The following discussion of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by, the condensed financial statements and notes thereto included in Item 1 in this Quarterly Report on Form 10-Q.
Our Management's Discussion and Analysis contains not only statements that are
historical facts, but also statements that are forward-looking. Forward-looking
statements are, by their very nature, uncertain and risky. Forward-looking
statements are often identified by words like: "believe", "expect", "estimate",
"anticipate", "intend", "project" and similar expressions, or words that, by
their nature, refer to future events. You should not place undue certainty on
these forward-looking statements, which apply only as of the date of this
Quarterly Report on Form 10-Q. These forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from historical results or our predictions. These risks and
uncertainties include international, national, and local general economic and
market conditions; our ability to sustain, manage, or forecast growth; our
ability to successfully make and integrate acquisitions; new product development
and introduction; existing government regulations and changes in, or the failure
to comply with, government regulations; adverse publicity; competition; the loss
of significant customers or suppliers; fluctuations and difficulty in
forecasting operating results; change in business strategy or development plans;
business disruptions; the ability to attract and retain qualified personnel; the
ability to protect technology; the risk of foreign currency exchange rate; and
other risks that might be detailed from time to time in our filing with the
Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in herein and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
Prospective investors should read the following discussion and analysis of our financial condition and results of operations together with our condensed financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See "Cautionary Note Regarding Forward-Looking Statements."
Overview
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Jumpstart Our Business Startups Act of 2012 ("JOBS Act")
On
We are in the process of evaluating the benefits of relying on other exemptions
and reduced reporting requirements provided by the JOBS Act. Subject to certain
conditions set forth in the JOBS Act, as an "emerging growth company," we intend
to rely on certain of these exemptions from, without limitation, (i) providing
an auditor's attestation report on our system of internal controls over
financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and
(ii) complying with any requirement that may be adopted by the
Results of Operations
For the Three Months and Nine months Ended
Sales for the three months ended
Cost of sales consisted primarily of cost of product, freight-in costs,
distribution and merchant fees. Cost of sales for the three months ended
Gross profit for the three months ended
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Operating expenses consisted of marketing and selling expenses, professional and
consulting fees, compensation to employees and other general and administrative
expenses. Operating expenses for the three months ended
Other income (expense) consisted of interest income, interest expense and other
finance charges, and gain on settlement of debt. Interest income for the three
months ended
As a result of the above, we reported a net loss of
Liquidity and Capital Resources
We are an emerging growth company and currently engaged in our initial product sales and development. We have an accumulated deficit and have incurred operating losses since our inception and expect losses to continue during the fiscal year 2020. We believe our current cash balances coupled with anticipated cash flow from operating activities will be sufficient to meet our working capital requirements in the short term. We continue to control our cash expenses as a percentage of expected revenue on an annual basis and thus may use our cash balances in the short-term to invest in revenue growth. We have and will continue to generate sufficient cash for our operational needs, including any required debt payments, for at least one year from the date of issuance of the accompanying financial statements. Management is focused on growing the Company's existing products offering, as well as its customer base, to increase its revenues. The Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash balances for its planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than recently experienced. We may need to raise additional capital in the future. However, the Company cannot assure that it will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, management believes that the Company has sufficient capital and liquidity to fund its operations for at least one year from the date of issuance of the accompanying financial statements
Cash Flows Operating Activities
Net cash flows provided by operating activities for the nine months ended
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Net cash flows used by investing activities for the nine months ended
Financing Activities
Net cash flows provided by financing activities for the nine months ended
As a result of the activities described above, we recorded a net increase in
cash of
We currently have no external sources of liquidity, such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.
We are dependent on our product sales to fund our operations and may require the sale of additional common stock to expand our operations. Our officers and directors have made no written commitments with respect to providing a source of liquidity in the form of cash advances, loans, and/or financial guarantees.
If we are unable to raise the funds required to fund our operations, we will seek alternative financing through other means, such as borrowings from institutions or private individuals. There can be no assurance that we will be able to raise the capital we need for our operations from the sale of our securities. We have not located any sources for these funds and may not be able to do so in the future. We expect that we will seek additional financing in the future. However, we may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, we may be forced to cease operations. If we fail to raise funds, we expect that we will be required to seek protection from creditors under applicable bankruptcy laws.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies
The preparation of condensed financial statements in conformity with accounting
principles generally accepted in
We believe that the estimates and assumptions that are most important to the portrayal of our financial condition and results of operations, in that they require the most difficult, subjective or complex judgments, form the basis for the accounting policies deemed to be most critical to us. These critical accounting policies relate to revenue recognition, impairment of intangible assets and long-lived assets, inventory, stock compensation, and evaluation of contingencies. We believe estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial condition or results of operations.
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Significant Accounting Policies
See the footnotes to our unaudited condensed financial statements for the
quarter ended
Impact of COVID-19
For over one year, the effects of a new coronavirus ("COVID-19") and related
actions to attempt to control its spread began to impact our business. The
impact of COVID-19 on our operating results for the three months ended
On
To the extent that COVID-19 continues or worsens, governments may impose additional restrictions or additional governments may impose restrictions. The result of COVID-19 and those restrictions could result in a number of adverse impacts to our business, including but not limited to additional disruption to the economy and consumers' willingness and ability to spend, temporary or permanent closures by businesses that consume our products, such as salons and spas, additional work restrictions, and supply chains being interrupted, slowed, or rendered inoperable. As a result, it may be challenging to obtain and process raw materials and supply chains to support our business needs, and individuals could become ill, quarantined, or otherwise unable to work and/or travel due to health reasons or governmental restrictions. Also, governments may impose other laws, regulations or taxes which could adversely impact our business, financial condition or results of operations. Further, if our customers' businesses or incomes are similarly affected, they might delay or reduce purchases from us. The potential effects of COVID-19 also could impact us in a number of other ways including, but not limited to, reductions to our profitability, laws and regulations affecting our business, the availability of future borrowings, the cost of borrowings, and credit risks of our customers and counterparties.
Given the evolving health, economic, social, and governmental environments, the potential impact that COVID-19 could have on our business remains uncertain and could be significant.
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