What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-04-15 compared with 2021-04-15 · 221 added, 93 removed, 45 unchanged (87% of the section changed)

3 unchanged sentences

Only a limited market exists for our securities.

is no assurance that a regular trading market will develop, or if developed, that it will be sustained.

Therefore, a shareholder

may be unable to resell his securities in our company.

assurance that a regular trading market will develop, or if developed, that it will be sustained.

Therefore, a shareholder may be unable

to resell his securities in our company.

following tables set forth the range of high and low bid information for our common stock for the each of the periods indicated.

These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent

actual transactions.

quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Year Ending December 31, 2021

Quarter Ended

March 31, 2021

June 30, 2021

September 30, 2021

December 31, 2021

Year Ending December 31, 2020

March 31, 2021, the last sales price per share of our common stock was $.40.

Quarter Ended

March 31, 2020

June 30, 2020

September 30, 2020

December 31, 2020

April 14, 2022, the last sales price per share of our common stock was $.11

of Our Common Stock

of March 31, 2021, we had 38,652,887 shares of our common stock issued and outstanding, held by approximately 187

shareholders of record at our transfer agent, with approximately 33 additional shareholders holding our shares in street name.

of April 14, 2022, we had 47,796,859 shares of our common stock issued and outstanding, held by approximately 164 shareholders

of record at our transfer agent, with approximately 47 additional shareholders holding our shares in street name.

currently intend to retain future earnings for the operation of our business.

We have never declared or paid cash dividends on

our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.

the event that a dividend is declared, common stockholders on the record date are entitled to share ratably in any dividends that

may be declared from time to time on the common stock by our board of directors from funds legally available.

We have never declared or paid cash dividends on our common

stock, and we do not anticipate paying any cash dividends in the foreseeable future.

the event that a dividend is declared, common stockholders on the record date are entitled to share ratably in any dividends that may

be declared from time to time on the common stock by our board of directors from funds legally available.

are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends.

2 unchanged sentences

would not be able to pay our debts as they become due in the usual course of business;

total assets would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights

of shareholders who have preferential rights superior to those receiving the distribution.

total assets would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights of shareholders

who have preferential rights superior to those receiving the distribution.

Authorized for Issuance under Equity Compensation Plans

March 19, 2019, our Board of Directors adopted the 2019 Equity Incentive Plan (the “Plan”).

The purpose of the Plan

is to attract and retain the best available personnel for positions of substantial responsibility with us, to provide additional

incentive to employees, directors and consultants, and to promote our success.

Under the Plan, we are currently able to issue

up to an aggregate total of 10,000,000 incentive or non-qualified options to purchase our common stock, stock awards and other

The purpose of the Plan is to

attract and retain the best available personnel for positions of substantial responsibility with us, to provide additional incentive

to employees, directors and consultants, and to promote our success.

Under the Plan, we are currently able to issue up to an aggregate

total of 10,000,000 incentive or non-qualified options to purchase our common stock, stock awards and other offerings.

Compensation Plans as of December 31, 2021

Equity Compensation

Plans Approved by

the Shareholders

of Securities

be issued upon

of outstanding options

exercise price of

outstanding options

of Securities

remaining available

for future issuance under

equity compensation plans

issuance under

equity compensation

Compensation Plan

Equity Compensation (restricted stock awards)

Other Equity Compensation (restricted stock awards)

Sales of Unregistered Securities

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

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 at an exercise price of $0.15 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.

the six-month ended June 30, 2021, the company issued a total of 2,868,025 shares of common stock to vendors for compensation and services

the third quarter of 2021 the company issued a total of 716,554 shares of common stock to vendors for compensation and services rendered.

the fourth quarter of 2021 the company issued a total of 59,171 shares of common stock to vendors for compensation and services rendered.

securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder.

1 unchanged sentence

their intention to acquire the securities for investment only and not with a view towards distribution.

The investors were given

adequate information about us to make an informed investment decision.

The investors were given adequate

information about us to make an informed investment decision.

We did not engage in any general solicitation or advertising.

We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted

our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

Selected Financial Data

1 unchanged sentence

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

continue to make headway with our strategic objectives to position our company for long-term growth.

We are laying the groundwork to

scale with key sales channels now operational, including our recently launched Direct-to-Consumer sales platform.

closely with industry-leading sales, marketing, and logistics partners for our flagship Koan Cordials product line, we have built a multi-channel

distribution strategy.

Following our launch into the retail chain and the opening of our e-commerce sales platform, we are turning our

focus to three critical areas - education, targeted marketing, and controlling the sales process.

took an ambitious approach to our original dispensary rollout and were met with a high amount of interest in our product, reflected by

the roughly 80 dispensaries who requested sample kits.

While the reception was very positive, we found reluctance for the dispensaries

to acquire new brands particularly with the advent of the Delta variant of COVID.

While the recent threat of a potential COVID-related

retail lockdown in California slowed our progress on the dispensary front, we expect to gain momentum in the retail market as it starts

to open up again by revisiting each of these dispensaries.

Many of those initial dispensary requests have been followed up by commitments

to buy once they begin bringing new brands into the stores.

believe the careful nurturing of our brand is one of our most important responsibilities as managers of Resonate Blends.

knows our product better than we do, we made the decision to bring the sales process in-house versus having an external salesforce.

are confident this move will have an immediate positive impact on revenues and allow our team to better control the narrative within

the retail network in California.

plan to soon offer several packaging variations for our Cordials based on dispensary and consumer feedback.

In addition to our Cordial

3-pack, we plan to soon have a single-packaged Cordial, and a multi-blends sampler SKU.

We believe having these options encourages the

consumer to try more blends and will allow us to do more sampling and upselling promotions.

We are also designing a multi-dose bottle

which will be more cost-effective for those who use our blends daily.

Together, these new packaging configurations should help accelerate

our sales revenue by providing consumers convenient options.

We also expect to introduce two new formulations and other unique product

lines that will showcase our focus on continual product development and brand innovation within our family of Koan products.

we expect to ramp up our retail footprint in the quarters ahead, we did make several key entry points to dispensaries.

To that end, we

recently announced nine (9) new California One Plant dispensaries and are working closely with them to co-market the Cordials across

their vast network.

The collaboration and communication with the One Plant team is deep and we will be exploring creative and unique

marketing efforts at two of their flagship stores.

We are an approved vendor for the Joy Reserve located in the Westfield Centre in Union

Square (San Francisco).

The Joy Reserve is the first cannabis dispensary located in a mall setting and offers consumers education and

guidance to select the best products for their lifestyles.

just launched with The Joy Reserve dispensary, which is focused on bringing a better understanding of the many benefits of cannabis and

how to safely pick quality products such as the Koan Cordials.

This unique showcase will be used to educate consumers about plant-based

wellness with an open browsing floor, free consultations and workshops.

We feel this setup is ideal to introduce consumers to our Cordials

and are excited to participate in this groundbreaking approach.

and branding are core components of our targeted customer acquisition strategy.

We have invested significantly to our overall marketing

efforts, including cannabis conferences, social media outreach, Search Engine Optimization (SEO), and marketing events with our dispensary

We recently consolidated our digital marketing to the Flower Agency, a full digital marketing agency that assists lifestyle,

wellness and cannabis brands with customer acquisition, awareness and re-engagement.

Importantly, our patent-pending Koan Cordials, the

world’s first cannabis-infused cordial, are starting to gain national recognition from cannabis industry leaders.

see a significant uptick in press and other media mentions in the coming months.

are very encouraged with our Koan Cordials winning the show’s Gold Leaf Award for “Best New Brand of 2021”

at the invitation-only

“Luxury Meets Cannabis Conference”.

The Gold Leaf Awards honor those visionary crossover brands, retailers, and founders

that are going above and beyond both in and outside of the cannabis space —

across beauty, skincare, food/beverage, and everyday

wellness sectors.

The interest since this award announcement for potential acquisitions and new state expansion has been extremely gratifying.

Koan Cordials also won a Bronze 2021 Clio Cannabis Award for brand

design in the packaging category.

The Clio Awards is an annual global award program recognizing innovation and creative excellence in

advertising, design and communication.

Clio Cannabis recognizes and elevates creative contributions from top design talent in the rapidly

growing cannabis market.

an established statewide infrastructure in California for manufacturing, distribution and sales, we are well-equipped to make progress

with our go-forward focus on revenue generation.

We are uniquely positioned to be a positive disruptive force in the wellness/lifestyle

segment of the industry built on a growing body of proprietary IP, and we firmly believe that value-added brands are the future of the

Cannabis industry.

Over the long-term, we believe that cannabis, as a part of the wellness lifestyle, will become the largest segment

in the burgeoning industry and we plan to be one of the leaders in this segment.

of Operations for the Years Ended December 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 years ended December 31, 2020 and 2019.

anticipate booking revenue from the Resonate Koan product line in early 2nd quarter of 2021.

operating expenses were $1,813,958 for the year ended December 31, 2020, as compared with $3,178,000 for the year

ended December 31, 2019.

main reason for our decreased operating expenses in 2020 was a result of non-cash management fees in 2019 of $2,650,518, 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 $143,113 for the year ended December 31, 2020 compared with other expenses of $320,974 for the year

ended December 31, 2019.

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

had net loss of $1,941,274 for the year ended December 31, 2020, as compared with net loss of $3,669,728 for the

year ended December 31, 2019.

have generated $27,031 in revenues for the year ended December 31, 2021, as compared with no sales for the year ended December

31, 2020 on our current product line, and also no sales from the discontinued operations of our sold subsidiary, Textmunication, Inc.,

for the years ended December 31, 2021 and 2020, respectively.

We have launched our first line of six Cordial products in California and

we have started to generate revenues from the sale of these products.

anticipate increased revenues on our six Cordials for the rest of 2022.

We anticipate a rollout of new packaging configurations by early

Q2 2022 for our Cordials;

to include both a one-pack and a multi-dose bottle which is expected to bring the cost per dose

down considerably.

We also plan on launching additional Cordial formulations by Q2 2022 and a new line of edibles in

mid-2022, which we anticipate will contribute to increasing our revenues.

As we have just launched our products,

however, it may take some time for the markets to react, gain traction and result in brand awareness among our customers.

be no assurances, however, that customers will positively react to our products.

operating expenses were $2,534,577 for the year ended December 31, 2021, as compared with $1,813,958 for the year ended December

The main drivers for

the overall increase in operating expenses in 2021 was our focus on advertising to support our planned growth and non-cash items related

to broker and employee equity compensation.

We paid both cash fees and stock compensation to a broker on our Private Placement Memorandum

Within the operating

expenses, there were a variety of increases, the largest of which was an increase in non-cash management fees of $400,349 as a result

of issuing stock in 2021 in settlement of accrued but unpaid management and employee salaries in 2020.

We hope that to avoid these settlement

expenses for 2022 and compensate employees with available cash on hand.

However, if we are forced to defer salaries and settle with shares

for employees this year, due to a lack of funds, we should expect our non-cash compensation expense in 2022 to resemble that of 2021.

In 2021 and 2020, we

compensated a broker with combined share and cash compensation valued at $512,312 and $34,250, respectively for its services as placement

We expect to incur similar broker expenses as long as we are dependent on additional financing for our operations, and we expect

that will be the case for the rest of 2022.

We spent $604,564 more

on advertising in 2021 than in 2020.

This money was used to introduce our Koan Cordials to the California retail channel, perform Search

Engine Optimization (SEO), conduct Programmatic advertising, hire a professional agency to promote our Cordials on social media channels

and other general advertising methods.

We believe our advertising efforts will pay dividends throughout 2022 as the awareness groundwork

has been established to educate the market on our family of Cordial formulations.

Professional fees increased

by $45,175 in 2021 compared with 2020.

With more focus on operations, we have spent more on professional fees.

We expect that professional

fees will increase in 2022 as we continue to ramp up operations.

General and administrative

expenses decreased by $520,409 in 2021 compared with 2020.

This resulted from bringing several outside services in-house and not having

to address outstanding debt liabilities from our previous spin-out of Textmunication Holdings, Inc.

We expect general and administrative

expenses to remain fairly constant throughout 2022 due to internal changes we’ve implemented.

had other expenses of $2,346,362 for the year ended December 31, 2021 compared with other expenses of $143,113 for the year ended

December 31, 2020.

Our other expenses for the year ended December 31, 2021 was mainly attributable to a loss on revaluation of derivative

had net loss of $4,873,056 for the year ended December 31, 2021, as compared with net loss of $1,941,274 for the year ended December

Our increased loss in 2021 is mainly from a lack of revenue, combined with increased advertising to support our growth and

significant non-cash expenses related to broker and employee equity compensation.

We believe that our increased marketing activity and

compensating valuable employees and partners will pay off with increased brand exposure that we expect will generate more sales for the

upcoming year.

and Capital Resources

of December 31, 2020, we had total current assets of $168,924, consisting of $114,325 in cash and $54,599 in advances

to suppliers.

of December 31, 2021, we had total current assets of $269,518, consisting of $12,913 in cash, $10,830 in advances to suppliers and

$245,776 in Inventories.

Our total current liabilities as of December 31, 2021 were $4,402,886.

We had a working capital deficit of

$996,439 as of December 31, 2020, compared with a working capital deficit of $612,330 as of December 31, 2019.

We had a working capital deficit

of $4,133,368 as of December 31, 2021, compared with a working capital deficit of $996,439 as of December 31, 2020.

Flows from Operating Activities

activities used $1,381,003 in cash for the year ended December 31, 2020, compared with cash used of $790,897 for

the year ended December 31, 2019.

Our negative operating cash flow for the year ended December 31, 2020 was largely the result

of our net loss of $1,941,274, offset by share based compensation of $508,419.

Our negative operating cash flow

for the year ended December 31, 2019 was largely the result of our net loss of $3,510,101, offset mainly by share based compensation

of $2,650,518.

activities used $2,792,687 in cash for the year ended December 31, 2021, compared with cash used of $1,381,003 for the year ended

December 31, 2020.

Our negative operating cash flow for the year ended December 31, 2021 was largely the result of our net loss, offset

mainly by the loss on derivative liabilities.

Our negative operating cash flow for the year ended December 31, 2020 was largely the

result also of our net loss, offset mainly by share based compensation.

Flows from Investing Activities

used no cash on investing activities for the year ended December 31, 2020, but we had $25,000 used in connection with an investment

in Joaint in 2019.

activities used $36,047 in cash for the year ended December 31, 2021 while we used no cash on investing activities for the year

ended December 31, 2020.

Flows from Financing Activities

flows provided by financing activities during the year ended December 31, 2020 amounted to $1,492,213 compared with cash

flows provided by financing activities of $819,012 for the year ended December 31, 2019.

Our positive cash flows for the year

ended December 31, 2020 consisted of proceeds from issuance of common stock $1,011,113, proceeds from Convertible notes

payable $850,100, offset by payments of notes payable of $369,000.

flows provided by financing activities during the year ended December 31, 2021 amounted to $2,727,322 compared with cash flows

provided by financing activities of $1,492,213 for the year ended December 31, 2020.

Our positive cash flows for the year ended December

consisted of proceeds from the issuance of preferred stock and warrants of $811,262 and proceeds from convertible notes of $267,750.

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.

31, 2021 consisted of proceeds from issuance of common stock of $1,367,115, proceeds from Convertible notes payable of $1,865,000,

offset by payments of notes payable of $504,793.

Our positive cash flows for the year ended December 31, 2020 consisted of proceeds

from issuance of common stock $1,011,113, proceeds from Convertible notes payable $850,100, offset by payments of notes payable of $369,000.

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

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.

We have raised money through convertible debt, almost always on unfavorable

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.

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 December 31, 2021, we have an accumulated deficit of $25,974,051.

1 unchanged sentence

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.

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 concern.

These financial

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

Balance Sheet Arrangements

2 unchanged sentences

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

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 5. Market for Registrant’s Common Equity