TRIDENT BRANDS INCORPORATED Forward Looking Statements
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") should be read in conjunction with the interim
consolidated financial statements, and notes thereto, for the quarter ended
Certain statements contained in this MD&A may constitute forward-looking statements as defined under securities laws. Forward-looking statements may relate to our future outlook and anticipated events or results and may include statements regarding our future financial position, business strategy, budgets, litigation, projected costs, capital expenditures, financial results, taxes, plans and objectives. In some cases, forward-looking statements can be identified by terms such as "anticipate", "estimate", "intend", "project", "potential", "continue", "believe", "expect", "could", "would", "should", "might", "plan", "will", "may", "predict", the negatives of such terms, and other similar expressions concerning matters that are not historical facts. To the extent any forward-looking statements contain future-oriented financial information or financial outlooks, such information is being provided to enable a reader to assess our financial condition, material changes in our financial condition, our results of operations, and our liquidity and capital resources. Readers are cautioned that this information may not be appropriate for any other purpose, including investment decisions.
Forward-looking statements contained in this MD&A are based on certain factors and assumptions regarding expected growth, results of operations, performance, and business prospects and opportunities. While we consider these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Forward-looking statements are also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what we currently expect. These factors are more fully described in the "Risk Factors" section at Item 1A of the Form 10-K.
Forward-looking statements contained in this commentary are based on our current estimates, expectations and projections, which we believe are reasonable as of the date of this report. You should not place undue importance on forward-looking statements and should not rely upon this information as of any other date. Other than as required under securities laws, we do not undertake to update any forward-looking information at any particular time.
All dollar amounts in this MD&A are expressed in thousands of
Results of Operations
The following summary of our results of operations should be read in conjunction
with our unaudited consolidated financial statements for the three and six month
periods ended
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Our operating results for three month periods ended
Three Three
Months Ended Months Ended
May 31, May 31,
2021 2020
Revenues $ 46,243 $ 244,102
Gross Profit $ 21,663 $ 76,862
Operating Expenses $ 537,978 $ 1,119,556
Other Expenses $ 200,008 $ (9,019,748 )
Net Loss $ (716,323 ) $ (10,062,442 )
Add back:
Interest Expense $ 200,008 $ 1,001,119
Depreciation $ -0- $ 2,095
Amortization $ -0- $ -0-
EBITDA $ (516,315 ) $ (9,059,228 )
Add back:
Derivative Loss $ -0- $ 8,028,629
Adjusted EBITDA $ (516,315 ) $ (1,030,599 )
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Revenues and Gross Profits
Sales in the first quarter of 2021 decreased to
Operating Expenses Our operating expenses for the three month period endedMay 31, 2021 andMay 31, 2020 is summarized below: Three Three Months Months Ended May Ended May 31, 31, 2021 2020 Professional Fees$ 80,478 $ 120,235 General & Administrative Expenses$ 374,804 $ 622,589 Marketing, Selling & Warehousing Expenses$ 34,451 $ 326,557 Management Salary$ 47,500 $ 35,125 Rent$ 745 $ 15,050
Operating expenses for the three month period ended
Other Expenses
Other expenses for the three month period ended
Non-GAAP Financial Measure
The following non-GAAP financial measures are presented in this quarterly report on Form 10-Q to supplement the financial information we present on a GAAP basis. We monitor and present EBITDA and Adjusted EBITDA because they are key measures used by our management to understand and evaluate our performance.
EBITDA
We define EBITDA as net income (loss), adjusted to exclude: Interest income and
expense, depreciation and amortization expense including impairment loss.
Reported net loss for the three month period
Adjusted EBITDA
We define Adjusted EBITDA as EBITDA, adjusted to exclude: stock options expense
and derivative loss. Reported EBITDA for the three month period
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Six Month Periods Ended
Our operating results for six month periods ended
Six Six
Months Ended Months Ended
May 31, May 31,
2021 2020
Revenues $ 190,291 $ 405,987
Gross Profit $ 86,923 $ 153,818
Operating Expenses $ 942,262 $ 2,433,290
Other Expenses $ 400,341 $ 12,039,149
Net Loss $ (1,255,680 ) $ (14,318,621 )
Add back:
Interest Expense $ 400,341 $ 2,447,807
Depreciation $ -0- $ 4,191
Amortization $ -0- $ -0-
EBITDA $ (855,339 ) $ (11,866,623 )
Add back:
Stock Options Expense $ -0- $ -0-
Derivative Loss $ -0- $ 9,601,342
Adjusted EBITDA $ (855,339 ) $ (2,265,281 )
Revenues and Gross Profits
Sales in the first half of fiscal 2021 decreased to
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Operating Expenses
Our operating expenses for the six month period ended May 31, 2021 and May 31,
2020 is summarized below:
Six Six
Months Ended Months Ended
May 31, May 31,
2021 2020
Professional Fees $ 94,127 $ 279,843
General & Administrative Expenses $ 699,750 $ 1,476,618
Marketing, Selling & Warehousing Expenses $ 61,481 $ 571,384
Management Salary $ 85,000 $ 73,375
Director's Fees $ -0- $ -0-
Rent $ 1,904 $ 32,070 Operating expenses for the six month period ended
Other Expenses
Other expenses for the six month period ended
Non-GAAP Financial Measure
The following non-GAAP financial measures are presented in this quarterly report on Form 10-Q to supplement the financial information we present on a GAAP basis. We monitor and present EBITDA and Adjusted EBITDA because they are key measures used by our management to understand and evaluate our performance.
EBITDA
We define EBITDA as net income (loss), adjusted to exclude: Interest income and
expense, depreciation and amortization expense including impairment loss.
Reported net loss for the six month period
Adjusted EBITDA
We define Adjusted EBITDA as EBITDA, adjusted to exclude stock options expense
and derivative loss. Reported EBITDA for the six month period
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Balance Sheet Data
The following table provides selected balance sheets data as at May 31, 2021 and
May 31, 2020 .
May 31, May 31,
Balance Sheet Data: 2021 2020
Cash and cash equivalents $ 131,361 $ 277,334
Total assets $ 1,779,360 $ 2,909,624
Total liabilities $ 31,153,522 $ 45,745,898
Stockholders' (deficit) $ (29,374,162 ) $ (42,836,274 )
Strategic Orientation
Our objective is to provide our shareholders with solid returns through strategic investments across multiple consumer product and ingredient platforms. The platforms we are focusing on include:
? Life science technologies and related products that have applications to a
range of consumer products;
? Nutritional supplements and related consumer goods providing defined
benefits to the consumer; and
? Functional foods and beverages ingredients with defined health and
wellness benefits.
We are building our business through strategic investments in high growth early stage consumer brands and functional ingredient platforms within segment/sectors which we believe offer sustainable commercial potential. We are focused on three core strategies underpinning our objectives:
? To execute a multi-tier brand, supply-chain and innovation strategy to
drive revenue;
? To aggressively manage an asset light business model to drive a low cost
platform; and
While we have yet to achieve profitability, we believe we are making significant progress against our commercial objectives. We expect revenue and margin to increase as we continue to strengthen distribution partnerships while capitalizing on product innovation, supply-chain optimization and brand equity within our current portfolio.
Liquidity and Capital Resources
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern, which contemplates
realization of assets and the satisfaction of liabilities in the normal course
of business within one year after the date the consolidated financial statements
are issued. In accordance with
As of
Working Capital Deficiency and Need for
We currently have a severe working capital deficiency. As of
As disclosed under Item 3. Legal Proceedings, a judgment was entered against us
in the Everlast matter in the amount of approximately
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As of
In order to remedy this liquidity deficiency, we are actively seeking to raise additional funds through the sale of equity and/or debt securities, and ultimately, we will need to generate substantial positive operating cash flows. Our internal sources of funds will consist of cash flows from operations, but not until we begin to realize additional revenues from the sale of our products and services. As previously stated, our operations are generating negative cash flows, and thus adversely affecting our liquidity. If we are unable to raise additional funds in the near term, we will not be able to implement our business plan, in which case there would be a material adverse effect on our results of operations and financial condition.
In the event we do not generate sufficient funds from revenues or financing through the issuance of common stock or from debt financing, we will be unable to fully implement our business plan and pay our obligations as they become due, any of which circumstances would have a material adverse effect on our business prospects, financial condition, and results of operations. The accompanying financial statements do not include any adjustments that might be required should we be unable to recover the value of our assets or satisfy our liabilities.
Based on our limited availability of funds we expect to spend minimal amounts on product development, sales and marketing and capital expenditures. We expect to fund any future product development expenditures through a combination of cash flows from operations and proceeds from equity and/or debt financing. If we are unable to generate positive cash flows from operations, and/or raise additional funds (either through debt or equity), we will be unable to fund our product development expenditures, in which case, there could be a material adverse effect on our business and results of operations.
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 of operations, liquidity, capital expenditures or capital resources that is material to investors.
Contractual Obligations
Except for the transactions noted in Business Developments, there have been no
material changes outside the normal course of business in our contractual
obligations since
Critical Accounting Estimates
The preparation of financial statements in conformity with
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