31, 2020 and 2019.
Our operating results for three month periods ended August 31, 2020 and 2019 are
summarized as follows:
Three Three
Months Ended Months Ended
August 31, August 31,
2020 2019
Revenues $ 273,044 342,109
Gross Profit $ 107,728 $ 102,462
Operating Expenses $ 962,341 $ 1,499,845
Other Expenses $ 11,846,356 $ 746,749
Net Loss $ (12,700,969 ) $ (2,144,132 )
Add back:
Interest Expense $ 833,040 $ 983,745
Depreciation $ 222 $ 2,095
Amortization $ -0- $ -0-
EBITDA $ (11,867,707 ) $ (1,158,292 )
Add back:
Stock Options Expense $ -0- $ -0-
Derivative Loss (Gain) $ 11,013,316 $ (236,996 )
Adjusted EBITDA $ (854,391 ) $ (1,395,288 )
Revenues and Gross Profits
Sales in the third quarter of 2020 decreased to $273,044 versus $342,109 in the
prior period. The decrease was the result of the negative impact of the COVID-19
pandemic on our supply chain and customer purchasing patterns coupled with a
significant opening fill order from a large retail trading partner in the prior
period. Gross profit increased to $107,728 versus $102,462 with an increase in
average margin in the period to 39.5% of revenues versus 30.0% of revenues in
the prior period. This is attributable to the impact of high margin Brain Armor®
and P2N Peak Performance Nutrition® branded product revenue. Subject to receipt
of additional funding which will be used in part for further sales and marketing
initiatives, Management expects revenue and profit contribution improvement as
commercial efforts continue to gain traction and market conditions normalize.
COVID-19 has thus far adversely affected our revenues and our ability to raise
additional capital, so there is no assurance we will be able to grow our
business or raise sufficient additional capital on acceptable terms or at all.
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Operating Expenses
Our operating expenses for the three month period ended August 31, 2020
and August 31, 2019 is summarized below:
Three Three
Months Ended Months Ended
August 31, August 31,
2020 2019
Professional Fees $ 178,164 $ 58,835
General & Administrative Expenses $ 550,875 $ 937,802
Marketing, Selling & Warehousing Expenses $ 183,903 $ 435,576
Management Salary $ 41,125 $ 38,250
Director's Fees $ -0- $ 6,500
Rent $ 8,274 $ 22,882
Total Operating Expenses $ 962,341 $ 1,499,845
Operating expenses for the three month period ended August 31, 2020 were
$962,341 as compared to $1,499,845 for the comparative period in 2019, a
decrease of 35.8%. The decrease in our operating expenses was primarily due to a
decrease in general administration and marketing and selling expenses related to
our cost control efforts during this COVID-19 period, partially offset by an
increase in professional fees. Management expects operating expenses to increase
as revenue is expected to gain traction and market conditions normalize.
Other Expenses
Other expenses for the three month period ended August 31, 2020 were $11,846,356
as compared to $746,749 for the comparative period in 2019. The increase in
other expenses was primarily due to an increase in non-cash derivative loss of
$11,250,312 (on the revaluation of the embedded conversion option of all the
convertible notes), and a $119,828 increase in interest expense (related to
higher debt levels), partially offset by a $270,533 decrease in non-cash
interest expense (related to the impact of the amortization of debt discount
from convertible notes entered into in 2016 and 2018). Management expects
interest expenses and amortization of debt discount to remain constant.
Derivative loss or gain will depend on the stock price, volatility factor and
interest rates at the end of the quarter.
Non-GAAP Financial Measure
The following non-GAAP financial measures are presented in this quarterly report
on Form 10-Q to supplement the financial information we present on a GAAP basis.
We monitor and present EBITDA and Adjusted EBITDA because they are key measures
used by our management to understand and evaluate our performance.
EBITDA
We define EBITDA as net income (loss), adjusted to exclude: Interest income and
expense, taxes, depreciation and amortization expense including impairment loss.
Reported net loss for the three month period August 31, 2020 was $12,700,969
compared to $2,144,132 in the comparative period in 2019. After deducting
interest, depreciation and amortization, EBITDA for the three month period ended
August 31, 2020 was ($11,867,707) compared to ($1,158,292) in 2019.
Adjusted EBITDA
We define Adjusted EBITDA as EBITDA, adjusted to exclude stock options expense
and derivative loss. Reported EBITDA for the three month period August 31, 2020
was ($11,867,707) compared to ($1,158,292) in the comparative period in 2019.
After deducting non-cash stock options expense and derivative loss, Adjusted
EBITDA for the three month period ended August 31, 2020 was ($854,391) compared
to ($1,395,288) in 2019.
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Nine Month Periods Ended August 31, 2020 and August 31, 2019
Our operating results for nine month periods ended August 31, 2020 and August
31, 2019 are summarized as follows:
Nine Nine
Months Ended Months Ended
August 31, August 31,
2020 2019
Revenues $ 679,031 $ 1,737,264
Gross Profit $ 261,546 $ 600,791
Operating Expenses $ 3,395,631 $ 5,511,730
Other Expenses $ 23,885,505 $ 4,219,228
Net Loss $ (27,019,590 ) $ (9,130,167 )
Add back:
Interest Expense $ 3,280,847 $ 2,965,106
Depreciation $ 4,413 $ 6,286
Amortization $ -0- $ -0-
EBITDA $ (23,734,330 ) $ (6,158,775 )
Add back:
Stock Options Expense $ -0- $ 380,751
Derivative Loss $ 20,614,658 $ 1,254,122
Adjusted EBITDA $ (3,119,672 ) $ (4,523,902 )
Revenues and Gross Profits
Sales in the first nine months of fiscal 2020 decreased to $679,031 versus
$1,737,264 in the prior period. In addition to the negative impact of the
COVID-19 pandemic on third fiscal quarter revenue, the decrease was the result
of a commercial shift away from high-volume private label product sales to
high-margin branded product sales in the period. Gross profit decreased to
$261,546 versus $600,791, with margin improvement in the period to 38.5% of
revenues versus 34.6% of revenues in the prior period. Subject to receipt of
additional funding which will be used in part for further sales and marketing
initiatives, Management expects revenue and profit contribution improvement as
commercial efforts continue to gain traction and market conditions normalize.
COVID-19 has thus far adversely affected our revenues and our ability to raise
additional capital, so there is no assurance we will be able to grow our
business or raise sufficient additional capital on acceptable terms or at all.
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Operating Expenses
Our operating expenses for the nine month period ended August 31, 2020 and
August 31, 2019 is summarized below:
Nine Nine
Months Ended Months Ended
August 31, August 31,
2020 2019
Professional Fees $ 458,007 $ 690,244
General & Administrative Expenses $ 2,027,493 $ 3,293,136
Marketing, Selling & Warehousing Expenses $ 755,287 $ 1,267,103
Management Salary $ 114,500 $ 115,500
Director's Fees $ -0- $ 29,500
Rent $ 40,344 $ 116,247
Total Operating Expenses $ 3,395,631 $ 5,511,730
Operating expenses for the nine month period ended August 31, 2020 were
$3,395,631 as compared to $5,511,730 for the comparative period in 2019, a
decrease of 38.4%. The decrease in our operating expenses was primarily due to a
decrease in legal expenses of $247,599, a decrease in non-cash options expense
of $380,751 and a decrease in general administration and marketing and selling
expenses related to our cost control efforts during this COVID-19 period.
Management expects operating expenses to increase as revenue is expected to gain
traction and market conditions normalize.
Other Expenses
Other expenses for the nine month period ended August 31, 2020 were $23,885,505,
compared to $4,219,228 in the comparative period in 2019, an increase of 466.1%.
The increase in other expenses was primarily due to an increase in non-cash
derivative loss of $19,360,536 (on the revaluation of the embedded conversion
option of all the convertible notes), and a $483,462 increase in interest
expense (related to higher debt levels), partially offset by a $167,721 decrease
in non-cash interest expense (related to the impact of the amortization of debt
discount from convertible notes entered into in 2016 and 2018). Management
expects interest expense and amortization of debt discount to remain constant.
Derivative loss or gain will depend on the stock price, volatility factor and
interest rates at the end of the quarter.
Non-GAAP Financial Measure
The following non-GAAP financial measures are presented in this quarterly report
on Form 10-Q to supplement the financial information we present on a GAAP basis.
We monitor and present EBITDA and Adjusted EBITDA because they are key measures
used by our management to understand and evaluate our performance.
EBITDA
We define EBITDA as net income (loss), adjusted to exclude: Interest income and
expense, taxes, depreciation and amortization expense including impairment loss.
Reported net loss for the nine month period August 31, 2020 was $27,019,590
compared to $9,130,167 in the comparative period in 2019. After deducting
interest, depreciation and amortization, EBITDA for the nine month period ended
August 31, 2020 was ($23,734,330) compared to ($6,158,775) in 2019.
Adjusted EBITDA
We define Adjusted EBITDA as EBITDA, adjusted to exclude stock options expense
and derivative loss. Reported EBITDA for the nine month period August 31, 2020
was ($23,734,330) compared to ($6,158,775) in the comparative period in 2019.
After deducting non-cash stock options expense and derivative loss, Adjusted
EBITDA for the nine month period ended August 31, 2020 was ($3,119,672) compared
to ($4,523,902) in 2019.
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Balance Sheet Data
The following table provides selected balance sheet data as at August 31, 2020
and August 31, 2019.
August 31, August 31,
Balance Sheet Data: 2020 2019
Cash and cash equivalents $ 82,658 $ 352,982
Total assets $ 2,538,488 $ 3,370,232
Total liabilities $ 58,075,731 $ 24,819,039
Stockholders' (deficit) $ (55,537,243 ) $ (21,448,807 )
Strategic Orientation
Our objective is to provide our shareholders with solid returns through
strategic investments across multiple consumer product and ingredient platforms.
The platforms we are focusing on include:
? Life science technologies and related products that have applications to a
range of consumer products;
? Nutritional supplements and related consumer goods providing defined
benefits to the consumer; and
? Functional foods and beverages ingredients with defined health and
wellness benefits.
We are building our business through strategic investments in high growth early
stage consumer brands and functional ingredient platforms within segment/sectors
which we believe offer sustainable commercial potential. We are focused on three
core strategies underpinning our objectives:
? To execute a multi-tier brand, supply-chain and innovation strategy to
drive revenue;
? To aggressively manage an asset light business model to drive our low cost
platform; and
? To drive disciplines leading to increased investor awareness and ability
to finance and govern growing operations.
While we have yet to achieve profitability, we believe are making significant
progress against our commercial objectives. Subject to receipt of additional
funding, which will be used in part for further sales and marketing initiatives,
we expect revenue and margin to increase as we continue to strengthen
distribution partnerships while capitalizing on product innovation, supply-chain
optimization and brand equity within our current portfolio. COVID-19 has thus
far adversely affected our revenues and ability to raise additional capital, so
there is no assurance we will be able to grow our business or raise sufficient
additional capital on acceptable terms or at all.
Liquidity and Capital Resources
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern, which contemplates
realization of assets and the satisfaction of liabilities in the normal course
of business within one year after the date the consolidated financial statements
are issued. In accordance with Financial Accounting Standards Board, or the
FASB, Accounting Standards Update No. 2014-15, Presentation of Financial
Statements - Going Concern (Subtopic 205-40), our management evaluates whether
there are conditions or events, considered in aggregate, that raise substantial
doubt about our ability to continue as a going concern within one year after the
date that the financial statements are issued.
As of August 31, 2020, the Company had $82,658 in cash and a working capital
deficit of $47,165,954. The Company also has generated losses and has an
accumulated deficit of $61,174,666 as of August 31, 2020. These factors raise
substantial doubt about the ability of the Company to continue as a going
concern. The Company completed additional long term financing with a non-US
institutional investor, receiving proceeds of $3,400,780 on November 30, 2018,
$2,804,187 on April 13, 2019 and $3,795,033 on November 6, 2019. However, unless
management is able to obtain additional financing, the Company may not be able
to meet its funding requirements during the next 12 months. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
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On May 28, 2020, we obtained a $135,165 unsecured loan payable through the
Paycheck Protection Program ("PPP"), which was enacted as part of the
Coronavirus Aid, Relief and Economic Security Act (the "CARES ACT"). The funds
were received from Bank of America through a loan agreement pursuant to the
CARES Act. The CARES Act was established in order to enable small businesses to
pay employees during the economic slowdown caused by COVID-19 by providing
forgivable loans to qualifying businesses for up to 2.5 times their average
monthly payroll costs. The amount borrowed under the CARES Act and used for
payroll costs, rent, mortgage interest, and utility costs during the 24 week
period after the date of loan disbursement is eligible to be forgiven provided
that (a) we use the PPP Funds during the eight week period after receipt
thereof, and (b) the PPP Funds are only used to cover payroll costs (including
benefits), rent, mortgage interest, and utility costs. While the full loan
amount may be forgiven, the amount of loan forgiveness will be reduced if, among
other reasons, we do not maintain staffing or payroll levels or less than 60% of
the loan proceeds are used for payroll costs. Principal and interest payments on
any unforgiven portion of the PPP Funds (the "PPP Loan") will be deferred to the
date the SBA remits the borrower's loan forgiveness amount to the lender or, if
the borrower does not apply for loan forgiveness, 10 months after the end of the
borrower's loan forgiveness period for six months and will accrue interest at a
fixed annual rate of 1.0% and carry a two year maturity date. There is no
prepayment penalty on the CARES Act Loan.
We are currently experiencing an increasing working capital deficiency. As of
August 31, 2020, we had a working capital deficit of approximately $47.2
million, compared to a deficit of approximately $18.3 million as of November 30,
2019. The approximate $28.9 million increase in our working capital deficit was
due primarily to (all amounts approximate) a $931,000 decrease in cash, a $2.6
million increase in accrued liabilities, a $335,000 increase in convertible debt
and a $24.6 million increase in derivative liability.
Currently, we anticipate that our baseline operating activities will use
approximately $300,000 in cash per month over the next twelve months, or
approximately $3.6 million. However, based on our current business plan, subject
to completion of a planned capital raise, we intend to expend at least an
additional $400,000 per month ($4.8 million annually) on an expansion of our
sales and marketing initiatives. Currently we have limited cash on hand, and
consequently, we are unable to fully implement our current business plan.
Accordingly, we have an immediate need for additional capital to fund our
operating activities. COVID-19 has thus far adversely affected our revenues and
our ability to raise additional capital, so there is no assurance we will be
able to grow our business or raise sufficient additional capital on acceptable
terms or at all.
In order to remedy this liquidity deficiency, we are actively seeking to raise
additional funds through the sale of equity and debt securities, and ultimately,
we will need to generate substantial positive operating cash flows. Our internal
sources of funds will consist of cash flows from operations, but not until we
begin to realize additional revenues from the sale of our products and services.
As previously stated, our operations are generating negative cash flows, and
thus adversely affecting our liquidity. If we are able to secure sufficient
funding in the near term to fully implement our business plan, we expect that
our operations could begin to generate significant cash flows during the middle
of 2021, which should ameliorate our liquidity deficiency. If we are unable to
raise additional funds in the near term, we will not be able to implement our
business plan, in which case there would be a material adverse effect on our
results of operations and financial condition.
In the event we do not generate sufficient funds from revenues or financing
through the issuance of common stock or from debt financing, we will be unable
to fully implement our business plan and pay our obligations as they become due,
any of which circumstances would have a material adverse effect on our business
prospects, financial condition, and results of operations. The accompanying
financial statements do not include any adjustments that might be required
should we be unable to recover the value of our assets or satisfy our
liabilities.
Based on our limited availability of funds we expect to spend minimal amounts on
product development, sales and marketing and capital expenditures. We expect to
fund any future product development expenditures through a combination of cash
flows from operations and proceeds from equity and/or debt financing. If we are
unable to generate positive cash flows from operations, and/or raise additional
funds (either through debt or equity), we will be unable to fund our product
development expenditures, in which case, there could be an adverse effect on our
business and results of operations.
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Cash Flows
Nine months ended
August 31,
2020 2019
Net cash used in operating activities $ (2,002,349 ) $ (5,596,957 )
Net cash provided by investing activities $ -0- $ 12,449
Net cash provided by financing activities $ 1,071,333 $ 2,804,187
Change in cash
$ (931,016 ) $ (2,780,321 )
Operating Activities
Cash used in operating activities was (all amounts approximate) $2 million for
the nine months ended August 31, 2020 (about $220,000 per month), compared to
$5.6 million during the comparable prior period (about $620,000 per month). The
approximate $3.6 million decrease in cash used by operating activities was due
primarily to an increase in non-cash derivative loss of $19.3 million and a $2.6
million change in operating assets and liabilities (primarily accounts payable
and accrued liabilities of $2.1 million and inventory of $700,000), partially
offset by an $18 million increase in net loss.
Financing Activities
Cash provided by financing activities was (all amounts approximate) $1.1 million
during the nine months ended August 31, 2020, compared to $2.8 million during
the comparable prior period. The $1.7 million decrease in cash provided by
financing activities related primarily to an approximate $1.9 million decrease
in proceeds from convertible debt, partially offset by $135,000 in proceeds from
the PPP loan.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
Contractual Obligations
Except for the transactions noted in Business Developments, there have been no
material changes outside the normal course of business in our contractual
obligations.
Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires
management to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities, related revenues and expenses, and disclosure
of gain and loss contingencies at the date of the financial statements. The
estimates and assumptions made require us to exercise our judgment and are based
on historical experience and various other factors that we believe to be
reasonable under the circumstances. We continually evaluate the information that
forms the basis of our estimates and assumptions as our business and the
business environment generally changes. The use of estimates is pervasive
throughout our financial statements. There have been no material changes to the
critical accounting estimates disclosed under the heading "Critical Accounting
Estimates" in Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations", of the Company's 2019 Form 10-K.
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