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Item 1. Financial Statements

2023-11-20 compared with 2023-08-14 · 191 added, 134 removed, 436 unchanged (43% of the section changed)

1 unchanged sentence

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

Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022;

Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 (unaudited);

Consolidated Statement of Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2023 and 2022 (unaudited);

Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (unaudited);

Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022;

Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (unaudited);

Consolidated Statement of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2023 and 2022 (unaudited);

Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (unaudited);

Notes to Consolidated Financial Statements.

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necessary for a fair presentation have been included.

Operating results for the interim three and six months ended June 30, 2023 are

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

Balance Sheets

June 30, 2023

Operating results for the interim three and nine months ended September 30, 2023

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

Resonate Blends, Inc.

Consolidated Balance Sheets

September 30, 2023

December 31, 2022

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Stockholders’ Deficit

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

and outstanding

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

Series D Preferred stock 40,000 shares authorized, $ 0.0001 par value 40,000 issued

and outstanding

Series B - Preferred stock, 66,667 shares authorized, $ 0.0001 par

value, 0 issued and outstanding

Series C - Preferred stock, 2,000,000 shares authorized, $ 0.0001

par value, 2,000,000 issued and outstanding

Series D Preferred stock 40,000 shares authorized, $ 0.0001 par

value 40,000 issued and outstanding

Preferred stock value

2 unchanged sentences

200,000,000 shares authorized;

78,328,877 and

75,437,604 shares issued and outstanding

82,841,096 and 75,437,604 shares issued and outstanding

Common stock issuable

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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

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

Statements of Operations

The accompanying notes are an integral part of these consolidated financial statements.

Resonate Blends, Inc.

Consolidated Statements of Operations

September 30, 2023

September 30, 2022

September 30, 2023

September 30, 2022

Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Nine Months Ended

September 30, 2023

September 30, 2022

September 30, 2023

September 30, 2022

COST OF REVENUES

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OPERATING LOSS

( 1,148,785 )

OTHER INCOME (EXPENSES)

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Amortization of issuance costs

Gain on settlement of notes payable

Gain (loss) on settlement of notes payable

Total operating income (expense)

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INCOME (LOSS) PER SHARE- basic and diluted

INCOME (LOSS) PER SHARE- basic

WEIGHTED AVERAGE SHARES OUTSTANDING

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

Statement of Stockholders’ Deficit

The accompanying notes are an integral part of these consolidated financial statements.

Resonate Blends, Inc.

Consolidated Statement of Stockholders’ Deficit

Preferred Stock

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( 3,278,319 )

$ ( 3,278,319 )

Stock issuance for services

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( 3,062,084 )

Stock issuance for services

Stock issuance for debt conversion

Stock issuance in private placement

Balance, September 30, 2022

$ ( 261,059 )

Balance, December 31, 2022

$ ( 25,210,179 )

3 unchanged sentences

$ ( 777,675 )

The accompanying notes are an integral part of these consolidated financial statements.

Resonate Blends, Inc.

Consolidated Statement of Stockholders’ Deficit

Preferred Stock

Balance, December 31, 2022

$ ( 261,059 )

$ ( 25,320,424 )

$ ( 1,146,730 )

Reclassification of convertible debt

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( 1,768,824 )

Exercise of warrants

Stock issuance for services

Issuance of common stock for commitment fees

Balance, June 30, 2023

( 26,103,686 )

( 2,099,146 )

Exercise of warrants

( 26,103,686 )

( 2,099,146 )

Recognition of stock issued for services

Stock issuance for services

Issuance of common stock in private placement

Conversion of convertible debt

Issuance of common stock for commitment fees

Net Income (loss)

Balance, June 30, 2023

Balance, September 30, 2023

$ ( 261,059 )

4 unchanged sentences

$ ( 2,000,918 )

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

Statements of Cash Flows

June 30, 2023

June 30, 2022

Six Months Ended

June 30, 2023

June 30, 2022

The accompanying notes are an integral part of these consolidated financial statements.

Resonate Blends, Inc.

Consolidated Statements of Cash Flows

September 30, 2023

September 30, 2022

September 30, 2023

September 30, 2022

Cash Flows from Operating Activities

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Adjustments to reconcile net income (loss) to net cash used in operations

Gain on derivative liability

Loss (gain) on derivative liability

( 2,213,527 )

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Proceeds from subscription

Proceeds from private placement

Proceeds from warrant exercise

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Conversion of debt for common stock

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

The accompanying notes are an integral part of these consolidated financial statements.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

THE THREE AND SIX MONTHS ENDED JUNE 30, 2023

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

1 – ORGANIZATION AND BUSINESS OPERATIONS

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new business focus.

On June 20, 2023, the Company entered into an Agreement and Plan of Merger

with Pegasus Specialty Vehicles, LLC, an Ohio limited liability company, and Pegasus Specialty Holdings LLC, an Ohio limited liability

company and wholly-owned subsidiary of the Company.

June 20, 2023, the Company entered into an Agreement and Plan of Merger with Pegasus Specialty Vehicles, LLC, an Ohio limited liability

company, and Pegasus Specialty Holdings LLC, an Ohio limited liability company and wholly-owned subsidiary of the Company.

of Presentation

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Reclassifications

reclassifications have been made to the June 30, 2022 classifications to make them comparable to June 30, 2023.

reclassifications have been made to the September 30, 2022 classifications to make them comparable to September 30, 2023.

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

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

As of June 30, 2023, the Company has an accumulated deficit of $ 26,103,686 .

As of September 30, 2023, the Company has an accumulated deficit of $ 26,331,856 .

The company’s ability to continue as a going concern

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collection information and existing economic conditions.

As of June 30, 2023 and December 31, 2022, there’s no allowance for doubtful

accounts and bad debts.

As of September 30, 2023 and December 31, 2022, there’s no allowance for

doubtful accounts and bad debts.

Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, the core principle of which is that the

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by little or no market activity).

assets and liabilities measured at fair value on a recurring basis are summarized below for the quarter ended June 30, 2023 and year

ended December 31, 2022.

assets and liabilities measured at fair value on a recurring basis are summarized below for the quarter ended September 30, 2023 and

year ended December 31, 2022.

OF ASSETS AND LIABILITIES MEASURED AT VALUE ON RECURRING BASIS

As of June 30, 2023

As of September 30, 2023

Derivative Liabilities

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has periodically advanced funds to the Company for operating expenses.

At June 30, 2023 and December 31, 2022, amounts due related parties

were $ 69,100 and $ 164,946 , respectively.

At September 30, 2023 and December 31, 2022, amounts due related

parties were $ 70,099 and $ 164,946 , respectively.

These advances are non-interest bearing and payable upon demand.

4 - CONVERTIBLE NOTE PAYABLE

notes payable consists of the following as of June 30, 2023 and December 31, 2022:

notes payable consists of the following as of September 30, 2023 and December 31, 2022:

OF CONVERTIBLE NOTES PAYABLE

June 30, 2023

September 30, 2023

December 31, 2022

2 unchanged sentences

Net convertible notes

June 30, 2023 and December 31, 2022, $ 200,000 of the convertible notes was an 8 % Unsecured Convertible Promissory Note from an investor

September 30, 2023 and December 31, 2022, $ 200,000 of the convertible notes was an 8 % Unsecured Convertible Promissory Note from an investor

issued March 5, 2021.

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lesser of $1.00 or 75% of the average selling price of the aggregate offering.

The noteholder has expressed to the Company not to convert

his Note into shares in the near term.

Consequently, we have mutually agreed not to accrue interest on the this Note going forward.

On July 10, 2023, the note was converted to 3,282,219

shares of common stock.

the year ended December 31, 2022, the Company entered into Securities Purchase Agreements with five accredited investors, pursuant to

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Day prior to the Conversion Date.

The Company is currently working with each of the accredited investor on payoff options.

June 27, 2022, we issued and sold to an accredited investor a convertible promissory note the principal amount of $ 138,800 under a Securities

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We received $ 128,500 from the Note after applying the original issue discount to the Note.

the six months ended June 30, 2023, the Company repaid the entire note.

September 8, 2022, we issued and sold a senior secured convertible promissory note to AJB Capital Investments LLC for a principal amount

of $ 600,000 , together with guaranteed interest of 12 % per year calendar from the date hereof.

All Principal and Interest owing hereunder,

along with any and all other amounts, shall be due and owing on the Maturity Date March 8, 2023 .

We received $ 540,000 from the Note after

applying the original issue discount to the Note.

The note is convertible at a Variable Conversion Price shall equal the volume weighted

average trading price (i) during the previous twenty (20) Trading Day period ending on the date of issuance of this Note, or (ii) during

the previous twenty (20) Trading Day period ending on the Conversion Date

the nine months ended September 30, 2023, the Company repaid the entire note.

September 8, 2022, we issued and sold a senior secured convertible promissory note to AJB Capital Investments LLC (“AJB”)

for a principal amount of $ 600,000 , together with guaranteed interest of 12 % per year calendar from the date hereof.

All Principal and

Interest owing hereunder, along with any and all other amounts, shall be due and owing on the Maturity Date March 8, 2023 .

$ 540,000 from the Note after applying the original issue discount to the Note.

The note is convertible at a Variable Conversion Price

shall equal the volume weighted average trading price (i) during the previous twenty (20) Trading Day period ending on the date of issuance

of this Note, or (ii) during the previous twenty (20) Trading Day period ending on the Conversion Date.

Maturity Date may be extended at the sole discretion of the Borrower up to six (6) months following the date of the original Maturity

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maturity date for repayment of the Notes is nine months from issuance and the Notes bear interest at 10 % per annum.

On September 29,

2023, we entered into an amendment with AJB extending the maturity date of the Note through December 28, 2023 .

In exchange for this amendment,

we issued AJB 3,000,000 shares (“extension shares”) of common stock.

We can redeem certain shares if all principal and interest

is repaid in full prior to the new maturity date.

Securities Purchase Agreement contain a most favored nation provision that allows the Investor to claim any lower price from any future

securities six months after this closing and a blocker on issuing variable rate investments.

connection with the investment, the Company issued Commitment Shares to the Investors in the amount of 5,571,429

shares collectively during the year ended December

of June 30, 2023 and December 31, 2022, accrued interest payable on notes payable was $ 202,556 and $ 265,480 respectively.

connection with the investment, the Company issued Commitment Shares to the Investors in the amount of 5,571,429 shares collectively

prior to the issuance of the 3,000,000 extension shares on September 29, 2023.

the nine months ended September 30, 2023, the Company issued 3 convertible promissory notes totaling $ 345,000 ,

net of debt issuance costs of $ 20,000 .

These notes are convertible into common stock into the next funding round expected to be priced at $ .08

per share issued in a Series Preferred with a 4 %

coupon payable until the Preferred is converted into common stock.

2 -year cash Warrant with 50 %

coverage priced at $ .25

is also available as part of this conversion.

A total of 812,500

commitment shares and

250,000 warrants issued.

This Note has a personal guarantee for the full principal amount to Resonate Blends, Inc.

Vyas, Principal of Pegasus.

Resonate Blends, Inc.

in return will guarantee the Lender.

of September 30, 2023 and December 31, 2022, accrued interest payable on notes payable was $ 252,091 and $ 265,480 respectively.

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

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OF DERIVATIVE LIABILITIES

June 30, 2023

September 30, 2023

December 31, 2022

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6 – SENIOR PROMISSORY NOTE

June 20, 2023, the Company signed a Securities Purchase Agreement with an accredited investor, pursuant to which the Company issued and

sold to the accredited investor a 15 % original issue discount Senior Promissory Note (non-convertible), dated June 20, 2023, in the principal

amount of $ 575,000 .

The Senior Promissory Note is secured by all of the Company’s assets under a separate security agreement between

the accredited investor and the Company.

June 20, 2023, the Company signed a Securities Purchase Agreement (“SPA”) with an accredited investor, pursuant to which

the Company issued and sold to the accredited investor a 15 % original issue discount Senior Promissory Note (non-convertible), dated

June 20, 2023, in the principal amount of $ 575,000 .

The Senior Promissory Note is secured by all of the Company’s assets under

a separate security agreement between the accredited investor and the Company.

Company received $ 435,000 from the Senior Promissory Note after applying the original issue discount and commissions and fees.

were utilized as a deposit on the Company’s acquisition of Pegasus Specialty Vehicles, LLC

(See Note 7).

were utilized as a deposit on the Company’s acquisition of Pegasus Specialty Vehicles, LLC (See Note 7).

maturity date for repayment of the Senior Promissory Note is September 20, 2023 and bears interest at 15 % per annum starting 60 days

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additional consideration, the Company issued 1,318,000 shares of its common stock as commitment shares.

The Company is required to issue

additional commitment shares in the event the Senior Promissory Note is not prepaid at 60 days.

Pursuant to a Registration Rights Agreement,

the Company has agreed to register the commitment shares with the SEC no later than 90 days from the issuance of the Senior Promissory

The Company was required to issue

an additional 330,000 commitment shares due to the Senior Promissory Note not being prepaid at 60 days as required in the SPA.

is currently working with investor to address the entire Note payoff.

the agreements, the Company agreed to certain restrictive covenants, including a restriction on borrowing and a most favored nation clause

in favor of the accredited investor for any future offerings not specifically exempted.

On June 20, 2023, the Company and Pegasus

Specialty Vehicles, LLC entered into a Loan and Security Agreement whereby the Company lent to Pegasus the principal amount of $ 575,000 secured by all of the Pegasus’

assets, but subordinate to the security interest of accredited investor and another lender of Pegasus .

June 20, 2023, the Company and Pegasus Specialty Vehicles, LLC entered into a Loan and Security Agreement whereby the Company lent to

Pegasus the principal amount of $ 575,000 secured by all of the Pegasus’ assets, but subordinate to the security interest of accredited

investor and another lender of Pegasus.

7 – AGREEMENT AND PLAN OF MERGER WITH PEGASUS SPECIALTY VEHICLES, LLC

June 20, 2023, the Company entered into an Agreement and Plan of Merger

with Pegasus Specialty Vehicles, LLC, an Ohio limited liability company (“Pegasus”), and Pegasus Specialty Holdings LLC, an

Ohio limited liability company and wholly-owned subsidiary of the Company (“Pegasus Sub”).

Merger Agreement provides that at the closing, subject to terms and conditions,

Pegasus Sub will merge with and into Pegasus , with Pegasus surviving as a wholly-owned subsidiary

of the Company.

At Closing of the Merger, the issued and outstanding common shares of Pegasus will automatically be converted into the

right to receive an aggregate of 623,500 shares of Series AA

Preferred Stock of the Company.

Company, Pegasus, and Pegasus Sub have each made various representations and warranties and agreed to certain covenants in the

Merger Agreement, including a covenant by the Company that it would raise $ 3,000,000

less costs in new financing at Closing, with $ 435,000

loaned pre-Closing to Pegasus under a secured promissory note with a face value of $ 575,000 .

Pegasus granted a security interest to

the Company in all of Pegasus’ assets on the $ 575,000

loan, subordinate to other security interests as to the same collateral.

The Company received $ 500,000 from the Note after applying

the Original Issue Discount (OID), $ 30,000 of which was used to pay commission to a broker as placement agent, $ 30,000 was paid to

the lender for its legal fees and $ 5,000 for a due diligence fee paid to the lender.

The balance was tendered to the Company to lend to Pegasus under a Loan and Security Agreement as

described below.

Consummation of the Merger is subject to the satisfaction or, if permitted

by applicable law, waiver, by the Company, Pegasus, or both of various conditions.

For Pegasus, these conditions include, without limitation,

(i) an agreeable plan to spin out the existing Company cannabis assets and operations, (ii) an agreeable plan to transfer the outstanding

shares of Series C Preferred Stock of the Company to Brian Barrington simultaneously to the date of the aforementioned spin-out;

an agreeable plan to retire the Series E Designation;

(iv) financing by the Company of $3,000,000 less costs;

(v) the filing of the Certificate

of Designation for the Series AA Preferred Stock with the Secretary of State of Nevada;

June 20, 2023, the Company entered into an Agreement and Plan of Merger with Pegasus Specialty Vehicles, LLC, an Ohio limited liability

company (“Pegasus”), and Pegasus Specialty Holdings LLC, an Ohio limited liability company and wholly-owned subsidiary of

the Company (“Pegasus Sub”).

Merger Agreement provides that at the closing, subject to terms and conditions, Pegasus Sub will merge with and into Pegasus, with Pegasus

surviving as a wholly-owned subsidiary of the Company.

At Closing of the Merger, the issued and outstanding common shares of Pegasus

will automatically be converted into the right to receive an aggregate of 623,500 shares of Series AA Preferred Stock of the Company.

Company, Pegasus, and Pegasus Sub have each made various representations and warranties and agreed to certain covenants in the Merger

Agreement, including a covenant by the Company that it would raise $ 3,000,000 less costs in new financing at Closing, with $ 435,000 loaned

pre-Closing to Pegasus under a secured promissory note with a face value of $ 575,000 .

Pegasus granted a security interest to the Company

in all of Pegasus’ assets on the $ 575,000 loan, subordinate to other security interests as to the same collateral.

received $ 500,000 from the Note after applying the Original Issue Discount (OID), $ 30,000 of which was used to pay commission to a broker

as placement agent, $ 30,000 was paid to the lender for its legal fees and $ 5,000 for a due diligence fee paid to the lender.

was tendered to the Company to lend to Pegasus under a Loan and Security Agreement as described below.

of the Merger is subject to the satisfaction or, if permitted by applicable law, waiver, by the Company, Pegasus, or both of various

For Pegasus, these conditions include, without limitation, (i) an agreeable plan to spin out the existing Company cannabis

assets and operations, (ii) an agreeable plan to transfer the outstanding shares of Series C Preferred Stock of the Company to Brian

Barrington simultaneously to the date of the aforementioned spin-out;

(iii) an agreeable plan to retire the Series E Designation;

financing by the Company of $3,000,000 less costs;

(v) the filing of the Certificate of Designation for the Series AA Preferred Stock

with the Secretary of State of Nevada;

and (vi) certain other customary conditions.

the Company, these conditions include, without limitation, (i) a secured promissory note issued by Pegasus to the Company in the amount

of $500,000 with the collateral being a UCC lien subordinate to other lenders;

(ii) the payback by the Company of certain advances contributed

by corporate officers and others in the Company in an amount not to exceed $140,000;

(iii) resolutions of the equity holders of Pegasus

approving the Merger Agreement and the transactions contemplated;

For the Company, these conditions include, without

limitation, (i) a secured promissory note issued by Pegasus to the Company in the amount of $500,000 with the collateral being a UCC

lien subordinate to other lenders;

(ii) the payback by the Company of certain advances contributed by corporate officers and others in

the Company in an amount not to exceed $140,000;

(iii) resolutions of the equity holders of Pegasus approving the Merger Agreement and

the transactions contemplated;

and (iv) certain other customary conditions.

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in the Merger Agreement.

Merger Agreement, the Merger, and the transactions contemplated thereby were unanimously approved by the board of directors of Pegasus, and unanimously approved by the board of directors of the Company.

Merger Agreement, the Merger, and the transactions contemplated thereby were unanimously approved by the board of directors of Pegasus,

and unanimously approved by the board of directors of the Company.

Closing of the Merger is expected to occur as soon as practicable after the satisfaction or waiver of all the conditions to Closing in

the Merger Agreement, which is currently expected to be in the 3rd quarter of calendar year 2023.

the Merger Agreement, which is currently expected to be in the 4th quarter of calendar year 2023.

8 – COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

Rent expense was approximately $ 8,406

and $ 2,502 for the six months ended June 30, 2023 and 2022, respectively .

and $ 5,796 for the nine months ended September 30, 2023 and 2022, respectively.

Employment Agreement

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9 – STOCKHOLDERS’ EQUITY

the six months ended June 30, 2023, the Company issued the following shares of common stock:

the nine months ended September 30, 2023, the Company issued the following shares of common stock:

Company issued 1,273,273 shares of common stock for the exercise of a warrant for proceeds of $ 30,000 ;

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the fair value at the issuance date.

Of this amount, $ 2,303 was recognized during the six months ended June 30, 2023, with the remaining

$ 11,947 unrecognized.

Of this amount, $ 5,895 was recognized during the nine months ended September 30, 2023, with

the remaining $ 8,355 unrecognized.

Company issued a total of 2,460,500 shares of common stock as commitment fees under borrowing agreements.

1 unchanged sentence

$ 116,263 in expenses, the fair value of the common stock on the issuance dates.

the six months ended June 30, 2022 the Company issued a total of 954,666 shares of common stock to vendors for compensation and services

rendered, valued at $ 200,014 .

Company issued 137,500 shares of common stock for $ 10,000 in a private placement.

Company issued a total of 3,282,219 shares of common stock as to convert a convertible note of $ 200,000 and accrued interest of $ 42,228 .

the nine months ended September 30, 2022, the Company issued the following shares of common stock:

Company issued 979,666 shares of common stock for services for $ 208,801 .

Company issued 6,636,985 shares of common stock for $ 243,917 in private placements.

Company issued a total of 22,749,316 shares of common stock as to convert convertible notes and accrued interest of $ 2,107,666 .

10 – SUBSEQUENT EVENTS

Company had one remaining convertible noteholder from the March 12, 2021 Private Placement Memorandum (PPM) that was holding his note,

without accrued interest, since the note maturity date of January 3, 2022.

On July 10, 2023, the noteholder converted his entire outstanding

note into 3,282,219 shares of the Company’s common stock and the note is now fully retired.

October 13, 2023, we issued a Promissory Note to an accredited investor in the principal amount of $ 55,000 .

We received $ 50,000 from

the note after applying the original issue discount of $ 5,000 in the transaction.

principal on the note is convertible at the investors’ option into our common stock in the next funding round which, if it occurs,

is expected to be priced at approximately $ .08 per share issued in a preferred stock.

were required to issue a total of 112,500 shares of our common stock in connection with the notes as commitment shares.

October 26, 2023, we issued a three-month Promissory Note to an accredited investor in the principal amount of $ 57,500 .

We received $ 45,000

from the note after paying the placement agent a fee of $ 5,000

and the original issue discount of $ 7,500

in the transaction.

were required to issue a total of 250,000 shares of our common stock in connection with the notes as commitment shares.

November 13, 2023, we issued a Promissory Note to an accredited Noteholder for $ 80,000 with a nine (9) month maturity date.

carries twelve ( 12 % ) interest rate per annum.

After the allowances for the $ 3,500 in legal fees and a $ 1,500 due diligence fee, the Company

received $ 75,000 .

The Company has the right to prepay the Note prior to 180 days with a set prepayment fee.

the Note isn’t paid in full at Day 180, the Noteholder has the right to convert the Note at a 37% discount with the conversion

price determined on the basis of the lowest closing bid price for the Common Stock during the prior ten (10) trading day period .

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

What changed 10-Q

Item 1. Financial Statements