Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 14, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | Resonate Blends, Inc. | |
Entity Central Index Key | 0000897078 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2021 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 39,626,389 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 1,573,717 | $ 114,325 |
Advances to Suppliers | 54,599 | |
Inventories | 182,326 | |
Total current assets | 1,756,043 | 168,924 |
Fixed assets, net | 20,333 | |
Investment in equity method investee | 100 | 100 |
TOTAL ASSETS | 1,776,476 | 169,024 |
Current liabilities | ||
Accounts payable and accrued liabilities | 203,494 | 198,936 |
Due to related parties | 162,500 | 187,500 |
Convertible notes payable, net of discount | 1,595,000 | 504,793 |
Derivative liability | 522,783 | 274,134 |
Total current liabilities | 2,483,777 | 1,165,363 |
Total liabilities | 2,483,777 | 1,165,363 |
Stockholders' deficit | ||
Common stock; $0.0001 par value; 200,000,000 shares authorized; 38,652,887 and 29,769,627 shares issued and outstanding as of March 31, 2021 December 31, 2020, respectively. | 4,139 | 2,976 |
Additional paid-in capital | 21,447,817 | 20,101,480 |
Accumulated deficit | (22,159,457) | (21,100,995) |
Total Stockholders' deficit | (707,301) | (996,339) |
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | 1,776,476 | 169,024 |
Series B Preferred Stock [Member] | ||
Stockholders' deficit | ||
Preferred stock,10,000,000 shares authorized, $0.0001 par value | ||
Series C Preferred Stock [Member] | ||
Stockholders' deficit | ||
Preferred stock,10,000,000 shares authorized, $0.0001 par value | 200 | 200 |
Series D Preferred Stock [Member] | ||
Stockholders' deficit | ||
Preferred stock,10,000,000 shares authorized, $0.0001 par value |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 2,000,000 | 2,000,000 |
Preferred stock, shares outstanding | 2,000,000 | 2,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 38,652,887 | 29,769,627 |
Common stock, shares outstanding | 38,652,887 | 29,769,627 |
Series B Preferred Stock [Member] | ||
Preferred stock, shares authorized | 66,667 | 66,667 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | ||
Series C Preferred Stock [Member] | ||
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 2,000,000 | 2,000,000 |
Preferred stock, shares outstanding | 2,000,000 | 2,000,000 |
Series D Preferred Stock [Member] | ||
Preferred stock, shares authorized | 40,000 | 40,000 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 40,000 | 0 |
Preferred stock, shares outstanding | 40,000 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
REVENUES | ||
COST OF REVENUES | ||
Gross profit | ||
Operating expenses | ||
Advertising | 53,375 | 6,500 |
General and administrative expenses | 134,498 | 210,011 |
Legal and Professional fees | 330,599 | 193,400 |
Officer Compensation | 133,750 | |
Salaries and Related | 125,000 | 141,500 |
Office Rent | 790 | |
Total operating expenses | 778,012 | 551,411 |
Loss from operations | (778,012) | (551,411) |
Other Income (expense) | ||
Other Income | 312 | |
Interest expense | (21,530) | (6,997) |
Loss on change of derivative liability | (248,649) | |
Amortization of debt discount | (10,583) | |
Gain (loss) on settlement of derivative liabilities | 82,231 | |
Total other expense | (280,450) | 75,234 |
Income (loss) from investment in equity method investee | ||
NET INCOME (LOSS) from continuing operations | (1,058,462) | (476,177) |
NET INCOME (LOSS) from discontinued operations | (132,651) | |
NET INCOME (LOSS) | $ (1,058,462) | $ (608,828) |
Basic weighted average common shares outstanding | 31,085,610 | 17,872,298 |
Net Income (loss) per common share: basic and diluted | $ (0.03) | $ (0.03) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($) | Preferred Stock Series A [Member] | Preferred stock - Series C [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2019 | $ 400 | $ 200 | $ 1,715 | $ 18,570,178 | $ (19,159,721) | $ (587,228) |
Balance, shares at Dec. 31, 2019 | 4,000,000 | 2,000,000 | 17,133,936 | |||
Common stock issuance | $ 255 | 275,440 | 275,696 | |||
Common stock issuance, shares | 2,551,718 | |||||
Net income (loss) for the quarter | (608,828) | (608,828) | ||||
Balance at Mar. 31, 2020 | $ 400 | $ 200 | $ 1,970 | 18,845,618 | (19,768,549) | (920,360) |
Balance, shares at Mar. 31, 2020 | 4,000,000 | 2,000,000 | 19,685,654 | |||
Balance at Dec. 31, 2020 | $ 200 | $ 2,976 | 20,101,480 | (21,100,995) | (996,339) | |
Balance, shares at Dec. 31, 2020 | 2,000,000 | 29,769,627 | ||||
Common stock issuance | $ 1,163 | 1,721,338 | 1,722,501 | |||
Common stock issuance, shares | 11,633,260 | |||||
Net income (loss) for the quarter | (1,058,462) | (1,058,462) | ||||
Balance at Mar. 31, 2021 | $ 200 | $ 4,139 | $ 21,822,818 | $ (22,159,457) | $ (707,301) | |
Balance, shares at Mar. 31, 2021 | 2,000,000 | 41,402,887 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash Flows from Operating Activities | ||
Net Income (loss) | $ (1,058,462) | $ (476,177) |
Net loss from discontinued operations | (132,651) | |
Adjustments to reconcile | ||
Amortization and depreciation | 10,583 | |
Loss on derivative liability | 248,649 | |
Non cash interest expense | 16,142 | 5,468 |
Share professional fees/ compensation | 82,473 | 225,695 |
Changes in assets and liabilities | ||
Inventories | (182,326) | |
Advances to suppliers | (54,599) | |
Accounts payable and accrued expenses | 4,558 | 7,901 |
Due to Related party | (25,000) | 25 |
Net cash used by operating activities | (957,982) | (369,739) |
Net cash provided by discontinued operations | 41,879 | |
Net cash used in operations | (957,982) | (327,860) |
Cash Flows from investing activities | ||
Purchase of fixed assets | (20,333) | |
Net cash used by investing activities | (20,333) | |
Cash Flows from Financing Activities | ||
Proceeds from subscription | 1,347,500 | 50,000 |
Proceeds from convertible notes (net) | 1,595,000 | 151,960 |
Proceeds from notes payables | 130,075 | |
Payments on preferred stocks buy back | ||
Payments on convertible notes payable | (504,793) | (17,757) |
Net cash provided by financing activities | 2,437,707 | 314,278 |
Net increase in cash | 1,459,392 | (13,582) |
Cash, beginning of period | 114,325 | 53,139 |
Cash, end of period | 1,573,717 | 39,557 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 21,530 | 1,529 |
Cash paid for tax | ||
Non-Cash investing and financing transactions | ||
Conversion of debt for common stock | $ 306,858 | $ 1,500 |
Organization and Business Opera
Organization and Business Operations | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business Operations | NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS The Company Resonate Blends, Inc. formerly Textmunication Holdings, Inc. (the “Company”) was incorporated on in October 1984 in the State of Georgia as Brock Control Systems. Founded by Richard T. Brock, the Company was in the sales automation market and an early developer of enterprise customer management systems. The Company went public at the end of March of 1993. In February of 1996, the Company changed its name to Brock International Inc., and in March of 1998, the Company again changed our name to Firstwave Technologies, Inc. On January 20, 2020, Wais Asefi resigned as Chairman and as a member of our Board of Directors. Mr. Asefi’s resignation is in support of Resonate Blends strategic direction of becoming a pure play cannabis company. The Company does not believe that Mr. Asefi has any disagreements on matters relating to our operations, policies or practices. Also, on January 20, 2020, our Board of Directors appointed Geoffrey Selzer as our Chairman. In connection with the name change, the Company’s symbol was changed to “KOAN” that more resembles the Company’s new business focus. On May 22, 2020, Resonate Blends, Inc. (the “Company”) entered into a Stock Purchase Agreement (the “SPA”) with Wais Asefi, Nick Miniello, Juleon Asefi, and Curt Byers (collectively, the “Asefi Group”) to sell to the Asefi Group its subsidiary, Textmunication, Inc., a California corporation (“Textmunication”). Textmunication operates the Company’s SMS business activities. The Company will retain its cannabis operations based in Calabasas, California. The consideration for the sale of Textmunication consists of the cancellation by the Asefi Group of 4,822,029 shares of common stock (the “Shares”) of the Company. The Shares have a market value of $337,542, based on our last sales price of $0.07 per share as of May 26, 2020. Upon the cancellation of the Shares, the Company agreed to execute a general release in favor of Mr. Asefi. Also on May 22, 2020, the Company entered into a Separation and Release Agreement (the “Separation Agreement”) with Wais Asefi. Pursuant to the Separation Agreement, Mr. Asefi agreed to separate from all officer positions and as a director of the Company and to further accept the payment of $200,000 from the Company’s future fundraising as consideration of all debts outstanding under Mr. Asefi’s employment agreement with the Company. Mr. Asefi further agreed to cancel his 4,000,000 shares of Series A Preferred Stock and to transfer his 2,000,000 shares of Series C Preferred Stock to Geoffrey Selzer, the Company’s current CEO and Director. Mr. Asefi further released the Company of all claims. Also on May 22, 2020, Mr. Selzer signed a Voting Agreement and agreed to vote his newly acquired 2,000,000 shares of Series C Preferred Stock in favor of the sale of Textmunication to the Asefi Group. On May 22, 2020, Resonate Blends, Inc. (the “Company”) entered into a Stock Purchase Agreement (the “SPA”) with Wais Asefi, Nick Miniello, Juleon Asefi, and Curt Byers (collectively, the “Asefi Group”) to sell to the Asefi Group its subsidiary, Textmunication, Inc., a California corporation (“Textmunication”). Textmunication operates the Company’s SMS business activities. On July 20, 2020, the parties closed on the transactions contained in the SPA. The Asefi Group cancelled 4,822,029 shares of common stock (the “Shares”) of the Company. The Shares have a market value of $332,842, based on our last sales price of $0.07 per share as of May 26, 2020. The Company also executed a general release in favor of Mr. Asefi. Basis of Presentation The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted. Going concern These consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As of March 31, 2021, the Company has an accumulated deficit of $22,159,457. The company’s ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations. While the Company is expanding its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. These consolidated financial statements do not include any adjustments that might arise from this uncertainty. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. Aa of March 31, 2021, the company balances exceeded the federally insured limit by approximately $1,250,000 deposited under one institution. Management is making certain arrangements to mitigate this risk during the next quarter. Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined using the moving average method and net realizable value is the estimated selling price less costs of disposal in the ordinary course of business. The cost of inventories includes direct costs plus shipping and packaging materials. Revenue Recognition The Company did not have any revenues from continuing operations for the periods presented. The Company’s policy is that revenues will be recognized when control of the product is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Fair Value of Financial Instruments The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items. As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The three levels of the fair value hierarchy are described below: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs that is observable, either directly or indirectly, for substantially the full term of the asset or liability; Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). Financial assets and liabilities measured at fair value on a recurring basis are summarized below for the quarter ended March 31, 2021 and year ended December 31, 2020. As of March 31, 2021 Level 1 Level 2 Level 3 Total Liabilities Derivative Liabilities - - 522,783 522,783 As of December 31, 2020 Level 1 Level 2 Level 3 Total Liabilities Derivative Liabilities - - 274,134 274,134 Net income (loss) per Common Share Basic net income (loss) per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Property and equipment Property and equipment are stated at cost, less accumulated depreciation provided on the straight-line method over the estimated useful lives of the assets, which range from three to seven years. Expenditures for renewals or betterments are capitalized, and repairs and maintenance are charged to expense as incurred the cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts, and any gain or loss thereon is reflected in operations. Company policy capitalize property and equipment for cost over $1,000, asset acquired under $1,000 are charge to operations. Income Taxes Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. Because the Company has no net income, the tax benefit of the accumulated net loss has been fully offset by an equal valuation allowance. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Stock-Based Compensation The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered. The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees. In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over the period during which services are rendered. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 3 – RELATED PARTY TRANSACTIONS On May 22, 2020, the Company entered into a Separation and Release Agreement (the “Separation Agreement”) with Wais Asefi. Pursuant to the Separation Agreement, Mr. Asefi agreed to separate from all officer positions and as a director of the Company and to further accept the payment of $200,000 from the Company’s future fundraising as consideration of all debts outstanding under Mr. Asefi’s employment agreement with the Company. Mr. Asefi further agreed to cancel his 4,000,000 shares of Series A Preferred Stock and to transfer his 2,000,000 shares of Series C Preferred Stock to Geoffrey Selzer, the Company’s current CEO and Director. Mr. Asefi further released the Company of all claims. On May 22, 2020, the 4,000,000 shares of Series A Preferred Stock were returned to the Company’s transfer agent and cancelled and on May 22, 2020 the 2,000,000 shares of Series C Preferred Stock were transferred to Mr. Selzer. The parties to the Separation Agreement agreed to a payment schedule of $200,000 based on future monies raised by the Company - and not on a specific date – as follows: ● $12,500 when the initial $250,000 is raised by the Company; ● $12,500 when a total of $500,000 is raised by the Company; ● $10,000 when a total of $750,000 is raised by the Company; ● $35,000 when a total of $1,750,000 is raised by the Company; ● $35,000 when a total of $2,750,000 is raised by the Company; ● $35,000 when a total of $3,750,000 is raised by the Company; ● $35,000 when a total of $4,750,000 is raised by the Company; and ● $25,000 when a total of $5,750,000 is raised by the Company. The outstanding balances as of March 31, 2021 and December 31, 2020 are $162,500 and $187,500 respectively. |
Convertible Note Payable
Convertible Note Payable | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Convertible Note Payable | NOTE 4 – CONVERTIBLE NOTE PAYABLE Convertible notes payable consists of the following as of March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 Convertible notes face value $ 1,595,000 $ 517,544 Less: Discounts - (12,751 ) Net convertible notes $ 1,595.000 $ 504,793 The convertible notes as of March 31, 2021 are 8% Unsecured Convertible Promissory Notes from various accredited investors issued from January 1, 2021 to March 31, 2021 from the Company’s Reg D 506(c) private placement. All notes have a mandatory conversion into equity on the maturity date, which is January 2, 2022, or at a Qualified Financing (QF) of $5,000,000, whichever occurs first. The maturity date conversion pricing is the lesser of .10 or 75% of the VWAP with a 20-day lookback. A QF converts into equity at the lesser of $1.00 or 75% of the average selling price of the aggregate QF offering. The three months ended March interest accrued for the convertible notes payable $26,704 and $17,556 respectively. The Company accounts for the fair value of the conversion features of its convertible debt in accordance with ASC Topic No. 815-15 “Derivatives and Hedging; Embedded Derivatives” (“Topic No. 815-15”). Topic No. 815-15 requires the Company to bifurcate and separately account for the conversion features as an embedded derivative contained in the Company’s convertible debt. The Company is required to carry the embedded derivative on its balance sheet at fair value and account for’ any unrealized change in fair value as a component of results of operations. The Company values the embedded derivatives using the Black-Scholes pricing model. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 5 – COMMITMENTS AND CONTINGENCIES Office Lease On October 16, 2019, the Company signed a lease agreement that expires on thirty days’ notice. Rent expense was approximately 790 and $0 for the quarter ended March 31, 2021 and 2020, respectively. Executive Employment Agreement On October 25, 2019 the Company entered into Employment Agreements with the following persons: (i) Geoffrey Selzer as Chief Executive Officer (CEO) of the Company with an annual salary of $180,000; (ii) Pamela Kerwin as Chief Operating Officer (COO) of the Company with an annual salary of $120,000: and David Thielen as Chief Investment Officer (CIO) with an annual salary of $120,000. All are eligible for salary increases upon milestone achievements and other benefits. The Employment Agreement for the CEO has a term of 2 years and can’t be terminated without cause. Severance of six (6) weeks is available for termination of the COO and CIO without cause before one-year of service and eight (8) weeks after one-year of service. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 6 – STOCKHOLDERS’ EQUITY During the first quarter of 2021 the company issued a total of 11,633,260 to various accredited investors and issued automatic convertible notes for a total funds of $2,937,500. Common shares issued $ 1,347,500 Convertible promissory notes 1,590,000 Total $ 2,937,500 Fees paid to secure financing $ 252,586 |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2021 | |
Discontinued Operation, Additional Disclosures [Abstract] | |
Discontinued Operations | NOTE 7 – DISCONTINUED OPERATIONS On July 20, 2020, the Company finalized a Stock Purchase Agreement (the “SPA”) with Wais Asefi, Nick Miniello, Juleon Asefi, and Curt Byers (collectively, the “Asefi Group”) to sell to the Asefi Group its subsidiary, Textmunication, Inc., a California corporation (“Textmunication”). Textmunication operates the Company’s SMS business activities. The Company retained its cannabis operations based in Calabasas, California. The Company has accounted for this spinout as a discontinued operation and retroactively reclassified all previously presented financial information. The following summarizes the results of operations for Textmunication, Inc. for the three months ended March 31, 2020 2020 Revenues $ 305,590 Cost of Revenues (90,559 ) Operating expenses (347,682 ) Loss from operations of discontinued operations (132,651 ) |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 8 – SUBSEQUENT EVENTS On April 28, 2021, we executed an agreement to bring on Albert Richards, PhD, CFA, as an Advisor responsible for investment strategies and Mergers & Acquisition guidance. Mr. Richards is a 20-year veteran of the financial services industry. Before starting Alambic Investment Management to develop systematic stock selection strategies, he perfected the art of tearing apart financial statements to find value and opportunity. As a sell-side analyst and head of research within two large global investment banks, Bert became adept at identifying and quantifying the key drivers of equity valuation and company quality as well as the behavioral pitfalls that create market opportunities. Prior to becoming a founding partner of Alambic, Bert was Managing Director and Head of European Equity Research (1994-2000) for Citigroup (previously Salomon Brothers), European Internet and Global Technology strategist (2000-2003) and Small and Mid-Cap strategist (2003-2006). From 1986 to 1994 Mr. Richards worked in equity research for Credit Suisse First Boston in New York and London. Mr. Richards received his B.S. in Chemical Engineering from Iowa State University in 1981, an M.S. in Chemical Engineering from MIT in 1983, a Ph.D. degree in Chemical Engineering from MIT in 1986, and an M.B.A. from the Sloan School of Management (MIT), also in 1986. He was awarded the Chartered Financial Analyst. On May 11, 2021, we added Colleen Quinn as an Advisor in support of product research activities and consumer education programs. Ms. Quinn is an internationally celebrated clinical aromatherapist, cosmetic chemist, and researcher. She specializes in cannabis research, formulations and education. Committed to delivering functional therapeutic plant-based products, Ms. Quinn has travelled the globe on a quest for knowledge, innovation and the best quality ingredients from dedicated sustainable farmers in order to create therapeutic benefits in skin and health care. She is constantly pushing back the boundaries of her knowledge and skill. The DNA of plants is of consuming interest for her and she derives satisfaction from exploring the chemistry of new ingredient pairings which create new and enhanced synergistic impacts. She has a particular interest in educating on the health benefits of essential oils and cannabis in the treatment of a wide array of conditions. On May 22, 2020, the Company entered into a Separation and Release Agreement (the “Separation Agreement”) with Wais Asefi. Pursuant to the Separation Agreement, Mr. Asefi agreed to separate from all officer positions and as a director of the Company and to further accept the payment of $200,000 from the Company’s future fundraising as consideration of all debts outstanding under Mr. Asefi’s employment agreement with the Company. On May 13, 2021, we amended the Separation Agreement to state the parties desire to reduce the total amount payable to Wais Asefi from $200,000 USD to $142,500 USD. In addition to the earlier payments made to Mr. Asefi, a payment of $40,000 was made on May 14, 2021 with two additional payments due on June 27, 2021 for $40,000 and the final payment due on August 11, 2021 for $25,000. The final payment due on August 11, 2021 will settle this agreement in full. Further under the amendment, Mr. Asefi nominated Textmunication, Inc., our prior subsidiary, as the recipient of the funds due under the Separation Agreement. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Cash | Cash The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. Aa of March 31, 2021, the company balances exceeded the federally insured limit by approximately $1,250,000 deposited under one institution. Management is making certain arrangements to mitigate this risk during the next quarter. |
Inventories | Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined using the moving average method and net realizable value is the estimated selling price less costs of disposal in the ordinary course of business. The cost of inventories includes direct costs plus shipping and packaging materials. |
Revenue Recognition | Revenue Recognition The Company did not have any revenues from continuing operations for the periods presented. The Company’s policy is that revenues will be recognized when control of the product is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items. As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The three levels of the fair value hierarchy are described below: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs that is observable, either directly or indirectly, for substantially the full term of the asset or liability; Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). Financial assets and liabilities measured at fair value on a recurring basis are summarized below for the quarter ended March 31, 2021 and year ended December 31, 2020. As of March 31, 2021 Level 1 Level 2 Level 3 Total Liabilities Derivative Liabilities - - 522,783 522,783 As of December 31, 2020 Level 1 Level 2 Level 3 Total Liabilities Derivative Liabilities - - 274,134 274,134 |
Net Income (Loss) Per Common Share | Net income (loss) per Common Share Basic net income (loss) per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. |
Property and Equipment | Property and equipment Property and equipment are stated at cost, less accumulated depreciation provided on the straight-line method over the estimated useful lives of the assets, which range from three to seven years. Expenditures for renewals or betterments are capitalized, and repairs and maintenance are charged to expense as incurred the cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts, and any gain or loss thereon is reflected in operations. Company policy capitalize property and equipment for cost over $1,000, asset acquired under $1,000 are charge to operations. |
Income Taxes | Income Taxes Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. Because the Company has no net income, the tax benefit of the accumulated net loss has been fully offset by an equal valuation allowance. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered. The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees. In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over the period during which services are rendered. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis | Financial assets and liabilities measured at fair value on a recurring basis are summarized below for the quarter ended March 31, 2021 and year ended December 31, 2020. As of March 31, 2021 Level 1 Level 2 Level 3 Total Liabilities Derivative Liabilities - - 522,783 522,783 As of December 31, 2020 Level 1 Level 2 Level 3 Total Liabilities Derivative Liabilities - - 274,134 274,134 |
Convertible Note Payable (Table
Convertible Note Payable (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes Payable | Convertible notes payable consists of the following as of March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 Convertible notes face value $ 1,595,000 $ 517,544 Less: Discounts - (12,751 ) Net convertible notes $ 1,595.000 $ 504,793 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Schedule of Issued Automatic Convertible Notes | During the first quarter of 2021 the company issued a total of 11,633,260 to various accredited investors and issued automatic convertible notes for a total funds of $2,937,500. Common shares issued $ 1,347,500 Convertible promissory notes 1,590,000 Total $ 2,937,500 Fees paid to secure financing $ 252,586 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Discontinued Operation, Additional Disclosures [Abstract] | |
Schedule of Discontinued Operations | The following summarizes the results of operations for Textmunication, Inc. for the three months ended March 31, 2020 2020 Revenues $ 305,590 Cost of Revenues (90,559 ) Operating expenses (347,682 ) Loss from operations of discontinued operations (132,651 ) |
Organization and Business Ope_2
Organization and Business Operations (Details Narrative) - USD ($) | Jul. 20, 2020 | May 26, 2020 | May 22, 2020 | Mar. 31, 2021 | Dec. 31, 2020 |
Accumulated deficit | $ (22,159,457) | $ (21,100,995) | |||
Asefi Group [Member] | |||||
Number of cancellation shares of common stock | 4,822,029 | 4,822,029 | |||
Value of cancellation shares of common stock, | $ 332,842 | $ 337,542 | |||
Sales share per price | $ 0.07 | $ 0.07 | |||
Asefi Group [Member] | Separation and Release Agreement [Member] | |||||
Number of cancellation shares of common stock | 4,000,000 | ||||
Payment of debt | $ 200,000 | ||||
Stock issuance, shares | 2,000,000 | ||||
Mr. Selzer [Member] | Separation and Release Agreement [Member] | |||||
Payment of debt | $ 200,000 | ||||
Number of shares issued during period | 2,000,000 | ||||
Mr. Selzer [Member] | Voting Agreement [Member] | |||||
Number of shares issued during period | 2,000,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Cash insured limit | $ 1,250,000 |
Property and equipment excess capitalized cost | 1,000 |
Value of assets acquired | $ 1,000 |
Minimum [Member] | |
Estimated useful life | 3 years |
Maximum [Member] | |
Estimated useful life | 7 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Derivative Liabilities | $ 522,783 | $ 274,134 |
Level 1 [Member] | ||
Derivative Liabilities | ||
Level 2 [Member] | ||
Derivative Liabilities | ||
Level 3 [Member] | ||
Derivative Liabilities | $ 522,783 | $ 274,134 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Jul. 20, 2020 | May 26, 2020 | May 22, 2020 | Mar. 31, 2021 | Dec. 31, 2020 |
Due to related parties | $ 162,500 | $ 187,500 | |||
IPO [Member] | |||||
Stock issuance, shares | 12,500 | ||||
Amount of capital raised | $ 250,000 | ||||
IPO One [Member] | |||||
Stock issuance, shares | 12,500 | ||||
Amount of capital raised | $ 500,000 | ||||
IPO Two [Member] | |||||
Stock issuance, shares | 10,000 | ||||
Amount of capital raised | $ 750,000 | ||||
IPO Three [Member] | |||||
Stock issuance, shares | 35,000 | ||||
Amount of capital raised | $ 1,750,000 | ||||
IPO Four [Member] | |||||
Stock issuance, shares | 35,000 | ||||
Amount of capital raised | $ 2,750,000 | ||||
IPO Five [Member] | |||||
Stock issuance, shares | 35,000 | ||||
Amount of capital raised | $ 3,750,000 | ||||
IPO Six [Member] | |||||
Stock issuance, shares | 35,000 | ||||
Amount of capital raised | $ 4,750,000 | ||||
IPO Seven [Member] | |||||
Stock issuance, shares | 25,000 | ||||
Amount of capital raised | $ 5,750,000 | ||||
Series A Preferred Stock [Member] | |||||
Cancellation of common stock, shares | 4,000,000 | ||||
Series C Preferred Stock [Member] | |||||
Cancellation of common stock, shares | 2,000,000 | ||||
Asefi Group [Member] | |||||
Cancellation of common stock, shares | 4,822,029 | 4,822,029 | |||
Asefi Group [Member] | Separation and Release Agreement [Member] | |||||
Payment of debt | $ 200,000 | ||||
Cancellation of common stock, shares | 4,000,000 | ||||
Stock issuance, shares | 2,000,000 | ||||
Mr. Selzer [Member] | Separation and Release Agreement [Member] | |||||
Payment of debt | $ 200,000 | ||||
Number of shares issued during period | 2,000,000 |
Convertible Note Payable (Detai
Convertible Note Payable (Details Narrative) - Convertible Promissory Note [Member] - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Accrued interest | $ 17,556 | $ 26,704 |
Unsecured Debt [Member] | ||
Debt instrument, interest rate | 8.00% | |
Maturity date | Jan. 2, 2022 | |
Qualified financing amount | $ 5,000,000 | |
Debt conversion description | All notes have a mandatory conversion into equity on the maturity date, which is January 2, 2022, or at a Qualified Financing (QF) of $5,000,000, whichever occurs first. The maturity date conversion pricing is the lesser of .10 or 75% of the VWAP with a 20-day lookback. A QF converts into equity at the lesser of $1.00 or 75% of the average selling price of the aggregate QF offering. |
Convertible Note Payable - Sche
Convertible Note Payable - Schedule of Convertible Notes Payable (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
Convertible Note face value | $ 1,595,000 | $ 517,544 |
Less: Discounts | (12,751) | |
Net Convertible notes payable | $ 1,595,000 | $ 504,793 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Oct. 25, 2019 | Oct. 16, 2019 | Mar. 31, 2021 | Mar. 31, 2020 |
Description on lease | The Company signed a lease agreement that expires on thirty days' notice. | |||
Rent expense | $ 790 | $ 0 | ||
Annual salary | $ 133,750 | |||
Employment Agreement [Member] | ||||
Agreement, description | The Employment Agreement for the CEO has a term of 2 years and can't be terminated without cause. Severance of six (6) weeks is available for termination of the COO and CIO without cause before one-year of service and eight (8) weeks after one-year of service. | |||
Employment Agreement [Member] | Geoffrey Selzer, CEO [Member] | ||||
Annual salary | $ 180,000 | |||
Employment Agreement [Member] | Pamela Kerwin, COO [Member] | ||||
Annual salary | 120,000 | |||
Employment Agreement [Member] | David Thielen, CIO [Member] | ||||
Annual salary | $ 120,000 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) | 3 Months Ended |
Mar. 31, 2021USD ($)shares | |
Shares issue for conversion of debts, value | $ | $ 2,937,500 |
Accredited Investors [Member] | |
Number of shares issued during period, shares | shares | 11,633,260 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Issued Automatic Convertible Notes (Details) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Shares issue for conversion of debts, value | $ 2,937,500 |
Fees paid to secure financing | 252,586 |
Convertible Promissory Note [Member] | |
Shares issue for conversion of debts, value | 1,590,000 |
Common Stock [Member] | |
Shares issue for conversion of debts, value | $ 1,347,500 |
Discontinued Operations - Sched
Discontinued Operations - Schedule of Discontinued Operations (Details) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Discontinued Operation, Additional Disclosures [Abstract] | |
Revenues | $ 305,590 |
Cost of revenues | (90,559) |
Operating expenses | (347,682) |
Loss from operations of discontinued operation | $ (132,651) |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Separation and Release Agreement [Member] - Wais Asefi [Member] - USD ($) | Aug. 11, 2021 | Jun. 27, 2021 | Mar. 14, 2021 | Mar. 13, 2020 |
Payments of debt | $ 40,000 | $ 200,000 | ||
Subsequent Event [Member] | ||||
Payments of debt | $ 25,000 | $ 40,000 | ||
Maximum [Member] | ||||
Payments of debt | 200,000 | |||
Minimum [Member] | ||||
Payments of debt | $ 142,500 |