ITEM
2.
MANAGEMENT’ DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 of 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:
(i)
filing Exchange Act reports, and
(ii)
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 no cash in its treasury. There are no assurances that the Company will be able to secure 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 months ended May 31, 2016 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 29, 2016.
RESULTS
OF OPERATIONS
The
Company was a startup company and has generated minimal revenue to date. We have incurred recurring losses to date. We currently
serve 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. 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 goal of consummating a business combination with suitable growth potential and 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
Month Period Ended May 31, 2016 Compared to Three Month Period Ended May 31, 2015.
We
earned no revenue during the three months ended May 31, 2016 and 2015. We have earned minimal revenue since the date of inception.
Our
net loss for the three month period ended May 31, 2016 was $16,542 compared to a net loss of $16,354 for the three months ended
May 31, 2015.
During
the three month period ended May 31, 2016, we incurred general and administrative expenses of $16,542 as compared to $16,354 incurred
for the three month period ended May 31, 2015. General and administrative expenses incurred during the three month periods ended
May 31, 2016 and 2015 were generally related to corporate overhead and administrative contracted services.
LIQUIDITY
AND CAPITAL RESOURCES
Three
Month Period Ended May 31, 2016
As of
May 31, 2016, we had cash of $0 prepaid expenses of 7,500, liabilities of $7,285, and a working capital surplus of $215. As
of February 29, 2016, we had cash of $3,757, liabilities of $4,678, and a working capital deficit of $921. 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 three months ended May 31, 2016 and 2015, net cash used in operating activities amounted to $16,542 and $16,354, respectively.
Cash
Flows from Investing Activities
For
the three months ended May 31, 2016 and 2015, the Company has not generated any cash flows from investing activities.
Cash
Flows from Financing Activities
We
have financed our operations primarily from loans or the issuance of equity. For the three months ended May 31, 2016 and 2015,
net cash provided by financing activities amounted to $13,432 and $2,800, 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, however, 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 future cash on hand, if any, 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 expenses in the future. Currently, we do not have any other arrangements
for financing. On May 2, 2016, the controlling stockholder loaned $432 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 29, 2016 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.
