What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-22 compared with 2022-11-21 · 137 added, 211 removed, 55 unchanged (86% of the section changed)

24 unchanged sentences

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”),

October 25, 2019, we announced our 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.

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

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

reliable, effective and beneficial experiences.

is committed to helping people live the life they love, but they do not make the medicinal vs.

recreational distinction.

This is a temporary

legal separation in some states that should soon cease to exist.

The Company believes in wellness for the whole person, especially people

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

Resonate is designing

experiences which should improve all areas of ones’ life.

accomplish this, Resonate is Mastering the Art of Experience.

This is the Company’s mission.

By integrating science, technology,

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

has a broad range of unique characteristics, and they are dedicated to harnessing and amplifying those characteristics to support healthy

empowered and engaged lifestyles.

From product development through customer communication, they 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 its 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 currently is crucial.

communicate the breadth of wellness products that Resonate is developing, the Company 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

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

human connection and joy.

Koan 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”).

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, the Koan

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

anything else in the marketplace.

Resonate has filed a provisional patent for protection of 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.

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.

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 intentionally improve their

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

A significant competitive advantage is that

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 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”

held in New York City in December.

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

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 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, 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.

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.

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.

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.

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.

is a brand-focused cannabis organization offering premium brands of consistent quality.

We also acquired Entourage Labs LLC (“Entourage

Labs”), a sister company of Resonate Blends.

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

For the first two years, we concentrated on releasing

product and brand building in California, and looked into state expansion efforts as well.

Resonate followed the launch of its first six

Koan products, based on The Resonate System, by releasing “Love” in Q1-2022 and “Sleep” Cordials in Q2-2022.

address the price sensitivity of the market, Resonate also produced multi-serve versions of our most popular Cordials which significantly

reduced the cost per serving.

The Resonate products were designed for the discriminating wellness— focused consumer and that market

has been slower to develop than anticipated.

The current buyers of cannabis products seem interested in purchasing the highest level of

THC for the least amount of money.

we have won awards for our Koan Cordial brand, such as the LMCC award for “Best New Brand of 2021” and also a Cannabis Clio

Award for “Packaging and Design”, the current environment in California has made it difficult to scale our business

opportunities in a challenging market environment.

Burdens such as overregulation, high taxes, price compression, the growth of the

illicit market and the overpopulation of dispensaries in some areas, and no dispensaries in other areas – have made it difficult for many

brands in California to succeed.

legal cannabis industry itself is laden with obstacles.

There are significant restrictions on marketing activities and excessively high

banking fees for compliant financial institutions.

Layer upon layer of taxes raise prices of legal cannabis products so that they become

cost prohibitive for customers.

Many of the California dispensaries are in financial trouble and are unable to pay for the products that

they have purchased.

The distributor therefore prevents those accounts from ordering additional products.

These and other constraints

have made it difficult to build a successful business in the cannabis industry at this time.

The cannabis industry is still in its infancy,

so we expect continued headwinds.

We recently pivoted to the cannabis consumption lounges for new revenue traction.

These lounges are becoming

popular in California, and we’ve teamed with several new lounges to introduce our six (6) Cordial blends into this new environment.

Company’s growth strategy is to create an innovative ecosystem of companies, investments and research that all support The Resonate

System and its mission of empowering the wellness market.

We have a product line of Cordials and have introduced our brand and products

to the market through dispensaries in California and now into cannabis consumption lounges.

Although we have had some success in establishing

our presence in the California market, as of the date of this filing, we have not achieved significant revenues.

We have a working capital

deficit of $2,632,858 as of March 31, 2023, and we are wholly dependent on capital to fund our business operations.

For these reasons,

there are no assurances that we will be successful in this or any of our endeavors or become financially viable and continue as a going

late 2019, we have been attempting to raise money to implement our business plan but have not been able to secure all the funds necessary

The lack of sufficient funds, the present economy, the restrictions on commercial banking and the saturated nature of the cannabis

industry have prevented this from happening.

We have recently relied on convertible loans for working capital expenses.

These loans were

mostly on unfavorable terms, such as discounted conversion rights, original discounts, equity incentives and restrictive covenants.

we have been unable to raise the capital necessary to fully implement our business plan, we recently commenced a search for other

business opportunities that may benefit our shareholders and allow us to raise capital to build a stronger operation.

Recent negotiations with what we believe is a more viable business opportunity

for the holding company has emerged.

We signed a non-binding Letter of Intent (“LOI”) with Pegasus Specialty Vehicles, LLC

Pegasus is a manufacturer built on an innovative business model and manufacturing architecture providing best-in-class

traditional, electric (EV) and hydrogen solutions to the multi-billion dollar school bus industry and also the broader specialty vehicle

This leads us to believe that we will be revising our business plan and focus over the coming weeks and months.

If this opportunity

does not develop, however, we will continue to both seek new opportunities and look for capital to continue with our efforts in the cannabis

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 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.

of Operation for Three Months Ended March 31, 2023 and 2022

have generated $10,107 in sales for the three months ended March 31, 2023, as compared with $27,652 in sales for the three months

ended March 31, 2022 on our current product line.

We launched our first line of Cordial products in California in 2021, and we

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

anticipate consistent revenues on our Cordials, including our newly launched Sleep Cordial, for the rest of 2023.

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.

Our family of Cordial products are now fully in the market;

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.

explained above, we are currently in negotiations to enter the electric vehicle (EV) bus and clean energy specialty vehicle sector.

this opportunity develops, we may be revising our business plan and focus over the coming months.

incurred $8,572 in cost of revenues for the three months ended March 31, 2023, resulting in a gross profit of $1,535 for the three

months ended March 31, 2023.

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 incurred $12,857 in cost of revenues for the three months ended March 31,

2022, resulting in a gross profit of $14,795 for the three months ended March 31, 2022.

In addition, our gross margin percentage was

15% for the three months ended March 31, 2023 due to initial discounting in developing new market share, which 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

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 $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 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.

Income/Expenses

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.

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.

operating expenses were $98,421 for the three months ended March 31, 2023, as compared with $655,619 for the three months ended March

main drivers for the overall decrease in operating expenses in 2023 were the reduction of advertising, salaries as well as not issuing

any shares for compensation or services.

we engage in a business combination with an opportunity within the electric vehicle (EV) bus and clean energy specialty vehicle sector,

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

throughout 2023.

spent $152,187 less on advertising for the three months ended March 31, 2023, than for the three months ended March 31, 2022.

more on advertising for the three months ended March 31, 2022 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.

fees decreased by $12,710 for the three months ended March 31, 2023, over the three months ended March 31, 2022.

Our professional fees

were less for this quarter compared to the same quarter last year, but we expect that professional fees will increase in 2023 as we continue

to ramp up operations or if we engage in a business combination with an opportunity within the electric vehicle (EV) bus and clean energy

specialty vehicle sector.

and administrative expenses increased by $39,656 for the three months ended March 31, 2023, over the three months ended March 31,

We expect general and administrative expenses to remain fairly constant throughout 2023, but expenses could increase

significantly if we acquire new companies as part of our overall corporate strategy or We expect general and administrative expenses

to remain fairly constant throughout 2023, but expenses could increase significantly if we engage in a business combination with an

opportunity within the electric vehicle (EV) bus and clean energy specialty vehicle sector.

had other expenses of $284,066 for the three months ended March 31, 2023, compared with other income of $1,130,864 for the same period

ended March 31, 2022.

other expense for the three months ended March 31, 2023 was mainly attributable a loss on the remeasurement of derivative liabilities, interest expense and amortization of debt discounts on convertible notes.

other income for the three months ended March 31, 2022 was mainly attributable to the gain on remeasurement of derivative liabilities.

had a net loss of $(380,952) for the three months ended March 31, 2023, as compared with net income of $653,627 for the three months

ended March 31, 2022.

and Capital Resources

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.

of March 31, 2023, we had total current assets of $236,114 consisting of $1,042 in cash, $120,000 in other receivable and $115,072 in

Our total current liabilities as of March 31, 2023 were $2,026,144.

We had a working capital deficit of $1,790,030 as of March

31, 2023 compared with a working capital deficit of $1,170,940 as of December 31, 2022.

Flows from Operating Activities

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.

activities provided $145,269 in cash for the three months period ended March 31, 2023, compared with cash used of $483,386 for the three

months period ended March 31, 2022.

Our operating cash flow for the three months period ended March 31, 2023 was largely the result of

an increase in accounts payable of $210,134, offset by our net loss, net of non-cash charges, of $140,285.

Our negative operating cash

flow for the three months period ended March 31, 2022 was largely the result of our net loss, net of non-cash charges, of $467,658.

Flows from Investing Activities

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.

did not use cash for investing activities for the three months ended March 31, 2023 or 2022.

Flows from Financing Activities

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.

flows used in financing activities during the three months ended March 31, 2023 amounted to $208,646, compared with cash flows provided

by financing activities of $655,000 for the three months period ended March 31, 2022.

Our use of cash flows for the three months period

ended March 31, 2023 consisted of repayments of convertible and related party debt.

Our positive cash flows for the three months ended

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

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 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.

of March 31, 2023, we have an accumulated deficit of $25,701,376.

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

of March 31, 2023, 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