What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-04-15 compared with 2020-05-14 · 450 added, 496 removed, 337 unchanged (74% of the section changed)

2 unchanged sentences

Financial Statements:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2019 and 2018

Consolidated Statements of Operations for the years ended December 31, 2019 and 2018

Consolidated Statement of Stockholders’

Deficit for the years ended December 31, 2019 and 2018

Consolidated Statements of Cash Flows for the years ended December 31, 2019 and 2018

Notes to Consolidated Financial Statements

of Independent Registered Public Accounting Firm;

the Shareholders and

of Directors of Resonate Blends, Inc.

Balance Sheets as of December 31, 2020 and 2019;

Statements of Operations for the years ended December 31, 2020 and 2019;

Statement of Stockholders’

Equity for the year ended December 31, 2020;

Statement of Stockholders’

Equity for the year ended December 31, 2019;

Statements of Cash Flows for the years ended December 31, 2020 and 2019;

to Consolidated Financial Statements

Public Accountants & Consultants

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Shareholders and Board of Directors of

(formerly Textmunication Holdings, Inc.)

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deficit, and cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred

to as the “consolidated financial statements”).

In our opinion, the financial statements present fairly, in all material

respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash

flows for each of the two years in the period ended December 31, 2019, in conformity with accounting principles generally accepted

in the United States of America.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an

opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered

with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with

respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for

each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the

United States of America.

Doubt About the Company’s Ability to Continue as a Going Concern

discussed in Note 1 to the consolidated financial statements, the Company’s continuing operating losses and accumulated

deficit raise substantial doubt about its ability to continue as a going concern for a period of one year from the issuance of

the financial statements.

Management’s plans are also described in Note 1.

The financial statements do not include adjustments

that might result from the outcome of this uncertainty.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company

Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States).

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We believe that our audits provide a reasonable basis for our opinion.

Doubt About the Company’s Ability to Continue as a Going Concern

discussed in Note 1 to the consolidated financial statements, the Company’s continuing operating losses and accumulated

deficit raise substantial doubt about its ability to continue as a going concern for one year from the issuance of these

financial statements.

Management’s plans are also described in Note 1.

The consolidated financial statements do

not include adjustments that might result from the outcome of this uncertainty.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that were

communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material

to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of

critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by

communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or

disclosures to which they relate.

Hopedale Drive SE

(732) 822-4427

(732) 510-0665

for Embedded Derivative Liabilities Related to Convertible Debentures

described in Notes 1 and 4 to the financial statements, the Company had convertible debentures that required accounting considerations

and significant estimates.

Company determined that variable conversion features issued in connection with certain convertible debentures required derivative

liability classification.

These variable conversion features were initially measured at fair value and subsequently have been

remeasured to fair value at each reporting period.

The Company determined the fair value of the embedded derivatives using the

Black-Scholes-Merton option pricing model.

The value of the embedded derivative liabilities related to the convertible debentures

was $274,134 at December 31, 2020.

identified the accounting considerations and related valuations, including the related fair value determinations of the embedded

derivative liabilities of such as a critical audit matter.

The principal considerations for our determination were:

(1) the accounting

consideration in determining the nature of the various features (2) the evaluation of the potential derivatives and potential

bifurcation in the instruments, and (3) considerations related to the determination of the fair value of the various debt and

equity instruments and the conversion features that include valuation models and assumptions utilized by management.

these elements is especially challenging and requires auditor judgement due to the nature and extent of audit effort required

to address these matters, including the extent of specialized skill or knowledge needed.

audit procedures related to management’s conclusion on the evaluation and related valuation of embedded derivatives, included

the following, among others:

(1) evaluating the relevant terms and conditions of the various financings, (2) assessing the appropriateness

of conclusions reached by the Company with respect to the accounting for the convertible debt, and the assessment and accounting

for potential derivatives and (3) independently recomputing the valuations determined by Management.

Boyle CPA, LLC

have served as the Company’s auditor since 2018

RESONATE BLENDS, INC.

(FORMERLY TEXTMUNICATION HOLDINGS, INC.)

Hopedale Drive SE

(732) 822-4427

(732) 510-0665

TEXTMUNICATION HOLDINGS, INC.)

BALANCE SHEETS

December 31, 2019

December 31, 2018

and cash equivalents

assets of discontinued operations

current assets

Cash and cash equivalents

Total current assets

Investment in equity method investee

LIABILITIES AND STOCKHOLDERS’

in equity method investee

AND STOCKHOLDERS’

payable and accrued liabilities

to related parties

notes payable, net of discount

liabilities of discontinued operations

current liabilities

Accounts payable and accrued liabilities

Due to related parties

Convertible notes payable, net of discount

Derivative liability

Settlement liability

Total current liabilities

Convertible notes payable, net of discount - Long term

Total liabilities

notes payable, net of discount - Long term

Stockholders’

Series A - Preferred stock, 10,000,000 shares authorized, $0.0001

stock, 10,000,000 shares authorized, $0.0001 par value

A - Preferred Stock, 4,000,000 shares authorized, $0.0001

par value, 4,000,000 issued and outstanding

Series B - Preferred stock, 66,667 shares authorized, $0.0001 par value, 66,667 issued and outstanding

Series C - Preferred stock, 2,000,000 shares authorized, $0.0001 par value,

2,000,000 issued and outstanding

Common stock;

B - Preferred stock, 66,667 shares authorized, $0.0001 par value, 66,667 issued and outstanding

C - Preferred stock, 2,000,000 shares authorized, $0.0001 par value, 2,000,000 issued and outstanding

$0.0001 par value;

200,000,000 shares authorized;

17,153,936 and 2,435,179 shares issued and outstanding as of December 31, 2019 and 2018, respectively.

Additional paid-in capital

Accumulated deficit

27,294,627 and 17,153,936 shares issued and outstanding as

of December 31, 2020 and 2019, respectively.

paid-in capital

(21,100,995 )

(19,159,721 )

Total Stockholders’

TOTAL LIABILITIES AND STOCKHOLDER’S DEFICIT

Stockholders’

LIABILITIES AND STOCKHOLDER’S DEFICIT

accompanying notes are an integral part of these consolidated financial statements

(FORMERLY TEXTMUNICATION HOLDINGS, INC.)

TEXTMUNICATION HOLDINGS, INC.)

STATEMENTS OF OPERATIONS

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Salaries and Related

Sales Commission

Impairment of in house software

Non cash management fees

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Interest expense

Loss on change of derivative liability

Impairment of investment

Amortization of debt discount

Gain (loss) on settlement of derivative liabilities

Gain (loss) on derivative liabilities

Legal settlement

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Income (loss) from investment in equity method investee

NET INCOME (LOSS)

NET INCOME (LOSS) from continuing operations

NET INCOME (LOSS) from discontinued operations

Basic weighted average common shares outstanding

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basic and diluted

The accompanying

notes are an integral part of these consolidated financial statements

(FORMERLY TEXTMUNICATION HOLDINGS, INC.)

accompanying notes are an integral part of these consolidated financial statements

TEXTMUNICATION, INC.)

STATEMENTS OF STOCKHOLDERS’

THE YEAR ENDED DECEMBER 31, 2020

Preferred stock

Preferred stock - Series B

Preferred stock - Series C

Preferred stock - Series D

Total Stockholders’

Balance, December 31, 2017

stock - Series B

stock - Series C

stock - Series D

Stockholders’

December 31, 2019

$ (19,159,721 )

Proceeds from subscription agreements

Stock issued to settle notes payable

Settlement of derivative liability

Balance, December 31, 2018

Stock Issuance

stock issuance for service

issuance to settle notes payable

of shares held by Textmunication Inc.

issued for legal settlement

of preferred stocks

December 31, 2020

$ (21,100,995

Settlement of liabilities

Stock issuance for services

Preferred shares converted to common

Stocks and warrant issued for cash

Conveyance of ownership of Aspire

Preferred shares D retired

Stock issuance for acquisition of Resonate Blends, LLC and Entourage, LLC

December 31, 2018

(15,489,993 )

of liabilities

Issuance for services

shares converted to common

and warrant issued for cash

of ownership to Aspire

shares D retired

issuance for acquisition of Resonate

December 31, 2019

$ (19,159,721 )

accompanying notes are an integral part of these consolidated financial statements

(FORMERLY TEXTMUNICATION HOLDINGS, INC.)

TEXTMUNICATION, INC.

STATEMENTS OF CASH FLOWS

the years ended December 31, 2019 and 2018

the years ended December 31

Cash Flows from Operating Activities

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$ (1,941,274 )

$ (3,510,101 )

Net loss from discontinued operations

Adjustments to reconcile

Amortization of debt discount

Loss on derivative liability

Impairment of software cost

Impairment of investment

Non cash interest expense

Legal Settlement

Share based professional fees

Share based compensation

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Changes in assets and liabilities

Advances to suppliers

Accounts payable and accrued expenses

Due to Related party

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Net cash provided by (used in) operating activities of discontinued operations

Net cash used in operations

Investments in Joiant

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Payments on preferred stocks buy back

Payments on convertible notes payable

Acquisition of Resonate Blends

Payments of convertible notes

Net cash provided by financing activities

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Settlement of derivative liability

accompanying notes are an integral part of these consolidated financial statements

(formerly TEXTMUNICATION HOLDINGS, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

accompanying notes are an integral part of these audited consolidated financial statements

TEXTMUNICATION HOLDINGS, INC.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

THE YEARS ENDED DECEMBER 31, 2020 and 2019

BASIS OF PRESENTATION AND GOING CONCERN

Resonate Blends, Inc.

formerly Textmunication

Holdings, Inc.

(the “Company”) was incorporated on in October 1984 in the State of Georgia as Brock Control

formerly Textmunication Holdings, Inc.

(the “Company”) was incorporated on in October 1984 in the State

of Georgia as Brock Control Systems.

Founded by Richard T.

Brock, the Company was in the sales automation market and an early developer of enterprise customer

management systems.

Brock, the Company was in the sales automation market and an early

developer of enterprise customer management systems.

The Company went public at the end of March of 1993.

In February of 1996, the Company changed its name to

Brock International Inc., and in March of 1998, the Company again changed our name to Firstwave Technologies, Inc.

In 2007, the Company deregistered its common

stock in order to avoid the expenses of being a public company.

The Company reported briefly on the OTC Disclosure & News

Service in 2008 but not for long.

In February of 1996,

the Company changed its name to Brock International Inc., and in March of 1998, the Company again changed our name to Firstwave

Technologies, Inc.

2007, the Company deregistered its common stock in order to avoid the expenses of being a public company.

The Company reported

briefly on the OTC Disclosure & News Service in 2008 but not for long.

The Company again changed its name to FSTWV, Inc.

On October 28, 2013, the Company held a

shareholder meeting to reincorporate the company in the State of Nevada and concurrently change its name to Textmunication Holdings,

The Company also voted to approve a 1 for 5 reverse split of its outstanding common stock.

On November 16, 2013, the Company entered

into a Share Exchange Agreement (SEA) with Textmunication, Inc.

a California corporation, whereby the sole shareholder of the

Company received 65,640,207 new shares of common stock of the Company in exchange for 100% of the Textmunication’s issued

and outstanding shares.

Textmunication is an online mobile marketing

platform service that will connect merchants with their customers and allow them to drive loyalty and repeat business in a non-intrusive,

value added medium.

For merchants we provide a mobile marketing platform where they can always send the most up-to-date offers/discounts/alerts/events

schedule, such as happy hours, trivia night, and other campaigns.

The consumer can also access specials and promotions that merchants

choose to distribute through Textmunication by opting into keywords designated to the merchant’s keywords.

On July 9, 2018, the 1 –

1,000 Reverse

Split of the Company’s common stock took effect at the open of business.

All shares and per share amounts have been

retroactively adjusted to reflect the reverse split.

On June 25, 2019, the Company issued a press

release announcing it plans to change its business direction from its current SMS technology business to focus on the emerging

national cannabis market.

The Company planned on using its mobile texting platform to enhance communication efforts with

the potential acquisitions.

On October 25, 2019, the Company entered into

a Membership Interest Purchase Agreement (the “Resonate Purchase Agreement”) with Resonate Blends, LLC, a California

limited liability company (“Resonate”), and the members of Resonate.

As a result of the transaction, Resonate became

a wholly owned subsidiary of the Company.

In accordance with the terms of the Purchase Agreement, at the closing an aggregate of

5% of the Company’s outstanding shares of common stock for a total of 665,072 shares were issued to the holders of Resonate

in exchange for their membership interests of Resonate.

These shares have anti-dilution protection.

We have also agreed as part

of the purchase price to issue:

(ii) such number of shares of Series E Preferred Stock that will convert into 5% of the outstanding

shares of common stock in the Company on a fully-diluted basis upon an annualized revenue run rate of Ten Million Dollars ($10,000,000.00)

for any three (3) consecutive month trailing period;

and (iii) such number of shares of Series E Preferred Stock that will convert

into 5% of the outstanding shares of common stock in the Company on a fully-diluted basis upon the occurrence of the Company’s

public market value reaching One Hundred Million US Dollars ($100,000,000).

The shares in (ii) and (iii) shall have anti-dilution

protections, except that this provision only applies for 2.5% of the outstanding shares acquired under each subsection.

October 28, 2013, the Company held a shareholder meeting to reincorporate the company in the State of Nevada and concurrently

change its name to Textmunication Holdings, Inc.

The Company also voted to approve a 1 for 5 reverse split of its outstanding

common stock.

November 16, 2013, the Company entered into a Share Exchange Agreement (SEA) with Textmunication, Inc.

a California corporation,

whereby the sole shareholder of the Company received 65,640,207 new shares of common stock of the Company in exchange for 100%

of the Textmunication’s issued and outstanding shares.

Textmunication

is an online mobile marketing platform service that will connect merchants with their customers and allow them to drive loyalty

and repeat business in a non-intrusive, value added medium.

For merchants Textmunication provides a mobile marketing platform

where they can always send the most up-to-date offers/discounts/alerts/events schedule, such as happy hours, trivia night, and

other campaigns.

The consumer can also access specials and promotions that merchants choose to distribute through Textmunication

by opting into keywords designated to the merchant’s keywords.

July 9, 2018, the 1 –

1,000 Reverse Split of the Company’s common stock took effect at the open of business.

and per share amounts have been retroactively adjusted to reflect the reverse split.

June 25, 2019, the Company issued a press release announcing it plans to change its business direction from its current SMS technology

business to focus on the emerging national cannabis market.

The Company planned on using its mobile texting platform to enhance

communication efforts with the potential acquisitions.

October 25, 2019, the Company entered into a Membership Interest Purchase Agreement (the “Resonate Purchase Agreement”)

with Resonate Blends, LLC, a California limited liability company (“Resonate”), and the members of Resonate.

result of the transaction, Resonate became a wholly owned subsidiary of the Company.

In accordance with the terms of the Purchase

Agreement, at the closing an aggregate of 5% of the Company’s outstanding shares of common stock for a total of 665,072

shares were issued to the holders of Resonate in exchange for their membership interests of Resonate.

These shares have anti-dilution

We have also agreed as part of the purchase price to issue:

(ii) such number of shares of Series E Preferred Stock

that will convert into 5% of the outstanding shares of common stock in the Company on a fully-diluted basis upon an annualized

revenue run rate of Ten Million Dollars ($10,000,000.00) for any three (3) consecutive month trailing period;

and (iii) such number

of shares of Series E Preferred Stock that will convert into 5% of the outstanding shares of common stock in the Company on a

fully-diluted basis upon the occurrence of the Company’s public market value reaching One Hundred Million US Dollars ($100,000,000).

The shares in (ii) and (iii) shall have anti-dilution protections, except that this provision only applies for 2.5% of the outstanding

shares acquired under each subsection.

on October 25, 2019, the Company entered into a Membership Interest Purchase Agreement (the “Entourage Labs Purchase Agreement”)

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only applies for 2.5% of the outstanding shares acquired under each subsection.

RESONATE BLENDS, INC.

(formerly TEXTMUNICATION HOLDINGS, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

THE YEARS ENDED DECEMBER 31, 2019 and 2018

addition, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations

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relating to the Company’s former business.

Finally, the Company entered into Employment

Agreements with the following persons:

(i) Geoffrey Selzer as Chief Executive Officer (CEO) of the Company with an annual

salary of $180,000;

and (ii) Pamela Kerwin as Chief Operating Officer (COO) of the Company with an annual salary of $120,000.

the Company entered into Employment Agreements with the following persons:

(i) Geoffrey Selzer as Chief Executive Officer (CEO)

of the Company with an annual salary of $180,000;

and (ii) Pamela Kerwin as Chief Operating Officer (COO) of the Company with

an annual salary of $120,000.

Both are eligible for salary increases upon milestone achievements and other benefits.

The Employment Agreement for the CEO has

a term of 2 years and can’t be terminated without cause.

Severance of six (6) weeks is available for termination of the

COO without cause before one-year of service and eight (8) weeks after one-year of service.

On December 16, 2019 the Company filed

Articles of Merger with the Secretary of State of Nevada in order to effectuate a merger with its wholly owned subsidiary;

The Employment

Agreement for the CEO has a term of 2 years and can’t be terminated without cause.

Severance of six (6) weeks is available

for termination of the COO without cause before one-year of service and eight (8) weeks after one-year of service.

December 16, 2019 the Company filed Articles of Merger with the Secretary of State of Nevada in order to effectuate a merger with

its wholly owned subsidiary;

Resonate Blends, Inc.

Shareholder approval was not required under Section 92A.180 of the Nevada Revised Statutes.

As part of the

merger, the Company’s board of directors authorized a change in our name to “Resonate Blends, Inc.”

the Company’s Articles of Incorporation have been amended to reflect this name change.

In connection with the name change, the Company’s

symbol was changed to “KOAN”

that more resembles the Company’s new business focus.

Shareholder approval was not required under Section 92A.180 of the Nevada Revised

As part of the merger, the Company’s board of directors authorized a change in our name to “Resonate Blends,

and the Company’s Articles of Incorporation have been amended to reflect this name change.

connection with the name change, the Company’s symbol was changed to “KOAN”

that more resembles the Company’s

new business focus.

December 16, 2019 the Company filed Articles of Merger with the Secretary of State of Nevada in order to effectuate a merger with

its wholly owned subsidiary;

Resonate Blends, Inc.

Shareholder approval was not required under Section 92A.180 of the Nevada Revised

As part of the merger, the Company’s board of directors authorized a change in our name to “Resonate Blends,

and the Company’s Articles of Incorporation have been amended to reflect this name change.

January 20, 2020, Wais Asefi resigned as Chairman and as a member of our Board of Directors.

Asefi’s resignation is

in support of Resonate Blends strategic direction of becoming a pure play cannabis company.

The Company does not believe that

Asefi has any disagreements on matters relating to our operations, policies or practices.

Also, on January 20, 2020, our Board

of Directors appointed Geoffrey Selzer as our Chairman.

connection with the name change, the Company’s symbol was changed to “KOAN”

that more resembles the Company’s

new business focus.

May 22, 2020, Resonate Blends, Inc.

(the “Company”) entered into a Stock Purchase Agreement (the “SPA”)

with Wais Asefi, Nick Miniello, Juleon Asefi, and Curt Byers (collectively, the “Asefi Group”) to sell to the Asefi

Group its subsidiary, Textmunication, Inc., a California corporation (“Textmunication”).

Textmunication operates the

Company’s SMS business activities.

The Company will retain its cannabis operations based in Calabasas, California.

consideration for the sale of Textmunication consists of the cancellation by the Asefi Group of 4,822,029 shares of common stock

(the “Shares”) of the Company.

The Shares have a market value of $337,542, based on our last sales price of $0.07

per share as of May 26, 2020.

Upon the cancellation of the Shares, the Company agreed to execute a general release in favor of

on May 22, 2020, the Company entered into a Separation and Release Agreement (the “Separation Agreement”) with Wais

Pursuant to the Separation Agreement, Mr.

Asefi agreed to separate from all officer positions and as a director of the

Company and to further accept the payment of $200,000 from the Company’s future fundraising as consideration of all debts

outstanding under Mr.

Asefi’s employment agreement with the Company.

Asefi further agreed to cancel his 4,000,000 shares

of Series A Preferred Stock and to transfer his 2,000,000 shares of Series C Preferred Stock to Geoffrey Selzer, the Company’s

current CEO and Director.

Asefi further released the Company of all claims.

on May 22, 2020, Mr.

Selzer signed a Voting Agreement and agreed to vote his newly acquired 2,000,000 shares of Series C Preferred

Stock in favor of the sale of Textmunication to the Asefi Group.

May 22, 2020, Resonate Blends, Inc.

(the “Company”) entered into a Stock Purchase Agreement (the “SPA”)

with Wais Asefi, Nick Miniello, Juleon Asefi, and Curt Byers (collectively, the “Asefi Group”) to sell to the Asefi

Group its subsidiary, Textmunication, Inc., a California corporation (“Textmunication”).

Textmunication operates the

Company’s SMS business activities.

July 20, 2020, the parties closed on the transactions contained in the SPA.

The Asefi Group cancelled 4,822,029 shares

of common stock (the “Shares”) of the Company.

The Shares have a market value of $332,842, based on our last sales

price of $0.07 per share as of May 26, 2020.

The Company also executed a general release in favor of Mr.

of Presentation

15 unchanged sentences

These consolidated financial statements do not include any adjustments that might arise from this

TEXTMUNICATION HOLDINGS, INC.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

THE YEARS ENDED DECEMBER 31, 2019 and 2018

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

14 unchanged sentences

of the Company’s accounts receivable.

are recognized when control of the promised is transferred to our customers, in an amount that reflects the consideration we expect

to be entitled to in exchange for those services.

Company currently derives a substantial majority of its revenue from fees associated with our subscription services, which generally

include mobile marketing platform services.

Customers are billed for the subscription on a monthly basis.

For all of the Company’s

customers, regardless of the method, the Company uses to bill them;

subscription revenue is recorded as deferred revenue

in the accompanying consolidated balance sheets.

As services are performed, the Company recognizes subscription revenue on a monthly

basis over the applicable service period.

When the Company provides a free trial period, the Company does not begin to recognize

subscription revenue until the trial period has ended and the customer has been billed for the services.

services revenues are generated from SMS and RCS packages where client logs into a cloud-based application to send targeted SMS

messages to their subscriber’s base.

Our custom web application SMS/RCS platform is typically billed on a fixed-price based

on the number of SMS/RCS allocated for each package our client purchases.

Generally, revenue for SMS/RCS services are recognized

immediately as our clients have instant access to their web-based application to send out messages, the number of SMS/RCS messages

allocated to a client expires at the end of each month and renews beginning of each month.

The Company offers whereby control

of the product passes to the customer when delivered and revenue is recognized at the time of delivery.

Company did not have any revenues from continuing operations for the periods presented.

The Company’s policy is that revenues

will be recognized when control of the product is transferred to our customers, in an amount that reflects the consideration we

expect to be entitled to in exchange for those services.

for reporting periods beginning after January 1, 2020 are presented under Topic 606, while prior period amounts are not adjusted

and continue to be reported in accordance with our historic accounting under Topic 605.

did not have a cumulative impact as of January 1, 2018 due to the adoption of Topic 606 and there was not an impact to our consolidated

statement of operations for the year ended December 31, 2018 as a result of applying Topic 606.

We did not have any cumulative impact

as a result of applying Topic 606.

Value of Financial Instruments

9 unchanged sentences

to develop its own assumptions.

TEXTMUNICATION HOLDINGS, INC.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

THE YEARS ENDED DECEMBER 31, 2019 and 2018

three levels of the fair value hierarchy are described below:

6 unchanged sentences

value is considered fair value.

of December 31, 2018, there are no financial assets and liabilities measured at fair value.

assets and liabilities measured at fair value on a recurring basis are summarized below for the year ended December 31, 2019:

Derivative Financial Instruments

assets and liabilities measured at fair value on a recurring basis are summarized below for the year ended December 31, 2020 and

Financial Instruments

income (loss) per Common Share

20 unchanged sentences

of the accumulated net loss has been fully offset by an equal valuation allowance.

TEXTMUNICATION HOLDINGS, INC.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

THE YEARS ENDED DECEMBER 31, 2019 and 2018

preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates

17 unchanged sentences

to compensation expense and additional paid-in capital over the period during which services are rendered.

Development Costs

Company applies the principles of FASB ASC 985-20, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise

Marketed (“ASC 985-20”).

ASC 985-20 requires that software development costs incurred in conjunction with product

development be charged to research and development expense until technological feasibility is established.

Thereafter, until the

product is released for sale, software development costs must be capitalized and reported at the lower of unamortized cost or

net realizable value of the related product.

Company also applies the principles of FASB ASC 350-40, Accounting for the Cost of Computer Software Developed or Obtained for

Internal Use (“ASC 350-40”).

ASC 350-40 requires that software development costs incurred before the preliminary project

stage be expensed as incurred.

We capitalize development costs related to these software applications once the preliminary project

stage is complete and it is probable that the project will be completed, and the software will be used to perform the function

2018, management determined that the software is unable to handle the expanding business and decided to scrap the entire project

and recognize as loss for the year.

A total cost of $85,092 was written off during the year ended December 31, 2018.

expenses are included in General and administrative expenses in the Statements of Operations and are expensed as incurred.

Company incurred $7,350 and $38,945 in advertising expenses for the years ended December 31, 2020 and 2019, respectively.

TEXTMUNICATION HOLDINGS, INC.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

THE YEARS ENDED DECEMBER 31, 2019 and 2018

Accounting Pronouncements

March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606):

Principal versus Agent Considerations

(Reporting Revenue Gross versus Net) .

ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations

and includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred

to the customers.

ASU 2016-08 is effective January 1, 2018 to be in alignment with the effective date of ASU 2014-09.

April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606):

Identifying Performance Obligations

and Licensing.

The amendments in ASU 2016-10 clarify the following two aspects

of Topic 606:

identifying performance obligations and the licensing implementation guidance, while retaining the related principles

for those areas.

ASU 2016-10 is effective January 1, 2018 to be in alignment with the effective date of ASU 2014-09.

May 2016, the FASB issued ASU 2016-12, Revenue from Contracts from Customers (Topic 606):

Narrow-Scope Improvements and Practical

The amendments in this update affect the guidance in ASU 2014-09, which is not yet effective.

The core principle

of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to

customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods

The amendments in ASU 2016-12 do not change the core principle of the guidance in Topic 606, but instead affect only

the narrow aspects noted in Topic 606.

ASU 2016-12 is effective January 1, 2018 to be in alignment with the effective date of

The Company will adopt the provisions of Topic 606 effective in January 1, 2018 and does not believe the adoption

of the new revenue recognition standard will have a material impact on the Company’s consolidated financial statements.

January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall:

Recognition and Measurement of Financial Assets and

Financial Liabilities.

ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of

financial instruments including requirements to measure most equity investments at fair value with changes in fair value recognized

in net income, to perform a qualitative assessment of equity investments without readily determinable fair values, and to separately

present financial assets and liabilities by measurement category and by type of financial asset on the balance sheet or the accompanying

notes to the financial statements.

ASU 2016-01 will be effective for the Company beginning on January 1, 2018 and will be applied

by means of a cumulative effect adjustment to the balance sheet, except for effects related to equity securities without readily

determinable values, which will be applied prospectively.

Management has reviewed this pronouncement and has determined that it

would not have a material impact to the consolidated financial statements.

February 2016, the FASB issued ASU 2016-02, Leases , which requires an entity to recognize long-term lease arrangements

11 unchanged sentences

the adoption of ASU 2016-02 will have a material impact on the Company’s consolidated financial statements.

March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging:

Effect of Derivative Contract Novations on Existing Hedge Accounting

Relationships, which clarifies that a change in the counterparty to a derivative instrument that has been designated as a hedging

instrument would not, in and of itself, be considered a termination of the derivative instrument, provided that all other hedge

accounting criteria continue to be met.

ASU 2016-05 is effective for the Company beginning on January 1, 2017.

Early adoption

is permitted, including in an interim period.

Management evaluated ASU 2016-05 and determined that the adoption of this new accounting

standard did not have a material impact on the Company’s consolidated financial statements.

TEXTMUNICATION HOLDINGS, INC.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

THE YEARS ENDED DECEMBER 31, 2019 and 2018

March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815):

Contingent Put and Call Options in Debt Instruments,

which aims to reduce the diversity of practice in identifying embedded derivatives in debt instruments.

ASU 2016-06 clarifies

that the nature of an exercise contingency is not subject to the “clearly and closely”

criteria for purposes of assessing

whether the call or put option must be separated from the debt instrument and accounted for separately as a derivative.

is effective for the Company beginning on January 1, 2017.

Management evaluated ASU 2016-06 and determined that the adoption of

this new accounting standard did not have a material impact on the Company’s consolidated financial statements.

March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation:

Improvements to Employee Share-Based Payment Accounting.

ASU 2016-09 simplifies several aspects of the accounting and presentation of share-based payment transactions, including the

accounting for related income taxes consequences and certain classifications within the statement of cash flows.

ASU 2016-09 is

effective for the Company beginning on January 1, 2017.

Management evaluated the impact of adopting ASU 2016-09 and determined

that the new accounting standard did not have a material impact on the Company’s consolidated financial statements.

August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230):

Classification of Certain Cash Receipts

and Cash Payments”

(“ASU 2016-15”).

ASU 2016-15 will make eight targeted changes to how cash receipts and cash

payments are presented and classified in the statement of cash flows.

ASU 2016-15 is effective for fiscal years beginning after

December 15, 2017.

The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which

case it would be required to apply the amendments prospectively as of the earliest date practicable.

November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230)”, requiring that the statement of

cash flows explain the change in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted

cash equivalents.

This guidance is effective for fiscal years, and interim reporting periods therein, beginning after December

15, 2017 with early adoption permitted.

The provisions of this guidance are to be applied using a retrospective approach which

requires application of the guidance for all periods presented.

Management has reviewed this pronouncement and has determined

that it would not have a material impact to the consolidated financial statements.

May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting.

8 unchanged sentences

Management has reviewed this pronouncement and has determined that it would not have a material impact to the consolidated financial

TEXTMUNICATION HOLDINGS, INC.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

THE YEARS ENDED DECEMBER 31, 2019 and 2018

July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

30 unchanged sentences

RELATED PARTY TRANSACTIONS

due to related parties are due on demand and have no interest.

Amounts outstanding as of December 31, 2019 and 2018 was approximately

$11,750 and $11,750, respectively

of December 31, 2020, the Company had notes payable to a related party of $187,500.

On May 22, 2020, the Company entered

into a Separation and Release Agreement (the “Separation Agreement”) with Wais Asefi.

Pursuant to the Separation Agreement,

Asefi agreed to separate from all officer positions and as a director of the Company and to further accept the payment of

$200,000 from the Company’s future fundraising as consideration of all debts outstanding under Mr.

Asefi’s employment

agreement with the Company.

Asefi further agreed to cancel his 4,000,000 shares of Series A Preferred Stock and to transfer

his 2,000,000 shares of Series C Preferred Stock to Geoffrey Selzer, the Company’s current CEO and Director.

Asefi further

released the Company of all claims.

May 22, 2020, the 4,000,000 shares of Series A Preferred Stock were returned to the Company’s transfer agent and cancelled

and on May 22, 2020 the 2,000,000 shares of Series C Preferred Stock were transferred to Mr.

The parties to the Separation

Agreement agreed to a payment schedule of $200,000 based on future monies raised by the Company - and not on a specific date –

when the initial $250,000 is raised by the Company;

when a total of $500,000 is raised by the Company;

when a total of $750,000 is raised by the Company;

when a total of $1,750,000 is raised by the Company;

when a total of $2,750,000 is raised by the Company;

when a total of $3,750,000 is raised by the Company;

when a total of $4,750,000 is raised by the Company;

when a total of $5,750,000 is raised by the Company.

Company made a payment of $12,500 on the payable to related parties as of December 31, 2020.

4 - CONVERTIBLE NOTE PAYABLE

notes payable consists of the following:

December 31, 2019

December 31, 2018

Total convertible notes payable

Less discounts

Convertible notes, net of discount

January 22, 2020, we executed a convertible promissory note with Geneva Roth Remark Holdings, Inc.

for $113,300 with note discounted

of $10,300 and interest at the rate of 10% per annum from the issue date.

This note will mature on January 22, 2021 with penalty

clause of 22% per annum should the note be defaulted.

If we decide to let this Note convert, the variable conversion price is

75% multiplied by the market price, representing a market discount of 25%.

We have the ability to prepay this Note beginning on

the Issue Date and ending on the date which is one hundred twenty (120) days following the Issue Date with a prepayment percentage

The period beginning on the date which is one hundred twenty-one (121) days following the Issue Date and ending on the

date which is one hundred eight (180) days following the Issue Date, the prepayment percentage is 118%.

March 3, 2020 Resonate Blends, Inc.

(“Resonate”) agreed to pay Cicero Holding, Inc.

(“Cicero”) five payments

of $10,000 plus a final balloon payment of $60,000 by September 15, 2020.

This settlement was on a previous $100,000 convertible

note issued to Textmunication Holdings, Inc.

on October 2, 2019.

To date, Resonate has made two payments of $10,000 each –

or $20,000 total.

On June 23, 2020, both Parties agreed to amend the settlement agreement dated March 3, 2020.

Resonate issued

900,000 common shares to Cicero with a leak-out of 120,000 shares per month to retire the remaining $90,000 owed on the Note.

March 13, 2020 we executed a convertible promissory note with Armada Capital Partners LLC.

for $142,000 with note discounted of

$8,667 and interest at the rate of 15% per annum from the issue date.

This note will mature on April 20, 2021 with penalty clause

of 18% per annum should the note be defaulted.

If we decide to let this Note convert, the variable conversion price is 65% multiplied

by the market price, representing a market discount of 35%.

We have the ability to prepay this Note beginning on the Issue Date

at our discretion.

March 13, 2020 we executed a convertible promissory note with BHP Capital NY for $142,000 with note discounted of $8,667 and interest

at the rate of 15% per annum from the issue date.

This note will mature on April 20, 2021 with penalty clause of 18% per annum

should the note be defaulted.

If we decide to let this Note convert, the variable conversion price is 65% multiplied by the market

price, representing a market discount of 35%.

We have the ability to prepay this Note beginning on the Issue Date at our discretion.

March 13, 2020 we executed a convertible promissory note with Jefferson Street Capital LLC for $142,000 with note discounted of

$8,667 and interest at the rate of 15% per annum from the issue date.

This note will mature on April 20, 2021 with penalty clause

of 18% per annum should the note be defaulted.

If we decide to let this Note convert, the variable conversion price is 65% multiplied

by the market price, representing a market discount of 35%.

We have the ability to prepay this Note beginning on the Issue Date

at our discretion.

June 18, 2020, we executed a convertible promissory note with Geneva Roth Remark Holdings, Inc.

for $85,800 together with any

interest at the rate of 10% per annum from the issue date.

If we decide to let this Note convert, the variable conversion price

is 75% multiplied by the market price, representing a market discount of 25%.

We have the ability to prepay this Note beginning

on the Issue Date and ending on the date which is one hundred twenty (120) days following the Issue Date with a prepayment percentage

The period beginning on the date which is one hundred twenty-one (121) days following the Issue Date and ending on the

date which is one hundred eight (180) days following the Issue Date, the prepayment percentage is 118%.

July 20, 2020, we executed a Securities Purchase Agreement (“SPA”) with FirstFire and issued the FirstFire Note with

a principal amount of $225,000, a $25,000 original issue discount and interest at 8% per annum.

The principal balance and accrued

but unpaid interest may be converted to our common stock at $0.10 per share or, upon default, at 75% of the lowest trading price

in the last 20 days in our trading market.

July 20, 2020, the parties closed on the transactions contained in the SPA.

The Asefi Group will cancel 4,822,029 shares of common

stock (the “Shares”) of the Company.

The Shares have a market value of $337,542, based on our last sales price of

$0.07 per share as of May 26, 2020.

The Company also executed a general release in favor of Mr.

July 21, 2020, we paid off the Geneva Note in its entirety with proceeds acquired from the below new convertible promissory note

(the FirstFire Note”) we issued to FirstFire Global Opportunities Fund LLC.

The amount paid to Geneva was $140,397.01.

notes payable consists of the following as of December 31, 2020 and 2019:

note face value

Net convertible Notes

of December 31, 2020 and 2019 accrued interest payable on notes payable were $71,346 and $10,556 respectively.

Company accounts for the fair value of the conversion features of its convertible debt in accordance with ASC Topic No.

10 unchanged sentences

pricing model.

following table presents details of the changes in the Company’s derivative liabilities associated with its convertible

notes for the year ended December 31, 2019:

Balance December 31, 2018

Add derivative liability due to new convertible notes

Change in fair market value of derivative liabilities

Balance December 31, 2019

the year ended December 31, 2019, the Company issued 1,280,000 shares of common stock with a fair value of $164,033 for the settlement

of liabilities payable.

The conversion of the derivative liabilities has been recorded through additional paid-in capital.

TEXTMUNICATION HOLDINGS, INC.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

THE YEARS ENDED DECEMBER 31, 2019 and 2018

INVESTMENT IN ASPIRE CONSULTING GROUP, LLC

January 5, 2016, the Company entered into a Share Exchange Agreement with Aspire Consulting Group, LLC, a Virginia limited liability

company and certain members of Aspire.

Pursuant to the terms of the Exchange Agreement, the Company agreed to acquire 49% of all

of the issued and outstanding membership units of Aspire in exchange for the issuance of 66,667 shares of the Company’s

newly created Series B Convertible Preferred Stock to the Members valued at $460,002.

Company has concluded that it has the ability to exercise significant influence, but not control, over an Aspire through its acquired

49% equity interest and therefore has accounted for the acquisition of the interest under the equity method.

following table presents details of the Company’s investment in Aspire as of December 31, 2017 and 2016:

Balance December 31, 2017

Loss from equity method

Balance December 31, 2018

Loss from equity method

Balance December 31, 2019

October 25, 2019 the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations

(the “Conveyance Agreement”) with Mark S.

Johnson and the Company’s 49% owned subsidiary, Aspire Consulting

Group, LLC, a Virginia limited liability company.

Pursuant to the Conveyance Agreement, the Company transferred all assets and

business operations associated with its IT consulting solutions, including all of the capital stock of Aspire Consulting, to Mr.

In exchange, Mr.

Johnson agreed to cancel 20,000 shares of common stock in the Company and to assume and cancel all liabilities

relating to the Company’s former business.

COMMITMENTS AND CONTINGENCIES

January 6, 2015 the Company signed an amendment to its lease originally signed on May 9, 2008.

The amended lease commenced January

1, 2015 and expires on thirty days’

Current month to month lease is for $1,838 a month.

October 16, 2019, the Company signed a lease agreement that expires on thirty days’

Rent expense was approximately

2 unchanged sentences

October 25, 2019 the Company entered into Employment Agreements with the following persons:

(i) Geoffrey Selzer as Chief

Executive Officer (CEO) of the Company with an annual salary of $180,000;

and (ii) Pamela Kerwin as Chief Operating Officer

(COO) of the Company with an annual salary of $120,000.

Both are eligible for salary increases upon milestone achievements and

other benefits.

The Employment Agreement for the CEO has a term of 2 years and can’t be terminated without cause.

of six (6) weeks is available for termination of the COO without cause before one-year of service and eight (8) weeks after one-year

RESONATE BLENDS, INC.

(formerly TEXTMUNICATION HOLDINGS, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31,

2019 and 2018

Claims and Assessments

October 12, 2018, the Company, Wais Asefi, the Company’s former CEO, and David Thielen, the Company’s COO, entered

into a Settlement Agreement and Release (the “Agreement”) with Lester Einhaus (“Holder”) concerning a

$25,000 convertible note issued by the Company to the Holder on September 23, 2015 (the “Note”).

Case detail as follows:

Textmunication

States District Court –

Northern District

1:17-cv-04478

Agreement requires the Company to issue to the Holder 475,000 shares of the Company’s common stock, subject to the condition

that the Holder does not own more than 4.99% of the Company’s outstanding shares at any time.

As such, the shares will be

issued out in tranches;

with the first such tranche was due within 10 days of signing the Agreement for 198,000 shares.

The Holder agreed to a daily leak out of the greater of 10,000 shares or 15% of the trading volume.

An anti-dilution provision

in the Agreement required an additional 379,386 shares to be issued.

During the year ended December 31, 2019, all required

shares were issued by the Company and no further liability exists.

(i) Geoffrey Selzer as Chief Executive

Officer (CEO) of the Company with an annual salary of $180,000;

(ii) Pamela Kerwin as Chief Operating Officer (COO) of the Company

with an annual salary of $120,000;

(iii) David Thielen as Chief Investment Officer (CIO) of the Company with an annual salary

All are eligible for salary increases upon milestone achievements and other benefits.

The Employment Agreement for

the CEO has a term of 2 years and can’t be terminated without cause.

Severance of six (6) weeks is available for termination

of the COO and CIO without cause before one-year of service and eight (8) weeks after one-year of service.

the year ended December 31, 2020, the cumulative net operating loss carry-forward from continuing operations is approximately

2 unchanged sentences

of December 31, 2020 and 2019:

Deferred tax asset attributable to:

Net operating loss carryover

Valuation allowance

Net deferred tax asset

tax attributable to:

Operating loss carry over

deferred tax assets

to the enactment of the Tax Reform Act of 2017, the corporate tax rate for those tax years beginning with 2018 has been reduced

STOCKHOLDERS’

The Company is authorized to issue an

aggregate of 100,000,000 shares of common stock with a par value of $0.0001.

The Company is also authorized to issue 10,000,000

shares of “blank check”

preferred stock with a par value of $0.0001, which includes 4,000,000 shares of Series A preferred

stock (“Series A”) and 2,000,000 shares of Series C preferred stock (“Series C”).

the Certificate of Designation, holders of Series A Preferred Stock will participate on an equal basis per-share with holders

of our common stock in any distribution upon winding up, dissolution, or liquidation.

Holders of Series A Preferred Stock are

entitled to vote together with the holders of our common stock on all matters submitted to shareholders at a rate of three hundred

(300) votes for each share held.

RESONATE BLENDS, INC.

(formerly TEXTMUNICATION HOLDINGS, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31,

2019 and 2018

Company is authorized to issue an aggregate of 200,000,000 shares of common stock with a par value of $0.0001.

The Company is

also authorized to issue 10,000,000 shares of “blank check”

preferred stock with a par value of $0.0001.

board of directors of the Company has designated, out of the 10,000,000 shares of preferred stock authorized, the following series

of preferred stock:

4,000,000 shares of Series A Preferred Stock, 66,667 shares of Series B Preferred Stock, 2,000,000 shares

of Series C Preferred Stock, 40,000 shares of Series D Preferred Stock and 10,000 shares of Series E Preferred Stock.

October 25, 2019, 66,667 outstanding shares of Series B Preferred Stock was returned to the Company’s transfer agent and

December 9, 2019, the Company exercised its right to redeem the 40,000 outstanding shares of Series D Preferred Stock by paying

the holders $260,000 or 130% of the amount paid for the shares, as called for under the Securities Purchase Agreement.

May 22, 2020, 4,000,000 outstanding shares of Series A Preferred Stock were returned to the Company’s transfer agent and

were 2,000,000 shares of Series C Preferred Stock issued and outstanding as of December 31, 2020.

There are no other series of

preferred stock outstanding as of December 31, 2020.

the year ended December 31, 2018,

9 unchanged sentences

The fair market value of the shares issues accounted as expenses as follows:

Management Fees

Payment to subcontractors

to subcontractor

the second quarter of 2019 the company issued 40,000 shares of preferred stock warrants for $200,000 cash.

the third quarter of 2019 the company issued 1,280,000 common stocks in settlement of liabilities.

The fair market value

of the liabilities accounted as additional paid in capital of $164,033.

The fair market value of the

liabilities accounted as additional paid in capital of $164,033.

the year ended December 31, 2019, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”)

5 unchanged sentences

Securities Purchase Agreement.

During the last quarter year end December

31, 2019, the company issued 4,274,936 shares of common stocks to acquire Resonate Blends, LLC, and Entourage LLC, both

California limited liability companies.

As a result of the transaction, both companies became wholly owned subsidiaries

of the Company.

the last quarter year end December 31, 2019, the company issued 4,274,936 shares of common stocks to acquire Resonate Blends,

LLC, and Entourage LLC, both California limited liability companies.

As a result of the transaction, both companies became wholly

owned subsidiaries of the Company.

The Company recognized a loss of $834,022 on the acquisitions.

the year ended December 31, 2020 the company issued a total of 3,830,408 shares of common stock to management and vendors for

compensation and services rendered.

The fair market value of the shares issues accounted as expenses as follows:

to obtain loan

to management staff

DISCONTINUED OPERATONS

July 20, 2020, the Company finalized a Stock Purchase Agreement (the “SPA”) with Wais Asefi, Nick Miniello, Juleon

Asefi, and Curt Byers (collectively, the “Asefi Group”) to sell to the Asefi Group its subsidiary, Textmunication,

Inc., a California corporation (“Textmunication”).

Textmunication operates the Company’s SMS business activities.

The Company retained its cannabis operations based in Calabasas, California.

The Company has accounted for this spinout as a discontinued

operation and retroactively reclassified all previously presented financial information.

The following summarizes the results

of operations for Textmunication, Inc.

Cost of revenues

from operations of discontinued operation

on disposal of discontinued operations

(loss) from discontinued operations

SUBSEQUENT EVENTS

January 20, 2020, Wais Asefi resigned as Chairman and as a member of our Board of Directors.

Asefi’s resignation is

in support of Resonate Blends strategic direction of becoming a pure play cannabis company.

The Company does not believe that

Asefi has any disagreements on matters relating to our operations, policies or practices.

Also, on January 20, 2020, our Board

of Directors appointed Geoffrey Selzer as our Chairman.

January 21, 2020, we executed a convertible promissory note with Geneva Roth Remark Holdings, Inc.

for $113,300 together with

any interest at the rate of 10% per annum from the issue date.

If we decide to let this Note convert, the variable conversion

price is 75% multiplied by the market price, representing a market discount of 25%.

We have the ability to prepay this Note beginning

on the Issue Date and ending on the date which is one hundred twenty (120) days following the Issue Date with a prepayment percentage

The period beginning on the date which is one hundred twenty-one (121) days following the Issue Date and ending on the

date which is one hundred eight (180) days following the Issue Date, the prepayment percentage is 118%.

RESONATE BLENDS, INC.

(formerly TEXTMUNICATION HOLDINGS, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31,

2019 and 2018

March 3, 2020, we executed a settlement agreement with Cicero on both the Note and email marketing program.

We agreed to pay back

the Note by making payments to Cicero of $10,000 monthly commencing on April 15, 2020 with a balloon payment due on September

Five equal monthly payments of $10,000 each will be made by the 15th of each month starting on April 15, 2020 through

August 15, 2020.

A final payment of $60,000 will be made on September 15, 2020 to close out the payment of the Note in its entirety.

To settle the email marketing program, the Company will issue to Cicero 500,000 shares of restricted common stock upon execution

of this Agreement.

Such shares will be issued to Cicero within 5 business days of the date hereof.

There will be a twelve (12)

month leak-out period that will start once the shares are eligible to be resold, with no more than 5,000 shares allowed to be

sold on any given trading day.

After the issuance of the 500,000 shares, the Contract is paid in full.

previously disclosed, on June 11, 2019, we sold 40,000 shares of our Series D Convertible Preferred Stock (the “Preferred

Shares”) for gross proceeds to us of approximately $200,000.

The Preferred Shares were sold along with warrants to purchase

83,333 shares of our common stock (the “Warrants”).

The Warrants have an exercise price of $0.30 per share and are

exercisable sixty months from the issuance date.

The Warrants provide for cashless exercise in the event we have not registered

the common shares underlying the Warrants.

On March 10, 2020, we entered into Exchange Agreements with three Warrant holders to

exchange their outstanding Warrants for shares of our common stock.

Each Warrant holder shall receive 184,000 shares of our common

stock (the “Exchange Shares”) valued at $0.25 per share in exchange for the Warrant holder’s surrender of the

Each Warrant holder agreed that it will not sell any of the Exchange Shares for sixty (60) days commencing on the Closing

Date (“Lockup Period”).

After the Lockup Period, each Warrant holder agreed that it will not sell more than 61,333

Exchange Shares, plus any Additional Shares (described below) issued in relation to such Exchange Shares in any calendar month.

March 13, 2020, we entered into Securities Purchase Agreements (the “Purchase Agreements”) with three accredited investors

(the “Investors”), pursuant to which we issued and sold to the Investors three promissory notes, dated March 13, 2020,

each in the principal amount of $141,999.99 for an aggregate principal amount of $425,999.97 (the “Notes”).

$399,999.99 from the Notes after applying the original issue discount to the Notes, $232,270.79 of which was used to retire an

existing convertible promissory note and the balance to our account, after legal costs, amounted to $157,229.20.

date for repayment of the Notes is April 20, 2021 and the Notes bear interest at 15% per annum.

We are required to repay the Notes

by making nine equal instalments of $17,613 to each of the three Investors starting on July 13, 2020 and ending on March 13,

As additional consideration, we agreed to issue to each Investor 250,000 shares of our common stock.

We are required to

issue additional shares in the event our common stock trades at less than $0.20 per share in any 10 day trading period.

a right to repurchase the total 750,000 shares issued by paying each Investor $50,000 within 170 calendar days.

The shares may

only be sold under a leak out provision that restricts sales to no more than 10% of our average daily trading volume for the prior

30 days and no more than $35,000 in any calendar month.

All principal and accrued interest on the Notes is convertible into shares

of our common stock upon an event of default.

The conversion price amounts to 65% of the lowest one day VWAP for our common stock

during the 10 trading days prior to the issue date.

The conversion price is subject to adjustment as provided in the Notes.

Company has evaluated subsequent events for recognition and disclosure through March 31, 2021 which is the date the financial

1 unchanged sentence

No other matters were identified affecting the accompanying financial statements and related

July 20, 2020, the Company entered into a Securities Purchase Agreement (“SPA”) with FirstFire Global Opportunities

Fund, LLC (“FirstFire”) and convertible promissory note with a principal amount of $225,000, a $25,000 original issue

discount and interest at 8% per annum (the “FirstFire Note”).

On September 16, 2020, we executed an addendum with

FirstFire whereby a $138,000 payment would be made followed by two additional payments to retire the FirstFire Note.

18, 2020 we made a $138,000 payment to FirstFire that took care of the first three (3) amortized payments due on December 20,

2020, January 20, 2021 and February 20, 2021.

There remained two (2) additional payments of $52,500, which equals the remaining

$105,000 due, were scheduled for payment on March 20, 2021 and April 20, 2021.

On February 12, 2021, we made the final two (2)

payments of $52,500 to retire the FirstFire Note.

March 13, 2020, the Company entered into a Securities Purchase Agreement (“SPA”) with each of BHP Capital NY, Inc.,

Armada Capital Partners LLC, and Jefferson Street Capital LLC, and sold a convertible promissory note to each party with a principal

amount of $141,999.

On February 25, 2021, we paid off all three convertible promissory notes with a payment to each note holder

for a total payout of $438,588.45.

March 18, 2021, the Company announced the closing of our private placements.

From December 1, 2020 through March 15, 2021 (collectively,

the “Closing”), Resonate Blends, Inc.

(the “Company”) entered into note subscription agreements (each,

Note Subscription Agreement”) with accredited investors (collectively the “Investors”), pursuant to

which the Company issued and sold units (the “Units”) where each Unit priced at $25,000 consists of (i) an 8.0% Note

in the principal amount of $25,000 convertible into Common Stock (the “Note) and (ii) a warrant for the purchase of 83,333

shares of the Company’s Common Stock (the “Warrant”).

We sold 90 Units for total proceeds of $2,265,000.

paying finder fees of $187,450 and 649,045 warrant shares to Boustead Securities, LLC, the Company netted $2,077,550, which will

be used for working capital.

addition, the Company also entered into subscription agreements (the “Equity Subscription Agreements”) with certain

accredited investor subscribers (the “Subscribers”) in connection with an equity placement offering of a maximum of

$2,000,000 in units (the “Equity Units”) where each Equity Unit consists of one share of Common Stock at a purchase

price of $0.15 and a warrant to purchase 0.5 share(s) of Common Stock at an exercise price of $0.225 per share.

We sold 6,983,333

Equity Units for total proceeds of $1,047,500.

finder fees of $100,763 and 314,249 warrant shares to Boustead Securities, LLC, the Company netted $946,737, which was used to

pay off the remaining convertible note debt and will also be used for working capital.

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data