What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-05-15 · 139 added, 87 removed, 190 unchanged (54% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

You should read the following

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their websites, their venues, or their streaming media content.

Our customers mostly sports

teams (Professional and Collegiate), venues (Arenas, Football Stadiums, Baseball Stadiums), and advertising agencies, which typically

use our products as part of their live events or as part of an advertising campaign with the goal of engaging fans, increasing consented

first-party data, and increasing sales.

At March 31, 2025 and December 31, 2024, we had two active customers.

Our products and games are designed so that end users of our products can earn prizes by registering on our system

and completing in-content challenges like trivia, polls, or casual mobile games.

Players could use our system to play a variety of games

and earn a wide range of prize types, provided by advertisers and sponsors.

Our products, include our in-venue XEO and Filter Fan Cam

products for live events, and our new stand-alone “Winfinite” product line that can be used by brands, advertising agencies,

and content partners to reach potential customers outside of sports venues, on mobile devices.

We also have an IP portfolio that could

create future licensing and product development opportunities including our recently allowed Artificial Intelligence (“AI”)

and Machine Learning (“ML”) series of patent claims.

Our customers mostly sports teams (Professional and Collegiate), venues

(Arenas, Football Stadiums, Baseball Stadiums), and advertising agencies, which typically use our products as part of their live events

or as part of an advertising campaign with the goal of engaging fans, increasing consented first-party data, and increasing sales.

June 30, 2025 and December 31, 2024, we had three active customers.

Our products and games are

designed so that end users of our products can earn prizes by registering on our system and completing in-content challenges like trivia,

polls, or casual mobile games.

Players could use our system to play a variety of games and earn a wide range of prize types, provided

by advertisers and sponsors.

Our products, include our in-venue XEO and Filter Fan Cam products for live events, and our new stand-alone

“Winfinite” product line that can be used by brands, advertising agencies, and content partners to reach potential customers

outside of sports venues, on mobile devices.

We also have an IP portfolio that could create future licensing and product development opportunities

including our recently allowed Artificial Intelligence (“AI”) and Machine Learning (“ML”) series of patent claims.

With the acquisition of Xcite

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were the Texas Rangers and San Jose Sharks.

For the six months ended June 30, 3025 our largest customer is ASPIS, a significant shareholder

of the Company.

We now have three principal

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ad agencies, and other content creators.

During the period, we have now made some major headway in our new market

of Brazil, which we expect to come online and be revenue generating within Q3.

Including and not limited to discussions with major soccer

franchises, leagues, festival promoters and tennis tournaments.

Additionally, we now are using Aspis Cyber Technologies, Inc products

to secure the company’s websites and all technology offerings.

We have now also embarked upon a project of creating new and more

current IP, which will be an ongoing project and bolster our company’s position.

Significant Components of Our Results of Operations

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Operating Results

Comparison of Results of Operations for the Three-Month periods

ended March 31, 2025 and March 31, 2024

Comparison of Results of Operations for the three months ended June

30, 2025 and June 30, 2024

The following table summarizes

our results of operations for the three month periods ended March 31, 2025 and 2024:

our results of operations for the three months ended June 30, 2025 and 2024:

For the Three Months Ended

Statement of Operations and Comprehensive Loss Data:

Consolidated Statement of Operations and Comprehensive Income (Loss)

Revenues – related party

Cost of revenues

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Total operating expenses

Operating loss

Other income/(expense)

Revenue was $199,347 for the three month period ended March 31, 2025,

representing an increase of $172,844, or 652%, from $26,403 for the three month period ended March 31, 2024.

The increase was primarily

due to consulting services attributed to the ASPIS arrangement which accounted for approximately $176,000 during the three months ended

March 31, 2025.

Operating income (loss)

Other income (expense), net

Net income (loss)

Other comprehensive income (loss), net of tax:

Change in foreign currency translation, net of tax

Total comprehensive income (loss)

Basic and diluted earnings (loss) per share to shareholders

Our revenues are derived

primarily from our license with ASPIS and related professional services.

Revenue was $1,980,000 for the three month period ended June

30, 2025, representing a increase of $1,953,063, or 7,250%, from $26,937 for the three month period ended June 30, 2024.

can be attributed to the recognition of the ASPIS license revenue of $1,980,000.

Cost of revenues

Cost of revenues was $8,223 for the three month period ended March 31,

2025, representing a decrease of $15,823, or 66%, from $24,046 for the three month period ended March 31, 2024.

The decrease was primarily

due to significant reductions in staff related to our company restructuring and third-party support.

Cost of revenues

was $8,222 for the three month period ended June 30, 2025, representing a decrease of $8,222, or 49%, from $16,231 for the three month

period ended June 30, 2024.

The decrease was due to the decrease in infrastructure needed for the Xcite Interactive.

Research and development

was $6,149 for the three month period ended March 31, 2025, representing a decrease of $33,263, or 84%, from $39,412 for the three month

period ended March 31, 2024.

The decrease was primarily due to a reduction in staffing levels, including a large portion of our engineering

staff, and a reduction in software costs.

was $6,219 for the three month period ended June 30, 2025, representing a decrease of $60,984, or 91%, from $67,203 for the three month

period ended June 30, 2024.

The decrease was primarily due to significant reductions in staff related to our company restructuring in

the prior year.

Selling, general and administrative

Selling, general and administrative was $1,026,758 for the three month

period ended March 31, 2025, representing a decrease of $106,745, or 7%, from $1,464,481 for the three month period ended March 31, 2024.

The decrease was primarily due to a decrease in administrative employees and professional fees.

Loss from Operations

Loss from operations was

$1,172,761 for the three month period ended March 31, 2025, representing a decrease of $328,675, or 22%, from $1,501,436 for the three

month period ended March 31, 2024.

The decrease was primarily the result of decreased spend on professional fees and headcount.

period ended June 30, 2025, representing a decrease of $416,413, or 29%, from $1,443,171 for the three month period ended June 30, 2024.

The decrease was primarily due to a decrease in payroll as the Company reduced head count and a decrease in professional fees.

there was a reduction in expense due to a one-time severance payment of $305,000 during the three months ended June 30, 2024.

Operating Results

Comparison of Results of Operations for the six month period ended

June 30, 2025 and June 30, 2024

The following table summarizes

our results of operations for the six months ended June 30, 2025 and 2024:

For the Six Months Ended

Consolidated Statement of Operations and Comprehensive Income (Loss) Data:

Revenues – related party

Cost of revenues

Research and development

Selling, general and administrative

Total operating expenses

Operating loss

Other income (expense), net

Other comprehensive income (loss), net of tax:

Change in foreign currency translation, net of tax

Total comprehensive loss

Basic and diluted loss per share to shareholders

Our revenues are derived

primarily from our license with ASPIS and related professional services.

Revenue was $2,179,348 for the six month period ended June 30,

2025, representing an increase of $2,125,908, or 3,978%, from $53,440 for the six month period ended June 30, 2024.

The increase can be

attributed to the recognition of the ASPIS license revenue and professional services.

Cost of revenues

Cost of revenues was $16,446 for the six month period ended June 30,

2025, representing a decrease of $23,831, or 59%, from $40,277 for the six month period ended June 30, 2024.

The decrease was due to the

decrease in infrastructure needed for the Xcite Interactive.

Research and development

was $12,368 for the six month period ended June 30, 2025, representing a decrease of $94,247, or 88%, from $106,615 for the six month

period ended June 30, 2024.

The decrease was primarily due to significant reductions in staff related to our company restructuring in

the prior year.

Selling, general and administrative

was $2,384,494 for the six month period ended June 30, 2025, representing a decrease of $523,158, or 18%, from $2,907,652 for the six

month period ended June 30, 2024.

The decrease was primarily due to a decrease in payroll as the Company reduced head count and a decrease

in professional fees, offset by a one-time severance payment of $305,000 during the six months ended June 30, 2024.

The effect of inflation on

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Liquidity and Capital Resources

We had cash of $2,432,219

and a working capital balance of $2,726,545 as at March 31, 2025, compared to a cash position of $3,065,914 and working capital balance

of $3,509,272 as at December 31, 2024.

The decrease in our cash position and decrease in working capital balance was related to using

cash to fund operations and ongoing losses.

We have cash of $1,682,256 and a working capital balance of $3,808,046

as at June 30, 2025, compared to a cash position of $3,065,914 and working capital balance of $3,509,272 as at December 31, 2024.

decrease in our cash related to using cash to fund operations and ongoing losses for the six months ended June 30, 2025 and an increase

in working capital balance was due to the account receivable’s owed from ASPIS.

Our financial condition and

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our capital expenditure requirements.

Since inception, we have

incurred significant operating losses.

For the three months ended March 31, 2025 and 2024, we incurred net losses of approximately $1.2

million and $1.5 million, respectively.

During such periods, we have financed our operations primarily through an initial public offering

of our common shares in January 2021 and subsequent public offerings, registered direct offerings, convertible debt, warrant exercises

and private placements.

In October 2024 warrant holders exercised $0.9 million of warrants into common stock.

Also, in November and December

2024 the Company raised $2.5 million of convertible debt.

Our cash and cash equivalents as of March 31, 2025 was $2.4 million.

cash needs are for working capital requirements, capital expenditures and to fund our operations.

Since inception, we have incurred significant operating losses.

the six months ended June 30, 2025 and 2024, we incurred net losses of approximately $0.2 million and $3.0 million, respectively.

such periods, we have financed our operations primarily through an initial public offering of our common shares in January 2021 and subsequent

public offerings, registered direct offerings, convertible debt, warrant exercises and private placements.

In October 2024 warrant holders

exercised $0.9 million of warrants into common stock.

Also, in November and December 2024 the Company raised $2.5 million of convertible

Our cash and cash equivalents as of June 30, 2025 was $1.7 million.

Our primary cash needs are for working capital requirements,

capital expenditures and to fund our operations.

We are subject to the risks

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The report of our independent registered public accounting

firm on our consolidated financial statements for the year ended December 31, 2024 stated that our recurring losses from operations, accumulated

deficit as of December 31, 2024, inability to achieve positive cash flows from operations and inability to fund day to day activities

through operations indicates that a material uncertainty exists that may cast significant doubt on our ability to continue as a going

firm on our condensed consolidated financial statements for the year ended December 31, 2024 stated that our recurring losses from operations,

accumulated deficit as of December 31, 2024, inability to achieve positive cash flows from operations and inability to fund day to day

activities through operations indicates that a material uncertainty exists that may cast significant doubt on our ability to continue

as a going concern.

We plan to increase our cash

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The following summarizes

the key components of our cash flows for the three month periods ended March 31, 2025 and 2024:

Three Months Ended

the key components of our cash flows for the six month period ended June 30, 2025 and 2024:

Net cash used in operating activities

$ (1,508,972 )

$ (3,874,311 )

Net cash used in investing activities

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$ (1,383,658 )

$ (3,783,092 )

Operating Activities

Net cash used in operating activities for the three month period ended March 31, 2025 was $641,445 as compared to $1,757,911 for the three

month period ended March 31, 2024.

The decrease in cash used in operating activities was primarily attributable to a decrease in the net

loss of $345,206, increase of stock-based compensation of $205,135 and a decrease of working capital accounts of $566,125.

Net cash used in operating

activities for the six months ended June 30, 2025 was $1,508,972 as compared to $3,874,311 for the six months ended June 30, 2024.

decrease in cash used in operating activities was primarily attributable to a decrease in the net loss of $2,787,409 and prepaids of $1,042,853

off set by an increase of stock-based compensation of $226,611 and an increase in accounts receivable of $1,987,972.

Investing Activities

No cash was used in or provided

by investing activities for the three months ended March 31, 2025 and 2024, respectively.

by investing activities for the six months ended June 30, 2025 and 2024, respectively.

Financing Activities

No cash was used in or provided

by financing activities for the three months ended March 31, 2025 and 2024, respectively.

by financing activities for the six months ended June 30, 2025 and 2024, respectively.

Critical Accounting Policies and Estimates

The preparation of consolidated

financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets

and liabilities at the date of the consolidated financial statements.

Estimates and assumptions are continually evaluated and are based

on historical experience and management’s assessment of current events and other facts and circumstances that are considered to

The preparation of condensed

consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts

of assets and liabilities at the date of the consolidated financial statements.

Estimates and assumptions are continually evaluated and

are based on historical experience and management’s assessment of current events and other facts and circumstances that are considered

to be relevant.

Actual results could differ from these estimates.

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to determine the stand-alone selling price, for each distinct performance obligation.

During the three months ended March 31, 2025, the Company recognized

$176,000 attributed to professional services.

During the three and six months ended June 30, 2025, the Company recognized $176,000

attributed to professional services, respectively.

License Revenue

We recognize revenue when

or as the performance obligations in the contract are satisfied.

For performance obligations that are fulfilled at a point in time, revenue

is recognized at the fulfillment of the performance obligation.

Since the IP is determined to be a functional license, the value of the

grant of use is recognized in the first period of the contract term in which the license agreement is in force.

For the three months ended

March 31, 2025, no revenue was recognized on our functional IP as the Technology Agreement with ASPIS as the license had not been delivered

to ASPIS during the year.

We recognize revenue when or as the performance obligations in the

contract are satisfied.

For performance obligations that are fulfilled at a point in time, revenue is recognized at the fulfillment of

the performance obligation.

Since the IP is determined to be a functional license, the value of the grant of use is recognized in the

first period of the contract term in which the license agreement is in force.

For the three and six month periods ended June 30, 2025,

$1,980,000 of revenue was recognized on our functional IP as the Technology Agreement with ASPIS as the license had been delivered to

ASPIS during the quarter.

Stock-based compensation

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis