What changed in this filing

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Item 1. Financial Statements

2021-05-19 compared with 2020-11-23 · 377 added, 546 removed, 273 unchanged (77% of the section changed)

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consolidated financial statements included in this Form 10-Q are as follows:

Consolidated Balance Sheets as of September 30, 2020 (unaudited) and December 31, 2019;

Consolidated Statements of Operations for the for the three and nine months ended September 30, 2020 and 2019 (unaudited);

Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020;

Consolidated Statements of Operations for the for the three months ended March 31, 2021 and 2020 (unaudited);

Consolidated Statement of Stockholders’

Equity (Deficit) for the nine months ended September 30, 2020 (unaudited);

Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 (unaudited);

Equity (Deficit) for the period ended March 31, 2021 (unaudited);

Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited);

Notes to Consolidated Financial Statements.

consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United

States of America for interim financial information and the SEC instructions to Form 10-Q.

In the opinion of management, all adjustments

considered necessary for a fair presentation have been included.

Operating results for the interim period ended September 30,

2020 are not necessarily indicative of the results that can be expected for the full year.

consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States

of America for interim financial information and the SEC instructions to Form 10-Q.

In the opinion of management, all adjustments considered

necessary for a fair presentation have been included.

Operating results for the interim period ended March 31, 2021 are not necessarily

indicative of the results that can be expected for the full year.

BLENDS , INC.

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BALANCE SHEETS

September 30, 2020

March 31,2021

December 31, 2020

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Cash and cash equivalents

Current assets of discontinued operations

Advances to Suppliers

Total current assets

Fixed assets, net

Investment in equity method investee

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Due to related parties

Notes Payable Related Party

Convertible notes payable, net of discount

Derivative liability

Settlement liability

Current liabilities of discontinued operations

Total current liabilities

Total liabilities

Stockholders’

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

0 and 4,000,000 issued and outstanding

Preferred stock, 10,000,000 shares authorized, $0.0001 par value, 2,000,000 shares issued and outstanding

Series B - Preferred stock, 66,667 shares authorized, $0.0001 par value, 0 issued.

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

Series D Preferred stock 40,000 shares authorized, $0.0001 par value 40,000 and 0 issued and outstanding, respectively

Common stock;

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200,000,000 shares authorized;

24,789,981 and 17,133,936 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively.

38,652,887 and 29,769,627 shares issued and outstanding as of March 31, 2021 December 31, 2020 , respectively.

Additional paid-in capital

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Total Stockholders’

TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY

TOTAL LIABILITIES AND STOCKHOLDER’S DEFICIT

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

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STATEMENTS OF OPERATIONS

The Three Months Ended

The Nine Months Ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Three Months Ended

March 31 2021

March 31 2020

COST OF REVENUES

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Salaries and Related

Sales Commission

Impairment of inhouse software

Non cash management fees

Total operating expenses

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Amortization of debt discount

Gain on settlement of derivative liabilities

Legal settlement

Gain on settlement of notes payable

Gain (loss) on settlement of derivative liabilities

Total other expense

Income (loss) from investment in equity method investee

Loss from continuing operations

Income (loss) on discontinued operations

$ (2,142,310 )

$ (3,023,461 )

NET INCOME (LOSS) from continuing operations

NET INCOME (LOSS) from discontinued operations

NET INCOME (LOSS)

Basic weighted average common shares outstanding

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

BLENDS , INC.

TEXTMUNICATION, INC.)

STATEMENTS OF STOCKHOLDERS’

THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

Preferred stock

THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

Preferred Stock

stock - Series C

Additional Paid-in

Total Stockholders’

AS OF SEPTEMBER 30, 2020

As of December 31, 2019

$ (19,159,721 )

Common stock issuance

Issuance for services

Net Loss 3 months ended March 31, 2020

Balances, March 31, 2020

Balance, December 31, 2020

$ (21,100,995 )

Conversion of notes payable

Common stock issuance

Non-cash Compensation

Net loss 3 months ended June 30, 2020

Balances June 30,2020

(20,950,632 )

Common stock Issuance for Cash

Conversion of notes payable

Cancellation of shares held by Textmunication

Non cash compensation

Shares issues for legal settlement

Cancellation of preferred stock

Net loss 3 months ended September 30, 2020

Balances, September 30, 2020

$ (21,302,031 )

$ (1,756,821 )

AS OF SEPTEMBER 30, 2019

As of December 31, 2018

$ (15,489,993 )

Settlement of liabilities

Stock issuance for services

Net loss 3 months ended March 31, 2019

Net income for the quarter

Balances March 31, 2021

$ (22,159,457 )

Preferred shares converted to common shares

Stocks and warrants issued for settlement for liabilities

Net loss 3 months ended June 30, 2019

Balances, June 30, 2019

As of March 31, 2020

Balance December 31, 2019

$ (19,159,721 )

Stock issuance for settlement of liabilities

Net loss 3 months ended September 30, 2019

Balances, September 30, 2019

Net Loss for the

Common stock issuance

Balance March 31, 2020

$ (19,768,549 )

accompanying notes are an integral part of these consolidated financial statements

TEXTMUNICATION,

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

BLENDS , INC.

TEXTMUNICATION, INC.)

STATEMENTS OF CASH FLOWS

the nine months ended September 30, 2020 and 2019

September 30, 2020

September 30, 2019

three months ended March 31

Cash Flows from Operating Activities

$ (2,142,310 )

Net Income (loss)

$ (1,058,462 )

(Income) loss from discontinued operations

Net loss from discontinued operations

Adjustments to reconcile

Amortization of debt discount

Amortization and depreciation

Loss on derivative liability

Non cash interest expense

Legal Settlement

Share based professional fees

Share based compensation

Gain (Loss) on the settlement of debt

Gain on settlement of derivative liabilities

Income (Loss) from equity method investee

Share professional fees/ compensation

Changes in assets and liabilities

Advances to suppliers

Accounts payable and accrued expenses

Due to Related party

Net cash used in operating

activities of continuing operations

Net cash provided by (used in)

operating activities of discontinued operations

Net cash used in operating activities

Net cash used by operating activities

Net cash provided by discontinued

Cash Flows from investing activities

Investments in Joiant

Disposal of subsidiary company

Net cash provided by investing activities

Purchase of fixed assets

Net cash used by investing activities

Cash Flows from Financing Activities

Proceeds from subscription

Proceeds from convertible notes / loans payable

Proceeds from issuance of stock warrants

Payments to notes payables

Net cash provided by financing activities of continuing operations

Net cash provided by financing

activities of discontinued operations

Proceeds from convertible notes (net)

Proceeds from notes payables

Payments on preferred stocks buy back

Payments on convertible notes payable

Net cash provided by financing activities

Net increase in cash

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

(FORMERLY TEXTMUNICATION HOLDINGS, INC.)

BLENDS , INC.

TEXTMUNICATION, INC.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

THE QUARTER ENDED SEPTEMBER 30, 2020

THE QUARTER ENDED MARCH 31, 2021

ORGANIZATION AND BUSINESS OPERATIONS

(formerly Textmunication Holdings, Inc.) (the “Company”) was incorporated in October 1984 in the

State of Georgia as Brock Control Systems.

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.

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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.

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 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 the company 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

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”)

with Entourage Labs, LLC, a California limited liability company (“Entourage Labs”), and the members of Entourage

As a result of the transaction, Entourage Labs 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 Entourage Labs in exchange for their membership interests of Entourage Labs.

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

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.

addition, 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.

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;

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

salary of $120,000;

and David Thielen as Chief Investment Officer (CIO) with an annual salary of $120,000.

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.

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”

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financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to

a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal

course of business.

As of September 30, 2020, the Company has an accumulated deficit of $21,302,031.

The company’s

ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its

ability to achieve and maintain profitable operations.

While the Company is expanding its best efforts to achieve the above plans,

there is no assurance that any such activity will generate funds that will be available for operations.

These conditions raise

substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance

of these financial statements.

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

consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going

concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

As of March 31, 2021, the Company has an accumulated deficit of $22,159,457.

The company’s ability to continue as a going

concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable

While the Company is expanding its best efforts to achieve the above plans, there is no assurance that any such activity

will generate funds that will be available for operations.

These conditions raise substantial doubt about the Company’s ability

to continue as a going concern for a period of one year from the issuance of these financial statements.

These consolidated financial

statements do not include any adjustments that might arise from this uncertainty.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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The balance at times may exceed federally insured limits.

At September 30, 2020 no cash balances exceeded

the federally insured limit.

receivable and allowance for doubtful accounts

receivable are stated at the amount management expects to collect.

The Company generally does not require collateral to support

customer receivables.

The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts

receivable, historical collection information and existing economic conditions.

As of September 30, 2020 and 2019 no allowance

for doubtful accounts was set up.

The 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.

Results 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.

We did not have any cumulative impact as a result of applying Topic 606.

Aa of March 31, 2021, the company balances exceeded the

federally insured limit by approximately $1,250,000 deposited under one institution.

Management is making certain arrangements

to mitigate this risk during the next quarter.

are stated at the lower of cost and net realizable value.

Cost is determined using the moving average method and net realizable

value is the estimated selling price less costs of disposal in the ordinary course of business.

cost of inventories includes direct costs plus shipping and packaging materials.

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.

Value of Financial Instruments

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three levels of the fair value hierarchy are described below:

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets

or liabilities;

Quoted prices in markets that are not active, or inputs that is observable, either directly or indirectly, for substantially

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(supported by little or no market activity).

fair value of the accounts receivable, accounts payable, notes payable are considered short term in nature and therefore their

value is considered fair value.

assets and liabilities measured at fair value on a recurring basis are summarized below for the quarter ended March 31, 2021 and

year ended December 31, 2020.

As of March 31, 2021

Derivative Liabilities

As of December 31, 2020

Derivative Liabilities

income (loss) per Common Share

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

in Securities

in securities are accounted for using the equity method if the investment provides the Company the ability to exercise significant

influence, but not control, over an investee.

Significant influence is generally deemed to exist if the Company has an ownership

interest in the voting stock of the investee between 20% and 50%, although other factors, such as representation on the investee’s

Board of Directors, are considered in determining whether the equity method is appropriate.

RELATED PARTY TRANSACTIONS

of September 30, 2020, the Company had notes payable to related party of $332,852.

The amount payable was in relation to

the agreed amount to buyout of shares held by former officer and employees of Textmunication Inc.

As of December 31, 2019,

there were approximately $11,650 of related party payables.

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

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

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.

outstanding balances as of March 31, 2021 and December 31, 2020 are $162,500 and $187,500 respectively.

CONVERTIBLE NOTE PAYABLE

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 September 30, 2020 and December 31, 2019:

September 30, 2020

notes payable consists of the following as of March 31, 2021 and December 31, 2020:

March 31, 2021

December 31, 2020

Convertible Note face value

Net Convertible notes payable

of September 30, 2020, and December 31, 2020 accrued interest on notes payable were $28,860 and $10,556, respectively .

Convertible notes face value

Net convertible notes

convertible notes as of March 31, 2021 are 8% Unsecured Convertible Promissory Notes from various accredited investors issued

from January 1, 2021 to March 31, 2021 from the Company’s Reg D 506(c) private placement.

All notes have a mandatory

conversion into equity on the maturity date, which is January 2, 2022, or at a Qualified Financing (QF) of $5,000,000,

whichever occurs first.

The maturity date conversion pricing is the lesser of .10 or 75% of the VWAP with a 20-day

A QF converts into equity at the lesser of $1.00 or 75% of the average selling price of the aggregate QF offering.

three months ended March interest accrued for the convertible notes payable $26,704 and $17,556 respectively.

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

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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’

Rent expense was approximately $5,607 and $11,025 for the three nine

ended September 30, 2020 and 2019, respectively.

We also have a co-share office located in Calabasas, California for our

executive team at Resonate.

We pay $99 month for the office space.

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

Rent expense was approximately

790 and $0 for the quarter ended March 31, 2021 and 2020, respectively.

Employment Agreement

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with an annual salary of $120,000:

On August 3, 2020, the Company entered into an Employment Agreement with David Thielen as Chief

Investment Officer (CIO) with an annual salary of $120,000.

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.

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.

and David Thielen as Chief Investment Officer (CIO) with an annual salary of $120,000.

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.

STOCKHOLDERS’

the nine months ended September 30, 2020, the company issued a total of 5,332,186 shares of common stock to vendors for

compensation and services rendered.

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

Professional Fees

Payment to obtain loan

Payment to management staff

DISCONTINUED OPERATONS

the first quarter of 2021 the company issued a total of 11,633,260 to various accredited investors and issued automatic convertible

notes for a total funds of $2,937,500.

Common shares issued

Convertible promissory notes

Fees paid to secure financing

DISCONTINUED OPERATIONS

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

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of operations for Textmunication, Inc.

Nine Months Ended

for the three months ended March 31, 2020

Cost of Revenues

Operating expenses

Loss from operations of discontinued operation

Gain on disposal of discontinued operations

Gain (loss) from discontinued operations

Loss from operations of discontinued operations

SUBSEQUENT EVENTS

company has evaluated subsequent events for recognition and disclosure through September 29, 2020 which is the date the financial

statements were available to be issued.

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

April 28, 2021, we executed an agreement to bring on Albert Richards, PhD, CFA, as an Advisor responsible for investment strategies

and Mergers & Acquisition guidance.

Richards is a 20-year veteran of the financial services industry.

Before starting Alambic Investment Management to develop systematic

stock selection strategies, he perfected the art of tearing apart financial statements to find value and opportunity.

As a sell-side

analyst and head of research within two large global investment banks, Bert became adept at identifying and quantifying the key

drivers of equity valuation and company quality as well as the behavioral pitfalls that create market opportunities.

to becoming a founding partner of Alambic, Bert was Managing Director and Head of European Equity Research (1994-2000) for Citigroup

(previously Salomon Brothers), European Internet and Global Technology strategist (2000-2003) and Small and Mid-Cap strategist

From 1986 to 1994 Mr.

Richards worked in equity research for Credit Suisse First Boston in New York and London.

Richards received his B.S.

in Chemical Engineering from Iowa State University in 1981, an M.S.

in Chemical Engineering from MIT

in 1983, a Ph.D.

degree in Chemical Engineering from MIT in 1986, and an M.B.A.

from the Sloan School of Management (MIT), also

He was awarded the Chartered Financial Analyst.

On May 11, 2021, we added Colleen Quinn

as an Advisor in support of product research activities and consumer education programs.

Quinn is an internationally celebrated

clinical aromatherapist, cosmetic chemist, and researcher.

She specializes in cannabis research, formulations and

Committed to delivering functional therapeutic plant-based products, Ms.

Quinn has travelled

the globe on a quest for knowledge, innovation and the best quality ingredients from dedicated sustainable farmers in order

to create therapeutic benefits in skin and health care.

She is constantly pushing back the boundaries of her knowledge

The DNA of plants is of consuming interest for her and she derives satisfaction from exploring the chemistry

of new ingredient pairings which create new and enhanced synergistic impacts.

She has a particular interest in educating on

the health benefits of essential oils and cannabis in the treatment of a wide array of conditions.

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.

On May 13, 2021, we amended the Separation

Agreement to state the parties desire to reduce the total amount payable to Wais Asefi from $200,000 USD to $142,500 USD.

to the earlier payments made to Mr.

Asefi, a payment of $40,000 was made on May 14, 2021 with two additional payments due on June

27, 2021 for $40,000 and the final payment due on August 11, 2021 for $25,000.

The final payment due on August 11, 2021 will settle

this agreement in full.

Further under the amendment, Mr.

Asefi nominated Textmunication, Inc., our prior subsidiary, as the recipient

of the funds due under the Separation Agreement.

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

Forward-Looking

statements, other than purely historical information, including estimates, projections, statements relating to our business plans,

objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking

statements”

within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act

of 1933 and Section 21E of the Securities Exchange Act of 1934.

These forward-looking statements generally are identified by the

words “believes,”

statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives,

and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements”

within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E

of the Securities Exchange Act of 1934.

These forward-looking statements generally are identified by the words “believes,”

“project,”

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“will continue,”

“will likely result,”

likely result,”

and similar expressions.

We intend such

forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private

Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe-harbor provisions.

Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which

may cause actual results to differ materially from the forward-looking statements.

Our ability to predict results or the actual

effect of future plans or strategies is inherently uncertain.

Factors which could have a material adverse effect on our operations

and future prospects on a consolidated basis include but are not limited to:

changes in economic conditions, legislative/regulatory

changes, availability of capital, interest rates, competition, and generally accepted accounting principles.

These risks and uncertainties

should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information,

future events or otherwise.

Further information concerning our business, including additional factors that could materially affect

our financial results, is included herein and in our other filings with the SEC.

We intend such forward-looking statements to be covered by the safe-harbor provisions

for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for

purposes of complying with those safe-harbor provisions.

Forward-looking statements are based on current expectations and assumptions

that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements.

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.

Factors which could have a

material adverse effect on our operations and future prospects on a consolidated basis include but are not limited to:

changes in economic

conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles.

These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed

on such statements.

We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new

information, future events or otherwise.

Further information concerning our business, including additional factors that could materially

affect our financial results, is included herein and in our other filings with the SEC.

October 25, 2019, Resonate Blends, Inc.

(formerly Textmunication Holdings Inc.) announced its entry into the cannabis industry

by acquiring Resonate Blends LLC (“Resonate”

or the “Company”), a California-based cannabis wellness lifestyle

product company built on a proprietary system of experiential targets.

Resonate is building a value-added, brand-focused cannabis

organization offering premium brands of consistent quality.

The Company also acquired Entourage Labs LLC (“Entourage Labs”),

a sister company of Resonate.

(formerly Textmunication Holdings Inc.) announced its entry into the cannabis industry by acquiring

Resonate Blends LLC (“Resonate”

or the “Company”), a California-based cannabis wellness lifestyle product company

built on a proprietary system of experiential targets.

Resonate is building a value-added, brand-focused cannabis organization offering

premium brands of consistent quality.

The Company also acquired Entourage Labs LLC (“Entourage Labs”), a sister company of

Entourage Labs is the Intellectual Property (IP) subsidiary of Resonate.

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is a cannabis holding company centered on valued-added holistic Wellness and Lifestyle

The Company’s strategy is to ignite future growth by building a purpose-driven portfolio of innovative, trusted

national brands, emerging brands, research organizations, and a variety of retail channels.

The Company’s focus is finding

mutual value between product and consumer by optimizing quality, supply chain resources and financial performance.

offers a family of premium cannabis-based products of consistent quality based on unique formations calibrated to Resonate Blends

effects system in what we believe is the industry gold standard in user experience.

Company believes the greatest long-term value creation in the cannabis industry will be in the establishment of high quality and

consistent consumer brands.

Resonate hopes to become a national leader through its vision in creating a family of brands designed

specifically to deliver reliable, effective, beneficial experiences.

the Resonate Blends product family, is based around a comprehensive system of interconnected experience targets that allow people

to select the products that best fit their lifestyle and health objectives.

Koan products are dedicated to the efficacy and precision

of functional experience targets across a broad range of product categories.

The Company’s strategy is to ignite future growth by building a purpose-driven portfolio of innovative, trusted national

brands, emerging brands, research organizations, and a variety of retail channels.

The Company’s focus is finding mutual value

between product and consumer by optimizing quality, supply chain resources and financial performance.

The Company offers a family of

premium cannabis-based products of consistent quality based on unique formations calibrated to Resonate Blends effects system in what

we believe is the industry gold standard in user experience.

Company believes the greatest long-term value creation in the cannabis industry will be in the establishment of high quality and consistent

consumer brands.

Resonate hopes to become a national leader through its vision in creating a family of brands designed specifically to

deliver reliable, effective, beneficial experiences.

is committed to helping you live the life you love.

We do not make the medicinal vs.

recreational distinction.

This is a temporary legal

separation in some states that we expect will soon cease to exist.

We believe in wellness for the whole person.

We know that people with

pain or anxiety also want to enjoy friends, concerts and have satisfying intimate experiences.

We are designing experiences which will

improve all areas of our lives.

accomplish this, Resonate is Mastering the Art of Experience.

This is our mission.

By integrating science, technology, education, branding,

marketing, sales and delivery - with every customer interaction we aim to provide exceptional experiences.

Cannabis has a broad range

of unique characteristics and we are dedicated to harnessing and amplifying those characteristics to support healthy empowered and engaged

From product development through customer communication, we prefect and demystify cannabis bringing innovative products to

an increasingly sophisticated market.

Resonate Blends has a strong social mission and the Resonate team is building a successful business

by focusing our knowledge, skill and energy on creating wellness-lifestyle products which will improve community by helping individuals

live more satisfying, meaningful and connected lives.

The need for these products at this time is crucial.

communicate the breadth of wellness products that Resonate is developing, our team created The Resonate System.

The Resonate System graphically

represents a spectrum of wellness products based on cannabis scaffolding.

This system helps users easily select which product they want.

Products based on The Resonate System deliver relaxation, freedom from pain and anxiety, boosts in focus and creativity, sensuality,

human connection and joy.

Our products are formulated around a system of interconnected experience targets that will allow you to know

exactly what to expect when using them.

respecting and honoring the natural power of plant medicine, Resonate also employs advanced science, leading technology and a deep understanding

of how various cannabis compounds, when working in the body, simultaneously can create unique effects and benefits (referred to as the

“Entourage Effect”).

Our product developers blend cannabinoids and terpenes to formulate products with specific, controllable

and repeatable, beneficial effects.

Through innovation, experimentation, testing and an iterative product development strategy, our team

has unlocked new plant constituent combinations resulting in unique, enjoyable and extremely effective wellness products unlike anything

else in the marketplace.

Resonate plans to explore obtaining patent protection for these formulations and products in the future.

the Resonate Blends product family, is based around a comprehensive system of interconnected experience targets that allow people to

select the products that best fit their lifestyle and health objectives.

Koan products are dedicated to the efficacy and precision of

functional experience targets across a broad range of product categories.

Resonate’s

initial products are a completely unique class of products called Cordials.

These blends offer a wide range of experiences not

currently available in the cannabis market.

Our Cordials are water-soluble and use nano-emulsification technology to allow for

quick onset and a sustained and nuanced experience.

Single dose, healthful, subtle in taste, cordials are an ideal way for people

to gently intentionally improve their well-being.

They can be shipped directly or substituted for alcohol as a cocktail mixer.

These blends offer a wide range of experiences not currently

available in the cannabis market.

Our Cordials are water-soluble and use emulsification technology to allow for quick onset and a sustained

and nuanced experience.

Single dose, healthful, subtle in taste, cordials are an ideal way for people to gently intentionally improve

their well-being.

They can be sipped directly or substituted for alcohol as a cocktail mixer.

Resonate’s

Cordials have been developed in partnership with an award-winning advanced infusion technology partner and are targeted for commercial

release in early Q1 of 2021.

The company plans to offer six unique blends at its initial release.

preparation for you upcoming release, we have formalized contracts with our logistical and marketing partners and are implementing

a digital native strategy supporting direct to consumer sales.

This release will be followed before year end with our second product

line that is already in full development.

Company signed a custom development contract with Vertosa in March of 2020, the leading provider of safe, reliable emulsion bases

for infused product developers.

This contract was a major milestone for the Company as it selects its strategic partners to develop

innovative products and solutions.

is an award-winning strategic partner who will assist the Company in the launch of its first unique category of six water soluble

These multi-use products deliver specific, predictable, reliable, effects in a format that is completely unique in the

The first product developed collaboratively is the Cordial product line, but both companies expect several other products

to be developed over time utilizing Vertosa’s nano-emulsification technology.

Vertosa and Resonate teams share a mission of maximizing the benefits of cannabinoids and plant medicine.

Resonate selected Vertosa

as a development partner because the Vertosa systems’

industry leading emulsification technology makes them highly stable,

bioavailable, and water compatible.

All of Vertosa’s inactive base materials are FDA approved and are lab tested for quality.

Vertosa’s Hemp-derived CBD Emulsion System is now certified organic by CCOF , a United States Department of

Agriculture-accredited certifier and non-profit advocacy group, and the company has also received its Good Manufacturing

Practice (GMP) certification , confirming that its offerings follow regulations promulgated by the US Food and Drug

Administration and are safe, pure, and effective.

Manufacturing:

Company partnered with The Hive Laboratory, LLC (THL), a California licensed Type N –

Infused Products Manufacturer based

in Grover Beach, CA.

THL produces and packages premium award-winning products for the medicinal, recreational and nutraceutical

cannabis industries, and has worked with some of the biggest named brands in the industry.

and THL entered into a Master Services Agreement in which THL will manufacture and package Resonate’s first family of products

to precise specifications.

THL also has a Bureau of Cannabis Control (BCC) issued distribution license in California and will

distribute Resonate’s products to retail establishments throughout the state.

and Resonate have been in frequent contact throughout Resonate’s development period and THL is prepared to support production

of the Company’s unique family of wellness lifestyle products.

Resonate’s upcoming first of its kind offerings are

emulsified through the advanced infusion technology provided by award-winning Vertosa and collaboratively developed to

push the state of the art in its cannabis products.

Distribution:

of the unique nature of Resonate’s Koan products and the recent expansion of home delivery services in the cannabis industry,

Resonate has adopted a direct to consumer method as their primary sales strategy.

Working with a technology partner, Resonate

is adding an e-commerce feature to the Koan web site that will allow the Company to sell products directly to consumers using

a licensed California state-wide delivery network for fulfilment.

addition to direct sales, the company plans to offer products to select premium dispensaries throughout California.

These products

will be delivered to retail establishments by Hive Labs under their distribution license.

is also developing relationships with a variety of complementary distribution channels such as subscription box companies and

other non-storefront reseller organizations.

selected Way To Blue as the marketing firm for its Koan family of wellness lifestyle blends.

Way To Blue, is an award-winning,

global, integrated communications agency working with consumer, lifestyle, media and entertainment companies, developing digitally

led strategic brand communications.

will draw upon Way To Blue’s expertise in social media strategy and execution, content creation, community management and

influencer engagement.

The marketing firm focuses on insight and data-driven storytelling campaigns to deliver optimal results

in both brand building and product sales.

Sale of Textmunication, Inc.:

holding company, Resonate Blends, Inc., is now comprised of Resonate Blends LLC, the cannabis operations and product development

side of the company;

and Entourage Labs LLC, which is our Intellectual Property (IP) subsidiary.

recently sold Textmunication, Inc., our mobile marketing subsidiary for the health, fitness and wellness sectors.

and a group of shareholders (hereinafter referred to as, the “Asefi Group”), including Wais Asefi, our former Chief

Executive Officer and director, have entered into a Purchase Agreement, dated as of May 22, 2020, pursuant to which we have agreed

to sell Textmunication, Inc.

to the Asefi Group.

consideration for the sale of Textmunication, Inc.

consisted of 4,822,029 shares of common stock of our company that belong to

Wais Asefi and other members of the Asefi Group, and which were cancelled in the transaction.

The 4,822,029 shares had a current

market value of $337,542, based on our sales price of $.07 per share as of May 22, 2020.

Cordials have been developed in partnership with an award-winning advanced infusion technology partner and we have released our six unique

blends in California.

Everything from ordering inventory, opening up distribution channels and final preparation for our marketing efforts

are now underway.

We believe value-added brands focused on experience targets represent the greatest market opportunity in the maturing

cannabis market.

Our mission is to demystify and normalize cannabis use through innovative products built around the healing powers of

plant medicine.

Cordials are the first in a family of products designed around our unique Resonate System—the heart of our product

development process.

are in early discussions to license our products in two other cannabis friendly states, and we hope to have further updates on this new

potential revenue stream following our launch of Cordials in California.

have signed and announced definitive agreements with various partners to execute on our overall business strategy.

Our partner Vertosa

is expected to develop our unique formulations through its advanced nano-emulsification process, the Hive Laboratory is expected to assemble,

package and distribute our products and Way To Blue is expected to actively market and deliver social media channels to the California

This release will be followed with our second product line that is already in full development and is expected for targeted

commercial release before the end of 2021.

principal executive office is located at 26565 Agoura Road, Suite 200, Calabasas, CA 91302.

Our executive telephone number is (571) 888-0009.

of Operation for Three and Nine Months Ended September 30, 2020 and 2019

have generated no revenues in our cannabis holding company or from our operating subsidiaries, Resonate Blends, LLC or Entourage

Labs, LLC, for the three and nine months ended September 30, 2020.

the discontinued operations of our prior held subsidiary, Textmunication, Inc., which we sold on July 20, 2020, we recorded discontinued

revenues of $534,743, as compared with revenues of $758,100 for the nine months ended September 30, 2019.

anticipate revenue from the Resonate Koan product line in first quarter of 2021.

Our operating expenses were $236,160

for the three months ended September 30, 2020, as compared with $112,129 for the three months ended September 30, 2019.

Our operating

expenses were $1,445,463 for the nine months ended September 30, 2020, as compared with $2,807,129 for the nine months

ended September 30, 2019.

main reason for our decreased operating expenses in 2020 was a result of non-cash management fees in 2019 of $2,521,582, while

this year we only have $198,514 non-cash management fees.

expect that our operating expenses will increase in 2021 over 2020 as a result of our product launch and the increased expenses

associated with operations.

had other expenses of $86,910 for the three months ended September 30, 2020 compared with other expenses of $96,460 for the same

period ended September 30, 2019.

We had other expenses of $712,625 for the nine months ended September 30, 2020 compared with

other expenses of $96,459 for the same period ended September 30, 2019.

main reason for our increased other expenses in 2020 was a result of loss on revaluation of derivative liabilities of $617,769.

had net loss of $351,399 for the three months ended September 30, 2020, as compared with net loss of $243,154 for the three

months ended September 30, 2019.

We had a net loss of $2,142,310 for the nine months ended September 30, 2020, as compared

with a net loss of $3,023,461 for the nine months ended September 30, 2019.

of Operation for Three Months Ended March 31, 2021 and 2020

have generated no revenues in our cannabis holding company or from our operating subsidiaries, Resonate Blends, LLC or Entourage Labs,

LLC, for the three months ended March 31, 2021.

have released our six unique Cordials in California We anticipate booking revenue from our product line in the 2nd quarter of 2021.

operating expenses were $778,012 for the three months ended March 31, 2021, as compared with $551,411 for the three months ended

March 31, 2020.

main reason for our increase operating expenses in 2021 was a result of professional fees in 2020 of $252,588 to obtain funds for company

operations, while last quarter we only had expenses of $193,400 which were mainly for legal and professional fees.

expect that our operating expenses will increase in 2021 over 2020 as a result of our product launch and the increased expenses associated

with operations.

had other expenses of $280,450 for the three months ended March 31, 2021 compared with other income of $75,234 for the same period ended

March 31, 2020.

main reason for our increased other expenses in 2021 was a result of loss on revaluation of derivative liabilities approximately $248,649.

had net loss of $1,058,462 for the three months ended March 31, 2021, as compared with net loss of $608,828 for the three months

ended March 31, 2020.

and Capital Resources

As of September 30, 2020, we had total current

assets of $9,014, consisting of $9,014 in cash.

Our total current liabilities as of September 30, 2020 were $1,790,835.

We had a working capital deficit of $1,781,821 as of September 30, 2020, compared with a working capital deficit of

$612,228 as of December 31, 2019.

of March 31, 2021, we had total current assets of $1,756,043, consisting of $1,573,717 in cash and $182,326 in inventories.

current liabilities as of March 31, 2021 were $2,483,777.

We had a working capital deficit of $727,734 as of March 31, 2021, compared

with a working capital deficit of $996,439 as of December 31, 2020.

Flows from Operating Activities

activities used $1,301,663 in cash for the nine months ended September 30, 2020, compared with cash used of $386,001

for the nine months ended September 30, 2019.

Our negative operating cash flow for the nine months ended September 30, 2020

was largely the result of our net loss of $2,142,310, offset by loss on derivative liability of $536,819 and share

based compensation of $198,514.

Our negative operating cash flow for the nine months ended September 30, 2019 was largely

the result of our net loss of $3,023,461, offset mainly by share based compensation of $2,521,635.

activities used $957,982 in cash for the three months ended March 31, 2021, compared with cash used of $327,860 for the three

months ended March 31, 2020.

Our negative operating cash flow for the three months ended March 31, 2021 was largely the result of our

net loss of $1,058,462, offset by loss on valuation of derivative liabilities of $248,649.

Our negative operating cash flow for

the three months ended March 31, 2020 was largely the result of the result out net loss of $608,828 offset mainly by share based compensation

Flows from Investing Activities

used no cash on investing activities for both the three or nine months ended September 30, 2020 and 2019.

used $20,333 to purchase various office furniture and equipment for the three months ended March 31, 2021 and no cash on investing activities

the three months ended March 31, 2020.

Flows from Financing Activities

flows provided by financing activities during the nine months ended September 30, 2020 amounted to $1,119,943 compared with cash

flows provided by financing activities of $367,500 for the nine months ended September 30, 2019.

Our positive cash flows for the

nine months ended September 30, 2020 consisted of proceeds from issuance of common stocks $540,000, proceeds from Convertible

notes payable $806,000, offset by payments of notes payable of $226,057.

Our positive cash flows for the nine months ended September

30, 2019 consisted of proceeds from the issuance of preferred stock and warrants of $200,000 and proceeds from convertible notes

features of the debt instruments and payables concerning our financing activities are detailed in the footnotes to our financial

optimum level of growth for success will be achieved if we are able to raise $1,500,000 in the next twelve months.

However, funds

are difficult to raise in today’s economic environment.

We have experienced a history of losses.

If we are unable to raise

$1,500,000, our ability to implement our business plan and achieve our goals will be significantly diminished.

are dependent on investment capital to continue our survival.

We have raised money through convertible debt, almost always on

unfavorable terms.

There is no guarantee that these small convertible loans will be available to us in the future or on terms

acceptable to us.

also plan to raise money in the sale of our equity and debt securities.

There can be no assurance of funds from these efforts

or that any other type of additional financing will be available to us on acceptable terms, or at all.

of September 30, 2020, we have an accumulated deficit of $21,302,031.

Our ability to continue as a going concern is contingent

upon the successful completion of additional financing arrangements and our ability to achieve and maintain profitable operations.

While we are expanding our best efforts to achieve the above plans, there is no assurance that any such activity will generate

funds that will be available for operations.

These conditions raise substantial doubt about our ability to continue as a going

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

cash flows provided by financing activities during the three months ended March 31, 2021 amounted to $2,437,707 compared with

cash flows provided by financing activities of $314,278 for the three months ended March 31, 2020.

Our positive cash flows for the three

months ended March 31, 2021 consisted of proceeds from issuance of common stock of $1,347,500 proceeds from Convertible notes

payable of $1,595,000, offset by payments of notes payable of $504,793.

Our positive cash flows for the three months ended March 31,

2020 consisted of proceeds from subscription $50,000, proceeds from convertible notes/loans payable $151,960 and proceeds from notes

payable of $130,075, offset by payments of $17,757 on convertible notes payable.

December 1, 2020 through March 15, 2021, we sold units priced at $25,000 per unit where each unit consisted 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”).

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

After paying finder fees of $187,450 to our placement agent, we netted $2,077,550, which

will be used for working capital.

addition, we also entered into subscription agreements 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.

After paying finder fees of $100,763 to our placement agent, we netted $946,737, which was used to pay off the

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

we are able to generate sufficient revenues to sustain operations, we are dependent on investment capital to continue our survival.

can be no assurance of funds from these efforts or that any other type of additional financing will be available to us on acceptable

terms, or at all.

of March 31, 2021, we have an accumulated deficit of $21,159,457.

Our ability to continue as a going concern is contingent upon

the successful completion of additional financing arrangements and our ability to achieve and maintain profitable operations.

are expanding our best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will

be available for operations.

These conditions raise substantial doubt about our ability to continue as a going concern.

These financial

statements do not include any adjustments that might arise from this uncertainty.

Balance Sheet Arrangements

of September 30, 2020, there were no off-balance sheet arrangements.

of March 31, 2021, there were no off-balance sheet arrangements.

Accounting Policies

December 2001, the SEC requested that all registrants list their most “critical accounting polices”

in the Management

Discussion and Analysis.

in the Management Discussion

and Analysis.

The SEC indicated that a “critical accounting policy”

is one which is both important to the

portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or

complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Our critical accounting policies are disclosed in Note 2 of our audited financial statements included in the Form 10-K filed with

the Securities and Exchange Commission.

is one which is both important to the portrayal of a

company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often

as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Our critical accounting policies

are disclosed in Note 2 of our audited financial statements included in the Form 10-K filed with the Securities and Exchange Commission.

Accounting Pronouncements

new accounting pronouncements issued or effective during the fiscal year has had or is expected to have a material impact on the

financial statements.

new accounting pronouncements issued or effective during the fiscal year has had or is expected to have a material impact on the financial

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 1. Financial Statements