Item 1. Financial Statements.
SENTIENT BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
12,318
|
|
|
$
|
68,047
|
|
|
Advances to Supplier
|
|
|
—
|
|
|
|
154,893
|
|
|
Inventory
|
|
|
258,804
|
|
|
|
—
|
|
|
TOTAL CURRENT ASSETS
|
|
|
271,122
|
|
|
|
222,940
|
|
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS (net of Depreciation)
|
|
|
35,548
|
|
|
|
36,803
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
306,670
|
|
|
$
|
259,743
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
369,097
|
|
|
$
|
246,100
|
|
|
Notes Payable
|
|
|
120,758
|
|
|
|
120,758
|
|
|
Convertible notes payable
|
|
|
240,134
|
|
|
|
230,134
|
|
|
PPP Loan
|
|
|
231,500
|
|
|
|
231,500
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
961,489
|
|
|
|
828,492
|
|
|
STOCKHOLDERS’ DEFICIENCY
|
|
|
|
|
|
|
|
|
|
Preferred Stock – Par Value of $0.001; 25,000,000 shares authorized; 1,000,000 and 1,000,000 shares issued and outstanding as of March 31, 2021 and December 31, 2020
|
|
|
1,000
|
|
|
|
1,000
|
|
|
Common Stock - Par Value of $0.001; 500,000,000 shares authorized; 50,782,116 and 50,782,116 shares issued and outstanding as of March 31, 2021 and December 31, 2020
|
|
|
50,782
|
|
|
|
50,782
|
|
|
Additional paid-in capital
|
|
|
1,333,356
|
|
|
|
1,333,356
|
|
|
Accumulated deficit
|
|
|
(2,039,957
|
)
|
|
|
(1,953,887
|
)
|
|
TOTAL STOCKHOLDERS’ DEFICIENCY
|
|
|
(654,819
|
)
|
|
|
(568,749
|
)
|
|
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIENCY
|
|
$
|
306,670
|
|
|
$
|
259,743
|
|
The accompanying notes are an integral
part of these unaudited consolidated financial statements.
SENTIENT BRANDS HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED STATEMENTS OF OPERATIONS
|
|
|
The three months ended March 31,
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
REVENUES:
|
|
$
|
—
|
|
|
$
|
6,783
|
|
|
TOTAL REVENUES
|
|
|
—
|
|
|
|
6,783
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
|
|
3,958
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
—
|
|
|
|
2,825
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
Advertising and Marketing
|
|
|
—
|
|
|
|
30,852
|
|
|
Selling Expenses
|
|
|
—
|
|
|
|
9,974
|
|
|
General and Administrative
|
|
|
4,861
|
|
|
|
40,070
|
|
|
Legal and Professional
|
|
|
66,807
|
|
|
|
131,009
|
|
|
Office rent
|
|
|
40
|
|
|
|
14,477
|
|
|
Management Fees
|
|
|
21,000
|
|
|
|
61,849
|
|
|
Product development cost
|
|
|
112
|
|
|
|
18,689
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING EXPENSES
|
|
|
92,820
|
|
|
|
306,920
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
(92,820
|
)
|
|
|
(304,095
|
)
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX PROVISION
|
|
|
—
|
|
|
|
—
|
|
|
Other Income (Expenses)
|
|
|
6,750
|
|
|
|
(58,578
|
)
|
|
NET LOSS
|
|
$
|
(86,070
|
)
|
|
$
|
(362,673
|
)
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS PER COMMON SHARE – BASIC AND DILUTED
|
|
$
|
(0.002
|
)
|
|
$
|
(0.007
|
)
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
|
|
|
50,782,116
|
|
|
|
52,711,029
|
|
The accompanying notes are an integral
part of these unaudited condensed consolidated financial statements.
SENTIENT BRANDS HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS’ DEFICIENCY
For the Three months
ended March 31, 2021
|
|
|
Common Stock
|
|
Preferred Stock
|
|
Additional Paid in
|
|
Accumulated
|
|
|
|
March 31, 2021
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Total
|
|
Balance - December 31, 2020
|
|
|
50,782,116
|
|
|
$
|
50,782
|
|
|
|
1,000,000
|
|
|
$
|
1,000
|
|
|
$
|
1,333,356
|
|
|
$
|
(1,953,887
|
)
|
|
$
|
(568,749
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(86,070
|
)
|
|
|
(86,070
|
)
|
|
March 31,2021
|
|
|
50,782,116
|
|
|
$
|
50,782
|
|
|
|
1,000,000
|
|
|
$
|
1,000
|
|
|
$
|
1,333,356
|
|
|
$
|
(2,039,957
|
)
|
|
$
|
(654,819
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2019
|
|
|
55,825,021
|
|
|
$
|
55,825
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
857,754
|
|
|
$
|
(1,137,626
|
)
|
|
$
|
(224,047
|
)
|
|
Common stock issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share exchange
|
|
|
4,914,777
|
|
|
|
4,915
|
|
|
|
1,000,000
|
|
|
$
|
1,000
|
|
|
|
121,480
|
|
|
|
—
|
|
|
|
127,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
|
|
|
17,725,400
|
|
|
|
17,725
|
|
|
|
—
|
|
|
|
—
|
|
|
|
382,275
|
|
|
|
—
|
|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock cancelled
|
|
|
(28,800,471
|
)
|
|
|
(28,800
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
28,800
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(362,673
|
)
|
|
|
(362,673
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances March 31, 2020
|
|
|
49,664,727
|
|
|
$
|
49,665
|
|
|
|
1,000,000
|
|
|
$
|
1,000
|
|
|
$
|
1,390,309
|
|
|
$
|
(1,500,299
|
)
|
|
$
|
(59,325
|
)
|
The accompanying notes are an integral
part of these unaudited condensed consolidated financial statements.
SENTIENT BRANDS HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF
CASH FLOWS
|
|
|
Three Months ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
2020
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(86,070
|
)
|
|
$
|
(362,673
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation Expense
|
|
|
1,255
|
|
|
|
755
|
|
|
Accounts payable written off
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Loans receivables
|
|
|
—
|
|
|
|
17,611
|
|
|
Inventory
|
|
|
(258,804
|
)
|
|
|
—
|
|
|
Advances to supplier
|
|
|
154,893
|
|
|
|
(11,874
|
)
|
|
Accounts payable and accrued expenses
|
|
|
122,997
|
|
|
|
(40,000
|
)
|
|
NET CASH USED IN OPERATING ACTIVITIES
|
|
|
(65,729
|
)
|
|
|
(396,181
|
)
|
|
INVESTMENT ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Purchase of office equipment
|
|
|
|
|
|
|
|
|
|
Deposit
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN INVESTMENT ACTIVITIES
|
|
|
—
|
|
|
|
—
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Proceeds (Payment) of loan payable – other
|
|
|
10,000
|
|
|
|
(20,000
|
)
|
|
Net proceeds from issuance of common stock
|
|
|
—
|
|
|
|
410,685
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
10,000
|
|
|
|
390,685
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH
|
|
|
(55,729
|
)
|
|
|
(5,496
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH-BEGINNING OF PERIOD
|
|
|
68,047
|
|
|
|
53,129
|
|
|
CASH-END OF PERIOD
|
|
$
|
12,318
|
|
|
$
|
47,633
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash paid during the year for:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
The accompanying notes are an integral
part of these unaudited condensed consolidated financial statements.
SENTIENT BRANDS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2021
NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS
Business description
The financial statements presented are those of Sentient
Brands Holdings Inc. (the “Company”). The Company was incorporated under the laws of the State of California on March
22, 2004 and until October 2016 was in the business of media advertising and acquiring high-end computer and networking equipment
from resellers and end-users and then reselling this equipment at discounted prices.
On December 9, 2020, the Company filed a Certificate of Amendment
of Articles of Incorporation (the “Certificate”) with the State of California to (i) effect a forward stock split of
its outstanding shares of common stock at a ratio of 7 for 1 (7:1) (the “Forward Stock Split”), (ii) increase the number
of authorized shares of common stock from 50,000,000 shares to 500,000,000 shares, and (iii) effectuate a name change (the “Name
Change”). Fractional shares that resulted from the Forward Stock Split will be rounded up to the next highest number. As
a result of the Name Change, the Company’s name changed from “Intelligent Buying, Inc.” to “Sentient Brands
Holdings Inc.”. The Certificate was approved by the majority of the Company’s shareholders and by the Board of Directors
of the Company. The effective date of the Forward Stock Split and the Name Change was March 2, 2021.
In connection with the above, the Company filed an Issuer Company-Related
Action Notification Form with the Financial Industry Regulatory Authority. The Forward Stock Split and the Name Change was implemented
by FINRA on March 2, 2021. Our symbol on OTC Markets was INTBD for 20 business days from March 2, 2021 (the “Notification Period”).
Our new CUSIP number is 81728V 102. As a result of the name change, our symbol was changed to “SNBH” following the Notification
Period. All share and per share information has been retroactively adjusted to reflect this forward stock split.
In addition, on January 29, 2021, the Company, merged with
and into its wholly owned subsidiary, Sentient Brands Holdings Inc., a Nevada corporation, pursuant to an Agreement and Plan of
Merger between Sentient Brands Holdings Inc., a California corporation, and Sentient Brands Holdings Inc., a Nevada corporation.
Sentient Brands Holdings Inc., a Nevada corporation, continued as the surviving entity of the migratory merger. Pursuant to the
migratory merger, the Company changed its state of incorporation from California to Nevada and each share of its common stock converted
into one share of common stock of the surviving entity in the migratory merger. No dissenters’ rights were exercised by any
of the Company’s stockholders in connection with the migratory merger.
Following the consummation of the migratory merger, the articles
of incorporation and bylaws of the Nevada corporation that was newly-created as a wholly owned subsidiary of the Company became
the articles of incorporation and bylaws for the surviving entity in the migratory merger.
NOTE 2 – BASIS OF PRESENTATION AND GOING CONCERN
Basis of Presentation
These interim consolidated financial statements of the Company
and its subsidiaries are unaudited. In the opinion of management, all adjustments (consisting of normal recurring accruals) and
disclosures necessary for a fair presentation of these interim condensed consolidated financial statements have been included.
The results reported in the unaudited condensed consolidated financial statements for any interim periods are not necessarily indicative
of the results that may be reported for the entire year. The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all
information and footnotes necessary for a complete presentation of financial statements in conformity with accounting principles
generally accepted in the United States (“U.S. GAAP”). The Company’s unaudited condensed consolidated financial
statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have
been eliminated in consolidation.
Certain information and footnote disclosures normally included
in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These unaudited
condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements
and notes thereto included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2020 filed with the Securities
and Exchange Commission on April 30, 2021.
Going concern
The Company currently has limited operations. These unaudited
consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates,
among other things, the realization of assets and the satisfaction of liabilities in the normal course of business.
As reflected in the accompanying unaudited consolidated financial
statements, the Company had an accumulated deficit of $2,039,957 at March 31, 2021 and
had a net loss and net cash flow used in operating activities of $ 65,729 and $396,181 for the three months ended March 31, 2021 and
2020, respectively. The Company has a limited operating history, and its continued growth is dependent upon the continuation of selling
its products; hence generating revenues and obtaining additional financing to fund future obligations and pay liabilities arising from
normal business operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The
ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital, implement
its business plan, and generate significant revenues. There are no assurances that the Company will be successful in its efforts to generate
significant revenues, maintain sufficient cash balance or report profitable operations or to continue as a going concern. The Company
plans on raising capital through the sale of equity or debt instruments to implement its business plan. However, there is no assurance
these plans will be realized and that any additional financings will be available to the Company on satisfactory terms and conditions,
if any.
The accompanying unaudited condensed consolidated financial
statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts
and classification of liabilities that may result should the Company be unable to continue as a going concern.
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES
Uses of estimates in the preparation of financial statements
The preparation of financial statements in conformity with
generally accepted accounting principles accepted in the United States of America (“GAAP”) 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 of the financial statements and the reported amounts of net revenue and expenses during each reporting period. Actual
results could differ from those estimates.
Cash
The Company considers all short-term highly liquid investments
with an original maturity date of purchase of three months or less to be cash equivalents.
Revenue Recognition
During the three months ended March 31, 2021 our revenue
recognition policy was in accordance with ASC 605, “Revenue Recognition”, which requires the recognition of sales following
five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine
the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue
when (or as) the entity satisfies a performance obligation.
Net loss per common share – basic and diluted
Authoritative guidance on Earnings per Share requires dual
presentation of basic and diluted earnings or loss per share (“EPS”) for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of
the diluted EPS computation. Basic EPS excludes dilution; diluted EPS reflects the potential dilution that could occur if securities
or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock
that then shared in the earnings of the entity.
Basic loss per share is computed by dividing net loss applicable
to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share reflects
the potential dilution that could occur if dilutive securities and other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company, unless the effect
is to reduce a loss or increase earnings per share.
Stock-based compensation
In accordance with ASC No. 718, Compensation – Stock
Compensation (“ASC 718”), the Company measures the compensation costs of share-based compensation arrangements based
on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required
to provide services.
During
the three months ended March 31, 2021 and 2020, there were no stock based awards issued or outstanding.
Fair value of financial instruments
We value our financial assets and liabilities on a recurring
basis using the fair value hierarchy established in Accounting Standards Codification (“ASC”) 820, Fair Value Measurements
and Disclosures.
ASC 820 describes three levels of inputs
that may be used to measure fair value, as follows:
Level 1 input, which include
quoted prices in active markets for identical assets or liabilities.
Level 2 inputs, which include
observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities; quoted prices for identical
or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the asset or liability; and
Level 3 inputs, which include
unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying
asset or liability. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models,
discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.
Income Taxes
The Company’s income tax benefit differs from the expected
income tax benefit by applying the U.S. Federal statutory rate of 21% to net income (loss) as follows:
|
Deferred Tax assets
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|
As of March 31, 2021
|
|
As of December 31,2020
|
|
Net operating losses
|
|
$
|
427,809
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|
|
$
|
358,200
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|
|
Less: Valuation Allowance
|
|
|
(427,809
|
)
|
|
|
(358,200
|
|
|
Deferred Tax assets – net
|
|
$
|
—
|
|
|
$
|
—
|
|
NOTE 4. 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.
As of March 31, 2021 inventories approximately $258,803 are
in transit to our storage and fulfilment center located at CN Logistics US, 3 Borinski Road Lincoln Park, NJ 07035.
NOTE 5. CONVERTIBLE NOTES PAYABLE
On December 2, 2020, we issued a promissory
note to an accredited investor in consideration for $50,000 with interest at the rate of 10% per annum from the issue date, and
also issued to the accredited investor a common stock purchase warrant (the “Warrant”) to acquire 400,000 shares of
common stock. The Warrant is exercisable for a period of five years at an exercise price of $0.10. This note will mature on the
earlier of (i) closing of the next equity financing of at least $1,000,000 or (ii) September 2, 2021 (maturity date). The holder,
at its sole election, may convert the interest accrued on this note into shares of stock of the company at $0.20 per share.
On December 3, 2020, we issued a convertible
debenture to an accredited investor in consideration for $50,000 with interest at the rate of 10% per annum from the issue date,
and also issued to the accredited investor a common stock purchase warrant (the “Warrant”) to acquire 400,000 shares
of common stock. The Warrant is exercisable for a period of five years at an exercise price of $0.10.. This debenture is convertible
at the election of the holder into shares of common stock at the price per share equal to 120% of the market price of the Company’s
listed common stock on the date of such conversion.
On January 3, 2020, specific terms were
reached on the remaining $150,046 of such advances pursuant to an unsecured demand note entered into between the Company and Pure
Energy 714 LLC, the terms call for repayment of the advances including interest on any unconverted principal amount at a rate of
12% per annum and a repayment date on or before June 3, 2021 at the rate of 12% per annum. If the demand note is unpaid by June
3, 2021, default interest of 3% monthly will apply. An additional $10,000 was received on March 16, 2021 but subsequently returned
in April 20,2021.
The Company has accrued interest of $43,741on these notes.
NOTE 6. PPP Loan
On April 18, 2020, the Company, through
its subsidiary Jaguaring Company, entered into Paycheck Protection Program Promissory Note and Agreement with KeyBank National
Association, pursuant to which the Company received loan proceeds of $231,500 (the “PPP Loan”). The PPP Loan was made
under, and is subject to the terms and conditions of, the PPP which was established under the CARES Act and is administered by
the U.S. Small Business Administration. The term of the PPP Loan is two years with a maturity date of April 18, 2022 and contains
a favorable fixed annual interest rate of 1.00%. Payments of principal and interest on the PPP Loan will be deferred for the first
six months of the term of the PPP Loan until November 18, 2020. Principal and interest are payable monthly and may be prepaid by
the Company at any time prior to maturity with no prepayment penalties. Under the terms of the CARES Act, recipients can apply
for and receive forgiveness for all or a portion of loans granted under the PPP. Such forgiveness will be determined, subject to
limitations, based on the use of loan proceeds for certain permissible purposes as set forth in the PPP, including, but not limited
to, payroll costs (as defined under the PPP) and mortgage interest, rent or utility costs (collectively, “Qualifying Expenses”),
and on the maintenance of employee and compensation levels during the eight-week period following the funding of the PPP Loan.
The Company has been using the proceeds of the PPP Loan, for Qualifying Expenses. However, no assurance is provided that the Company
will be able to obtain forgiveness of the PPP Loan in whole or in part.
NOTE 7. STOCKHOLDERS’ (DEFICIENCY)
Preferred stock
The Company is authorized to issue 25,000,000 shares of Preferred
Stock, par value $.001 per share. As of March 31, 2021 and December 30, 2020, 1,000,000 shares of Series B Preferred Stock were issued
and outstanding.
For five years from the date of issuance, the Series B Preferred
Stock shall have the number of votes equal to fifty-one percent (51%) of the cumulative total vote of all classes of stock of the
Corporation, common or preferred, whether such other class of stock is voting as a single class or the other classes of stock are
voting together as a single group, and with respect to such vote, such holder shall have full voting rights and powers equal to
the voting rights and powers of the holders of Common Stock, or any other class of preferred stock, and shall be entitled to notice
of any stockholders’ meeting in accordance with the bylaws of the Corporation, and shall be entitled to vote, together with
holders of Common Stock and any class of preferred stock entitled to vote, with respect to any question upon which holders of Common
Stock or any class of preferred stock have the right to vote. After five years, the Series B Preferred Stock shall automatically,
and without further action by the Corporation, be cancelled and void, and may not be reissued.
Common stock
On March 3, 2021 The forward stock split of its outstanding shares
of common stock at a ratio of 7 for 1 took effect. The number of authorized shares of common stock from 50,000,000 shares to 500,000,000
shares. All share and per share information has been retroactively adjusted to reflect this forward stock split.
In addition, on January 29, 2021, the Company, merged with
and into its wholly owned subsidiary, Sentient Brands Holdings Inc., a Nevada corporation, pursuant to an Agreement and Plan of
Merger between Sentient Brands Holdings Inc., a California corporation, and Sentient Brands Holdings Inc., a Nevada corporation.
Sentient Brands Holdings Inc., a Nevada corporation, continued as the surviving entity of the migratory merger. Pursuant to the
migratory merger, the Company changed its state of incorporation from California to Nevada and each share of its common stock converted
into one share of common stock of the surviving entity in the migratory merger. No dissenters’ rights were exercised by any
of the Company’s stockholders in connection with the migratory merger.
NOTE 8. COMMITMENTS AND CONTINGENCIES
On December 26, 2019, the Company entered into an Employment Agreement
(the “Furlan Agreement”) with George Furlan pursuant to which Mr. Furlan was appointed as the Company’s Chief Operating
officer. The Furlan Agreement provides for a base salary of $60,000 per year with such base salary being increased to $120,000 per year
beginning on the one (1) year anniversary of the completion of a financing by the Company of no less than $3,000,000. The Employment Agreement
also contains an annual bonus based on the amount of revenue generated by the Company from the sale of certain products. The Employment
Agreement has a term of three years from the effective date. Pursuant to the Employment Agreement, the Company and Mr. Furlan also entered
into a into a Restricted Stock Agreement to purchase 718,403 shares of the Company’s Common Stock.
NOTE 9. SUBSEQUENT EVENTS
On April 27, 2021 (the “Issuance Date”),
Sentient Brands Holdings Inc. (the “Company”) entered into a Securities Purchase Agreement with an accredited investor (the
“April 2021 Investor”) providing for the sale by the Company to the April 2021 Investor of a 10% Senior Secured Convertible
Promissory Note in the principal amount of $315,789 (the “April 2021 Note”, and, the “Financing”). The principal
amount of the April 2021 Note includes an Original Issue Discount of $15,789, resulting in $300,000 in total proceeds received by the
Company in the Financing. The April 2021 Note is convertible at the option of the April 2021 Investor into shares of common stock of
the Company at $0.40 per share. In addition to the April 2021 Note, the April 2021 Investor also received 250,000 shares of common stock
of the Company (the “Commitment Shares”), and a common share purchase warrant (the “April 2021 Warrant”, and
together with the April 2021 Note and the Commitment Shares, the “Securities”) to acquire 500,000 shares of common stock
of the Company. The April 2021 Warrant is exercisable for five years at an exercise price of $0.60. The closing of the Financing in the
amount of $300,000 occurred on April 27, 2021.
The company has evaluated subsequent events for recognition
and disclosure through May 17, 2021 which is the date the financial statements were available to be issued. No other matters were
identified affecting the accompanying financial statements and related disclosures.
ITEM 2. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following
discussion and analysis of the results of operations and financial condition of Sentient Brands Holdings Inc. for the three months
ended March 31, 2021 and 2020 should be read in conjunction with the Sentient Brands Holdings Inc. unaudited condensed consolidated
financial statements and the notes thereto contained elsewhere in this report. Our discussion includes forward-looking statements
based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions.
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 set forth under the Risk Factors, Special Note Regarding Forward-Looking Statements
and Business sections in our Form 10-K as filed with the Securities and Exchange Commission on April 15, 2021. 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 .
Unless otherwise indicated, references
to the “Company,” “us” or “we” refer to Sentient Brands Holdings Inc. and its subsidiaries.
Overview
Sentient Brands is a next-level product
development and brand management company with a focus on building innovative brands in the Luxury and Premium Market space. The
Company has a Direct-to Consumer business model focusing on the integration of CBD, wellness and beauty for conscious consumers.
The Company incorporates an omnichannel approach in its marketing strategies to ensure that its products are accessible across
both digital and retail channels. The Company develops and nurtures Lifestyle Brands with carefully thought-out ingredients, packaging,
fragrance and design. Sentient Brands’ leadership team has extensive experience in building world-class brands such as Hugo
Boss, Victoria’s Secret, Versace, and Bath & Body Works. The Company is focused on two key market segments targeting:
wellness and responsible luxury, which the Company believes represent unique opportunities for its Oeuvre product line. Sentient
Brands intends to leverage its in-house innovation capabilities to launch new products that “disrupt” adjacent product
categories. We plan to grow by leveraging our deep connections within our existing network and attract consumers through increased
brand awareness and investing in unique social media marketing. The Company’s goal is to create customer experiences that
have sustainable resonance with consumers and consistently implement strategies that result in long-term profit growth for our
investors.
Principal Products and Services
The Company currently has one main product
line and two in development. The Company’s current active product line is Oeuvre.
Ouevre
Oeuvre - ”A Body
of Art” – is the next product line we plan to launch in Spring 2021 and is intended to be a next generation
CBD luxury skin care line and lifestyle brand. Planned product offerings under this line include:
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Purifying
Exfoliator
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Replenishing Oil
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Ultra-Nourishing Face
Cream
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Revitalizing Eye Cream
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High Potency Tincture
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CBD infused and scented
candles
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CBD infused women’s
fragrance
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Drawing inspiration from petals, leaves,
roots, minerals and gemstones, Ouevre celebrates the artistry of well-being and beauty, inside and out. Ouevre products
are non-toxic, ungendered products made with zero GMO, retinyl palmitate, petroleum, mineral oil, parabens, sulfates, and synthetic
colors.
Ouevre Target
Market
Ouevre is planned to be
our luxury segment product line. With Ouevre, we are targeting a large and influential consumer class of individuals
that are “HENRYs” – High-Earners-Not-Rich-Yet. They have discretionary income and are highly likely to be wealthy
in the future. HENRYs earn between $100,000 and $250,000 annually. They are digitally fluent, love online shopping online, and
are big discretionary spenders. Therefore, ouvreskincare.com offers inclusive, aspirationally affordable luxury products positioned
for them.
We believe the benefit of onboarding
this demographic to Ouevre are twofold: securing valuable present customers and building relationships and business
with those most likely to be amongst the most affluent consumers in the future. By the year 2025, Millennials and Generation Z
will represent more than 40% of the overall luxury goods market, according to a 2019 report published by Boston Consulting Group.
We seek to target such group for the sale of our Ouevre products.
On social media, we will target the
following audiences for the Ouevre brand:
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Women aged 30+
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Luxury Skincare Enthusiasts
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CBD Enthusiasts
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Crystal Lovers
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Wellness Audience
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Makeup Artists
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Art
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Beauty
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Influencers
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Bloggers
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Stores
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Future Product Lines
The Company has two product lines planned
for introduction by the end of 2021:
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F.A.M.E. - a millennial, premium priced dual-gender lifestyle brand
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LevelLab – a premium priced millennial fitness/wellness/performance product line
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LevelLab
We intend LevelLab to
be a premium priced millennial fitness, wellness, and performance product line. Intended products include:
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Therapeutic recovery cream that provides heating and cooling effects to sooth pain, containing isolate hemp CBD, 100% THC free.
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LevelLab Bundle including daily facial cleanser, hyaluronic and vitamin C moisturizer, and retinol night cream.
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LevelLab Active Hydration – supplement for mineral replenishment and optimal hydration for before, during, and after workout.
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LevelLab Fuel – a recovery drink containing a unique combination of CBD and amino acids.
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LevelLab Target Market
We plan to
target Millennials (generally ages 23 – 38 as of 2019) for our LevelLab product line. These consumers, who
came of age in a hyper-connected, digital world, have unique shopping preferences, spend their time in different mediums, and respond
to a different style of messaging than generations past. This evolution in consumer behavior accompanies a significant transition
of purchasing power to the Millennial generation. According to the 2015 U.S. Census Bureau, Millennials accounted for more than
25% of the U.S. population, exceeding the number of baby boomers and making it the largest percentage of the workforce in the United
States. Further, according to the U.S. Bureau of Labor Statistics, people born after 1981, including Millennials and Generation
Z, accounted for approximately $1.7 trillion or 22% of the nation’s total consumer expenditure in 2017. We expect this number
to significantly increase as Millennials enter their peak earning years and an increasing percentage of Generation Z joins the
workforce.
F.A.M.E
F.A.M.E. will merge health
and wellness with art and entertainment to curate unique and impactful products, content, and activities for a global community.
As stated in a 2017 article on the Wellness industry published by Forbes, 72% of millennials would rather spend money on experiences
than on material goods. With F.A.M.E., we intend to give them both. Products and offerings under the F.A.M.E. brand
name are currently under development.
F.A.M.E Target
Market
The target market for F.A.M.E. is
also Millennials. We intend to market F.A.M.E. to premium consumers – both male and female – in the
Millennial market.
Suppliers
The Company has several third-party
suppliers and is not reliant on any particular supplier for its product offerings. Many of our products contain CBD derived from
industrial hemp or cannabis which we get from third parties. Hemp cultivation can be impacted by weather patterns and other natural
events, but we have not faced any supply issues to date with obtaining raw materials for our products.
Distribution
We have two primary methods through
which we sell our products:
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1.
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Direct to Consumer online e-commerce platform
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2.
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Wholesale partners
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Marketing Strategy
We support brand launches with social
media & marketing campaigns, including influencers. Leading marketing and PR firms were engaged by the Company to spearhead
the launch of Oeuvre, and will likely be engaged for our future planned brand launches.
Sentient Brands Growth Strategies:
In order to grow our company, Sentient
Brands intends to:
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Create a leading consumer packaged goods company;
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Partner with established distributers and retailers;
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Focus on operational excellence and product quality; and
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Establish ongoing communication with the capital markets
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Sentient Brand’s mission is to
create the next generation of CBD consumer brands. The Company believes it has assembled a highly accomplished team of branding
and marketing professionals who have successfully launched and operated major brands in the consumer market space, which the Company
believes will give it a competitive edge in the industry.
Customers
The company plans to launch its Oeuvre
product line in the second quarter of 2021. The Company’s sales channels will be direct to consumer and wholesale.
Intellectual Property
The Company’s Oeuvre brand is
trademarked in the United States with a European trademark application pending. The Company expects to rely on trade secrets
and proprietary know-how protection for our confidential and proprietary information, however we have not yet taken security
measures to protect this information.
Competition
We have experienced, and expect to continue
to experience, intense competition from a number of companies.
The current market for hemp-derived
CBD products is highly competitive, consisting of publicly-trade and privately-owned companies, many of which are more adequately
capitalized than the Company. The Company’s current publicly listed competitors include market leader Charlotte’s Web,
CV Sciences, Elixinol, Abacus, and Green Growth Brands, and private companies such as BeBoe, St. Jane. Mary’s, Lord Jones,
Bluebird Folium Biosciences, Global Cannabinoids, and Pure Kana. In addition, both public and private U.S. multi-state operators
and Canadian LP’s have entered the hemp-derived CBD consumer market or have announced plans to do so. This market is highly
fragmented, and according to the Hemp Business Journal, the vast majority of industry participants generate less than ~$2 million
of annual revenue. We see this an opportunity to get a foothold in the CBD consumer marketplace and build our company as a major
brand name in this space.
Industry Overview
The market for products based on extracts
of hemp and cannabis, is expected to grow substantially over the coming years. Arcview Market Research and BDS Analytics are forecasting
the combined market to reach nearly $45 billion within the U.S. in the year 2024. While much of this market is expected to be comprised
of high potency THC-based products that will be sold in licensed dispensaries, the research firms are still predicting the market
to grow to $5.3 billion, $12.6 billion, and $2.2 billion by 2024 for the product areas of low THC cannabinoids, THC-free Cannabinoids
and pharmaceutical cannabinoids, respectively.
We believe the recent passage of the
2018 Farm Bill will allow the Company to expand its marketplace opportunities. On December 20, 2018, President Donald J. Trump
signed into law the Agriculture Improvement Act of 2018, otherwise known as the “Farm Bill.” Prior to its passage,
hemp, a member of the cannabis family, and hemp-derived CBD were classified as a Schedule I controlled substances, and so illegal
under the CSA. Under Section 10113 of the Farm Bill, hemp cannot contain more than 0.3 percent THC. THC refers to the chemical
compound found in cannabis that produces the psychoactive “high” associated with cannabis. Any cannabis plant that
contains more than 0.3 percent THC would be considered non-hemp cannabis—or marijuana—under federal law and would thus
face no legal protection under this new legislation and would be an illegal Schedule 1 drug under the CSA.
With the passage of the Farm Bill, hemp
cultivation is broadly permitted. The Farm Bill explicitly allows the transfer of hemp-derived products across state lines for
commercial or other purposes. It also puts no restrictions on the sale, transport, or possession of hemp-derived products, so long
as those items are produced in a manner consistent with the law.
Recent Developments
Covid-19
A novel strain of coronavirus (“Covid-19”)
emerged globally in December 2019 and has been declared a pandemic. The extent to which Covid-19 will impact our customers, business,
results and financial condition will depend on current and future developments, which are highly uncertain and cannot be predicted
at this time. While the Company’s day-to-day operations beginning March 2020 have been impacted, we have suffered less immediate
impact as most staff can work remotely and can continue to develop our product offerings.
On April 18, 2020, the Company, through
its subsidiary Jaguaring Company, entered into Paycheck Protection Program Promissory Note and Agreement with KeyBank National
Association, pursuant to which the Company received loan proceeds of $231,500 (the “PPP Loan”). The PPP Loan was made
under, and is subject to the terms and conditions of, the PPP which was established under the CARES Act and is administered by
the U.S. Small Business Administration. The term of the PPP Loan is two years with a maturity date of April 18, 2022 and contains
a favorable fixed annual interest rate of 1.00%. Payments of principal and interest on the PPP Loan will be deferred for the first
six months of the term of the PPP Loan until November 18, 2020. Principal and interest are payable monthly and may be prepaid by
the Company at any time prior to maturity with no prepayment penalties. Under the terms of the CARES Act, recipients can apply
for and receive forgiveness for all or a portion of loans granted under the PPP. Such forgiveness will be determined, subject to
limitations, based on the use of loan proceeds for certain permissible purposes as set forth in the PPP, including, but not limited
to, payroll costs (as defined under the PPP) and mortgage interest, rent or utility costs (collectively, “Qualifying Expenses”),
and on the maintenance of employee and compensation levels during the eight-week period following the funding of the PPP Loan.
The Company has been using the proceeds of the PPP Loan, for Qualifying Expenses. However, no assurance is provided that the Company
will be able to obtain forgiveness of the PPP Loan in whole or in part.
Forward Stock Split / Increase of
Authorized / Name Change / Migratory Merger
On December 9, 2020, the Company filed
a Certificate of Amendment of Articles of Incorporation (the “Certificate”) with the State of California to (i) effect
a forward stock split of its outstanding shares of common stock at a ratio of 7 for 1 (the “Forward Stock Split”),
(ii) increase the number of authorized shares of common stock from 50,000,000 shares to 500,000,000 shares, and (iii) effectuate
a name change (the “Name Change”). Fractional shares that resulted from the Forward Stock Split will be rounded up
to the next highest number. As a result of the Name Change, the Company’s name changed from “Intelligent Buying, Inc.”
to “Sentient Brands Holdings Inc.”. The Certificate was approved by the majority of the Company’s shareholders
and by the Board of Directors of the Company. The effective date of the Forward Stock Split and the Name Change was March 2, 2021.
In connection with the above, the Company
filed an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority. The Forward Stock Split
and the Name Change was implemented by FINRA on March 2, 2021. Our symbol on OTC Markets was INTBD for 20 business days from March
2, 2021 (the “Notification Period”). Our new CUSIP number is 81728V 102. As a result of the name change, our symbol
was changed to “SNBH” following the Notification Period.
In addition, on January 29, 2021, the
Company, merged with and into its wholly owned subsidiary, Sentient Brands Holdings Inc., a Nevada corporation, pursuant to an
Agreement and Plan of Merger between Sentient Brands Holdings Inc., a California corporation, and Sentient Brands Holdings Inc.,
a Nevada corporation. Sentient Brands Holdings Inc., a Nevada corporation, continued as the surviving entity of the migratory merger.
Pursuant to the migratory merger, the Company changed its state of incorporation from California to Nevada and each share of its
common stock converted into one share of common stock of the surviving entity in the migratory merger. No dissenters’ rights
were exercised by any of the Company’s stockholders in connection with the migratory merger.
Following the consummation of the migratory
merger, the articles of incorporation and bylaws of the Nevada corporation that was newly-created as a wholly owned subsidiary
of the Company became the articles of incorporation and bylaws for the surviving entity in the migratory merger.
The foregoing
information is a summary of each of the matters described above, is not complete, and is qualified in its entirety by reference
to the full text of the exhibits, each of which is attached an exhibit to this Form 10-Q Quarterly Report. Readers should review
those exhibits for a complete understanding of the terms and conditions associated with this matter.
Government Regulation
The United States Food & Drug Administration
(“FDA”) is generally responsible for protecting the public health by ensuring the safety, efficacy, and security of
(1) prescription and over the counter drugs; (2) biologics including vaccines, blood & blood products, and cellular and gene
therapies; (3) foodstuffs including dietary supplements, bottled water, and baby formula; and, (4) medical devices including heart
pacemakers, surgical implants, prosthetics, and dental devices.
Regarding its regulation of drugs, the
FDA process requires a review that begins with the filing of an investigational new drug (IND) application, with follow on clinical
studies and clinical trials that the FDA uses to determine whether a drug is safe and effective, and therefore subject to approval
for human use by the FDA.
Aside from the FDA’s mandate to
regulate drugs, the FDA also regulates dietary supplement products and dietary ingredients under the Dietary Supplement Health
and Education Act of 1994. This law prohibits manufacturers and distributors of dietary supplements and dietary ingredients from
marketing products that are adulterated or misbranded. This means that these firms are responsible for evaluating the safety and
labeling of their products before marketing to ensure that they meet all the requirements of the law and FDA regulations, including,
but not limited to the following labeling requirements: (1) identifying the supplement; (2) nutrition labeling; (3) ingredient
labeling; (4) claims; and, (5) daily use information.
The FDA has not approved cannabis, marijuana,
hemp or derivatives as a safe and effective drug for any indication. As of the date of this filing, we have not, and do not intend
to file an IND with the FDA, concerning any of our products that contain CBD derived from industrial hemp or cannabis. Further,
our products containing CBD derived from industrial hemp are not marketed or sold using claims that their use is safe and effective
treatment for any medical condition subject to the FDA’s jurisdiction.
Government Approvals
The Company does not currently require
any government approvals for its operations or product offerings. In August 2019, the DEA affirmed that CBD preparations at or
below the 0.3 percent delta-9 THC threshold, is not a controlled substance, and a DEA registration is not required. As a result
of the 2018 Farm Bill the FDA has been tasked with developing CBD regulations. The FDA has not yet published regulations.
Research and Development
We are constantly in the process of
identifying and/or developing potential new products to offer to our customers. Our expenditures on research and development have
historically been small and immaterial compared to our other business expenditures. We are currently developing new formulations
for additional product lines.
Employees
We believe that our success depends
upon our ability to attract, develop and retain key personnel. As of April 15, 2021, we employed 2 full-time employees. The Company
otherwise currently relies on the services of independent contractors. None of our employees are covered by collective bargaining
agreements, and management considers relations with our employees to be in good standing. Although we continually seek to add additional
talent to our work force, management believes that it currently has sufficient human capital to operate its business successfully.
Our compensation programs are designed
to align the compensation of our employees with our performance and to provide the proper incentives to attract, retain and motivate
employees to achieve superior results. The structure of our compensation programs balances incentive earnings for both short-term
and long-term performance.
The health and safety of our employees
is our highest priority, and this is consistent with our operating philosophy. Since the onset of the COVID-19 pandemic, employees,
including our specialized technical staff, are working from home or in a virtual environment unless they have a requirement to
be in the office for short-term tasks and projects.
The primary mailing address for the Company is 555 Madison
Avenue, 5th Floor, New York, New York 10022. The Company’s telephone number is (646) 202-2897. The Company’s website
is https://www.sentientbrands.com/.
RESULTS OF OPERATIONS
Comparison of Results of Operations
for the Three Months ended March 31, 2021 and 2020
Revenue
We acquired
Cannavolve on February 14, 2020 where we consolidated our financial statements since then. The Company provides advisory and operational
services to hemp and ancillary cannabis companies, serving as a full-service business accelerator working with startups and emerging
brands nationwide. The Company accelerates customer’s businesses through a proven model of funding; operations; product launches;
and ongoing sales, marketing, and expansion into new markets. Each customer arrangement is unique and revenue is recognized, both
over time and at a point in time, depending upon the performance obligations stated in the contract. During the three months ending
March 31, 2021 and 2020, we did not generate revenue for the three month period ending March 31, 2020.
Operating
Expenses
For the three
months ended March 31, 2021 and 2020, operating expenses consisted of the following:
|
|
|
2021
|
|
2020
|
|
Advertising and Marketing
|
|
|
—
|
|
|
|
30,852
|
|
|
Selling Expenses
|
|
|
—
|
|
|
|
9,974
|
|
|
General and Administrative
|
|
|
4,861
|
|
|
|
40,070
|
|
|
Legal and Professional
|
|
|
66,807
|
|
|
|
131,009
|
|
|
Office rent
|
|
|
40
|
|
|
|
14,477
|
|
|
Management Fees
|
|
|
21,000
|
|
|
|
61,849
|
|
|
Product development cost
|
|
|
112
|
|
|
|
18,689
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING EXPENSES
|
|
|
92,820
|
|
|
|
306,920
|
|
|
|
●
|
Our advertising and marketing mainly include consulting fees for branding, social media and creation of marketing materials for our brand.
|
|
|
●
|
Selling expense mainly includes our marketing and sales staff’s salaries and related benefits, and travel and entertainment costs incurred by our sales department.
|
|
|
●
|
Legal and professional fees primarily consisted of accounting fees, legal service fees, consulting fees, investor relations service charges and other fees incurred for service related to becoming and being a public company. For three months ended March 31, 2021, professional fees increase over the same period in 2020 as mainly attributable to an increase in fees of approximately $15.000 incurred for services performed by our marketing consultant, and an legal services fees of approximately $40,000. We expect professional fees to increase as we incur significant costs associated with our public company reporting requirements, and costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission.
|
|
|
●
|
Office rent are monthly lease payments for our principal executive offices in New York.
|
|
|
●
|
Our management fees comprise mainly of salaries paid our management staff. The nine months period ending March 31, 2021 the increase in management fee mainly attributable to the salaries of our Chief Financial Officer and directors approximately $21,000.
|
|
|
●
|
Product development cost includes packaging supplies and materials, design and marketing consultants approximately $112.00 for the three months period ending March 31, 2021, and 418,689 product development cost incurred for the three months period ending March 31, 2020
|
Loss
from Operations
The Company’s operating loss for the
three-month period ended March 31, 2021 and 2020 was $92,820 and $304,095, respectively.
Other Income
We had other income of
$6,750 for the three months ended March 31, 2021 consist mainly of gain from settling accounts payables compared with other expenses
of $58,578 for the same period ended March 31, 2020 mainly due other business expenses in relation to acquisition of subsidiary companies
Income
Taxes
We did not
have any income taxes expense for the three months ended March 31, 2021 and 2020 since we incurred losses in the periods.
Net Loss
The Company’s net loss for the three-month period ended March 31,
2021 and 2020 was $86,070 and $362,673, respectively.
Liquidity
and Capital Resources
As of March 31, 2021, we had total current
assets of $271,122, consisting of $12,318 in cash and $258,804 in inventories. Our total current liabilities as of March 31, 2021 were
$901,489. We had a working capital deficit of $690,367 as of March 31, 2021, compared with
a working capital deficit of $605,552 as of December 31, 2020.
Cash Flows from Operating Activities
Operating activities used $65,729 in
cash for the three months ended March 31, 2021, compared with cash used of $396,181 for the three months ended March 31, 2020.
Our negative operating cash flow for the three months ended March 31, 2021 was largely the result of our net loss of $26,070, full
payment of inventories $258,804 and offset by decrease in advances from supplier $154,893. Our negative operating cash flow for
the three months ended March 31, 2020 was largely the result of the result out net loss of $362,673 partially offset loans receivable
of $17,611.
Cash Flows from Financing Activities
Net
cash flows provided by financing activities during the three months ended March 31, 2021 amounted to $10,000 compared with cash
flows provided by financing activities of $390,685 for the three months ended March 31, 2020. Our positive cash flows for the three
months ended March 31, 2021 consisted of proceeds from loans payable of $10,000. Our positive cash flows for the three months ended
March 31, 2020 consisted of proceeds from issuance of common stock of $410,685 offset by $20,000 payments to loans payable.
Covid 19
A novel strain of coronavirus (“Covid-19”)
emerged globally in December 2019 and has been declared a pandemic. The extent to which Covid-19 will impact our customers, business,
results and financial condition will depend on current and future developments, which are highly uncertain and cannot be predicted
at this time. While the Company’s day-to-day operations beginning March 2020 have been impacted, we have suffered less immediate
impact as most staff can work remotely and can continue to develop our product offerings.
That said we have seen our business
opportunities develop more slowly as business partners and potential customers are dealing with Covid-19 issues, working remotely
and these issues are causing delays in decision making and finalization of negotiations and agreements.
Contractual Obligations and Off-Balance Sheet Arrangements
Contractual
Obligations
We presently
do not have any contractual obligations.
Off-balance
Sheet Arrangements
We presently
do not have off-balance sheet arrangements.
Inflation
The effect
of inflation on our revenue and operating results was not significant.
