What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-21 compared with 2022-08-22 · 133 added, 124 removed, 133 unchanged (66% of the section changed)

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

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.

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 targets.

Resonate Blends

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 Blends.

Entourage 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,

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 the Company

believes is the industry gold standard in user experience.

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 the Company believes is

the industry gold standard in user experience.

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

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the Cordials allow users to select both the experience they want and the beverage they choose to enjoy them in.

Cordials have been developed in partnership with an award-winning advanced infusion technology partner and were launched to the retail

channel in late Q2 of 2021.

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.

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

Cordials have been developed in partnership with an award-winning advanced infusion technology partner and were launched to the

retail channel in late Q2 of 2021.

The company is now offering seven unique formulations including the newly released Sleep Cordial

available as of September 29, 2022.

The Sleep Cordial has been thoroughly tested and is now available in “Single”

samples and in cost effective 100 ml, 10 serving multi-serve bottles.

Koan Cordials now come in:

Calm, Create, Delight, Love, Play,

Wonder and Sleep experience-targeted blends providing consumers a choice on how they want to feel.

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

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

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

Based on customer demand, the Company offers 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.

10-serving bottles, also known as “multi-serve” bottles, that provide a lower cost per serving and allow users to customize

their servings to their personal preference.

In 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.

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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 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

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.

The Company has added several new

retail partners in 2022 to include Atrium, Cornerstone Wellness, 99 High Tide, Artist Tree, Canni Delivery and Rose Mary Jane.

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.

The Studio 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.

Rose Mary Jane Cannabis

Lounge in Oakland also added the Cordials to its menu on September 24, 2022.

The Company is placing a major focus on cannabis

lounges throughout California to enhance its marketing and sales efforts.

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

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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 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.

are in negotiations with Chemistry, Inc.

(“Chemistry”), a California corporation, to acquire the company pending execution

of definitive agreements, obtaining the required corporate approvals and other matters.

We are no longer pursuing Iron Summit Distribution,

Inc., as was announced on September 20 through a Press Release, but are instead focused on an anticipated closing of Chemistry in Q4 2022.

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 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.

of Operation for Three and Nine Months period Ended September 30, 2022 and 2021

have generated $10,429 and $40,917 in sales for the three and nine months period ended September 30, 2022, respectively, as compared

with $7,574 in sales for the three months and nine months period ended September 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.

We anticipate increased revenues on our seven Cordials including our newly

launched Sleep Cordial, discussed above, for the rest of 2022.

In Q3 2022, we rolled out a new packaging configuration 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 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

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

We accrued $9,718 and $24,996 in cost of revenues for the three and nine

months period ended September 30, 2022, respectively, resulting in a gross profit of $711 and $15,921 for the three and nine months period

ended September 30, 2022, respectively.

We have had little historical data to compare our margins for the sale of our new products, which

were introduced into the retail channel in late Q2 of 2021.

We accrued $12,304 in cost of revenues for the three months ended September

30, 2021, resulting in a gross loss of $4,730 for the three months ended September 30, 2021.

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

In addition, our gross margin percentage, which was 6.82% and 38.91% for the three and nine months period ended September 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.

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

operating expenses were $218,876 and $1,164,706 for the three and nine months period ended September 30, 2022, respectively, as

compared with $762,912 and $2,937,437 for the three and nine months period ended September 30, 2021, respectively.

main drivers for the overall decrease in operating expenses in Q3 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

having these non-cash management and broker fees would reduce our operating expenses by $0 and $206,462 for the three and nine months

period ended September 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.

We spent $129,316 and $104,957 less on advertising for the three and nine

months period ended September 30, 2022, respectively, than for the same periods in 2021.

We spent more on advertising for the nine-month

ended September 30, 2021 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,

We believe our advertising efforts will pay dividends for the rest of 2022 and into 2023 as the

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

fees decreased by $27,951 and $381,618 for the three and nine months period ended September 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 $70,717 and $53,855 for the three and nine months period ended September 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.

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.

had other income of $280,267 and $1,912,657 for the three and nine months period ended September 30, 2022, respectively, compared

with other income of $866,917 and other expense of $3,398,548, respectively, for the same periods ended September 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.

The main reason for our other expenses

in 2021 was the loss on revaluation of derivative liabilities.

had net income of $62,102 and $763,872 for the three and nine months period ended September 30, 2022, as compared with net income of

$99,274 and a net loss of $6,340,715 for the three and nine months period ended September 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

$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.

September 30, 2022, we had total current assets of $616,531 consisting of $274,840 in cash, $19,592 in advances to suppliers,

$126,811 in other receivable and $195,288 in inventories.

Our total current liabilities as of September 30, 2022 were $1,419,130.

had a working capital deficit of $802,599 as of September 30, 2022 compared with a working capital deficit of $3,088,810 as of June

30, 2022 and $4,133,368 as of December 31, 2021.

Flows from Operating Activities

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.

activities used $1,476,854 in cash for the nine months period ended September 30, 2022, compared with cash used of $ 2,415,066 for the

nine months period ended September 30, 2021.

Our negative operating cash flow for the nine months period ended September 30, 2022 was

largely the result of our unrealized gain on derivative liability of $2,213,527, offset by our net income of $763,872.

Our negative operating

cash flow for the nine months period ended September 30, 2021 was largely the result of our net loss of $6,340,715, offset by share based

compensation of $1,267,297 and the unrealized loss on derivative liability of $3,106,826.

Flows from Investing Activities

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.

activities used $0 in cash for the nine months period ended September 30, 2022, as compared with $36,047 to purchase computer equipment

for the nine months period ended September 30, 2021.

Flows from Financing Activities

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

flows provided by financing activities during the nine months period ended September 30, 2022 amounted to $1,738,781, compared with cash

flows provided by financing activities of $2,727,322 for the nine months period ended September 30, 2021.

Our positive cash flows for

the nine months period ended September 30, 2022 consisted of proceeds from issuance of common stock of $349,981 and proceeds from Convertible

notes payable of $1,388,800.

Our positive cash flows for the nine months period ended September 30, 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.

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

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.

of September 30, 2022, we have an accumulated deficit of $25,210,179.

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.

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

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

Accounting Policies

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis