The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the financial statements and
related notes thereto included elsewhere in this Annual Report on Form 10-K. In
addition to historical financial information, the following discussion and
analysis contains forward-looking statements based upon current expectations
that involve risks, uncertainties, and assumptions, such as our plans,
objectives, expectations, and intentions. Forward-looking statements are
statements not based on historical information and which relate to future
operations, strategies, financial results, or other developments.
Forward-looking statements are based upon estimates, forecasts, and assumptions
that are inherently subject to significant business, economic, and competitive
uncertainties, and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward-looking
statements made by us, or on our behalf. We disclose any obligation to update
forward-looking statements. Our actual results and the timing of events could
differ materially from those anticipated in these forward-looking statements as
a result of a number of factors, including those discussed under
“Forward-Looking Statements,” “Item 1. Business,” and “Item 1A. Risk Factors”
sections in this Annual Report on Form 10-K. We use words such as “anticipate,”
“estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,”
“intend,” “may,” “will,” “should,” “could,” and similar expressions to identify
forward-looking statements.
Overview
We develop hemp-derived, cannabidiol-based products, each formulated to address
key segments of the health and wellness market. Through our subsidiaries, we
sell high-end, full-spectrum hemp-derived oils, extracts, topicals, and pet
products, all with the shared purpose of supporting the potential of relief of
pain and inflammation for humans and pets, through our e-commerce site
www.cbdunlimited.com, as well as other online and in-store retailers. In
addition to our consumer products, our Gorilla-Tek division offers a state-of
the art automated dispensing system providing a secure method of distributing
hemp-based products. The proprietary system enables retailers to increase sales
channels without opening a physical storefront location. Complementing our
retail products and Gorilla-Tek divisions, we also own and operate a number of
wholly-owned subsidiaries that offer technology and consulting solutions to the
hemp and CBD industry, including an easy to use “Seed-to-Shelf” compliance and
inventory tracking and process management system for regulated products in a
front of counter pharmacy support platform.
The Company was incorporated in the
Micron Solutions in order to complete a merger with Shillelagh. In
1997
the surviving entity. In 2002, Micron Solutions entered into the Exchange
Agreement with
the Exchange Agreement, Micron also changed its name to
In
with the Secretary of State of the
Corporation
merger, whereby VBB merged with and into us, and we were the surviving entity.
Subsequently, we operated as a diversified technology and SaaS and compliance
and tracking systems company, until we shifted our focus to the hemp-derived
product industry in
Unlimited, Inc.
Corporation
Results of Operations
Fiscal Year Ended
30, 2021
Revenues
Revenues for the fiscal year ended
compared to
(or 96.4%) increase in revenues. The improvement in revenue for fiscal 2022 is
partly attributable to improved market conditions, new sales channels and
improved marketing efforts in promoting the Company’s products.
We expect an increase in commercial revenue over the next 12 months as our
business model is implemented and expanded and our commercial and retail
accounts continue to grow and expand the products being sold in each of their
retail locations. Additionally, we will continue to focus on the development of
both current and new products while continuing to commercialize existing
products lines.
Gross Profit (Loss)
Gross profit (loss) for the fiscal year ended
30, 2021
decreased inventory impairment.
Operating Expenses
Operating expenses for the fiscal year ended
2021
prior period can be attributed to significant decreases in advertising expenses.
We expect that operating expenses will continue to decrease over the next 12
months as our long-term growth strategy will require significant changes in
personnel and facilities, offset increased research and development expenses to
ensure that products nearing commercialization are brought to market as quickly
and as effectively. We cannot provide any assurances that our strategy will be
effective.
26 Other Expense
Other expense for the fiscal year ended
compared to other expense of
interest expenses. Derivative liabilities are associated with loans that are
convertible and have variable pricing on the equivalent shares of Common Stock.
At the end of each period, these derivative liabilities are valued, and the net
change is recorded as a gain or loss in other expense and income.
Loss from Operations and Total Net Loss
Loss from operations for the fiscal year ended
year ended
a increase in gross revenues, (ii) a marginally lower increase in cost of
revenues, and (iii) a decrease in inventory impairment, and (iv) a decrease in
total operating expenses. Total net loss for the fiscal year ended
2022
fiscal year ended
loss. The decrease in total net loss for 2022 was as a result of decreased
operating expenses, lower interest expenses and gains in default penalties.
Derivative liabilities are associated with loans that are convertible and have
variable pricing on the equivalent shares of Common Stock. At the end of each
period, these derivative liabilities are valued, and the net change is recorded
as a gain or loss in other expense and income.
We do not expect to realize net income in the near term as anticipated
operational expenses are expected to increase as a result of increased research
and development expenses, consulting fees, payroll expenses, and administrative
costs as staffing increases. Despite management’s focus on ensuring operating
efficiencies, we expect to continue to operate at a loss through fiscal 2023
only in part due to the COVID-19 pandemic. Nevertheless, we expect that, during
our current fiscal year, the adverse impact of COVID-19 on our business will
slowly abate, as the positivity rate in tests for COVID-19 continues to decrease
along with the new infection and mortality rates and the number of people
becoming vaccinated continues to increase.
Liquidity and Capital Resources – Fiscal Year Ended
Going Concern
We have incurred operating losses since inception and have negative cash flow
from operations. As of
accumulated deficit of
fiscal year 2022. Additionally, we utilized
year ended
financing activities. As a result, our continuation as a going concern is
dependent on our ability to obtain additional financing until we can generate
sufficient cash flow from operations to meet our obligations. We intend to
continue to seek additional debt or equity financing to continue our operations,
but there can be no assurance that such financing will be available on terms
acceptable to us, if at all.
Our consolidated financial statements have been prepared on a going concern
basis, which implies we may not continue to meet our obligations and continue
our operations for the next fiscal year. The continuation of our Company as a
going concern is dependent upon our ability to obtain necessary debt or equity
financing to continue operations until we begin generating positive cash flow.
As of
operating expenses for the near- and mid-term may continue to exceed the
revenues that we may generate, and we may need to raise capital through either
debt or equity offerings to continue operations. We are in the early stages of
our business. We are required to fund growth from financing activities, and we
intend to rely on a combination of equity and debt financings. Due to market
conditions and the early stage of our operations, there is considerable risk
that we will not be able to raise such financings at all, or on terms that are
not overly dilutive to our existing stockholders. We can offer no assurance that
we will be able to raise such funds. If we are unable to raise the funds we
require for all of our planned operations, we may be forced to reallocate funds
from other planned uses and may suffer a significant negative effect on our
business plan and operations, including our ability to develop new products and
continue our current operations. As a result, our business may suffer, and we
may be forced to reduce or discontinue operations.
There is no assurance that we will ever be profitable or that debt or equity
financing will be available to us in the amounts, on terms, and at times deemed
acceptable to us, if at all. The issuance of additional equity securities by us
would result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be
available, would increase our liabilities and future cash commitments. If we are
unable to obtain financing in the amounts and on terms deemed acceptable to us,
we may be unable to continue our business, as planned, and as a result may be
required to scale back or cease operations for our business, the result of which
would be that our stockholders would lose some or all of their investment. The
consolidated financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classifications of liabilities that may result should we be
unable to continue as a going concern.
Cash Flow – Operating Activities
For the 12 months ended
activities amounted to an outflow of
the 12 months ended
in our operating activities is due to changes in our inventory value, prepaid
expenses, accounts receivable, and accrued interest on notes payable.
Cash Flow – Financing Activities
For the 12 months ended
activities amounted to
the issuances of our Common Stock and
of convertible notes, and
payable.
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For the 12 months ended
activities amounted to
from the issuances of our Common Stock and
issuance of convertible notes, and
notes payable.
Cash Flow – Investing Activities
Net cash used in investing activities in the 12 months ended
was
months ended
Accounts Receivable and Allowance for Doubtful Account Receivable
Accounts receivable are recorded at net realizable value. We determine
provisions for uncollectible accounts, sales returns, and claims based upon
factors including the credit risk and activity of specific distributors and
resellers, historical trends, and other information. If we become aware of a
specific distributor’s or reseller’s inability to meet its financial
obligations, bad debt charges are recorded based on an overall assessment of
past due accounts receivable outstanding. In the opinion of management, a
provision was deemed necessary for uncollectible accounts.
Inventory
The cost of inventory using the standard cost method, which approximates actual
cost based on a first-in, first-out method. Our inventories are valued at the
lower of cost or net realizable value. Our inventory consists almost entirely of
finished and unfinished goods, and freight, which include CBD creams, oils,
capsules, and sprays. We periodically evaluate and adjust inventories for
obsolescence. In the opinion of management, no provision for obsolescence is
deemed necessary. The shelf life of all product inventory is two years, and as
of
which was a decrease of approximately
in direct relation to the increase in sales that we expect.
excess of the fair value of the consideration transferred, plus the fair value
of any noncontrolling interests in the acquiree, over the fair value of the net
assets acquired and liabilities assumed as of the acquisition date.
acquired in a purchase business combination and determined to have an indefinite
useful life are not amortized, but tested for impairment at least annually or
more frequently if events and circumstances exists that indicate that a goodwill
impairment test should be performed. We have selected
perform the annual impairment test.
Intangible assets represent both indefinite lived and definite lived assets.
Trademarks are deemed to have definite useful lives of ten years, are amortized,
and are tested annually for impairment. Intangible assets are reported on the
balance sheet at cost less accumulated amortization. We have selected
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Stock-Based Compensation
FASB’s ASC Topic 718, Stock Compensation (formerly, FASB Statement 123R),
prescribes accounting and reporting standards for all stock-based payment
transactions in which employee and non-employee services are acquired. We
measure the cost of employee and non-employee services received in exchange for
an award of equity instruments based on the grant-date fair value of the award.
Fair value for restricted stock awards is valued using the closing price of our
Common Stock on the date of grant. For our 2022 and 2021 fiscal years, we
recognized stock-based compensation expense of approximately
Off Balance Sheet Arrangements
As of
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 stockholders.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles
generally accepted in
of estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements. Such estimates and assumptions affect the reported
amounts of revenues and expenses during the reporting period. We base our
estimates on historical experiences and on various other assumptions that we
believe to be reasonable under the circumstances. Actual results may differ
materially from these estimates under different assumptions and conditions. We
continue to monitor significant estimates made during the preparation of our
financial statements. On an ongoing basis, we evaluate estimates and assumptions
based upon historical experience and various other factors and circumstances. We
believe our estimates and assumptions are reasonable in the circumstances;
however, actual results may differ from these estimates under different future
conditions.
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