UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Amendment No. 1)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-56155
CRYOMASS TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
| Nevada | 82-5051728 | |
| (State of incorporation) | (IRS Employer Identification No.) | |
| 3531 South Logan St, Suite D-357, Englewood, CO | 80113 | |
| (Address of principal executive offices) | (Zip Code) |
303-416-7208
(Registrant’s telephone number, including area code)
ANDINA GOLD CORP.
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer | ☐ |
| Non-accelerated filer ☐ | Smaller reporting company | ☒ |
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐ Yes ☒ No
As of August 17, 2021, the registrant had 118,749,474 shares of its common stock, par value $0.001 per share, outstanding.
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
CRYOMASS TECHNOLOGIES INC.
EXPLANATORY NOTE
The purpose of this Amendment No. 1 on Form 10-Q/A (“Amendment No. 1”) to the Quarterly Report on Form 10-Q of Cryomass Technologies Inc(the “Company,” “we,” “our” or “us”) for the quarter ended June 30, 2021, filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 23, 2021 (the “Quarterly Report”), is to adjust previously reported balances and activity included in our consolidated financial statements. As part of year-end audit procedures, we identified certain warrant contracts requiring independent fair value calculation, as well as additional beneficial conversion value to be attributed to convertible notes issued during the second quarter of 2021.
No other changes have been made to the Quarterly Report, except for the information disclosed in Part I Item 1 below. This Form 10-Q/A speaks as of the original filing date of the Quarterly Report and has not been updated to reflect events occurring subsequent to the original filing date.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
ANDINA GOLD CORP.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| June 30, 2021 | December 31, 2020 | |||||||
| ASSETS | As restated, see Note 1 | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents (Note 2) | $ | 431,306 | $ | 329,839 | ||||
| Accounts receivable, net (Note 2) | 540,000 | 540,000 | ||||||
| Prepaid expenses | 20,000 | 60,475 | ||||||
| Related party note receivable | 281,771 | |||||||
| Assets held for sale, current | 7,171,434 | 6,867,840 | ||||||
| Total current assets | 8,444,511 | 7,798,154 | ||||||
| Intangible assets, net | 4,082,263 | - | ||||||
| Goodwill | 1,190,000 | |||||||
| Total assets | $ | 13,716,774 | $ | 7,798,154 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses (Note 2) | $ | 2,430,809 | $ | 2,248,235 | ||||
| Loans payable | - | 412,560 | ||||||
| Taxes payable | 771 | 771 | ||||||
| Liabilities held for sale, current | 735,746 | 1,464,285 | ||||||
| Total current liabilities | 3,167,326 | 4,125,851 | ||||||
| Notes payable | 4,933,115 | 52,083 | ||||||
| Deferred tax liability | 14,926 | 14,926 | ||||||
| Total liabilities | 8,115,367 | 4,192,860 | ||||||
| Commitments and contingencies (Note 16) | ||||||||
| Shareholders’ equity: | ||||||||
| Preferred stock, $0.001 par value, 100,000 shares authorized, no shares issued and outstanding respectively | - | - | ||||||
| Common stock, $0.001 par value, 500,000,000 shares authorized, 118,533,933 and 97,005,817 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively | 118,534 | 97,006 | ||||||
| Additional paid-in capital | 25,028,633 | 19,138,947 | ||||||
| Common stock to be issued | - | 98,535 | ||||||
| Accumulated deficit | (19,545,760 | ) | (15,729,194 | ) | ||||
| Total shareholders’ equity | 5,601,407 | 3,605,294 | ||||||
| Total liabilities and shareholders’ equity | $ | 13,716,774 | $ | 7,798,154 | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
1
ANDINA GOLD CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| As restated, see Note 1 | As restated, see Note 1 | |||||||||||||||
| Net sales | $ | - | $ | 769,555 | $ | - | $ | 781,455 | ||||||||
| Cost of goods sold, inclusive of provision for inventory loss of $0 and $400,787 for the three and six months, respectively, ended June 30, 2020 | - | 310,695 | - | 744,279 | ||||||||||||
| Gross profit | - | 458,860 | - | 37,176 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Personnel costs | 426,082 | 687,573 | 799,796 | 1,416,685 | ||||||||||||
| Sales and marketing | 14 | 237 | 14 | 14,854 | ||||||||||||
| General and administrative | 1,979,323 | 219,054 | 2,375,793 | 1,799,762 | ||||||||||||
| Legal and professional fees | 232,026 | 243,561 | 457,546 | 927,315 | ||||||||||||
| Total operating expenses | 2,637,445 | 1,150,425 | 3,633,149 | 4,158,616 | ||||||||||||
| Loss from operations | (2,637,445 | ) | (691,565 | ) | (3,633,149 | ) | (4,121,440 | ) | ||||||||
| Other income (expenses): | ||||||||||||||||
| Interest expense | (359,648 | ) | - | (562,257 | ) | - | ||||||||||
| Gain / (loss) on foreign exchange | (11,232 | ) | (16,011 | ) | 23,538 | (16,011 | ) | |||||||||
| Total other expenses | (370,880 | ) | (16,011 | ) | (538,719 | ) | (16,011 | ) | ||||||||
| Net loss from continuing operations, before taxes | (3,008,325 | ) | (707,576 | ) | (4,171,868 | ) | (4,137,451 | ) | ||||||||
| Income taxes | - | 5,117 | - | 5,117 | ||||||||||||
| Net loss from continuing operations | (3,008,325 | ) | (712,693 | ) | (4,171,868 | ) | (4,142,568 | ) | ||||||||
| Net gain / (loss) from discontinued operations, net of tax | 238,686 | (60,315 | ) | 355,302 | (227,749 | ) | ||||||||||
| Net loss | $ | (2,769,639 | ) | $ | (773,008 | ) | $ | (3,816,566 | ) | $ | (4,370,317 | ) | ||||
| Comprehensive loss from discontinued operations | - | - | - | - | ||||||||||||
| Comprehensive loss | $ | (2,769,639 | ) | $ | (773,008 | ) | $ | (3,816,566 | ) | $ | (4,370,317 | ) | ||||
| Net loss per common share: | ||||||||||||||||
| Loss from continuing operations - basic and diluted | $ | (0.03 | ) | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.04 | ) | ||||
| Gain / (loss) from discontinued operations - basic and diluted | $ | 0.00 | $ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | ||||||
| Loss per common share - basic and diluted | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.04 | ) | ||||
| Weighted average common shares outstanding—basic and diluted | 106,008,685 | 105,243,905 | 102,176,247 | 105,957,797 | ||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
2
ANDINA GOLD CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
| Common Stock | Additional Paid-In | Common Stock to | Accumulated | Total Shareholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Be Issued | Deficit | Equity | |||||||||||||||||||
| Balance at December 31, 2019 (Revised) | 106,216,708 | $ | 106,216 | $ | 16,894,103 | $ | - | $ | (3,913,287 | ) | $ | 13,087,032 | ||||||||||||
| Issuance of common stock pursuant to separation agreement | 1,175,549 | 1,176 | 763,049 | - | - | 764,225 | ||||||||||||||||||
| Issuance of common stock pursuant to accelerated vesting of RSU’s | 600,000 | 600 | 389,460 | - | - | 390,060 | ||||||||||||||||||
| Stock-based compensation | - | - | 159,529 | - | - | 159,529 | ||||||||||||||||||
| Net loss | - | - | - | - | (3,597,309 | ) | (3,597,309 | ) | ||||||||||||||||
| Balance at March 31, 2020 | 107,992,257 | $ | 107,992 | $ | 18,206,141 | $ | - | $ | (7,510,596 | ) | $ | 10,803,537 | ||||||||||||
| Share cancellations | (15,050,000 | ) | - | - | - | - | - | |||||||||||||||||
| Stock-based compensation | - | - | 58,842 | - | - | 58,842 | ||||||||||||||||||
| Net loss | - | - | - | - | (773,008 | ) | (773,008 | ) | ||||||||||||||||
| Balance at June 30, 2020 | 92,942,257 | 107,992 | 18,264,983 | - | (8,283,604 | ) | 10,089,371 | |||||||||||||||||
| Balance at December 31, 2020 | 97,005,817 | $ | 97,006 | $ | 19,138,947 | $ | 98,535 | $ | (15,729,194 | ) | $ | 3,605,294 | ||||||||||||
| Share issuance | 1,491,819 | 1,492 | 207,043 | (98,535 | ) | - | 110,000 | |||||||||||||||||
| Stock-based compensation | - | - | 250,817 | - | - | 250,817 | ||||||||||||||||||
| Net loss | - | - | - | - | (1,046,927 | ) | (1,046,927 | ) | ||||||||||||||||
| Balance at March 31, 2021 | 98,497,636 | $ | 98,498 | $ | 19,596,807 | $ | - | $ | (16,776,121 | ) | $ | 2,919,184 | ||||||||||||
| Share issuance | 201,586 | 202 | - | - | - | 202 | ||||||||||||||||||
| Share issuance related to Cryocann asset purchase | 10,000,000 | 10,000 | 1,794,500 | - | - | 1,804,500 | ||||||||||||||||||
| Share issuance pursuant to employment agreements | 6,701,586 | 6,701 | 894,000 | - | - | 900,701 | ||||||||||||||||||
| Share issuance in exchange for extinguishment of debt | 2,500,000 | 2,500 | 505,902 | - | - | 508,402 | ||||||||||||||||||
| Share issuance in exchange for services | 633,125 | 633 | 56,867 | - | - | 57,500 | ||||||||||||||||||
| Stock-based compensation | - | - | 190,026 | - | - | 190,026 | ||||||||||||||||||
| Stock options issued and outstanding | - | - | 710,202 | - | - | 710,202 | ||||||||||||||||||
| Beneficial Conversion Feature of Note Payable | - | - | 391,958 | - | - | 391,958 | ||||||||||||||||||
| Warrants issued in conjunction with Convertible Notes Payable | - | - | 888,371 | - | - | 888,371 | ||||||||||||||||||
| Net loss | - | - | - | - | (2,769,639 | ) | (2,769,639 | ) | ||||||||||||||||
| Balance at June 30, 2021 (As restated, see Note 1) | 118,533,933 | $ | 118,534 | $ | 25,028,633 | $ | - | $ | (19,545,760 | ) | $ | 5,601,407 | ||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
3
ANDINA GOLD CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| As restated, see Note 1 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (4,171,868 | ) | $ | (4,142,568 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities from continuing operations: | ||||||||
| Amortization of debt discount | 251,282 | - | ||||||
| Provision for inventory loss | - | 400,787 | ||||||
| Stock-based compensation expense | 2,074,547 | 1,372,656 | ||||||
| Deferred income tax expense | - | 426 | ||||||
| Fair value of common stock issued pursuant to service agreements | 27,200 | - | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | - | (720,000 | ) | |||||
| Prepaid expenses | 40,475 | (76,285 | ) | |||||
| Inventory, net | - | (60,787 | ) | |||||
| Assets held for sale | - | 7,134 | ||||||
| Accounts payable and accrued expenses | 182,574 | 848,553 | ||||||
| Taxes payable | - | 771 | ||||||
| Net cash used in operating activities from continuing operations | (1,595,790 | ) | (2,369,313 | ) | ||||
| Net cash provided by / (used in) operating activities from disc ops | (452,828 | ) | (41,332 | ) | ||||
| Net cash used in operating activities | (2,048,618 | ) | (2,410,645 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash payment for Cryocann asset purchase | (1,000,000 | ) | - | |||||
| Issuance of other payable related to Cryocann asset purchase | (1,247,684 | ) | - | |||||
| Net cash used in investing activities from continuing operations | (2,247,684 | ) | - | |||||
| Net cash used in investing activities from discontinued operations | (224,003 | ) | (451,262 | ) | ||||
| Net cash used in investing activities | (2,471,687 | ) | (451,262 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of common stock | 120,000 | - | ||||||
| Repayment of loans payable, current | (412,359 | ) | - | |||||
| Proceeds from notes payable | 4,690,000 | - | ||||||
| Related party note disbursement | (281,771 | ) | - | |||||
| Net cash provided by financing activities from continuing operations | 4,115,870 | - | ||||||
| Net cash provided by financing activities from discontinued operations | 505,902 | - | ||||||
| Net cash provided by financing activities | 4,621,772 | - | ||||||
| Net increase / (decrease) in cash from continuing operations | 272,396 | (2,369,313 | ) | |||||
| Net increase / (decrease) in cash from discontinued operations | (170,929 | ) | (492,594 | ) | ||||
| Cash at beginning of period | 329,839 | 3,473,770 | ||||||
| Cash at end of period | $ | 431,306 | $ | 611,863 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 171,604 | $ | 6,855 | ||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Common stock issued pursuant to separation agreement | $ | - | $ | 764,225 | ||||
| Common stock issued pursuant to vesting of restricted stock units | $ | 2,940,603 | $ | 390,060 | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
4
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Revision
During Q2 2021, the Company executed two tranches of convertible term note agreements in aggregate principal value of $3.0 million and $1.9 million, respectively that bear interest at a rate of 12% per annum. The notes mature on March 31, 2022 and September 30, 2022, respectively. In conjunction with the notes, the Company entered into certain warrant purchase agreements to purchase common shares of the Company. The Company offered 24,500,000 of warrant shares in conjunction with the issuance of the notes with an exercise price of $0.40. The warrants from each tranche of convertible notes shall be exercisable from the issuance date through March 31, 2023 and April 30, 2023, respectively.
As part of year-end audit procedures, the Company discovered these warrant contracts would require an independent fair value calculation, as well as beneficial conversion value to be attributed to the convertible notes. The Company engaged an independent valuation firm to perform a fair value calculation of the warrants and associated beneficial conversion feature. As a result of the fair value analysis, additional paid-in capital was allocated to beneficial conversion feature and to warrants, resulting in debt discount and associated amortization expense as of and for the period ended June 30, 2021.
Fair Value Measurements
Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
| ● | Level 1 — Quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. |
| ● | Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. |
5
The carrying values reported in the consolidated balance sheets for cash, prepaid expenses, inventories, accounts payable, notes payable, and taxes payable approximate fair values because of the immediate or short-term maturities of these financial instruments. There were no other assets or liabilities that require fair value to be recalculated on a recurring basis.
The fair value of beneficial conversion features associated with convertible notes and the fair value of warrants are calculated utilizing level 2 inputs.
When multiple instruments are issued in a single transaction, the total proceeds from the transaction should be allocated among the individual freestanding instruments identified. The allocation occurs after identifying (1) all the freestanding instruments and (2) the subsequent measurement basis for those instruments. The subsequent measurement basis helps inform how the proceeds should be allocated. After the proceeds are allocated to the freestanding instruments, those instruments should be further evaluated for embedded features that may need to be bifurcated or separated.
If debt or stock is issued with detachable warrants, the guidance in ASC 470-20-25-2 (applied by analogy to stock) requires that the proceeds be allocated to the two instruments based on their relative fair values. This method is generally appropriate if debt or stock is issued with any other freestanding instrument that is classified in equity (such as a detachable forward contract) or as a liability but not subject to subsequent fair value accounting.
Given that the Notes and Warrants that were issued in the singular transaction are both not subject to subsequent fair value accounting treatment, Management determined the relative fair value method shall be used for allocating the proceeds of the transaction. Under the relative fair value method, the instrument being analyzed is allocated a portion of the proceeds based on its fair value to the sum of the fair value of all the instruments covered int the allocation.
Management additionally evaluated the facts and circumstances to determine whether the principal balance of the Notes ($4.9 million and $250K) approximated their fair value. The Notes were issued entirely to unrelated third parties which were deemed to be arm’s length transactions. In addition, the comparable interest rates for loans of similar companies as of the date of the Note issuances range from 10-15% given the liquidity concerns of the Company. The term of the Notes issued range from 8-15 months, which would support the conclusion that the principal balance approximates their fair value given the short-term maturities of each Note. Finally, the Warrants issued in connection with the Notes were included akin to a “sweetener” in the offering as opposed to compensation for adjusting the interest rate or other key terms within the Convertible Term Loan Agreements. As such, the Company concluded that the principal balance of the Notes approximated their fair value.
The Warrants were initially measured at fair value and subsequent fair value measurement is not required as long as the instrument continues to be classified in equity. The proceeds from the transaction will be allocated between the Notes and Warrants based on the relative fair value method.
As a result of our fair value calculations, we recognized $928,779 and $515,763 of additional paid in capital associated with the value of the warrants and beneficial conversion, respectively, resulting in a total notes payable discount of $1,444,542. As such, $188,782 of debt discount amortization was recognized as interest expense during the three months ended June 30, 2021.
6
CRYOMASS TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| As of June 30, 2021 | ||||||||||||
| Previously Reported | Adjustments | Revised | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 431,306 | $ | - | $ | 431,306 | ||||||
| Accounts receivable, net | 540,000 | - | 540,000 | |||||||||
| Prepaid expenses | 20,000 | - | 20,000 | |||||||||
| Related party note receivable | 281,771 | - | 281,771 | |||||||||
| Assets held for sale, current | 7,171,434 | - | 7,171,434 | |||||||||
| Total current assets | 8,444,511 | - | 8,444,511 | |||||||||
| Intangible assets, net | 4,082,263 | - | 4,082,263 | |||||||||
| Goodwill | 1,190,000 | - | 1,190,000 | |||||||||
| Total assets | $ | 13,716,774 | $ | - | $ | 13,716,774 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable and accrued expenses | $ | 2,430,809 | $ | - | $ | 2,430,809 | ||||||
| Loans payable | - | - | - | |||||||||
| Taxes payable | 771 | - | 771 | |||||||||
| Liabilities held for sale, current | 735,746 | - | 735,746 | |||||||||
| Total current liabilities | 3,167,326 | - | 3,167,326 | |||||||||
| Notes payable | 6,024,662 | (1,091,547 | ) | 4,933,115 | ||||||||
| Deferred tax liability | 14,926 | - | 14,926 | |||||||||
| Total liabilities | 9,206,914 | (1,091,547 | ) | 8,115,367 | ||||||||
| Commitments and contingencies | ||||||||||||
| Shareholders’ equity: | ||||||||||||
| Preferred stock, $0.001 par value, 100,000 shares authorized, no shares issued and outstanding respectively | - | - | - | |||||||||
| Common stock, $0.001 par value, 500,000,000 shares authorized, 118,533,933 and 97,005,817 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively | 118,534 | - | 118,534 | |||||||||
| Additional paid-in capital | 23,748,304 | 1,280,329 | 25,028,633 | |||||||||
| Accumulated deficit | (19,356,978 | ) | (188,782 | ) | (19,545,760 | ) | ||||||
| Total shareholders’ equity | 4,509,860 | 1,091,547 | 5,601,407 | |||||||||
| Total liabilities and shareholders’ equity | $ | 13,716,774 | $ | - | $ | 13,716,774 | ||||||
7
CRYOMASS TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended June 30, 2021 | ||||||||||||
| Previously Reported | Adjustments | Revised | ||||||||||
| Operating expenses: | ||||||||||||
| Personnel costs | $ | 426,082 | $ | - | $ | 426,082 | ||||||
| Sales and marketing | 14 | - | 14 | |||||||||
| General and administrative | 1,979,323 | - | 1,979,323 | |||||||||
| Legal and professional fees | 232,026 | - | 232,026 | |||||||||
| Research and development | - | - | - | |||||||||
| Total operating expenses | 2,637,445 | - | 2,637,445 | |||||||||
| Loss from operations | (2,637,445 | ) | - | (2,637,445 | ) | |||||||
| Other income (expenses): | ||||||||||||
| Interest expense | (170,866 | ) | (188,782 | ) | (359,648 | ) | ||||||
| Gain on foreign exchange | (11,232 | ) | - | (11,232 | ) | |||||||
| Total other expenses | (182,098 | ) | (188,782 | ) | (370,880 | ) | ||||||
| Net loss from continuing operations, before taxes | (2,819,543 | ) | (188,782 | ) | (3,008,325 | ) | ||||||
| Income taxes | - | - | - | |||||||||
| Net loss from continuing operations | (2,819,543 | ) | (188,782 | ) | (3,008,325 | ) | ||||||
| Net loss from discontinued operations, net of tax | 238,686 | - | 238,686 | |||||||||
| Net loss | $ | (2,580,857 | ) | $ | (188,782 | ) | $ | (2,769,639 | ) | |||
| Comprehensive loss from discontinued operations | - | - | - | |||||||||
| Comprehensive loss | $ | (2,580,857 | ) | $ | (188,782 | ) | $ | (2,769,639 | ) | |||
| Net loss per common share: | ||||||||||||
| Loss from continuing operations - basic and diluted | $ | (0.03 | ) | $ | (0.00 | ) | $ | (0.03 | ) | |||
| Loss from discontinued operations - basic and diluted | $ | 0.00 | $ | - | $ | 0.00 | ||||||
| Loss per common share - basic and diluted | $ | (0.02 | ) | $ | (0.00 | ) | $ | (0.02 | ) | |||
| Weighted average common shares outstanding—basic and diluted | 106,008,685 | - | 106,008,685 | |||||||||
8
| For the Six Months Ended June 30, 2021 | ||||||||||||
| Previously Reported | Adjustments | Revised | ||||||||||
| Operating expenses: | ||||||||||||
| Personnel costs | $ | 799,796 | $ | - | $ | 799,796 | ||||||
| Sales and marketing | 14 | - | 14 | |||||||||
| General and administrative | 2,375,793 | - | 2,375,793 | |||||||||
| Legal and professional fees | 457,546 | - | 457,546 | |||||||||
| Research and development | - | - | - | |||||||||
| Total operating expenses | 3,633,149 | - | 3,633,149 | |||||||||
| Loss from operations | (3,633,149 | ) | - | (3,633,149 | ) | |||||||
| Other income (expenses): | ||||||||||||
| Interest expense | (373,475 | ) | (188,782 | ) | (562,257 | ) | ||||||
| Gain on foreign exchange | 23,538 | - | 23,538 | |||||||||
| Total other expenses | (349,937 | ) | (188,782 | ) | (538,719 | ) | ||||||
| Net loss from continuing operations, before taxes | (3,983,086 | ) | (188,782 | ) | (4,171,868 | ) | ||||||
| Income taxes | - | - | - | |||||||||
| Net loss from continuing operations | (3,983,086 | ) | (188,782 | ) | (4,171,868 | ) | ||||||
| Net loss from discontinued operations, net of tax | 355,302 | - | 355,302 | |||||||||
| Net loss | $ | (3,627,784 | ) | $ | (188,782 | ) | $ | (3,816,566 | ) | |||
| Comprehensive loss from discontinued operations | - | - | - | |||||||||
| Comprehensive loss | $ | (3,627,784 | ) | $ | (188,782 | ) | $ | (3,816,566 | ) | |||
| Net loss per common share: | ||||||||||||
| Loss from continuing operations - basic and diluted | $ | (0.04 | ) | $ | (0.00 | ) | $ | (0.04 | ) | |||
| Loss from discontinued operations - basic and diluted | $ | 0.00 | $ | - | $ | 0.00 | ||||||
| Loss per common share - basic and diluted | $ | (0.04 | ) | $ | (0.00 | ) | $ | (0.04 | ) | |||
| Weighted average common shares outstanding—basic and diluted | 102,176,247 | - | 102,176,247 | |||||||||
9
CRYOMASS TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
| Common Stock | Additional Paid-In | Common Stock to | Accumulated | Total Shareholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Be Issued | Deficit | Equity | |||||||||||||||||||
| Balance at March 31, 2021 | 98,497,636 | $ | 98,498 | $ | 19,596,807 | $ | - | $ | (16,776,121 | ) | $ | 2,919,184 | ||||||||||||
| Share issuance | 201,586 | 202 | - | - | - | 202 | ||||||||||||||||||
| Share issuance related to Cryocann asset purchase | 10,000,000 | 10,000 | 1,794,500 | - | - | 1,804,500 | ||||||||||||||||||
| Share issuance pursuant to employment agreements | 6,701,586 | 6,701 | 894,000 | - | - | 900,701 | ||||||||||||||||||
| Share issuance in exchange for extinguishment of debt | 2,500,000 | 2,500 | 505,902 | - | - | 508,402 | ||||||||||||||||||
| Share issuance in exchange for services | 633,125 | 633 | 56,867 | - | - | 57,500 | ||||||||||||||||||
| Stock-based compensation | - | - | 190,026 | - | - | 190,026 | ||||||||||||||||||
| Stock options issued and outstanding | - | - | 710,202 | - | - | 710,202 | ||||||||||||||||||
| Net loss | - | - | - | - | (2,580,857 | ) | (2,580,857 | ) | ||||||||||||||||
| Previously reported balance at June 30, 2021 | 118,533,933 | $ | 118,534 | $ | 23,748,304 | $ | - | $ | (19,356,978 | ) | $ | 4,509,860 | ||||||||||||
| Adjustments: | ||||||||||||||||||||||||
| Interest expense from debt discount amortization related to Beneficial Conversion Feature | - | - | - | - | (188,782 | ) | (188,782 | ) | ||||||||||||||||
| Beneficial Conversion Feature of Note Payable | - | - | 391,958 | - | - | 391,958 | ||||||||||||||||||
| Warrants issued in conjunction with Convertible Notes Payable | - | - | 888,371 | - | - | 888,371 | ||||||||||||||||||
| Adjusted balance at June 30, 2021 | 118,533,933 | $ | 118,534 | $ | 25,028,633 | $ | - | $ | (19,545,760 | ) | $ | 5,601,407 | ||||||||||||
10
CRYOMASS TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six Months Ended June 30, 2021 | ||||||||||||
| Previously Reported | Adjustments | Revised | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net loss | $ | (3,983,086 | ) | $ | (188,782 | ) | $ | (4,171,868 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities from continuing operations: | ||||||||||||
| Amortization of debt discount | 62,500 | 188,782 | 251,282 | |||||||||
| Fair value of common stock issued pursuant to service and advisory agreements | 27,200 | - | 27,200 | |||||||||
| Stock-based compensation expense | 2,074,547 | - | 2,074,547 | |||||||||
| Change in operating assets and liabilities: | ||||||||||||
| Accounts receivable | - | - | - | |||||||||
| Prepaid expenses | 40,475 | - | 40,475 | |||||||||
| Accounts payable and accrued expenses | 182,574 | - | 182,574 | |||||||||
| Taxes payable | - | - | - | |||||||||
| Net cash used in operating activities from continuing operations | (1,595,790 | ) | - | (1,595,790 | ) | |||||||
| Net cash provided by operating activities from discontinued operations | (452,828 | ) | - | (452,828 | ) | |||||||
| Net cash used in operating activities | (2,048,618 | ) | - | (2,048,618 | ) | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| Cash Payment for CryoCann asset purchase | (1,000,000 | ) | - | (1,000,000 | ) | |||||||
| Issuance of other payable related to CryoCann asset purchase | (1,247,684 | ) | - | (1,247,684 | ) | |||||||
| Net cash used in investing activities from continuing operations | (2,247,684 | ) | - | (2,247,684 | ) | |||||||
| Net cash used in investing activities from discontinued operations | (224,003 | ) | - | (224,003 | ) | |||||||
| Net cash used in investing activities | (2,471,687 | ) | - | (2,471,687 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Proceeds from issuance of common stock | 120,000 | - | 120,000 | |||||||||
| Repayment of loans payable, current | (412,359 | ) | - | (412,359 | ) | |||||||
| Proceeds from notes payable | 4,690,000 | - | 4,690,000 | |||||||||
| Related party note disbursement | (281,771 | ) | - | (281,771 | ) | |||||||
| Net cash provided by financing activities from continuing operations | 4,115,870 | - | 4,115,870 | |||||||||
| Net cash provided by financing activities from discontinued operations | 505,902 | - | 505,902 | |||||||||
| Net cash provided by financing activities | 4,621,772 | - | 4,621,772 | |||||||||
| Net decrease in cash from continuing operations | 272,396 | - | 272,396 | |||||||||
| Net decrease in cash from discontinued operations | (170,929 | ) | - | (170,929 | ) | |||||||
| Cash at beginning of period | 329,839 | - | 329,839 | |||||||||
| Cash at end of period | $ | 431,306 | $ | - | $ | 431,306 | ||||||
| Supplemental disclosure of cash flow information: | ||||||||||||
| Cash paid for interest | $ | 171,604 | $ | - | $ | 171,604 | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | - | |||||||||||
| Common stock issued pursuant to vesting of restricted stock units | $ | 2,940,603 | $ | - | $ | 2,940,603 | ||||||
11
Item 6. Exhibits
| Exhibit Number | Description | |
| 31.1* | Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer. | |
| 31.2* | Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer. | |
| 32.1* | Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer. | |
| 32.2* | Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer. | |
| 101.INS | Inline XBRL Instance Document. | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| * | Filed herewith. |
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CRYOMASS TECHNOLOGIES INC | |
| (Registrant) | |
| Dated: January 26, 2022 | |
| /s/ Christian Noel | |
| Christian Noel | |
| Chief Executive Officer and Director | |
| (Principal Executive Officer) | |
| Dated: January 26, 2022 | |
| /s/ Philip Mullin | |
| Philip Mullin | |
| Chief Financial Officer and Treasurer | |
| (Principal Financial Officer and Principal Accounting Officer) |
13