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Item 2. Management’s Discussion and Analysis

2023-05-15 compared with 2022-11-08 · 39 added, 53 removed, 63 unchanged (59% of the section changed)

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The following discussion and analysis of financial condition and results of operations of the Company is based upon, and should be read in conjunction with, its unaudited financial statements and related notes elsewhere in this Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States.

Summary Overview

We were incorporated on December 19, 2014 in the State of Nevada.

We had revenues of $1,465,782 in the year ended December 31, 2021 and $1,276,559 in the year ended December 31, 2020.

We had revenues of $573,967 for the three months ended September 30, 2022 and $447,986 for the three months ended September 30, 2021.

On February 4, 2019, we acquired BergaMet NA, LLC, a Delaware limited liability company (“BergaMet”).

BergaMet is a wholly-owned subsidiary through which we conduct our nutraceuticals business.

On April 3, 2020, we acquired Ultimate Brain Nutrients, LLC, a Delaware limited liability company (“UBN”).

UBN is a wholly-owned subsidiary through which we conduct our plant-based neuro-products business.

BergaMet NA, LLC

On February 4, 2019, we issued and exchanged shares of our common stock for all of the outstanding equity securities of BergaMet.

BergaMet is an established company that was already generating revenues when we acquired it.

Ultimate Brain Nutrients, LLC

On April 3, 2020, we issued and exchanged shares of our common stock for all of the outstanding equity securities of UBN.

UBN is a science-based company that develops unique, plant-based health technology neuro-products that provide natural brain solutions.

UBN has numerous proprietary products, with four unique patent-pending formulations and two patents issued.

Going Concern

We are a platform for acquiring, developing, patenting, marketing, and distributing plant-based nutraceuticals.

Our products have not been evaluated by the FDA or any similar regulatory body for safety and efficacy.

Our proprietary and patented products target select high-growth categories within the multibillion-dollar nutraceuticals market, such as heart, brain and immune health.

Our mission is to acquire or create products with health and performance benefits that have mass consumer appeal.

Guided by this mission, our first two acquisitions formed our current operating subsidiaries, Bergamet, which offers nutraceutical heart and immune health products, and UBN, which offers nutraceutical products for brain health.

Through published research from outside sources, our Bergamet products have been shown to support heart health, support immune response, and address metabolic syndrome.

Our Financial Condition and Going Concern Issues

As a result of our financial condition, we have received a report from our independent registered public accounting firm for our financial statements for the years ended December 31, 2022 and 2021 that includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern.

From inception

(December 19, 2014) through the end of December 31, 2021, we have incurred accumulated net losses of $14,943,620.

From inception (December 19, 2014) through the end of December 31, 2022, we have incurred accumulated net losses of $15,926,742.

In order to continue as a going concern we must effectively balance many factors and generate more revenue so that we can fund our operations from our sales and revenues.

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However, there is no assurance that our existing cash flow will be adequate to satisfy our existing operating expenses and capital requirements.

Results of Operations for the Three and Nine Months Ended September 30, 2022 and 2021

We had revenues of $573,967 and $1,668,105 for the three and nine months ended September 30, 2022, respectively, compared to $447,986 and $903,142 for the three and nine months ended September 30, 2021.

Our cost of revenue for the three and nine months ended September 30, 2022 were $68,551 and $402,788, respectively, compared to $72,250 and $147,456 for the three and nine months ended September 30, 2021.

Our operating expenses were $485,568 and $1,744,326 for the three and nine months ended September 30, 2022, respectively, compared to $692,940 and $1,873,858 for the three and nine months ended September 30, 2021.

Results of Operations for the Three Months Ended March 31, 2023 and 2022

We had revenues of $614,943 for the three months ended March 31, 2023, compared to $551,654 for the three months ended March 31, 2022.

Our cost of revenue for the three months ended March 31, 2023 were $337,102, compared to $226,949 for the three months ended March 31, 2022.

Our operating expenses were $683,029 for the three months ended March 31, 2023, compared to $370,357 for the three months ended March 31, 2022, an increase of $312,672, or 84%.

Our operating expenses consisted entirely of general and administrative expenses.

We had a Net Loss of $170,223 for the three months ended September 30, 2022, compared to a Net Loss of $672,470 for the three months ended September 30, 2021.

Revenues and Net Operating Loss

Our revenue, operating expenses, net operating loss, and net gain (loss) for the three and nine months ended September 30, 2022 and 2021 were as follows:

September 30,

Our revenue, operating expenses, net operating loss, and net gain (loss) for the three months ended March 31, 2023 and 2022 were as follows:

Cost of Revenue

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Net income (loss)

We had revenues of $573,967 and $1,668,105 for the three and nine months ended September 30, 2022, compared to $447,986 and $903,142 for the three and nine months ended September 30, 2021, an increase of $125,981 and $764,963, or 28% and 85%, respectively.

We had revenues of $614,943 for the three months ended March 31, 2023, compared to $551,654 for the three months ended March 31, 2022, an increase of $63,290, or 11%.

Our cost of revenue for the three months ended March 31, 2023 were $337,102, or 55% of revenue, compared to $226,949 for the three months ended March 31, 2022, or 41% of revenue.

Cost of Revenue

Our cost of revenue for the three and nine months ended September 30, 2022 was $68,551 and $402,788, or 12% and 24% of revenue, respectively, compared to $72,250 and $147,456, or 16% and 16% of revenue, for the three and nine months ended September 30, 2021.

Gross profit was $431,102 and $1,030,062 for the three and nine months ended September 30, 2022, compared to $307,625 and $646,737 for the three and nine months ended September 30, 2021, an increase of $123,477 and $383,325, or 40% and 59%, respectively.

Cost of revenue was $337,102 for the three months ended March 31, 2023, compared to $226,949 for the three months ended March 31, 2022, an increase of $110,153, or 49%.

Gross profit was $277,841 for the three months ended March 31, 2023, compared to $324,705 for the three months ended March 31, 2022, a decrease of $46,864, or 14%.

Cost of revenue as a percentage of revenues was 55% for the three months ended March 31, 2023, compared to 41% for the three months ended March 31, 2022.

General and Administrative

General and administrative expenses were $485,568 and $1,744,326 for the three and nine months ended September 30, 2022, compared to $692,940 and $1,873,858 for the three and nine months ended September 30, 2021.

In the three months ended September 30, 2022, general and administrative expenses consisted mainly of advertising of $456,270, consulting fees of $448,515, broker fees of $383,938, professional fees of $94,966, and salary and wages of $109,305.

In the three months ended September 30, 2021, general and administrative expenses consisted mainly of advertising of $443,416, consulting fees of $534,702, professional fees of $445,223, salary and wages of $109,236, and postage of $36,956.

General and administrative expenses were $683,029 for the three months ended March 31, 2023, compared to $370,357 for the three months ended March 31, 2022.

In the three months ended March 31, 2023, general and administrative expenses consisted mainly of advertising of $175,870, consulting fees of $193,405, professional fees of $104,233, and salary and wages of $35,157.

In the three months ended March 31, 2022, general and administrative expenses consisted mainly of advertising of $162,329, consulting fees of $97,750, professional fees of $43,870, and salary and wages of $35,489.

Other Income (Expense)

Other income (expense) was $(115,757) and $(312,274) for the three and nine months ended September 30, 2022, compared to $(287,155) and $(1,296,736) for the three and nine months ended September 30, 2021, a decrease of $171,398, or 60%, for three months ended September 30, 2022 and a decrease of $984,462, or 76%, for the three months ended September 30, 2021.

In the three months ended September 30, 2022, other income (expense) consisted of interest expenses, net of interest income of $(11,336) and change in fair value on derivative of $(104,421).

In the three months ended September 30, 2021, other income (expense) consisted of interest expense, net of interest income of $(19,242) and change in fair value on derivative of $(307,746), offset by SBA loan forgiveness of $39,833.

Other income (expense) was $(173,968) for the three months ended March 31, 2023, compared to $48,664 for the three months ended March 31, 2022, a decrease of $222,632, or 457%.

In the three months ended March 31, 2023, other income (expense) consisted of interest expenses, net of interest income of $(89,060) and change in fair value on derivative of $(84,908).

In the three months ended March 31, 2022, other income (expense) consisted of interest expense, net of interest income of $(32,957) and change in fair value on derivative of $78,978.

Change in fair value of derivative was related to the conversion of convertible debts into common stock shares .

Net Income (Loss)

Net income (loss) was $(170,223) and $(1,026,538), or $0.00 and $0.00 per share, for the three and nine months ended September 30, 2022, compared to $(672,470) and $(2,523,857), or $0.00 and $0.01 per share, for the three and nine months ended September 30, 2021.

Net income (loss) was ($579,157) and $3,011, or $0.00 and $0.00 per share, for the three months ended March 31, 2023 and 2021.

Our net income (loss) various from period to period primarily because of the change in fair value on derivative.

Liquidity and Capital Resources

During the three and nine months ended September 30, 2022, we were unable to generate sufficient revenues and had negative operating cash flows.

Our cash on hand as of December 31, 2021 was $222,098 and as of September 30, 2022 was $73,884.

Our monthly cash flow burn rate for 2021 (not including inventory purchases) was approximately $37,000 and for the nine months ended September 30, 2022 was approximately $27,000.

During the three months ended March 31, 2023, we were unable to generate sufficient revenues and had negative operating cash flows.

Our cash on hand as of December 31, 2022 was $65,651, and as of March 31, 2023 was $213,204.

The increase in cash on hand was primarily from our net cash provided by financing activities of $457,812, offset in part by our net cash used in operating activities of $(310,259).

Our monthly cash flow burn rate for the three months ended March 31, 2023 was approximately $26,000.

We have strong short and medium term cash needs.

We anticipate that these needs will be satisfied through increased revenues and the issuance of debt or the sale of our securities until such time as our cash flows from operations will satisfy our cash flow needs.

Our cash, current assets, total assets, current liabilities, and total liabilities as of September 30, 2022 and December 31, 2021, respectively, are as follows:

September 30,

Our cash, current assets, total assets, current liabilities, and total liabilities as of March 31, 2023 and December 31, 2022, respectively, are as follows:

Total Current Assets

Total Current and Total Liabilities

Our total current assets and total assets decreased during the nine months ended September 30, 2022 primarily as a result of our decrease in cash of $148,214, accounts receivable of $32,585, and inventory of $91,524.

Our total current and total liabilities increased by $385,407 during the nine months ended September 30, 2022 primarily because of an increase in accounts payable of $76,799, notes payable of $93,174, convertible debt of $189,000, and derivative liabilities of $246,260, offset in part by a decrease in accrued liabilities of $52,330 and notes payable to related party of $170,000.

Our accumulated deficit increased during the nine months ended September 30, 2022 by $1,026,538 to $15,970,158.

Our total current assets and total assets increased during the three months ended March 31, 2023 primarily as a result of our increase in cash of $147,553 and prepaid acquisition costs of $32,617, offset by our decrease in inventory of $164,922.

Our accumulated deficit increased during the three months ended March 31, 2023 by $579,157 to $16,505,898.

In order to repay our obligations in full or in part when due, we will be required to raise significant capital from other sources.

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Cash Requirements

Our cash on hand as of September 30, 2022 was $73,884.

Our cash on hand as of March 31, 2023 was $213,204.

Based on our current level of revenues and monthly burn rate of approximately $26,000 per month, we will need to continue to fund operations by raising capital from the sale of our stock and debt financings.

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Operating Activities

We had net cash used in operating activities of $(241,015) for the nine months ended September 30, 2022, compared to $(942,175) for the nine months ended September 30, 2021.

We had net cash used in operating activities of $(310,259) for the three months ended March 31, 2023, compared to $(108,408) for the three months ended March 31, 2022.

We use our cash for normal business operations.

Our net cash used in operating activities for the nine months ended September 30, 2022 consisted of our net loss of $1,026,538 plus primarily our increase in accrued liabilities of $52,330, offset primarily by our warrants issued for services of $402,100, change in fair value on derivative liability of $246,260, increase in inventory of $91,523, and increase in accounts payable of $76,799.

Our net cash used in operating activities for the nine months ended September 30, 2021 consisted of our net loss of $2,523,857, plus a decrease in inventory of $115,487, a decrease in accounts receivable of $70,311, and a decrease in accounts payable of $41,678, offset in part by a change in fair value on derivative liability of $1,287,971 and warrants issued for services of $434,836.

Our net cash used in operating activities for the three months ended March 31, 2023 consisted of our net loss of $579,157 plus our decrease in accounts receivable of $29,604, offset by our increase in inventory of $164,922, change in fair value on derivative liability of $84,908, and increase in accounts payable of $23,170.

Our net cash used in operating activities for the three months ended March 31, 2022 consisted of our net gain of $3,011 plus our increase in accounts payable of $68,153, offset by our change in fair value on derivative liability of $(78,978), decrease in accrue liabilities of $(54,767), and decrease in inventory of $(50,558).

Investing Activities

We had $(7,987) in cash flows provided by investing activities for the nine months ended September 30, 2022, compared to $(84,888) for the nine months ended September 30, 2021.

We had zero cash flows provided by investing activities for the three months ended March 31, 2023, compared to $(7,987) for the three months ended March 31, 2023.

Financing Activities

Our net cash provided by financing activities for the nine months ended September 30, 2022 was $100,788, compared to $1,083,000 for the nine months ended September 30, 2021.

Our net cash provided by financing activities consisted of proceeds from the issuance of convertible debt of $445,826, offset by proceeds from the issuance of common stock of $(11,386), payments for repayment of convertible debt of $(256,826), and payments for repayment of notes payable related party of $(170,000).

Our net cash provided by financing activities for the three months ended March 31, 2023 was $457,812, compared to $(13,417) for the three months ended March 31, 2022.

Our net cash provided by financing activities consisted of proceeds from the issuance of convertible debt of $167,819, proceeds from issuance of note payable of $136,705, payments for repayment of convertible debt of $110,535, and payments for repayment of notes payable of $75,370, offset by expenses for the purchase of Hyperion and OP&M of $(32,617).

ITEM 3 Quantitative and Qualitative Disclosures About Market Risk

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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