Business Warrior Corp (BZWR)

[bob4uall]

Is..this contract with a "partner" a new disclosure?

If I understand correctly, the unnamed partner was to "develop and market a small business funding program" and be guaranteed a minimum of $3,000,000 out of its profits. If $3,000,000 wasn't achieved, it would still be owed to the partner whereby any shortfall was defined as a "penalty".

This has been going on since 2021. Is anyone here familiar with this deal? I don't think that I have seen it before.

I think this means that to end up with PayPlan, first, they contracted a "partner" to develop lending technology for a cost of $3 million. But that wasn't enough, so they decided to buy the Alchemy company for many more dollars on top of that.

Please correct me if I am wrong.

Somehow, they found a $5 million line of credit after doing all that.

If I understand this correctly, I should join the bears here.

Here is how their February report explained it:

In November 2021, the Company entered into an agreement with a partner to develop and market a small business funding program. The program (technology) was built and loans were distributed on a pilot basis, but 90% were funded internally by the Company. Due to challenging
macroeconomic conditions, the program has been temporarily paused, as securing adequate funding for the small business loans has proven difficult. As per the contract terms, if the Company does not generate a minimum of three million dollars in earnings on the partner’s behalf by December 31, 2023, a penalty equal to the difference between the total amount earned and three million dollars will be triggered. This penalty would be payable by the Company to the partner by March 1, 2024.

During the second quarter of fiscal 2023, the Company determined that the three-million-dollar penalty would occur. As of the date of these financial statements, the Company is actively exploring potential solutions to assist the partner in achieving the three-million-dollar target, including the possibility of resuming the program once macroeconomic conditions improve. This may involve negotiating an extension and amending the current agreement to extend the terms. The ultimate outcome of these negotiations cannot be determined at this time. Accordingly, a contingent liability of three million dollars, discounted to present value at an imputed interest rate of 17.97%, has been recognized in the financial statements. The Company will continue to assess this contingency and will update the financial statements accordingly as new information becomes available.
(page F-10)