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SYMBID CORP. - 10-K/A - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

May 7, 2014

The following management's discussion and analysis should be read in conjunction with the historical financial statements and the related notes thereto contained in this report. The management's discussion and analysis contains forward-looking statements, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words "believe," "plan," "intend," "anticipate," "target," "estimate," "expect" and the like, and/or future tense or conditional constructions ("will," "may," "could," "should," etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those under "Risk Factors" in this Form 8-K, that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. The Company's actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report.

As a result of the Share Exchange and the change in business and operations of the Company, from engaging in the business of an e-commerce daily discount marketplace to the business of becoming a global, equity based crowdfunding platform, a discussion of the past, pre-Share Exchange financial results of Symbid Corp., is not pertinent, and under applicable accounting principles, the historical financial results of Symbid B.V., the wholly owned operating subsidiary of Symbid Holding B.V. and the accounting acquirer, prior to the Share Exchange are considered the historical financial results of the Company.

The following discussion highlights the Company's results of operations and the principal factors that have affected our financial condition, as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on the Company's audited financial statements contained in this Current Report, which we have prepared in accordance with United States generally accepted accounting principles. You should read this discussion and analysis together with such financial statements and the related notes thereto.

Basis of Presentation

The audited financial statements for our fiscal years ended December 31, 2013 and 2012, include a summary of our significant accounting policies and should be read in conjunction with the discussion below. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in these audited financial statements. All such adjustments are of a normal recurring nature.

Overview

Overview 2012

In 2012, we experienced a growth in revenues over 2011, both crowdfunding related and software license fee related. Also other sources of revenues have been explored in 2012, but all were platform software related. Traffic on the platform has increased significantly compared to 2011. Entrepreneurs pitching successfully for capital on the platform followed each other at a fast pace, and in the first quarter of 2012 an additional three entrepreneurs were funded on the platform. Though, as a result of significant investments in further improving and maintaining the platform the operating result remains negative. The revenue directly from the platform activities amounts to some $40,000, consisting of success, registration and administration fees. While the remaining revenue is mainly realized by sub licensing the platform and advise on software development for third parties. Management decided by the end of 2012 to focus on core activities, being offering a crowdfunding platform to entrepreneurs and investors. Most advise on software development activities and related stand-alone license agreements were not extended or renewed in order to be able to focus on our core strategy.

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Overview 2013

A new product was introduced to the market at the start of 2013 to balance our product portfolio and strengthen the focus on the core activity of matching online entrepreneurs and investors. Symbid Group licenses were being offered to partners wanting their own crowdfunding Group on the Symbid platform. Fees are typically lower as compared to fees charged for the white label platforms, lowering the barriers for new partners to enter the Symbid eco-system. Refocusing the product strategy to the core activity is the main reason for the total revenue for 2013 being lower compared to the 2012 period. However, we feel comfortable by this shift in the product strategy our product portfolio has become more balanced and focused. In addition to the Group product, we developed new corporate partnership products, with this product category we are taking first steps in offering crowdfunding services to large corporates. A corporate partnership deal consists of several other products being packaged into one deal, which over time, will result in more efficient sales cycles and a focus on building up a portfolio of partners we can scale up our services with. One of those crowdfunding related services is the valuation tool from Equidam Holding B.V. where we became a shareholder in August 2013. In September we raised $143,277 as Symbid B.V. in equity from one new investor, Sharpe Financial Communication, and current shareholders of Symbid B.V. The proceeds from this raise have been used as working capital and for PR services.

Going Concern

The Company has suffered recurring losses, for 2013 a net loss of $ 1,260,196 (December 31, 2012, $ 440,379). The Company managed to turn around the working capital deficit of $ 231,993 at December 31, 2012 to a surplus of $ 505,878 at December 31, 2013. As of December 31, 2013, the Company had cash on hand of $ 891,592 and current liabilities to credit institutions of $ 41,657. The recurring losses raise substantial doubt about the Company's ability to continue as a going concern. The recoverability of a major portion of the recorded asset amounts shown in the accompanying consolidated balance sheet is dependent upon continued operations of the Company, which in turn, is dependent upon the Company's ability to raise capital and/or generate positive cash flows from operations. The financial statements do not include any adjustments related to the recoverability and classification of recorded assets and classifications that might be necessary in the event the Company cannot continue in existence. Additionally, our independent registered public accounting firm included an explanatory paragraph in their report for the years ended December 31, 2013 and 2012 regarding concerns about our ability to continue as a going concern.

Our ability to continue as a going concern is dependent upon our generating operating cash flow and raising capital sufficient to fund operations. We have discussed our strategy and plans relating to these matters elsewhere in this Annual Report although the consolidated financial statements included herein do not include any adjustments that might result from the outcome of these uncertainties. We expect that with the successful closing of the PPO we will be able to fund ongoing operations and accelerate our international expansion for the next nine (9) months. Our business strategy may not be successful in addressing these issues, however, and if we cannot continue as a going concern, our stockholders may lose their entire investment in us.

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Strategy

During 2012, we developed a template model for our corporate crowdfunding platform. The pillars of this model are standardization, economies of scale and the concept "think global, act local." Through standardization, our core crowdfunding processes have been fully documented and can be easily rolled out in other markets. Other new crowdfunding related products and services can be incorporated under the same model, with the Netherlands being our test market, and copied from there to other markets. Our main revenue stream is based on a transaction based model, so in the end we require a certain scale to operate successfully. By expanding our market reach on a fast as possible pace we intend to reach this level as soon as possible. However, this does imply we require a significant capital increase to realize this growth path and cover the related expected investments and operational losses. With the current PPO we intend to obtain the required capital for the first stage of the international roll-out in Europe. By being quoted as Symbid Corp. on the OTC Bulletin Board and the OTC Markets QB Tier we intend to raise more capital from the markets in order to realize also the future stages of our growth path and start also operations in the United States once the JOBS-act has been implemented. Ultimately we intend to become the largest equity-based crowdfunding platform worldwide, however there can be no assurance this goal will be achieved.

Highlights

On September 4, 2013, we filed a Certificate of Amendment to our Articles of Incorporation with the Nevada Secretary of State to change our name from HapyKidz.com, Inc. to Symbid Corp.

On December 6, 2013, we closed a Share Exchange pursuant to which the 19 shareholders of Symbid Holding B.V. sold all of their capital stock in Symbid Holding B.V. to us in exchange for 21,170,000 shares of our common stock, $0.001 par value per share. Concurrent with the closing of the Share Exchange, we completed a closing of a PPO in which we sold 3,089,736 units of our common stock and warrants, at a price of $0.50 per unit for a total consideration of $1,549,368.

During the financial year 2013, except from the capital contributions, there have been no unusual or infrequent events or transactions or any significant economic changes that materially affected the reported income from continuing operations. The capital contribution referred to mainly relates to the additional paid in capital from the investors in Gambitious B.V., which is accounted for as a transaction under common control and therefore, instead as result on investment, presented directly in equity of Symbid B.V.

Critical Accounting Estimates

We regularly evaluate the accounting estimates that we use to prepare our financial statements. A complete summary of these policies is included in the Notes to our audited financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

We believe that of our significant accounting policies, which are described in note 2 to our consolidated financial statements, the following accounting policies involve a greater degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

Revenue Recognition

We are generating substantially all our revenue from administration and success fees from transactions on the Crowdfunding platform. Revenue from these transactions is accounted for at the moment an investment is made or a proposition is successfully funded. There is no credit risk since the fees are collected directly at the moment that the transaction takes place on the platform.

At the start of a funding campaign, the entrepreneur signs a contract with Symbid pursuant to which he or she agrees to pay Symbid a success fee once a successful fund raising campaign for that entrepreneur closes. Once the funding campaign has closed, Symbid's success fee is transferred by Intersolve, the third party banking entity that holds all funds in escrow until closing, and the net proceeds of the funding are transferred by Intersolve to the entrepreneur. Upon completion of the funding campaign on Symbid's platform, services delivered under the contract with the entrepreneur have been and Symbid recognizes its success fee revenues at the time the campaign's proceeds have been simultaneously transferred to the Company. Also, because the success fee percentage is stated in the contract with the entrepreneur prior to the start of the funding campaign, Symbid believes that this amount is fixed and, assuming the successful conclusion of the funding campaign, collectible from Intersolve. This revenue recognition policy complies with ASC 605-10-S99-1 in that it is based on written agreements with the entrepreneurs, contractual services have been completed, pricing is fixed and determinable based on agreements with the customer and collectability is reasonably assured as revenues are forwarded directly by Intersolve.

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Effectively Symbid has no refund policy. The cash which is collected from investors is held in a third party bank account with Intersolve, which cannot be used or accessed by Symbid. With funds in this bank account, an investor buys crowdfunding credits which are accounted for in an electronic wallet and allocated by the investor to the investor's funding projects of choice. Allocated funds can only be refunded to an investor from his electronic wallet if a particular project is not fully funded and the funding campaign is terminated. In that situation the investor project allocated funds are credited by Intersolve back to his electronic wallet, from where he can invest again in another project or request a refund of his money from Intersolve, net of an administration fee of approximately $ 27.50 (20). Symbid receives 25% of this administrative fee. At each year end, InterSolve marks the processed and completed refunds and, after this internal process, InterSolve sends a credit invoice to Symbid, recognizing the refund administration costs as revenues to be paid out to Symbid. At the moment Symbid receives the credit invoice from InterSolve stating the total number of refunds and the refund administration costs to be paid out to Symbid, we recognize these refunds as revenue.

Other revenue is generated by licensing the platform to third parties. Revenue is accounted for on a monthly basis for the agreed monthly licensed fee. There is limited credit risk. If the monthly licensed fee is not paid we are entitled to set the platform offline. We provide a description of the different types of revenue below.

Revenue related to Crowdfunding Operation:

1. Registration Fee (until 12/31/2012) - Approximately $327 per portfolio company to list on the Platform 2. Administration Fee - A fee is charged to investors for investments. The revenue is recognized monthly based upon transactions (i.e. investments) that occurred during the period. a. 2.5% Fee charged for investments up to $6,550 b. 1% fee charged for investments exceeding $6,550 3. Success Fee - An approximate success fee of 3- 5% is charged by the Company for a successful private placement. The fee and revenue is recognized when the funding is completed, subject to all requirements needed. 4. Refund Fee -If an investor requests a refund from the "Online Wallet" a fee is charged to the investor in the amount of approximately $27.50 ( 20), of which the Company will receive approximately $6.55. Revenue is recognized at the moment InterSolve sends a credit invoice to Symbid, acknowledging the refunds as complete and paid out to the customer. 5. Paying method fee - If an investor uses a certain payment method (i.e., Pay Pal) an additional amount is charged to the customer to account for processing fees incurred by the Company. This amount is typically negligible. 46



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Other Revenue related to License Agreements, affiliate URL and Group license and website consultancy:

1. (White label) licenses - Entered into with third party for one time upfront

payment and an earn-out period of approximately 3 years. The earn-out is

based upon the income earned through crowd-funding over the period

2. Affiliate URL and Group licenses - Symbid offers owners of existing

communities or groups a crowdfunding service so they do not require their own crowdfunding infrastructure. Prices range from $700 to $2,500 on a yearly basis.



3. Website consultancy - Typically, the white label portals relate to crowd

"voting" - A typical contract would be with the city of Rotterdam to host a vote with residents of the city to determine which particular project should get funded (public works projects).



a. Symbid performs the following services for approximately EUR 6,550 to

19,650. The projects typically are less than one year. Invoicing typically

50% upfront and the remainder at the conclusion.

i. Front-end user portal

ii. Implementing and designing the website

iii. Setup back end iv. Hosting and Support



In general, and in compliance with ASC 605-10-S99-1, revenue is recognized when the services have been rendered and upfront payments are deferred until services have been rendered.

Concentrations of Credit Risk

The Company has cash balances at financial institutions located in the Netherlands. Balances at financial institutions in the Netherlands may, from time to time, exceed insured limits. Currently the insured limit amounts to $ 137,700. We have not experienced any losses in such accounts.

Accounts Receivable: Customer accounts typically are collected within a short period of time, and based on its assessment of current conditions and its experience collecting such receivables, management believes it has no significant risk related to its concentration within its accounts receivable.

Components of Results of Operations Revenues



We generate our revenues partly from crowdfunding related fees like administration fees and success fees and for the other part from software license fees.

Research and development

Research and development expenses consist primarily of fees we are being charged for developing the source code of the software platform enabling us to build new products as well as improve existing products. We expense substantially all of our research and development costs as they are incurred.

Selling, General and Administrative

Our selling, general and administrative expenses consist primarily of salaries for our executives as well as our finance, legal, human resources, and other administrative employees. In addition, general and administrative expenses include outside consulting, legal and accounting services, and facilities and other supporting overhead costs.

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Distinct Characteristics of The Dutch Model

Symbid B.V. has a variable interest in Symbid Cooperatie U.A. Symbid Cooperatie U.A. licenses from Symbid B.V. its online crowdfunding platform in exchange for 100% of the administration fees and success fees earned by Symbid Cooperatie U.A. In addition, Symbid Cooperatie U.A. has entered into a perpetual platform management service agreement with Symbid B.V. for customer support, software updates and content management system control for approximately $6,000 per year. The management team of Symbid Cooperatie U.A. is the same as the management team of Symbid B.V.

The Company consolidates any variable interest entity ("VIE") for which the Company is considered the primary beneficiary2.

Symbid B.V. is deemed to be the primary beneficiary of Symbid Cooperatie U.A. Symbid B.V. has a controlling financial interest in Symbid Cooperatie U.A. because it has the power to direct the activities of Symbid Cooperatie U.A. that most significantly impact Symbid Cooperatie U.A.'s economic performance. Symbid B.V., through its control of Symbid Foundation, can appoint the majority of the members' council of Symbid Cooperatie U.A. which, in turn, appoints the management board of Symbid Cooperatie U.A. The Management Board of Symbid Cooperatie U.A. controls the activities that are most significant to Symbid Cooperatie U.A. In addition, by virtue of the license agreement and management service agreement between Symbid Cooperatie U.A. and Symbid B.V., substantially all revenue earned by Symbid Cooperatie U.A. is remitted to Symbid B.V.

As a result of this VIE structure, Symbid B.V. consolidates the financial statements of Symbid Cooperatie U.A. Every reporting period Symbid B.V. reassesses its relationship with Symbid Cooperatie U.A. to determine whether consolidation is required. As such, our conclusion regarding our status as the primary beneficiary of Symbid Cooperatie U.A. is subject to change.

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2 AVIE is an entity in which either a) the equity investment at risk is not sufficient to permit the entity to finance its own activities without additional financial support or b) the voting rights of the equity investors are not proportional to their obligations to absorb the expected losses of the entity or their rights to receive the expected residual returns of the entity. The Company evaluates whether entities in which it has an interest are VIEs and whether the Company qualifies as the primary beneficiary of any VIEs identified in its analysis.

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Results of Operations

Fiscal Year Ended December 31, 2013

The following table summarizes our historical consolidated financial statements:

Year Ended December 31, 2013 2012 Net Revenues Crowd funding $ 66,716$ 50,319 Other 12,714 57,418 79,430 107,737 Operating expenses Selling general and administrative 427,103 290,395 Professional fees 795,615 97,332 Research and development costs 78,773 165,357 Depreciation and amortization 1,302 979 1,302,793 554,063 Operating loss (1,223,363 ) (446,326 ) Other income (expenses) Fair value adjustment derivative liability 1,341 - Interest income - 3,335 Interest expenses (20,166 ) (15,688 ) Government subsidy 31,905 20,885 Gain on sale of 450 common shares of Gambitious B.V. - 19,345 Equity in losses of Gambitious B.V. (49,913 ) (86,492 ) (36,833 ) (58,615 ) Net loss (1,260,196 ) (504,941 )



Net loss attributable to non-controlling interests (30,016 ) (64,562 )

Net loss attributable to Symbid Corp. shareholders $ (1,230,180 )$ (440,379 )

Basic and diluted loss per common share $ (0.05 )$ (0.02 ) Weighted average number of shares outstanding Basic and diluted 22,580,549 20,409,933 Revenues



Total revenue declined for the twelve month period ended December 31, 2013 by approximately $28,000 compared to the same period in 2012. However, Crowdfunding revenue in the same period has increased by approximately $16,000 during the same period. Crowdfunding revenue increased compared to the prior period due to the refocusing of our product strategy to core crowdfunding activities and new products introduced into the market during 2013.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses for 2013 totaled $427,103, an increase of approximately $137,000 compared to the same period in 2012. The increase was primarily due to an increase in payroll expenses.

We anticipate that Selling, General and Administrative expenses will continue to increase as a percentage of revenue as a result of growth in headcount and headcount- related expenses. We plan to continue to increase Selling, General and Administrative employee headcount to support our growth and expansion. We also anticipate increases in Selling, General and Administrative expenses in 2014 due to the inclusion of share- based compensation expenses.

Professional fees

Professional fees increased for the year ended 2013 to a total of $795,615, an increase of almost $698,000 compared to 2012. The increase was primarily due to the PPO and share exchange transaction.

We anticipate that professional fees will remain an substantial percentage of the operating costs for the coming years. These costs will have to be incurred in relation to the listing of the Company on the OTC.

Research and development

Research and development expenses for the year ended 2013 decreased by approximately $87,000 when compared to the same period in 2012. The decrease was primarily due to a change in the product strategy through which the requests for software features decreased.

Based on the outcome of the PPO through 2014, we anticipate an increased in hiring product management employees, which will result in a corresponding increase in research and development expense.

Other expenses

Other expenses for 2013 totaled $36,833, a decrease of approximately $22,000 compared to the same period in 2012. This decrease is mainly caused by the decrease in Equity in losses in Gambitious B.V. over 2013 by approximately 36,000 compared to the same period in 2012.

Financial Condition, Liquidity and Capital Resources

As of December 31, 2013, we had cash on hand of $891,592 and a working capital surplus of $ 505,878.

Our principal sources of liquidity have been cash generated through the PPO and, prior to the Share Exchange, by issuing new shares in Symbid B.V. and cash generated from operations.

Our liquidity position in 2013 increased as compared to 2012 by approximately $ 883,860. This increase in cash can be attributed to proceeds from the PPO, partially offset by the related legal and accounting expenses.

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In order to be able to achieve our strategic goals, we need to further expand our business and financing activities. We aim to accomplish these goals by further developing our crowdfunding software platform and achieve a more international coverage of our services. Expanding our international network, together with further improvement of our crowdfunding platform will require future capital and liquidity expansion. Since our inception in March 2011, our shareholders have contributed a significant amount of capital making it possible for us to develop our crowdfunding platform, services and activities. To continue to develop our product offerings, expand our services and to obtain international coverage, a significant capital increase has been and will continue to be required.

In the first quarter of 2013, Symbid B.V. raised approximately $304,589 through the sale of its common stock to its then current shareholders and one new investor.

In September 2013, Symbid B.V. raised an additional amount of $77,544 through the sale of its common stock to its then current shareholders and one additional new investor.

Concurrent with the closing of the Share Exchange, we completed a closing of the PPO in which we sold 3,089,736 units of our common stock and warrants, at a price of $0.50 per unit for a total consideration of $1,549,368. We incurred total advisory and professional fees of $406,035 in connection with the PPO of which $60,250 were allocated to equity issuance costs and deducted from additional paid in capital. The net cash proceeds received by the Company were $1,143,333.

Each of the units sold in the PPO consisted of one share of our Common Stock and a warrant to purchase one share of our Common Stock. The warrants are exercisable for a period of three (3) years at a purchase price of $ 0.75 per share. In addition the Company issued 77,500 warrants to the placement agent as a commission. These warrants are exercisable for a period of three (3) years at a purchase price of $ 0.50.

On February 5, 2014, we completed a second closing of the PPO in which we sold an additional 373,984 units for gross proceeds of $186,922. In connection with the second closing the Company paid commissions of $7,750, and issued 11,500 Broker Warrants with a term of five (5) years and an exercise price of $0.50 per share to a broker.

We plan to continue raising capital in order to meet our liquidity needs. However, we may be unable to raise sufficient additional capital when we need it or raise capital on favorable terms. If we are unable to obtain adequate funds on reasonable terms, we may be required to significantly curtail or discontinue operations or obtain funds by entering into financing agreements with unattractive terms.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of December 31, 2013 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.


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