This section of this report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions or words which, 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 report. 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.
Business
We will sell our products and services through our Internet website (the "Website"). The Company is developing an online store whose merchandise includes hemp related products, CBD (Cannabidiol) related products and additional products focusing on health and lifestyle.
Initially, we intend to carry in excess of 10 products from two suppliers. We intend to place directed advertising throughout the online store. Advertising will originate through internet or direct-advertising sales by the Company. The company may also use social media outlets such as Facebook, Twitter and Instagram in an effort to attract customers with product specific advertisements or posts.
As an online retail store operating with distribution hub, we will be able to rapidly scale our products and services with minimal marginal costs. Each additional brand, category or product that we add to our platform adds negligible server hosting costs. It also allows us to have a virtual presence and exposure to every regulated cannabis market without establishing a costly physical presence in each state. This minimizes the costs of scaling and required capital while, at the same time, offering a direct role in the cannabis industry without ever touching the plant itself.
We are a startup company in the cannabis industry. Our focus is to create online sales and marketing initiatives to build a dominate brand. Our oil and extracts division will focus on online sales of formulated CBD / hemp oil tinctures, softgels, capsules. We have our Website under development and anticipate to be online in the next few months. We are in the process of acquiring trademarks relative to our products. Agreements with raw material suppliers and related products have been obtained. All supply will come domestically with white label agreements when needed. Online Marketing program in place to drive fast paced growth plan in line with industry. Orders will be handled online and shipped via appropriate carriers from our inventory in leased warehouse. Drop shipping may be used during initial launch phases. Customers for CBD/hemp products expect the highest of quality and consistency and pricing is based on those levels. We expect to be price and quality competitive on the higher end of that scale. All product quality is 100% customer satisfaction guaranteed and products not deemed to be of quality can be returned for a refund. Quality and consistency of quality are needed to avoid returned product issues which could result in financial liability. Online payment gateway being established with backup vendor for online payment gateway in place as well.
5 Results of Operations Below is a summary of the results of operations for the years endedDecember 31, 2021 and 2020: For the Year ended December 31, 2021 2020 $ Change % Change Revenue $ - $ - $ - -% Cost of revenue - - - -% Gross loss - - - -% Operating expenses Professional fees 71,224 134,843 (63,619 ) (47.2)% General & administrative 274,400 410,627 (136,227 ) (33.2)% Total operating expenses 345,624 545,470 (199,846 ) (36.6)% Loss on lease settlement - (179,684 ) 179,684 100.0% Derivative gain (loss) (131,257 ) 18,022 (149,279 ) (828.3)% Interest expense, net (158,618 ) (411,312 ) (252,694 ) (61.4)% Gain on settlement of liabilities 58,617 - 58,617 100.0% Loss from disposal (53,442 ) - (53,442 ) (100.0)% Net gain (loss) from discontinued operations, net of tax - 52,459 (52,459 ) (100.0)% Net income (loss)$ (630,324 ) $ (1,065,985 ) $ (437,582 ) (41.0)% Operating expenses
Operating expenses decreased by
Professional fees decreased by
General and administrative expenses decreased by
Other income (expense)
Other income (expense) decreased by
6
Liquidity and Capital Resources
The following is a summary of the cash and cash equivalents as of the years
ended
As of December 31, December 31, 2021 2020 $ Change Cash and cash equivalents$ 10,735 $ -$ 10,735 Summary of Cash Flows Below is a summary of the Company's cash flows for the years endedDecember 31, 2021 and 2020. December 31, December 31, 2021 2020
Net cash used in operating activities from continuing operations
$ (135,765 ) $ (143,981 )
Net cash provided by (used in) operating activities from discontinued operations
- 1,959
Net cash used in investing activities from continuing operations
- -
Net cash used in investing activities from discontinued operations
- - Net cash provided by financing activities from continuing operations 146,500 37,952
Net cash used in financing activities from discontinued operations
- - Net increase in cash and cash equivalents$ 10,735 $ (104,070 ) Operating activities
Net cash used in operating activities was
Investing activities
Net cash used in investing activities was
Financing activities
Net cash provided by financing activities was
7 Going Concern
The financial statements for the years ended
Financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that may be necessary if the Company is unable to continue as a going concern.
Off-Balance Sheet Arrangements
As of
Unrecognized Tax Benefits
The Company uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. The Company has incurred net losses in past years and, therefore, has no tax liability.
The Company reported no uncertain tax liability as of
Stock Based Compensation
The Company applies Topic 718 "Share-Based Payments" ("Topic 718") to share-based compensation, which requires the measurement of the cost of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Compensation cost is recognized when the event occurs. The Black-Scholes option-pricing model is used to estimate the fair value of options granted.
The Company accounts for equity-based transactions with non-employees under the provisions of ASC Topic No. 505-50, "Equity-Based Payments to Non-Employees" ("Topic No. 505-50"). Topic No. 505-50 establishes that equity-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.
Revenue Recognition
The Company recognizes revenue in accordance with
8
Revenue is recognized when control of the services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for the services.
Revenue is recognized based on the following five step model:
- Identification of the contract with a customer - Identification of the performance obligations in the contract - Determination of the transaction price
- Allocation of the transaction price to the performance obligations in the contract
- Recognition of revenue when, or as, the Company satisfies a performance obligation
Performance Obligations
The Company generates revenue from sales of cannabinoid products. For contracts with multiple performance obligations, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. The Company uses an observable price to determine the stand-alone selling price for separate performance obligations or a cost plus margin approach when one is not available. Historically the Company's contracts have not had multiple performance obligations. Revenue related to the sales of products are recognized at the point in time at which control transfers to the buyer.
Sales, value add, and other taxes collected concurrent with revenue-producing
activities are excluded from revenue. Incidental items that are immaterial in
the context of the contract are recognized as expense. Payment terms between
invoicing and when payment is due is less than one year. As of
The Company elected the practical expedient to not adjust the amount of revenue to be recognized under a contract with an end user for the effects of time value of money when the timing difference between receipt of payment and recognition of revenue is less than one year.
Transaction Price Allocated to the Remaining Performance Obligations
From time to time, the Company may receive payment for sales of its products
from a customer before the goods have shipped. This amount is considered a
contract liability and is recorded as deferred revenue. At
Contract Costs
Costs incurred to obtain a customer contract are not material to the Company. The Company elected to apply the practical expedient to not capitalize contract costs to obtain contracts with a duration of one year or less, which are expensed and included within cost of goods and services.
Critical Accounting Estimates
Estimates are used to determine the amount of variable consideration in contracts, the standalone selling price among separate performance obligations and the measure of progress for contracts where revenue is recognized over time. The Company reviews and updates these estimates regularly.
9 Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in
Fair Value of Financial Instruments
As defined in ASC 820" Fair Value Measurements,"fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities? quoted prices in markets that are not active? or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs which reflect a reporting entity's own assumptions about the assumptions that market participants would use for pricing an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.
The following table summarizes fair value measurements by level at
December 31, 2021 Level 1 Level 2 Level 3 Total Assets None $ - $ - $ - $ - Liabilities Derivative liabilities $ - $ -$ 219,625 $ 219,625 December 31, 2020 Level 1 Level 2 Level 3 Total Assets None $ - $ - $ - $ - Liabilities Derivative liabilities $ - $ -$ 301,467 $ 301,467
The recorded amounts of financial instruments, including cash equivalents,
investments, accounts payable, accrued expenses, note payable and loan from
related parties approximate their market values as of
10
New Accounting Pronouncements
In preparing the financial statements, management considered all new pronouncements through the date of the report.
The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.
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