What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-22 compared with 2022-05-20 · 136 added, 121 removed, 121 unchanged (68% of the section changed)

16 unchanged sentences

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

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.

5 unchanged sentences

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

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

in Calabasas, California, Resonate Blends is a cannabis holding company centered on value-added holistic Wellness and Lifestyle brands.

October 25, 2019, the Company announced its entry into the cannabis industry by acquiring Resonate Blends LLC (“Resonate

Blends”), a California-based cannabis wellness lifestyle product company built on a proprietary system of experiential

Resonate Blends is building a value-added, brand-focused cannabis organization offering premium brands of consistent

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

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

in Calabasas, California, the Company is a cannabis holding company centered on value-added holistic Wellness and Lifestyle brands.

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

61 unchanged sentences

The company is now offering seven unique formulations and expects to have its Sleep Cordial in production

by early Q3 2022.

The Sleep Cordial has been thoroughly tested and is ready for launch once the multi-serve bottles are available.

will only come in a multi-serve bottle based on the anticipated consumer usage patterns and testing data available to the Company.

blend will only come in a multi-serve bottle based on the anticipated consumer usage patterns and testing data available to the Company.

Cordials were awarded the Golden Leaf Award as “Best New Brand of 2021” at the “Luxury Meets Cannabis Conference”

1 unchanged sentence

Resonate also won a Cannabis Clio Award for “Brand Design” in 2021.

Resonate has formalized contracts with logistical,

sales and marketing partners to build a digital native strategy supporting Direct-to-Consumer (D2C) sales.

The D2C sales platform launched

in October 2021 and now allows California consumers the ability to order on-line and have the Cordials home delivered in most metro areas

within four hours.

Based on customer demand, the Company is creating a “Singles” option for the Cordials which will be

available in early 2022 and a multi-serve bottle option shipping in early Q3 2022.

Company offers market support to select premium California dispensaries both in person and thorough the Leaf.VIP budtender

training program.

The Company expects that building its brand online will complement retail sales by increasing customer awareness and

creating “pull-through” at brick-and-mortar facilities.

The social media strategy was brought in-house during Q1 to both

reduce overall costs and control the messaging to the appropriate audience for the Cordials.

has formalized contracts with logistical, sales and marketing partners to build a digital native strategy supporting Direct-to-Consumer

The D2C sales platform launched in October 2021 and now allows California consumers the ability to order on-line and have

the Cordials home delivered in most metro areas within four hours.

Based on customer demand, the Company is creating a “Singles”

option for the Cordials which are now available.

In response to customer requests, the company is now offering five popular blends in

10-serving bottles that provide a lower cost per serving and allow users to customize their servings to their personal preference.

addition, the company is also offering a 4-pack that also lowers the cost per serving while preserving the convenience and portability

of the discrete smaller bottles.

Company offers market support to select premium California dispensaries both in person and thorough the Leaf.VIP budtender training program.

The Company expects that building its brand online will complement retail sales by increasing customer awareness and creating “pull-through”

at brick-and-mortar facilities.

The social media strategy was brought in-house during Q1 to both reduce overall costs and control the

messaging to the appropriate audience for the Cordials.

recently hired an internal sales manager to oversee all sales efforts in Southern California and expects to hire a sales manager for

Northern California in the near future.

The Company implemented an in-house sales strategy in Q1 2022 to maximize both the

dispensary outreach and budtender education – and to increase D2C sales platform activity.

While wellness dispensaries will be

a focus for the Company, the customer acquisition focus will now be towards the D2C portal.

The Company added several new retail

partners in Q1 to include Atrium, Cornerstone Wellness, 99 High Tide and Canni Delivery.

With the new in-house sales strategy in

place, new wellness dispensaries are expected to grow throughout 2022 in addition to the D2C sales platform activity.

dispensaries are the main target due to the demographics of the consumer and the thorough educational process these dispensaries

offer to buyers in their stores.

Multi-state expansion through licensing arrangements with the Cordials is also being planned.

Several retailers and leading brands in multiple states have reached out to Resonate requesting the Cordials to be stocked in their

dispensaries.

The Company implemented an in-house sales strategy in Q1 2022 to maximize both the dispensary

outreach and budtender education – and to increase D2C sales platform activity.

While wellness dispensaries will be a focus for

the Company, the customer acquisition focus will now be towards the D2C portal.

The Company has added several new retail partners in

2022 to include Atrium, Cornerstone Wellness, 99 High Tide, Artist Tree and Canni Delivery.

The Cordials are now featured at West Hollywood’s

The Artist Tree Studio Cannabis Lounge where music performers will be providing the entertainment events throughout the summer.

Cannabis Lounge in West Hollywood is the only one of its kind in the United States and this partnership should provide users an interactive

experience unavailable elsewhere.

the new in-house sales strategy in place, new wellness dispensaries are expected to grow throughout 2022 in addition to the D2C sales

platform activity.

Wellness dispensaries are the main target due to the demographics of the consumer and the thorough educational process

these dispensaries offer to buyers in their stores.

Multi-state expansion through licensing arrangements with the Cordials is also being

Several retailers and leading brands in multiple states have reached out to Resonate requesting the Cordials to be stocked in

their dispensaries.

The Company is currently evaluating where and when to open new states outside of California.

new unique edible line is currently being developed and is expected to be released in Q3.

The form factor for the edible line will be

similar to one of the leading candies in the market and also have the ability to target the desired experience of the consumer –

similar to the Cordials.

new unique edible line is currently being developed and is expected to be released towards the end of 2022.

The form factor for the edible

line will be unique in the market and also have the ability to target the desired experience of the consumer – similar to the Cordials.

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

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

of Operation for Three Months Ended March 31, 2022 and 2021

have generated $27,652 in sales for the three months ended March 31, 2022, as compared with no sales for the three months ended March

31, 2021 on our current product line.

We launched our first line of seven 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 in 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 hope 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.

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

We paid $12,857 in cost of revenues for the three months ended March

31, 2022, resulting in a gross profit of $14,795 for the quarter.

We have not had any historical data to compare our margins for the

sale of our new products.

Our gross margin, which is the difference between our revenues and our cost of revenues, is expected to increase

in future quarters as we work to increase our efficiency and lessen costs.

In addition, our gross margin percentage, which was 54% for

the three months ended March 31, 2022, we hope will stabilize in the 45% to 55% range as we implement cost saving measures and roll out

new products to increase sales for the balance of 2022.

operating expenses were $655,619 for the three months ended March 31, 2022, as compared with $778,012 for the three months ended

March 31, 2021.

main drivers for the overall decrease in operating expenses in Q1 2022 were the lack of cash fees and stock compensation we paid to a

broker in 2021 for our Private Placement Memorandum and employee equity compensation for deferred salaries.

We hope to avoid these settlement

expenses for 2022 and compensate employees and vendors 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

continued focus on advertising and marketing costs to support our planned growth is expected to increase throughout 2022.

spent $112,096 more on advertising in 2022 than in 2021.

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.

fees decreased by $304,924 in 2022 compared with 2021.

Our professional fees were less for this period compared to last period, but we

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

and administrative expenses decreased by $111,151 in 2022 compared with 2021.

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.

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

expect that our operating expenses will increase in 2022 over 2021 as we roll out new products along with our existing products, and

the increased expenses associated with operations.

had other income of $1,130,864 for the three months ended March 31, 2022 compared with other expenses of $280,450 for the

same period ended March 31, 2021.

main reason for our increased other expenses in 2021 was a result of loss on revaluation of derivative liabilities.

We had net income of $490,040 for the

three months ended March 31, 2022, as compared with net loss of $1,058,462 for the three months ended March 31, 2021.

Liquidity and Capital Resources

As of March 31, 2022,

we had total current assets of $477,615, consisting of $184,527 in cash, $23,781 in advances to suppliers and $269,307 in

Our total current liabilities as of March 31, 2022 were $3,784,367.

of Operation for Three and Six Months Ended June 30, 2022 and 2021

have generated $2,836 and $30,488 in sales for the three and six months ended June 30, 2022, respectively, as compared with no sales

for the three and six months ended June 30, 2021 on our current product line.

We launched our first line of seven Cordial products in

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

anticipate increased revenues on our seven Cordials and newly anticipated Cordials, such as Sleep Cordial, discussed below, for the

rest of 2022.

We anticipate a rollout of new packaging configurations in Q3 2022 for our Cordials;

to include a one-pack, a 4-pack

to replace the 3-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 late Q3 2022, to include our new Sleep Cordial - and a new line of edibles in late

2022, which we hope 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.

There can be no assurances, however,

that customers will positively react to our products.

paid $2,421 and $15,278 in cost of revenues for the three and six months ended June 30, 2022, respectively, resulting in a gross

profit of $415 and $15,210 for the three and six months ended June 30, 2022, respectively.

We have not had any historical data to compare our

margins for the sale of our new products.

Our gross margin, which is the difference between our revenues and our cost of revenues,

is expected to increase in future quarters as we work to increase our efficiency and lessen costs.

In addition, our gross margin

percentage, which was 14.6% and 49.90% for the three and six months ended June 30, 2022, respectively, and we hope will stabilize in

the 35% to 43% range as we implement cost saving measures and roll out new products to increase sales for the balance of 2022.

are also implementing new packaging configurations which we expect to stabilize our overall gross margins.

operating expenses were $290,211 and $945,830 for the three and six months ended June 30, 2022, respectively, as compared with $1,397,013

and $2,175,025 for the three and six months ended June 30, 2021, respectively.

main drivers for the overall decrease in operating expenses in Q2 2022 were the reduction of Legal, Professional Fees and Salaries as

well as a significant decrease in non-cash management fees.

having these non-cash management and broker fees would reduce our operating expenses by $1,106,802 and $1,229,195 for the three and six months

ended June 30, 2022, respectively.

Our continued focus on sales, advertising, marketing and new product development costs to support our planned growth

is expected to increase throughout 2022.

spent and $87,738 less and $24,358 more on advertising for the three and six months ended June 30, 2022, respectively, than for the

same periods in 2021.

We spent more on advertising for the six-month ended June 30, 2022 particularly

the first quarter 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.

fees decreased by $45,687 and $337,156 for the three and six months ended June 30, 2022, respectively, over for the same periods in 2021.

Our professional fees were less for this period compared to last period, but we expect that professional fees will increase in 2022 as

we continue to ramp up operations.

and administrative expenses increased by $90,734 and decreased by $32,872 for the three and six months ended June 30, 2022, respectively,

over for the same periods in 2021.

The increased expenses resulted from establishing our internal sales team, attending strategic trade shows and bringing on consultants and financial analysts

to assist in analyzing our acquisition strategy.

We expect general and administrative expenses to

remain fairly constant throughout 2022, but they could increase significantly if we acquire new companies as

part of our overall corporate strategy.

also expect that our operating expenses will increase in 2022 over 2021 as we roll out new products along with our existing

products, and the increased expenses associated with operations.

Income/Expenses

had other income of $501,526 and $1,632,390 for the three and six months ended June 30, 2022, respectively, compared with

other expenses of $3,984,516 and $4,264,966 for the same period ended June 30, 2021, respectively.

main reason for our other income in 2022 was the gain on revaluation of derivative liabilities.

The main reason for our other expenses in 2021 was the loss on revaluation of derivative liabilities.

Net Income/Loss

had net income of $211,730 and $701,770 for the three and six months ended June 30, 2022, as compared with a net loss of $5,381,529

and $6,439,991 for the three and six months ended June 30, 2021, respectively.

and Capital Resources

of June 30, 2022, we had total current assets of $315,546 consisting of $34,823 in cash, $14,551 in advances to suppliers and

$266,172 in inventories.

Our total current liabilities as of June 30, 2022 were $3,404,366.

We had a working capital deficit of

as of March 31, 2022 compared with a working capital deficit of $4,133,368 as of December 31, 2021.

$3,088,810 as of June 30, 2022 compared with a working capital deficit of $3,306,752 as of March 31, 2022 and $4,133,368 as of

December 31, 2021.

Flows from Operating Activities

activities used $478,386 in cash for the three months ended March 31, 2022, compared with cash used of $957,982 for the three months

ended March 31, 2021.

The decrease in our cash utilized in operating activities primarily related to a decline in operating expenses

during the three months ended March 31, 2022, as well as decreases in inventory purchases during the three months ended March 31,

The Company purchased inventory for the launch of its’ KOAN product line during the three months ended March 31,

activities used $1,009,564 in cash for the six months ended June 30, 2022, compared with cash used of $1,802,187 for the six months

ended June 30, 2021.

Our negative operating cash flow for the six months ended June 30, 2022 was largely the result of our

unrealized gain on derivative liability of $1,687,112, offset by our net income of 701,770.

Our negative operating cash flow for the six months ended June 30, 2021 was

largely the result of our net loss of $6,439,991, offset by share based compensation of $986,121.

Flows from Investing Activities

activities used $0 in cash for the three months ended March 31, 2022, as compared with $20,333 to purchase various office furniture and

equipment for the three months ended March 31, 2021.

activities used $0 in cash for the six months ended June 30, 2022, as compared with $21,063 to purchase various office furniture and

equipment for the six months ended June 30, 2021.

Flows from Financing Activities

flows provided by financing activities during the three months ended March 31, 2022 amounted to $650,000, compared with cash flows provided

by financing activities of $2,437,707 for the three months ended March 31, 2021.

Our positive cash flows for the three months ended March

31, 2022 consisted of proceeds from Convertible notes payable of $650,000.

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.

flows provided by financing activities during the six months ended June 30, 2022 amounted to $1,031,474, compared with cash flows provided

by financing activities of $2,684,794 for the six months ended June 30, 2021.

Our positive cash flows for the six months ended June 30,

2022 consisted of proceeds from issuance of common stock of $392,674, proceeds from Convertible notes payable of $788,800, offset by

payments of notes payable of $150,000.

Our positive cash flows for the six months ended June 30, 2021 consisted of proceeds from issuance

of common stock of $1,319,587, proceeds from Convertible notes payable of $1,870,000, offset by payments of notes payable of $504,793.

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

5 unchanged sentences

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

of March 31, 2022, we have an accumulated deficit of $25,484,011.

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.

of June 30, 2022, we have an accumulated deficit of $25,272,281.

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 concern.

These financial

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

These financial statements

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

Balance Sheet Arrangements

of March 31, 2022, there were no off-balance sheet arrangements.

of June 30, 2022, there were no off-balance sheet arrangements.

Accounting Policies

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis