U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2021
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file number: 333-206764
BLOOMIOS, INC. |
Nevada |
| 88-0488851 |
(State of Incorporation) |
| (I.R.S. Employer Identification Number) |
201 W Montecito St, Santa Barbara, CA 93101
Address of registrant’s principal executive offices
(805) 222-6330
Issuer’s telephone number
XLR MEDICAL CORP.
20 West Park Avenue, Suite 207, Long Beach, NY 11561
Former Fiscal Year End January 31
(Former name, former address and former
fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
None | None | None |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
|
| Emerging Growth Company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
At May 14, 2021, there were 12,662,134 shares of common stock outstanding.
PART I — FINANCIAL INFORMATION
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Table of Contents |
Bloomios, Inc. | ||||||||
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| March 31, 2021 |
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| December 31, 2020 |
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Assets |
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Current Assets: |
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Cash |
| $ | 890,106 |
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| $ | 72,205 |
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Accounts receivable - net |
|
| 103,685 |
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| 36,274 |
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Inventory |
|
| 204,834 |
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|
| 195,681 |
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WIP |
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| 74,256 |
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|
| 96,551 |
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Investment in life on earth Series B |
|
| - |
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|
| 50,000 |
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Total Current Assets |
|
| 1,272,881 |
|
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| 450,711 |
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Property and Equipment - Net |
|
| 2,017,838 |
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| 2,070,416 |
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Loan receivable |
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| 50,000 |
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| 50,000 |
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Right of use asset |
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| 250,421 |
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| 258,019 |
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Goodwill |
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| 300,000 |
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| 300,000 |
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Other assets |
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| 68,447 |
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| 64,511 |
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Total Assets |
| $ | 3,959,587 |
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| $ | 3,193,657 |
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Liabilities and Stockholders' (Deficit) |
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Current Liabilities: |
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Accounts payable - trade |
| $ | 1,949,235 |
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| $ | 1,747,852 |
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Accrued expenses |
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| 84,990 |
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| 73,501 |
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Accrued expenses related party |
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| 17,859 |
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|
| 14,235 |
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Unearned revenue |
|
| 139,014 |
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| 149,966 |
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Customer JV account liabilities |
|
| 600,000 |
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|
| 600,000 |
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Lease liability current |
|
| 111,028 |
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|
| 114,675 |
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Notes payable |
|
| 836,331 |
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|
| 771,000 |
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Notes payable - related party |
|
| 100,800 |
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| 120,800 |
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Notes payable |
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| 165,000 |
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Notes payable - convertibles |
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| 980,078 |
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| 202,300 |
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Total Current Liabilities |
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| 4,984,335 |
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| 3,794,329 |
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Long-Term Debt: |
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Lease liability |
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| 139,393 |
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| 143,344 |
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Notes payable |
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| 310,000 |
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| 520,000 |
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Total Liabilities |
|
| 5,433,728 |
|
|
| 4,457,673 |
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Stockholders' (Deficit) |
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Common stock ($0.00001 par value; 950,000,000 shares authorized; 12,624,678 and 12,508,011 shares issued and outstanding at March 31, 2021 and December 31, 2020 respectively |
|
| 137 |
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| 125 |
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Additional paid-in capital |
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| 4,418,258 |
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| 3,059,920 |
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Accumulated deficit |
|
| (5,892,536 | ) |
|
| (4,324,061 | ) |
Total Stockholders' (Deficit) |
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| (1,474,141 | ) |
|
| (1,264,016 | ) |
Total Liabilities and Stockholders' Deficit |
| $ | 3,959,587 |
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| $ | 3,193,657 |
|
The accompanying notes are an integral part of these financial statements.
3 |
Table of Contents |
Bloomios, Inc.
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for the three months ended | ||||||||
March 31, | ||||||||
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| 2021 |
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| 2020 |
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Sales |
| $ | 2,162,032 |
|
| $ | - |
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Cost of Goods Sold |
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| 1,126,244 |
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|
| - |
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Gross Profit |
|
| 1,035,788 |
|
|
| - |
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General and Administrative expense |
|
| 210,166 |
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|
| 716 |
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Salaries |
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| 368,660 |
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|
| - |
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Rent |
|
| 129,735 |
|
|
| - |
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Utilities |
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| 33,453 |
|
|
| - |
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Professional fees |
|
| 26,120 |
|
|
| - |
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Consulting |
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| 217,352 |
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|
| 105,000 |
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Depreciation |
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| 96,106 |
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Total Expenses |
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| 1,081,592 |
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| 105,716 |
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Net Profit From Operations |
|
| (45,804 | ) |
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| (105,716 | ) |
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Other Income / (Expenses) |
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Gain on Debt settlement |
|
| - |
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|
| - |
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Financing Fees |
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| (1,492,127 | ) |
|
| - |
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Interest Expense |
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| (30,544 | ) |
|
| - |
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Net Profit / (Loss) Before Income Taxes |
|
| (1,568,475 | ) |
|
| (105,716 | ) |
Income Tax Expense |
|
| - |
|
|
| - |
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Net Profit / (Loss) |
| $ | (1,568,475 | ) |
| $ | (105,716 | ) |
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NET LOSS PER COMMON SHARE - BASIC & DILUTED |
| $ | (0.13 | ) |
| $ | (0.01 | ) |
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC & DILUTED |
|
| 12,515,789 |
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| 12,508,011 |
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The accompanying notes are an integral part of these financial statements.
4 |
Table of Contents |
Bloomios, Inc.
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March 31, 2021 | ||||||||||||||||||||
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| Common Stock |
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| Additional Paid in |
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| Accumulated |
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| Stock |
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Description |
| Shares |
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| Amount |
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| Capital |
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| Deficit |
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| Totals |
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December 31, 2019 |
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| 12,508,011 |
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| $ | 125 |
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| $ | 2,680,399 |
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| $ | (3,153,395 | ) |
| $ | (472,871 | ) |
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Capital Contributions |
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| - |
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| - |
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| 11,225 |
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| - |
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| 11,225 |
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CBD Equity |
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| 368,296 |
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| 368,296 |
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| - |
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Net Loss |
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| (1,170,666 | ) |
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| (1,170,666 | ) |
December 31, 2020 |
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| 12,508,011 |
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| $ | 125 |
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| $ | 3,059,920 |
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| $ | (4,324,061 | ) |
| $ | (1,264,016 | ) |
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Commitment Shares |
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| 116,667 |
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| 12 |
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| 388,489 |
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| - |
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| 388,501 |
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Warrants issued |
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| 969,849 |
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| 969,849 |
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| - |
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Net Loss |
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| (1,568,475 | ) |
|
| (1,568,475 | ) |
March 31, 2021 |
|
| 12,624,678 |
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| $ | 137 |
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| $ | 4,418,258 |
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| $ | (5,892,536 | ) |
| $ | (1,474,141 | ) |
The accompanying notes are an integral part of these financial statements.
5 |
Table of Contents |
Bloomios, Inc.
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for the three months ended |
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March 31, |
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| 2021 |
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| 2020 |
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Cash provided (used) from operating activities |
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Net Income (Loss) |
| $ | (1,568,475 | ) |
| $ | (105,716 | ) |
Depreciation |
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| 96,106 |
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| - |
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Change in Accounts Receivable |
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| (17,411 | ) |
|
| - |
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Change in inventory |
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| 13,142 |
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| (76,900 | ) |
Shares and warrants issued |
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| 1,358,350 |
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Change in other assets |
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| (3,936 | ) |
|
| - |
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Change in JV liabilities |
|
| - |
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|
| 900,000 |
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Change in Accounts Payable and Accrued Expenses |
|
| 212,872 |
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|
| 823,569 |
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Change in Accrued Expenses - related party |
|
| 3,624 |
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|
| - |
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Change in Unearned Revenue |
|
| (10,952 | ) |
|
| - |
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Net cash provided (used) from operating activities |
|
| 83,320 |
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|
| 1,540,953 |
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Cash used in investing activities |
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Purchase of Equipment |
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| (43,528 | ) |
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| (2,230,821 | ) |
Net cash used in investing activities |
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| (43,528 | ) |
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| (2,230,821 | ) |
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Cash provided by financing activities |
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Proceeds from Notes Payable |
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| 798,109 |
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| 631,900 |
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Contributed Capital |
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| - |
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| 58,296 |
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Proceeds from (payments to) Notes Payable related parties |
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| (20,000 | ) |
|
| - |
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Net cash provided by financing activities |
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| 778,109 |
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| 690,196 |
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Net Increase (Decrease) In Cash |
|
| 817,901 |
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|
| 328 |
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Cash at Beginning of Period |
|
| 72,205 |
|
|
| - |
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Cash at End of Period |
| $ | 890,106 |
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| $ | 328 |
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Supplemental Cashflow Information |
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Interest Paid |
| $ | - |
|
| $ | - |
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Taxes Paid |
| $ | - |
|
| $ | - |
|
The accompanying notes are an integral part of these financial statements.
6 |
Table of Contents |
Bloomios, Inc.
Notes to the Consolidated financial statements
March 31, 2021
NOTE 1 - BUSINESS ACTIVITY
Bloomios Inc fka XLR Medical Corp. (the "Company”) was organized under the laws of the State of Nevada on February 2, 2001 under the name Relay Mines Limited—subsequently the name of the Company was changed to XLR Medical Corp. After the October 31, 2007 10Q filing, the management of the Company abandoned the company and it became a dormant company until 2018 when a new shareholder acquired stock to become the majority shareholder and owner of the Company. The Company’s fiscal year end is December 31st. On April 12, 2021 the Company amended its name from XLR Medical Corp to Bloomios Inc., its fiscal year end from January 31 to December 31, authorized the designation of Series A, B and C Preferred Stock, and acquired CBD Brand Partners LLC (“CBDBP”).
The Company is an integrated, seed-to-shelf operation which includes the growing, processing, extraction, and manufacture of cannabidiol (“CBD”) products. The Company intends to grow both organically and by way of an acquisition strategy that is currently in development. Currently, the Company is principally a business-to-business operation with plans to sell directly to consumers in the future.
NOTE 2 - GOING CONCERN
The financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the normal course of business. The Company had a total stockholder’s deficit of $1,474,141 and a net loss of $1,568,475 for the three months ended March 31, 2021. The Company also had an accumulated deficit of $5,892,536 as of March 31, 2021. Therefore, there is substantial doubt about the ability of the Company to continue as a going concern. There can be no assurance that the Company will achieve its goals and reach profitable operations and is still dependent upon its ability (1) to obtain sufficient debt and/or equity capital and/or (2) to generate positive cash flow from operations.
The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might arise because of this uncertainty.
To address the aforementioned, management has undertaken the following initiatives: 1) enter into discussions to secure additional equity funding; 2) undertake a program to continue to monitor the Company’s ongoing working capital requirements; and 3) focus on maintaining an appropriate level of corporate overhead in line with the Company’s available cash resources.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 revenue and expenses during the reporting period. Such estimates may be materially different from actual financial results. Significant estimates include the recoverability of long-lived assets, the collection of accounts receivable and valuation of inventory and reserves.
Cash and Cash Equivalents
We maintain the majority of our cash accounts at a commercial bank. The total cash balance is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per commercial bank, at times we may exceed the FDIC limits. For purposes of the statement of cash flows we consider all cash and highly liquid investments with initial maturities of one year or less to be cash equivalents.
7 |
Table of Contents |
Accounts Receivable
We grant credit to our customers and do not require collateral. Our ability to collect receivables is affected by economic fluctuations in the geographic areas and industries served by us. Reserves for un-collectable amounts are provided, based on past experience and a specific analysis of the accounts. Although we expect to collect amounts due, actual collections may differ from the estimated amounts. As of March 31, 2021, and December 31, 2020, we had a reserve for potentially un-collectable accounts of $26,000 and $0 respectively. Historically, our bad debt write-offs related to these trade accounts have been insignificant.
Inventory
Inventories are valued at the lower of weighted average cost or market value. Our industry experiences changes in technology, changes in market value and availability of raw materials, as well as changing customer demand. We make provisions for estimated excess and obsolete inventories based on regular audits and cycle counts of our on-hand inventory levels and forecasted customer demands and at times additional provisions are made. Any inventory write offs are charged to the reserve account. As of March 31, 2021, and December 31, 2020, we had a reserve for potentially obsolete inventory of $0.
Property and Equipment
Property and equipment are recorded at cost. Assets held under capital leases are recorded at lease inception at the lower of the present value of the minimum lease payments or the fair market value of the related assets. The cost of ordinary maintenance and repairs is charged to operations. Depreciation and amortization are computed on the straight-line method over the following estimated useful lives of the related assets:
Furniture and fixtures |
| 3 to 7 years |
Equipment |
| 7 to 10 years |
Leasehold Improvements |
| 7 years |
Long –Lived Assets
Our management assesses the recoverability of its long-lived assets by determining whether the depreciation and amortization of long-lived assets over their remaining lives can be recovered through projected undiscounted future cash flows. The amount of long-lived asset impairment if any, is measured based on fair value and is charged to operations in the period in which long-lived assets impairment is determined by management. There can be no assurance however, that market conditions will not change or demand for our services will continue, which could result in impairment of long-lived assets in the future.
8 |
Table of Contents |
Revenue Recognition
The Company recognizes revenue under ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASC 606”).
Performance Obligations Satisfied Over Time
FASB ASC 606-10-25-27 through 25-29, 25-36 through 25-37, 55-5 through 55-10
An entity transfers control of a good or service over time and satisfies a performance obligation and recognizes revenue over time if one of the following criteria is met:
a. The customer receives and consumes the benefits provided by the entity’s performance as the entity performs (as described in FASB ASC 606-10-55-5 through 55-6).
b. The entity’s performance creates or enhances an asset (for example, work in process) that the customer controls as the asset is created or enhanced (as described in FASB ASC 606-10-55-7).
c. The entity’s performance does not create an asset with an alternative use to the entity (see FASB ASC 606-10-25-28), and the entity has an enforceable right to payment for performance completed to date (as described in FASB ASC 606-10-25-29).
Performance Obligations Satisfied at a Point in Time
FASB ASC 606-10-25-30
If a performance obligation is not satisfied over time, the performance obligation is satisfied at a point in time. To determine the point in time at which a customer obtains control of a promised asset and the entity satisfies a performance obligation, the entity should consider the guidance on control in FASB ASC 606-10-25-23 through 25-26. In addition, it should consider indicators of the transfer of control, which include, but are not limited to, the following:
a. The entity has a present right to payment for the asset
b. The customer has legal title to the asset
c. The entity has transferred physical possession of the asset
d. The customer has the significant risks and rewards of ownership of the asset
e. The customer has accepted the asset
The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. In addition, a) the Company also does not have an alternative use for the asset if the customer were to cancel the contract, and b.) has a fully enforceable right to receive payment for work performed (i.e., customers are required to pay as various milestones and/or timeframes are met)
Also, from time to time we require deposits from our customers. As of March 31, 2021, and December 31, 2020 we had $139,014 and $149,966 of deferred revenue respectively.
9 |
Table of Contents |
Fair Value of Financial Instruments
The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures” for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:
| ● | Level 1: Quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices 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 related assets or liabilities. |
| ● | Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
The Company’s financial instruments consist of cash, prepaid expenses, inventory, accounts payable, convertible notes payable, and advances from related parties. The estimated fair value of cash, prepaid expenses, investments, accounts payable, convertible notes payable and advances from related parties approximate their carrying amounts due to the short-term nature of these instruments.
The carrying amounts of accounts payable and accrued expenses are considered to be representative of their respective fair values because of the short-term nature of these financial instruments.
Other Comprehensive Income
We have no material components of other comprehensive income (loss) and accordingly, net loss is equal to comprehensive loss in all periods.
Net Profit (Loss) per Common Share
Basic profit / (loss) per share is computed on the basis of the weighted average number of common shares outstanding. At March 31, 2021, we had outstanding common shares of 12,624,678 used in the calculation of basic earnings per share. Basic Weighted average common shares and equivalents for the three months ended March 31, 2021 and 2020 were 12,515,789 and 12,508,011 respectively. As of March 31, 2021, we had convertible notes to potentially convert into approximately 1,011,500 of additional common shares and 740,305 common stock warrants convertible into an additional 740,305 common shares. Fully diluted weighted average common shares and equivalents were withheld from the calculation as they were considered anti-dilutive.
Research and Development
We had no amounts of research and development expense during the three and nine months ended March 31, 2021 and 2019.
Share-Based Compensation
The Company has adopted the use of Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (SFAS No. 123R) (now contained in FASB Codification Topic 718, Compensation-Stock Compensation), which supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and its related implementation guidance and eliminates the alternative to use Opinion 25’s intrinsic value method of accounting that was provided in Statement 123 as originally issued. This Statement requires an entity to measure the cost of employee services received in exchange for an award of an equity instruments, which includes grants of stock options and stock warrants, based on the fair value of the award, measured at the grant date (with limited exceptions). Under this standard, the fair value of each award is estimated on the grant date, using an option-pricing model that meets certain requirements. We use the Black-Scholes option-pricing model to estimate the fair value of our equity awards, including stock options and warrants. The Black-Scholes model meets the requirements of SFAS No. 123R; however, the fair values generated may not reflect their actual fair values, as it does not consider certain factors, such as vesting requirements, employee attrition and transferability limitations. The Black-Scholes model valuation is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. We estimate the expected volatility and estimated life of our stock options at grant date based on historical volatility. For the “risk-free interest rate,” we use the Constant Maturity Treasury rate on 90-day government securities. The term is equal to the time until the option expires. The dividend yield is not applicable, as the Company has not paid any dividends, nor do we anticipate paying them in the foreseeable future. The fair value of our restricted stock is based on the market value of our free trading common stock, on the grant date calculated using a 20-trading-day average. At the time of grant, the share-based compensation expense is recognized in our financial statements based on awards that are ultimately expected to vest using historical employee attrition rates and the expense is reduced accordingly. It is also adjusted to account for the restricted and thinly traded nature of the shares. The expense is reviewed and adjusted in subsequent periods if actual attrition differs from those estimates.
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We re-evaluate the assumptions used to value our share-based awards on a quarterly basis and, if changes warrant different assumptions, the share-based compensation expense could vary significantly from the amount expensed in the past. We may be required to adjust any remaining share-based compensation expense, based on any additions, cancellations or adjustments to the share-based awards. The expense is recognized over the period during which an employee is required to provide service in exchange for the award—the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. For the years ended December 31, 2020 and 2019, the Company had no share-based expense.
Income Taxes
Federal Income taxes are not currently due since we have had losses since inception.
On December 22, 2018 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018. The Company will compute its income tax expense for the months ended September 30, 2020 using a Federal Tax Rate of 21%.
Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes – Recognition. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard required by ASC 740-10-25-5.
Deferred income tax amounts reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes.
As of March 31, 2021, we had a net operating loss carry-forward of approximately $(5,892,536) and a deferred tax asset of $1,237,433 using the statutory rate of 21%. The deferred tax asset may be recognized in future periods, not to exceed 20 years. However, due to the uncertainty of future events we have booked valuation allowance of $(1,237,433). FASB ASC 740 prescribes recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At March 31, 2021, the Company had not taken any tax positions that would require disclosure under FASB ASC 740.
|
| March 31, 2021 |
|
| December 31, 2020 |
| ||
Deferred Tax Asset |
| $ | 1,237,433 |
|
| $ | 908,053 |
|
Valuation Allowance |
|
| (1,237,433 | ) |
|
| (908,053 | ) |
Deferred Tax Asset (Net) |
| $ | - |
|
| $ | - |
|
Reclassification
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported income, total assets, total liabilities or stockholders’ equity as previously reported.
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Recently Issued Accounting Standards
The Company is reviewing the effects of following recent updates. The Company has no expectation that any of these items will have a material effect upon the financial statements.
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit Losses [codified as Accounting Standards Codification Topic (ASC) 326]. ASC 326 adds to US generally accepted accounting principles (US GAAP) the current expected credit loss (CECL) model, a measurement model based on expected losses rather than incurred losses. Under this new guidance, an entity recognizes its estimate of expected credit losses as an allowance, which the FASB believes will result in more timely recognition of such losses. This will become effective in January 2023 and the impact on the Company is under evaluation.
Update 2020-06—Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This was issued in August of 2020 and will become effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. We are in the process of evaluating the impact to the Company.
NOTE 4 - WRITE-OFF OF PAYABLES, RELATED PARTY TRANSACTIONS AND ACCRUED INTEREST OCCURRING PRIOR TO THE COMPANY ABANDONMENT
The Company takes the position that the statute of limitations with respect to the Related Party Loans has expired and the lenders are barred from pursuing a claim against us for repayment of the amount loaned. Nevada law relating to the statute of limitations is found in Chapter 11 of the Nevada Revised Statutes (“NRS”), titled “Limitations of Actions” (https://www.leg.state.nv.us/NRS/NRS-011.html#NRS011Sec190). NRS 11.010 titled “Commencement of civil actions” provides that “Civil actions can only be commenced within the periods prescribed in this chapter, after the cause of action shall have accrued, except where a different limitation is prescribed by statute.”
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Given the foregoing, all existing liabilities would be time barred by the statute of limitations:
|
| Last 10-Q |
|
| Last 10-K |
| ||
|
| 10/31/07 |
|
| 1/31/07 |
| ||
Accounts payable |
|
| 94,888 |
|
|
| 85,225 |
|
Accrued liabilities |
|
| 25,347 |
|
|
| 18,935 |
|
Due to related parties |
|
| 293,931 |
|
|
| 248,636 |
|
Loans payable |
|
| 409,000 |
|
|
| 397,000 |
|
Total Liabilities |
|
| 823,166 |
|
|
| 749,796 |
|
Therefore, the Company made the decision to write-off the Related Party Loans, Accrued Interest and Other Payables totaling $823,160 as of January 31, 2017. The debts were written off against Additional Paid in Capital—per ASC Section 470-50-40. ASC Section 470-50-40 (Debt Modification and Extinguishments), considers Related Party Transactions to be capital transactions and the extinguishment of the debt is in effect a capital transaction and it is not a gain or loss recognition event and should be excluded from the determination of net income.
NOTE 5 - EQUITY
Common Stock
The Company is authorized to issue 950,000,000 shares of Common Stock at $.00001 par value per share.
On November 30, 2018, the Company’s board of directors and custodian appointed, Bryan Glass as the Company’s President, Secretary and Treasurer and authorized the issuance of 12,000,000 shares of stock to Mr. Glass for an aggregate price of $120.
On March 26, 2021, the Company issued 116,667 in commitment shares for the issuance of a convertible note.
Total issued and outstanding shares as of March 31, 2021 is 12,624,678.
Preferred Stock
At March 31, 2021, the Company did not have any Preferred Stock authorized or issued. Note: See Subsequent Events.
NOTE 6 - MATERIAL EVENTS
In October 2007, prior management of the Company discontinued filing reports required under the Exchange Act, at which time current management considers the prior business of the Company to have been abandoned. In February 2009, the Company filed a Form 15 with the SEC terminating the registration of its class of common stock under Section 12(g) of the Exchange Act and its duty to file periodic and other reports with the SEC.
Current management assumed control of the Company in November 2018. This Registration Statement is being filed to register the Company’s class of common stock under Section 12 of the Exchange Act on a voluntary basis.
On November 29, 2018, the Eight Judicial District Court of Nevada entered an order appointing Bryan Glass as custodian of the Company, authorizing and directing him to, among other things, take any action reasonable, prudent and for the benefit of the Company, including reinstating the Company under Nevada law, appointing officers and convening an annual meeting of stockholders (the “Order”).
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On November 30, 2018, Bryan Glass, as custodian, appointed himself to serve as an interim director of the Company until the next meeting of stockholders, as permitted by the Order. Also, on November 30, 2018, the board of directors and the custodian appointed Bryan Glass as our President, Secretary and Treasurer and authorized the issuance of 12,000,000 shares of stock to Mr. Glass for an aggregate price of $120.
On December 6, 2018, the Company filed a Certificate of Reinstatement with the state of Nevada to reestablish the Company’s existence.
On January 16, 2019, the Company held a stockholder’s meeting at which Mr. Glass was elected as the sole director of the Company.
On November 30, 2020, Mr. Bryan Glass, our President and a sole director of the Company, resigned from both positions as part of his departure from the Company. Mr. Glass served as the President, Secretary and Treasurer and a member of our Board since November 30, 2018. This resignation is not the result of any disagreement with the Company on any matter related to the Company’s operations, policies, or practices.
On November 30, 2020, the board of directors appointed Mr. Michael Hill, as the sole director of the Company, and as interim Chief Executive Officer and Chief Financial Officer of the Company. The board of directors has agreed to compensate Mr. Hill at a rate of $25,000 per month during his interim service to the Company.
On February 10, 2021, the Company entered into a non-binding Letter of (the “LOI”) with CBDBP. Under the terms of the LOI, the Company agreed to acquire CBDBP as its wholly owned subsidiary, such that the Company would acquire all of the outstanding equity of CBDBP and the holders of the shares of CBDBP immediately prior to the Merger would receive 10,000 shares of Series A Preferred Stock, 800 shares of Series B Preferred Stock and 3,000,000 shares of Series C Preferred Stock.
On March 25, 2021, XLR Medical Corp. (the “Company”), entered into a Securities Purchase Agreement (the "Purchase Agreement") with a non-affiliated accredited investor (the "Investor"), pursuant to which the Company agreed to issue and sell directly to the Investor in a private offering (the "Offering"), a Senior Secured Promissory Note (the "Note"), in the aggregate principal amount of up to $1,666,666.67 or so much as has been advanced in one or more tranches. The Note carries an original issue discount of $166,666.67, to cover the Investor's accounting fees, due diligence fees, monitoring, and/or other transactional costs incurred in connection with the purchase and sale of the Note, which is included in the principal balance of the Note. As a result of the original issuance discount, the potential aggregate purchase price of the Note is $1,500,000. The initial tranche was paid upon closing in an amount of $700,000, resulting in a current face value of the Note of $777,777.78. As additional consideration for the first tranche funded upon closing, the Company issued to the Investor 116,667 shares of its common stock. Upon future tranches being funded under the Note, the Company shall issue to the Investor an amount of the Company's restricted common stock equal to the purchase price of such future tranche or tranches divided by six. The maturity date of each tranche of the Note is twelve months after the payment of such tranche. The Note provides that the Investor may not convert any amount of the Note that would result in the beneficial ownership of greater than 4.99% of the outstanding shares of the Company, with the exception that the beneficial ownership limitation may be waived up to a maximum of 9.99% at the election of the Investor, with not less than 61 days prior notice. The Note is secured with all of the assets of the Company, as described in the Security Agreement attached as Exhibit 10.3 to Form 8-K filed on April 2, 2021. The Purchase Agreement contains customary representations and warranties, and the Offering was subject to customary closing conditions. The Shares were offered by the Company pursuant to the exemption provided in Section 4(a)(2) under the Securities Act, and Rule 506(b) promulgated thereunder. The Company is obligated to register the shares of common stock underlying the Note and the Warrants (as described below), within 90 days from the date of the Purchase Agreement.
As additional consideration for the purchase of the Note, the Company agreed to issue to the Investor Warrants (the Warrants"). The Warrants shall be issued upon the advance of each tranche by the Investor to the Company, exercisable for an amount of the Company's common stock equal to the purchase price of such tranche divided by three. The Warrants have a term of 60 months, and contain full-ratchet anti-dilution protection provisions, and have an exercise price of $1.50 per share for 50% of the Warrants, and $2.00 per share for 50% of the Warrants. If at any time after the six-month anniversary of the issue date of the Warrants, the market price of one share of the Company's common stock is greater than the exercise price of such Warrant, and there is not an effective registration statement registering the resale of the shares of common stock underlying the Warrants, then the Warrants may be exercised by means of a cashless exercise. The Warrants do not allow for any exercise that would result in the beneficial ownership of greater than 4.99% of the number of shares of the Company's common stock outstanding immediately after giving effect to such exercise, with the exception that the beneficial ownership limitation may be increased or decreased upon no less than 61 days prior notice.
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As stated in our 8-K filing dated April 12, 2021, on April 12, 2021, Bloomios (the “Company”), acquired CBDBP.
The foregoing summaries of the Purchase Agreement, the Note, the Warrants and the Security Agreement do not purport to be complete and are subject to, and qualified in their entirety by, such documents attached as Exhibits 10.1, 10.2, 10.3, and 4.1, respectively, to the Current Report on Form 8-K filed on April 2, 2021, which are incorporated herein by reference.
NOTE 7 - NOTES PAYABLE
On February 19, 2019 the Company entered into a promissory note with a related party in the amount of $17,000, with an interest due at the rates of 8% per annum and a due date of February 19, 2020.
On March 31, 2019 the Company entered into a promissory note with a related party in the amount of $9,300, with an interest due at the rates of 8% per annum and a due date of March 31, 2020.
On March 31, 2019 the Company entered into a promissory note with a related party in the amount of $14,500, with an interest due at the rates of 8% per annum and a due date of March 30, 2020.
On February 29, 2020 the Company entered into a promissory note with a related party in the amount of $531,000, with an interest due at the rates of 9.9% per annum and a due date of January 1, 2021.
On February 29, 2020 the Company entered into a promissory note with a related party in the amount of $60,000, with an interest due at the rates of 8% per annum and a due date of February 29, 2021.
On May 5, 2020 the Company entered into a promissory note under the Payroll Protection Program in the amount of $310,000, with an interest due at the rates of 1% per annum and a due date of August 15, 2022.
On July 8, 2020 the company entered into an SBA promissory note in the amount of $150,000, with an interest due at the rates of 3.75% per annum and a due date of August 15, 2022.
On June 4, 2020 the Company entered into a promissory note with a third party in the amount of $20,000, with an interest due at the rates of 8% per annum and a due date of September 5, 2020. This note was offset against an account receivable in the fourth quarter of 2020 and the balance due as of March 31, 2021 was $0.
On June 5, 2020 the Company entered into a promissory note with a third party in the amount of $10,000, with an interest due at the rates of 8% per annum and a due date of March 31, 2020. This note was offset against an account receivable in the fourth quarter of 2020 and the balance due as of March 31, 2021 was $0.
On June 8, 2020 the Company entered into a promissory note with a related party in the amount of $10,000, with an interest due at the rates of 8% per annum and a due date of September 8, 2020. The balance due as of March 31, 2021 was $0.
On June 11, 2020 the Company entered into a promissory note with a related party in the amount of $10,000, with an interest due at the rates of 8% per annum and a due date of September 11, 2020. The balance due as of March 31, 2021 was $0.
On July 27, 2020 the Company entered into a promissory note with a third-party in the amount of $300,000, with an interest due at the rates of 9% per annum and a due date of August 15, 2022.
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On November 30, 2020, the Company entered into a 6% secured convertible promissory note with a third-party in the amount of $203,000.00. Pursuant to the agreement, the Company issued the lender 350,000 5-year warrants with an exercise price of $1.00. On January 19, 2021, we issued the lender an additional 100,000 warrants on the same terms as the previous warrants, as a penalty pursuant to the agreement. Subsequently, on April 2, 2021, the Company and lender entered into a pay-off letter agreement in the amount of $252,875.00 and the Company paid the amount on April 6, 2021. The note has been paid in full.
The prior majority shareholder, Bryan Glass contributed $26,864 for expenses and fees to reinstate the Company. This money was booked as a capital contribution.
On March 25, 2021, the Company entered into a 11% secured convertible promissory note with a third-party with a total commitment of $1,666,667 and the first tranche advanced on that date of $777,778. Pursuant to the agreement, the Company issued the lender 116,667 shares of common stock, 116,667 5-year warrants with an exercise price of $1.50 and 116,667 5-year warrants with an exercise price of $2.00. The note had an original issue discount of $77,778.
NOTE 8 – WARRANTS
On November 30, 2020, we issued 350,000 five-year common stock warrants exercisable at $1.00 per share.
On November 30, 2020, we issued 40,000 five-year common stock warrants exercisable at $.264 per share.
On January 19, 2021, we issued 100,000 five-year common stock warrants exercisable at $1.00 per share.
On March 25, 2021, we issued 116,667 five-year common stock warrants exercisable at $1.50 per share.
On March 25, 2021, we issued 116,667 five-year common stock warrants exercisable at $2.00 per share.
On March 26, 2021, we issued 16,971 five-year common stock warrants exercisable at $3.30 per share.
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The following is the outstanding warrant activity:
|
| Warrants - Common Share Equivalents |
|
| Weighted Average Exercise price |
|
| Warrants exercisable - Common Share Equivalents |
|
| Weighted Average Exercise price |
| ||||
Outstanding December 31, 2020 |
|
| 390,000 |
|
| $ | 0.63 |
|
|
| 390,000 |
|
| $ | 0.63 |
|
Additions |
|
| 350,305 |
|
|
| 1.61 |
|
|
| 350,305 |
|
|
| 1.61 |
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
Expired |
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Outstanding March 31, 2021 |
|
| 740,305 |
|
| $ | 1.25 |
|
|
| 740,305 |
|
|
| 1.250 |
|
NOTE 9 - SUBSEQUENT EVENTS
On November 30, 2020, the Company entered into a 6% secured convertible promissory note with a third-party in the amount of $203,000.00. Pursuant to the agreement, the Company issued the lender 350,000 5-year warrants with an exercise price of $1.00. On January 19, 2021, we issued the lender an additional 100,000 warrants on the same terms as the previous warrants, as a penalty pursuant to the agreement. Subsequently, on April 2, 2021, the Company and lender entered into a pay-off letter agreement in the amount of $252,875.00 and the Company paid the amount on April 6, 2021. The note has been paid in full.
On April 8, 2021, the Company established a wholly owned subsidiary with the Oregon Secretary of State, Bloomios Labs, LLC, an Oregon limited liability company.
On April 12, 2021, XLR Medical Corp (the “Company”), acquired CBDBP. XLR issued 10,000 shares of its Series A Preferred Stock and 800 shares of its Series B Preferred Stock as the purchase price.
On April 16, 2021, we received notification from the U.S. Small Business Administration (“SBA”) that our Paycheck Protection Program Loan Forgiveness Application was approved, and our Paycheck Protection Program loan has been paid in full.
On April 19, 2021, the Company established a wholly owned subsidiary with the Florida Secretary of State, Bloomios Private Label, LLC, a Florida limited liability company.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Statements, other than historical facts, contained in this Quarterly Report on Form 10-Q, including statements of potential acquisitions and our strategies, plans and objectives, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Although we believe that our forward-looking statements are based on reasonable assumptions, we caution that such statements are subject to a wide range of risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among those risks, trends and uncertainties are important factors that could cause actual results to differ materially from the forward looking statements, including, but not limited to; the time management devotes to identifying a target business; management’s ability to consummate a business combination; the financial condition of the target company with which we may enter a business combination; the effect of existing and future laws; governmental regulations; political and economic conditions; and conditions in the capital markets. We undertake no duty to update or revise these forward-looking statements.
When used in this Form 10-Q, the words, “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Because these forward-looking statements involve risks and uncertainties, actual results could differ materially from those expressed or implied by these forward-looking statements for a number of important reasons.
Overview
Prior to the acquisition of CBD Brand Partners, the Company was engaged in the identification of suitable opportunities for a business transaction.
On April 12, 2021, the Company completed the acquisition of CBDBP.
The Company is an integrated, seed-to-shelf operation which includes the growing, processing, extraction, and manufacture of cannabidiol (“CBD”) products. The Company believes that it is positioned to become an industry leader. It maintains the highest standards, is GMP certified and tracks its products utilizing a proprietary system to maintain chain of custody and to ensure the safety and efficacy of its products. The Company continues to make improvements in order to build on and maintain its competitive advantage.
On April 19, 2021, the Company filed what is commonly called a Super 8K that provides the information that would be filed via a Form 10 registration. Upon making that filing with the SEC disclosing the cessation of the Company’s status as a shell company. Due to the Company’s former shell status, certain exemptions are not available for different mandated periods of time. The Company is prohibited from using Form S-8 until sixty calendar days after the date it filed it’s Super 8K. Additionally, Rule 144 under the Act provides an exemption from the registration requirements of the Securities Act and allows the holders of restricted securities to sell their securities utilizing one of the provisions of this Rule. However, Rule 144 specifically precludes reliance by holders of securities of shell companies such as ours has been historically classified or any issuer that has been at any time previously a shell company, except if the following conditions are met:
| · | The issuer of the securities that was formerly a shell company has ceased to be a shell company; |
|
|
|
| · | The issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; |
|
|
|
| · | The issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than current reports on Form 8-K; and |
|
|
|
| · | At least one year has elapsed from the time that the issuer filed current comprehensive disclosure with the SEC reflecting its status as an entity that is not a shell company. |
The Company has met all of the conditions above with the exception of the final one which will not be met until one year has elapsed.
Our common stock is a “penny stock,” as defined in Rule 3a51-1 promulgated by the SEC under the Exchange Act. The penny stock rules require a broker-dealer, among other things, prior to a transaction in penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. A broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that the broker-dealer, not otherwise exempt from such rules, must make a special written determination that the penny stock is suitable for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure rules have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. So long as our common stock is subject to the penny stock rules, it may be more difficult for us and you to sell your common stock.
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Emerging Growth Company
We are an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We intend to take advantage of all of these exemptions.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, and delay compliance with new or revised accounting standards until those standards are applicable to private companies. We have elected to take advantage of the benefits of this extended transition period.
We could be an “emerging growth company” until the last day of the first fiscal year following the fifth anniversary of our first common equity offering, although circumstances could cause us to lose that status earlier if our annual revenues exceed $1.0 billion, if we issue more than $1.0 billion in non-convertible debt in any three-year period or if we become a “large-accelerated filer” as defined in Rule 12b-2 under the Exchange Act.
Smaller Reporting Company
We also qualify as a “smaller reporting company” under Rule 12b-2 of the Exchange Act, which is defined as a company with a public equity float of less than $250 million or less than $100 million in annual revenues and no public float or a public float of less than $700 million. To the extent that we remain a smaller reporting company, we will have reduced disclosure requirements for our public filings, including: (1) less extensive narrative disclosure than required of other reporting companies, particularly in the description of executive compensation and (2) the requirement to provide only two years of audited financial statements, instead of three years. In addition, until such time as the public float of our common stock exceeds $75 million, we will be a non-accelerated filer and will not be required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act.
Results of Operations
Results of Operations during the three months ended March 31, 2021 as compared to the three months ended March 31, 2020
During the three months ended March 31, 2021 and 2020, Our net revenue for the three months ended March 31, 2021, was $2,162,032, compared to $0 for the same period in 2020
Our cost of goods sold for the three months ended March 31, 2021, was $1,126,244, compared to $0 for the same period in 2020.
Our general and administrative expense for the three months ended March 31, 2021, was $1,081,592, compared to $105,716 for the same period in 2020.
This increase in all of the these was mainly due to the acquisition of CBDBP, and associated costs.
Our salary expense for the three months ended March 31, 2021, was $368,660, compared to $0 for the same period in 2020. This increase was mainly due to the acquisition.
Our rent expense for the three months ended March 31, 2021, was $129,735, compared to $0 for the same period in 2020. This increase was mainly due to the acquisition of CBDBP.
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Our utilities expense for the three months ended March 31, 2021, was $33,453, compared to $0 for the same period in 2020. This increase was mainly due to the acquisition of CBDBP.
Our professional fees expense for the three months ended March 31, 2021, was $26,120, compared to $0 for the same period in 2020. This increase was mainly due to acquisition and related expenses.
Our consulting expense for the three months ended March 31, 2021, was $217,352 compared to $105,000 for the same period in 2020. This increase was mainly due to acquisition and related expenses.
Our depreciation expense for the three months ended March 31, 2021, was $96,106, compared to $0 for the same period in 2020. This increase was mainly due to the acquisition of CBDBP.
Our financing fees expense for the three months ended March 31, 2021, was $1,492,127, compared to $0 for the same period in 2020. This increase was mainly due to the issuance of commitment shares and common stock warrants.
Our Interest expense for the three months ended March 31, 2021, was $30,544, compared to $0 for the same period in 2020. This increase was mainly due to the acquisition of CBDBP.
Our net loss for the three months ended March 31, 2021, was $1,568,475 compared to $105,716 for the same period in 2020. This increase was mainly due to the factors listed above.
Liquidity and Capital Resources
As of March 31, 2021, the Company current assets of $1,272,881 and total assets of $3,959,587 As of December 31, 2020 the Company current assets of $450,711 and total assets of $3,193,657.
As of March 31, 2021, the Company current liabilities of $4,984,335 and total Liabilities of $5,433,728 As of December 31, 2020, the Company current liabilities of $3,794,329 and total liabilities of $4,457,673
The Company has funded its operations from contributions made by management and outside investors. The Company has a funding agreement with a third-party investor as discussed above; however, the investor’s obligation to provide additional capital is solely at the third-party’s discretion.
At present, the Company has business operations which management believes will allow the Company maintain operations. The Company’s cash requirements to continue to grow the Company may exceed cash flow from operations requiring the Company to seek additional capital sources. If we require additional financing, we cannot predict whether equity or debt financing will become available at terms acceptable to us, if at all. The Company depends upon services provided by management to fulfill its filing obligations under the Exchange Act.
The following table summarizes our cash flows for the three months ended March 31, 2021 and 2020.
|
| 2021 |
|
| 2020 |
| ||
Net cash provided (used) from operating activities |
| $ | 83,320 |
|
| $ | 1,540,953 |
|
Net cash used in investing activities |
|
| (43,528 | ) |
|
| (2,230,821 | ) |
Net cash provided by financing activities |
|
| 778,109 |
|
|
| 690,196 |
|
Net Increase (Decrease) In Cash |
| $ | 817,901 |
|
| $ | 328 |
|
20 |
Table of Contents |
Going Concern
Our modest revenues, continuing operating losses and lack of operating capital create 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 growing its revenues and minimizing our expenses, its ability to obtain capital from our affiliates to fund our operations, generate cash from the sale of its securities and attain future profitable operations. Management’s plans include selling its equity securities and obtaining debt financing to fund its capital requirements and ongoing operations; however, there can be no assurance the Company will be successful in these efforts.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Contractual Obligations
As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Principal Executive Officer and the Principal Financial Officer, to allow timely decisions regarding required disclosures.
In connection with the preparation of this report, our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the date of this report.
Changes in Internal Controls
There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15 and 15d-15 under the Exchange Act) during the three months ended March 31, 2021 that would have materially affected, or been reasonably likely to materially affect, the Company’s internal control over financial reporting.
21 |
Table of Contents |
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
There are presently no material pending legal proceedings to which the Company is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.
Item 1A. Risk Factors.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On January 19, 2021, we issued 100,000 five-year common stock warrants exercisable at $1.00 per share.
On March 25, 2021, the Company issued an investor 116,667 shares of its common stock as additional consideration pursuant to a Senior Secured Promissory Note. The proceeds of the note were used for repayment of obligations and general working capital.
On March 25, 2021, we issued 116,667 five-year common stock warrants exercisable at $1.50 per share.
On March 25, 2021, we issued 116,667 five-year common stock warrants exercisable at $2.00 per share.
On March 26, 2021, we issued 16,971 five-year common stock warrants exercisable at $3.30 per share.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
N/A
Item 5. Other Information.
None.
22 |
Table of Contents |
Item 6. Exhibits.
The following documents are incorporated by reference:
| (1) | The 8-K Current Reports filed with the Securities and Exchange Commission on April 2, 2021, April 12, 2021 and April 20, 2021; and |
| (2) | Exhibits. |
Exhibit No. |
| Description of Exhibit |
| Location Reference |
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| 2 | ||
| Articles of Merger for Relay Mines Limited and TSI Med Acquisition Corp. |
| 2 | |
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| 1 | ||
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| 3 | ||
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| 2 | ||
|
| 6 | ||
| Certificate of Amendment by Custodian, dated December 6, 2018. |
| 5 | |
| Certificate of Reinstatement with the state of Nevada, filed December 6, 2018. |
| 5 | |
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| 4 | ||
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| 4 | ||
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| 4 | ||
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| * | ||
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| * | ||
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| * | ||
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| * | ||
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101.INS |
| XBRL Instance Document |
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101.SCH |
| XBRL Taxonomy Extension Schema Document |
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|
101.CAL |
| XBRL Taxonomy Extension Calculation Linkbase Document |
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|
101.DEF |
| XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB |
| XBRL Taxonomy Extension Labels Linkbase Document |
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|
101.PRE |
| XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
__________
(1) | Incorporated by reference from registration statement on Form SB-2 filed on May 1, 2001. |
(2) | Incorporated by reference from current report on Form 8-K filed on September 17, 2004. |
(3) | Incorporated by reference from Quarterly Report on Form 10-QSB for the nine months ended October 31, 2006 filed on December 15, 2006. |
(4) | Incorporated by reference from Annual Report on Form 10-KSB for the year ended June 30, 2003 filed on September 12, 2003. |
(5) | Previously filed as an exhibit to the Company’s Registration Statement on Form 10 filed on April 30, 2019. |
(6) | Incorporated by reference from the Company s Registration Statement on Form 10/A filed on June 18, 2019. |
* | Filed herewith. |
* Pursuant to Commission Release No. 33-8238, this certification will be treated as “accompanying” this Quarterly Report on Form 10-Q and not “filed” as part of such report for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of Section 18 of the Securities Exchange Act of 1934, as amended, and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.
23 |
Table of Contents |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BLOOMIOS, INC. |
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Date: May 14, 2021 | By: | /s/ Michael Hill |
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| Michael Hill President, Chief Executive Officer and Chief Financial Officer |
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24 |
EXHIBIT 31.1
Rule 13a-14(a)/15d-14(a) Certification
I, Michael Hill, certify that:
1. | I have reviewed this report on Form 10-Q for the period ended March 31, 2021 of Bloomios Inc.; |
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|
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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|
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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|
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: May 14, 2021 | By: | /s/ Michael Hill | |
|
| Michael Hill, Chief Executive Officer, | |
principal executive officer |
EXHIBIT 31.2
Rule 13a-14(a)/15d-14(a) Certification
I, Michael Hill, certify that:
1. | I have reviewed this report on Form 10-Q for the period ended March 31, 2021 of Bloomios Inc; |
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|
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: May 14, 2021 | By: | /s/ Michael Hill | |
|
| Michael Hill, Chief Executive Officer, | |
principal executive officer |
EXHIBIT 32.1
Rule 13a-14(a)/15d-14(a) Certification
I, Michael Hill, certify that:
1. | I have reviewed this report on Form 10-Q for the period ended March 31, 2021 of Bloomios Inc.; |
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|
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: May 14, 2021 | By: | /s/ Michael Hill | |
|
| Michael Hill, Chief Financial Officer, | |
principal financial and accounting officer |
EXHIBIT 32.2
Section 1350 Certification
In connection with the Quarterly Report of Bloomios, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2021 as filed with the Securities and Exchange Commission (the “Report”), I, Michael Hill, Chief Executive Officer, and Chief Financial Officer, of the Company, do hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and |
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| 2. | The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company. |
Dated: May 14, 2021 | By: | /s/ Michael Hill | |
|
| Michael Hill, Chief Executive | |
Officer, Chief Financial Officer, principal financial | |||
and accounting officer |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Cover - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
May 14, 2021 |
|
Cover [Abstract] | ||
Entity Registrant Name | BLOOMIOS, INC. | |
Entity Central Index Key | 0001138608 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Mar. 31, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 | |
Entity Ex Transition Period | false | |
Entity Common Stock Shares Outstanding | 12,662,134 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes |
Consolidated Balance Sheet (Parenthetical) - $ / shares |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
STOCKHOLDER'S EQUITY | ||
Common stock, shares par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 950,000,000 | 950,000,000 |
Common stock, shares issued | 12,624,678 | 12,508,011 |
Common stock, shares outstanding | 12,624,678 | 12,508,011 |
Consolidated Statement of Operations - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Consolidated Statement of Operations | ||
Sales | $ 2,162,032 | $ 0 |
Cost of Goods Sold | 1,126,244 | 0 |
Gross Profit | 1,035,788 | 0 |
General and Administrative expense | 210,166 | 716 |
Salaries | 368,660 | 0 |
Rent | 129,735 | 0 |
Utilities | 33,453 | 0 |
Professional fees | 26,120 | 0 |
Consulting | 217,352 | 105,000 |
Depreciation | 96,106 | 0 |
Total Expenses | 1,081,592 | 105,716 |
Net Profit From Operations | (45,804) | (105,716) |
Other Income / (Expenses) | ||
Gain on Debt settlement | 0 | 0 |
Financing Fees | (1,492,127) | 0 |
Interest Expense | (30,544) | 0 |
Net Profit / (Loss) Before Income Taxes | (1,568,475) | (105,716) |
Income Tax Expense | 0 | 0 |
Net Profit / (Loss) | $ (1,568,475) | $ (105,716) |
NET LOSS PER COMMON SHARE - BASIC & DILUTED | $ (0.13) | $ (0.01) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC & DILUTED | 12,515,789 | 12,508,011 |
Consolidated Statement of Stockholders Equity - USD ($) |
Total |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
---|---|---|---|---|
Balance, shares at Dec. 31, 2019 | 12,508,011 | |||
Balance, amount at Dec. 31, 2019 | $ (472,871) | $ 125 | $ 2,680,399 | $ (3,153,395) |
Capital Contributions | 11,225 | $ 0 | 11,225 | 0 |
CBD Equity | 368,296 | 368,296 | ||
Net Loss | (1,170,666) | (1,170,666) | ||
Balance, shares at Dec. 31, 2020 | 12,508,011 | |||
Balance, amount at Dec. 31, 2020 | (1,264,016) | $ 125 | 3,059,920 | (4,324,061) |
Net Loss | (1,568,475) | (1,568,475) | ||
Commitment Shares, shares | 116,667 | |||
Commitment Shares, amount | 388,501 | $ 12 | 388,489 | 0 |
Warrants issued | 969,849 | 969,849 | ||
Balance, shares at Mar. 31, 2021 | 12,624,678 | |||
Balance, amount at Mar. 31, 2021 | $ (1,474,141) | $ 137 | $ 4,418,258 | $ (5,892,536) |
BUSINESS ACTIVITY |
3 Months Ended |
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Mar. 31, 2021 | |
BUSINESS ACTIVITY | |
NOTE 1 - BUSINESS ACTIVITY | Bloomios Inc fka XLR Medical Corp. (the "Company”) was organized under the laws of the State of Nevada on February 2, 2001 under the name Relay Mines Limited—subsequently the name of the Company was changed to XLR Medical Corp. After the October 31, 2007 10Q filing, the management of the Company abandoned the company and it became a dormant company until 2018 when a new shareholder acquired stock to become the majority shareholder and owner of the Company. The Company’s fiscal year end is December 31st. On April 12, 2021 the Company amended its name from XLR Medical Corp to Bloomios Inc., its fiscal year end from January 31 to December 31, authorized the designation of Series A, B and C Preferred Stock, and acquired CBD Brand Partners LLC (“CBDBP”).
The Company is an integrated, seed-to-shelf operation which includes the growing, processing, extraction, and manufacture of cannabidiol (“CBD”) products. The Company intends to grow both organically and by way of an acquisition strategy that is currently in development. Currently, the Company is principally a business-to-business operation with plans to sell directly to consumers in the future. |
GOING CONCERN |
3 Months Ended |
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Mar. 31, 2021 | |
GOING CONCERN | |
NOTE 2 - GOING CONCERN | The financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the normal course of business. The Company had a total stockholder’s deficit of $1,474,141 and a net loss of $1,568,475 for the three months ended March 31, 2021. The Company also had an accumulated deficit of $5,892,536 as of March 31, 2021. Therefore, there is substantial doubt about the ability of the Company to continue as a going concern. There can be no assurance that the Company will achieve its goals and reach profitable operations and is still dependent upon its ability (1) to obtain sufficient debt and/or equity capital and/or (2) to generate positive cash flow from operations.
The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might arise because of this uncertainty.
To address the aforementioned, management has undertaken the following initiatives: 1) enter into discussions to secure additional equity funding; 2) undertake a program to continue to monitor the Company’s ongoing working capital requirements; and 3) focus on maintaining an appropriate level of corporate overhead in line with the Company’s available cash resources. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 revenue and expenses during the reporting period. Such estimates may be materially different from actual financial results. Significant estimates include the recoverability of long-lived assets, the collection of accounts receivable and valuation of inventory and reserves.
Cash and Cash Equivalents
We maintain the majority of our cash accounts at a commercial bank. The total cash balance is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per commercial bank, at times we may exceed the FDIC limits. For purposes of the statement of cash flows we consider all cash and highly liquid investments with initial maturities of one year or less to be cash equivalents.
Accounts Receivable
We grant credit to our customers and do not require collateral. Our ability to collect receivables is affected by economic fluctuations in the geographic areas and industries served by us. Reserves for un-collectable amounts are provided, based on past experience and a specific analysis of the accounts. Although we expect to collect amounts due, actual collections may differ from the estimated amounts. As of March 31, 2021, and December 31, 2020, we had a reserve for potentially un-collectable accounts of $26,000 and $0 respectively. Historically, our bad debt write-offs related to these trade accounts have been insignificant.
Inventory
Inventories are valued at the lower of weighted average cost or market value. Our industry experiences changes in technology, changes in market value and availability of raw materials, as well as changing customer demand. We make provisions for estimated excess and obsolete inventories based on regular audits and cycle counts of our on-hand inventory levels and forecasted customer demands and at times additional provisions are made. Any inventory write offs are charged to the reserve account. As of March 31, 2021, and December 31, 2020, we had a reserve for potentially obsolete inventory of $0.
Property and Equipment
Property and equipment are recorded at cost. Assets held under capital leases are recorded at lease inception at the lower of the present value of the minimum lease payments or the fair market value of the related assets. The cost of ordinary maintenance and repairs is charged to operations. Depreciation and amortization are computed on the straight-line method over the following estimated useful lives of the related assets:
Long –Lived Assets
Our management assesses the recoverability of its long-lived assets by determining whether the depreciation and amortization of long-lived assets over their remaining lives can be recovered through projected undiscounted future cash flows. The amount of long-lived asset impairment if any, is measured based on fair value and is charged to operations in the period in which long-lived assets impairment is determined by management. There can be no assurance however, that market conditions will not change or demand for our services will continue, which could result in impairment of long-lived assets in the future.
Revenue Recognition
The Company recognizes revenue under ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASC 606”).
Performance Obligations Satisfied Over Time
FASB ASC 606-10-25-27 through 25-29, 25-36 through 25-37, 55-5 through 55-10
An entity transfers control of a good or service over time and satisfies a performance obligation and recognizes revenue over time if one of the following criteria is met:
a. The customer receives and consumes the benefits provided by the entity’s performance as the entity performs (as described in FASB ASC 606-10-55-5 through 55-6).
b. The entity’s performance creates or enhances an asset (for example, work in process) that the customer controls as the asset is created or enhanced (as described in FASB ASC 606-10-55-7).
c. The entity’s performance does not create an asset with an alternative use to the entity (see FASB ASC 606-10-25-28), and the entity has an enforceable right to payment for performance completed to date (as described in FASB ASC 606-10-25-29).
Performance Obligations Satisfied at a Point in Time
FASB ASC 606-10-25-30
If a performance obligation is not satisfied over time, the performance obligation is satisfied at a point in time. To determine the point in time at which a customer obtains control of a promised asset and the entity satisfies a performance obligation, the entity should consider the guidance on control in FASB ASC 606-10-25-23 through 25-26. In addition, it should consider indicators of the transfer of control, which include, but are not limited to, the following:
a. The entity has a present right to payment for the asset
b. The customer has legal title to the asset
c. The entity has transferred physical possession of the asset
d. The customer has the significant risks and rewards of ownership of the asset
e. The customer has accepted the asset
The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. In addition, a) the Company also does not have an alternative use for the asset if the customer were to cancel the contract, and b.) has a fully enforceable right to receive payment for work performed (i.e., customers are required to pay as various milestones and/or timeframes are met)
Also, from time to time we require deposits from our customers. As of March 31, 2021, and December 31, 2020 we had $139,014 and $149,966 of deferred revenue respectively.
Fair Value of Financial Instruments
The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures” for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:
The Company’s financial instruments consist of cash, prepaid expenses, inventory, accounts payable, convertible notes payable, and advances from related parties. The estimated fair value of cash, prepaid expenses, investments, accounts payable, convertible notes payable and advances from related parties approximate their carrying amounts due to the short-term nature of these instruments.
The carrying amounts of accounts payable and accrued expenses are considered to be representative of their respective fair values because of the short-term nature of these financial instruments.
Other Comprehensive Income
We have no material components of other comprehensive income (loss) and accordingly, net loss is equal to comprehensive loss in all periods.
Net Profit (Loss) per Common Share
Basic profit / (loss) per share is computed on the basis of the weighted average number of common shares outstanding. At March 31, 2021, we had outstanding common shares of 12,624,678 used in the calculation of basic earnings per share. Basic Weighted average common shares and equivalents for the three months ended March 31, 2021 and 2020 were 12,515,789 and 12,508,011 respectively. As of March 31, 2021, we had convertible notes to potentially convert into approximately 1,011,500 of additional common shares and 740,305 common stock warrants convertible into an additional 740,305 common shares. Fully diluted weighted average common shares and equivalents were withheld from the calculation as they were considered anti-dilutive.
Research and Development
We had no amounts of research and development expense during the three and nine months ended March 31, 2021 and 2019.
Share-Based Compensation
The Company has adopted the use of Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (SFAS No. 123R) (now contained in FASB Codification Topic 718, Compensation-Stock Compensation), which supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and its related implementation guidance and eliminates the alternative to use Opinion 25’s intrinsic value method of accounting that was provided in Statement 123 as originally issued. This Statement requires an entity to measure the cost of employee services received in exchange for an award of an equity instruments, which includes grants of stock options and stock warrants, based on the fair value of the award, measured at the grant date (with limited exceptions). Under this standard, the fair value of each award is estimated on the grant date, using an option-pricing model that meets certain requirements. We use the Black-Scholes option-pricing model to estimate the fair value of our equity awards, including stock options and warrants. The Black-Scholes model meets the requirements of SFAS No. 123R; however, the fair values generated may not reflect their actual fair values, as it does not consider certain factors, such as vesting requirements, employee attrition and transferability limitations. The Black-Scholes model valuation is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. We estimate the expected volatility and estimated life of our stock options at grant date based on historical volatility. For the “risk-free interest rate,” we use the Constant Maturity Treasury rate on 90-day government securities. The term is equal to the time until the option expires. The dividend yield is not applicable, as the Company has not paid any dividends, nor do we anticipate paying them in the foreseeable future. The fair value of our restricted stock is based on the market value of our free trading common stock, on the grant date calculated using a 20-trading-day average. At the time of grant, the share-based compensation expense is recognized in our financial statements based on awards that are ultimately expected to vest using historical employee attrition rates and the expense is reduced accordingly. It is also adjusted to account for the restricted and thinly traded nature of the shares. The expense is reviewed and adjusted in subsequent periods if actual attrition differs from those estimates.
We re-evaluate the assumptions used to value our share-based awards on a quarterly basis and, if changes warrant different assumptions, the share-based compensation expense could vary significantly from the amount expensed in the past. We may be required to adjust any remaining share-based compensation expense, based on any additions, cancellations or adjustments to the share-based awards. The expense is recognized over the period during which an employee is required to provide service in exchange for the award—the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. For the years ended December 31, 2020 and 2019, the Company had no share-based expense.
Income Taxes
Federal Income taxes are not currently due since we have had losses since inception.
On December 22, 2018 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018. The Company will compute its income tax expense for the months ended September 30, 2020 using a Federal Tax Rate of 21%.
Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes – Recognition. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard required by ASC 740-10-25-5.
Deferred income tax amounts reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes.
As of March 31, 2021, we had a net operating loss carry-forward of approximately $(5,892,536) and a deferred tax asset of $1,237,433 using the statutory rate of 21%. The deferred tax asset may be recognized in future periods, not to exceed 20 years. However, due to the uncertainty of future events we have booked valuation allowance of $(1,237,433). FASB ASC 740 prescribes recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At March 31, 2021, the Company had not taken any tax positions that would require disclosure under FASB ASC 740.
Reclassification
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported income, total assets, total liabilities or stockholders’ equity as previously reported.
Recently Issued Accounting Standards
The Company is reviewing the effects of following recent updates. The Company has no expectation that any of these items will have a material effect upon the financial statements.
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit Losses [codified as Accounting Standards Codification Topic (ASC) 326]. ASC 326 adds to US generally accepted accounting principles (US GAAP) the current expected credit loss (CECL) model, a measurement model based on expected losses rather than incurred losses. Under this new guidance, an entity recognizes its estimate of expected credit losses as an allowance, which the FASB believes will result in more timely recognition of such losses. This will become effective in January 2023 and the impact on the Company is under evaluation.
Update 2020-06—Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This was issued in August of 2020 and will become effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. We are in the process of evaluating the impact to the Company. |
WRITEOFF OF PAYABLES RELATED PARTY TRANSACTIONS AND ACCRUED INTEREST OCCURRING PRIOR TO THE COMPANY ABANDONMENT |
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WRITEOFF OF PAYABLES RELATED PARTY TRANSACTIONS AND ACCRUED INTEREST OCCURRING PRIOR TO THE COMPANY ABANDONMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE 4 - WRITE-OFF OF PAYABLES, RELATED PARTY TRANSACTIONS AND ACCRUED INTEREST OCCURRING PRIOR TO THE COMPANY ABANDONMENT | The Company takes the position that the statute of limitations with respect to the Related Party Loans has expired and the lenders are barred from pursuing a claim against us for repayment of the amount loaned. Nevada law relating to the statute of limitations is found in Chapter 11 of the Nevada Revised Statutes (“NRS”), titled “Limitations of Actions” (https://www.leg.state.nv.us/NRS/NRS-011.html#NRS011Sec190). NRS 11.010 titled “Commencement of civil actions” provides that “Civil actions can only be commenced within the periods prescribed in this chapter, after the cause of action shall have accrued, except where a different limitation is prescribed by statute.”
Given the foregoing, all existing liabilities would be time barred by the statute of limitations:
Therefore, the Company made the decision to write-off the Related Party Loans, Accrued Interest and Other Payables totaling $823,160 as of January 31, 2017. The debts were written off against Additional Paid in Capital—per ASC Section 470-50-40. ASC Section 470-50-40 (Debt Modification and Extinguishments), considers Related Party Transactions to be capital transactions and the extinguishment of the debt is in effect a capital transaction and it is not a gain or loss recognition event and should be excluded from the determination of net income. |
EQUITY |
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EQUITY | |
NOTE 5 - EQUITY | Common Stock
The Company is authorized to issue 950,000,000 shares of Common Stock at $.00001 par value per share.
On November 30, 2018, the Company’s board of directors and custodian appointed, Bryan Glass as the Company’s President, Secretary and Treasurer and authorized the issuance of 12,000,000 shares of stock to Mr. Glass for an aggregate price of $120.
On March 26, 2021, the Company issued 116,667 in commitment shares for the issuance of a convertible note.
Total issued and outstanding shares as of March 31, 2021 is 12,624,678.
Preferred Stock
At March 31, 2021, the Company did not have any Preferred Stock authorized or issued. Note: See Subsequent Events. |
MATERIAL EVENTS |
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Mar. 31, 2021 | |
MATERIAL EVENTS | |
NOTE 6 - MATERIAL EVENTS | In October 2007, prior management of the Company discontinued filing reports required under the Exchange Act, at which time current management considers the prior business of the Company to have been abandoned. In February 2009, the Company filed a Form 15 with the SEC terminating the registration of its class of common stock under Section 12(g) of the Exchange Act and its duty to file periodic and other reports with the SEC.
Current management assumed control of the Company in November 2018. This Registration Statement is being filed to register the Company’s class of common stock under Section 12 of the Exchange Act on a voluntary basis.
On November 29, 2018, the Eight Judicial District Court of Nevada entered an order appointing Bryan Glass as custodian of the Company, authorizing and directing him to, among other things, take any action reasonable, prudent and for the benefit of the Company, including reinstating the Company under Nevada law, appointing officers and convening an annual meeting of stockholders (the “Order”).
On November 30, 2018, Bryan Glass, as custodian, appointed himself to serve as an interim director of the Company until the next meeting of stockholders, as permitted by the Order. Also, on November 30, 2018, the board of directors and the custodian appointed Bryan Glass as our President, Secretary and Treasurer and authorized the issuance of 12,000,000 shares of stock to Mr. Glass for an aggregate price of $120.
On December 6, 2018, the Company filed a Certificate of Reinstatement with the state of Nevada to reestablish the Company’s existence.
On January 16, 2019, the Company held a stockholder’s meeting at which Mr. Glass was elected as the sole director of the Company.
On November 30, 2020, Mr. Bryan Glass, our President and a sole director of the Company, resigned from both positions as part of his departure from the Company. Mr. Glass served as the President, Secretary and Treasurer and a member of our Board since November 30, 2018. This resignation is not the result of any disagreement with the Company on any matter related to the Company’s operations, policies, or practices.
On November 30, 2020, the board of directors appointed Mr. Michael Hill, as the sole director of the Company, and as interim Chief Executive Officer and Chief Financial Officer of the Company. The board of directors has agreed to compensate Mr. Hill at a rate of $25,000 per month during his interim service to the Company.
On February 10, 2021, the Company entered into a non-binding Letter of (the “LOI”) with CBDBP. Under the terms of the LOI, the Company agreed to acquire CBDBP as its wholly owned subsidiary, such that the Company would acquire all of the outstanding equity of CBDBP and the holders of the shares of CBDBP immediately prior to the Merger would receive 10,000 shares of Series A Preferred Stock, 800 shares of Series B Preferred Stock and 3,000,000 shares of Series C Preferred Stock.
On March 25, 2021, XLR Medical Corp. (the “Company”), entered into a Securities Purchase Agreement (the "Purchase Agreement") with a non-affiliated accredited investor (the "Investor"), pursuant to which the Company agreed to issue and sell directly to the Investor in a private offering (the "Offering"), a Senior Secured Promissory Note (the "Note"), in the aggregate principal amount of up to $1,666,666.67 or so much as has been advanced in one or more tranches. The Note carries an original issue discount of $166,666.67, to cover the Investor's accounting fees, due diligence fees, monitoring, and/or other transactional costs incurred in connection with the purchase and sale of the Note, which is included in the principal balance of the Note. As a result of the original issuance discount, the potential aggregate purchase price of the Note is $1,500,000. The initial tranche was paid upon closing in an amount of $700,000, resulting in a current face value of the Note of $777,777.78. As additional consideration for the first tranche funded upon closing, the Company issued to the Investor 116,667 shares of its common stock. Upon future tranches being funded under the Note, the Company shall issue to the Investor an amount of the Company's restricted common stock equal to the purchase price of such future tranche or tranches divided by six. The maturity date of each tranche of the Note is twelve months after the payment of such tranche. The Note provides that the Investor may not convert any amount of the Note that would result in the beneficial ownership of greater than 4.99% of the outstanding shares of the Company, with the exception that the beneficial ownership limitation may be waived up to a maximum of 9.99% at the election of the Investor, with not less than 61 days prior notice. The Note is secured with all of the assets of the Company, as described in the Security Agreement attached as Exhibit 10.3 to Form 8-K filed on April 2, 2021. The Purchase Agreement contains customary representations and warranties, and the Offering was subject to customary closing conditions. The Shares were offered by the Company pursuant to the exemption provided in Section 4(a)(2) under the Securities Act, and Rule 506(b) promulgated thereunder. The Company is obligated to register the shares of common stock underlying the Note and the Warrants (as described below), within 90 days from the date of the Purchase Agreement.
As additional consideration for the purchase of the Note, the Company agreed to issue to the Investor Warrants (the Warrants"). The Warrants shall be issued upon the advance of each tranche by the Investor to the Company, exercisable for an amount of the Company's common stock equal to the purchase price of such tranche divided by three. The Warrants have a term of 60 months, and contain full-ratchet anti-dilution protection provisions, and have an exercise price of $1.50 per share for 50% of the Warrants, and $2.00 per share for 50% of the Warrants. If at any time after the six-month anniversary of the issue date of the Warrants, the market price of one share of the Company's common stock is greater than the exercise price of such Warrant, and there is not an effective registration statement registering the resale of the shares of common stock underlying the Warrants, then the Warrants may be exercised by means of a cashless exercise. The Warrants do not allow for any exercise that would result in the beneficial ownership of greater than 4.99% of the number of shares of the Company's common stock outstanding immediately after giving effect to such exercise, with the exception that the beneficial ownership limitation may be increased or decreased upon no less than 61 days prior notice.
As stated in our 8-K filing dated April 12, 2021, on April 12, 2021, Bloomios (the “Company”), acquired CBDBP.
The foregoing summaries of the Purchase Agreement, the Note, the Warrants and the Security Agreement do not purport to be complete and are subject to, and qualified in their entirety by, such documents attached as Exhibits 10.1, 10.2, 10.3, and 4.1, respectively, to the Current Report on Form 8-K filed on April 2, 2021, which are incorporated herein by reference. |
NOTES PAYABLE |
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NOTE 7 - NOTES PAYABLE | On February 19, 2019 the Company entered into a promissory note with a related party in the amount of $17,000, with an interest due at the rates of 8% per annum and a due date of February 19, 2020.
On March 31, 2019 the Company entered into a promissory note with a related party in the amount of $9,300, with an interest due at the rates of 8% per annum and a due date of March 31, 2020.
On March 31, 2019 the Company entered into a promissory note with a related party in the amount of $14,500, with an interest due at the rates of 8% per annum and a due date of March 30, 2020.
On February 29, 2020 the Company entered into a promissory note with a related party in the amount of $531,000, with an interest due at the rates of 9.9% per annum and a due date of January 1, 2021.
On February 29, 2020 the Company entered into a promissory note with a related party in the amount of $60,000, with an interest due at the rates of 8% per annum and a due date of February 29, 2021.
On May 5, 2020 the Company entered into a promissory note under the Payroll Protection Program in the amount of $310,000, with an interest due at the rates of 1% per annum and a due date of August 15, 2022.
On July 8, 2020 the company entered into an SBA promissory note in the amount of $150,000, with an interest due at the rates of 3.75% per annum and a due date of August 15, 2022.
On June 4, 2020 the Company entered into a promissory note with a third party in the amount of $20,000, with an interest due at the rates of 8% per annum and a due date of September 5, 2020. This note was offset against an account receivable in the fourth quarter of 2020 and the balance due as of March 31, 2021 was $0.
On June 5, 2020 the Company entered into a promissory note with a third party in the amount of $10,000, with an interest due at the rates of 8% per annum and a due date of March 31, 2020. This note was offset against an account receivable in the fourth quarter of 2020 and the balance due as of March 31, 2021 was $0.
On June 8, 2020 the Company entered into a promissory note with a related party in the amount of $10,000, with an interest due at the rates of 8% per annum and a due date of September 8, 2020. The balance due as of March 31, 2021 was $0.
On June 11, 2020 the Company entered into a promissory note with a related party in the amount of $10,000, with an interest due at the rates of 8% per annum and a due date of September 11, 2020. The balance due as of March 31, 2021 was $0.
On July 27, 2020 the Company entered into a promissory note with a third-party in the amount of $300,000, with an interest due at the rates of 9% per annum and a due date of August 15, 2022.
On November 30, 2020, the Company entered into a 6% secured convertible promissory note with a third-party in the amount of $203,000.00. Pursuant to the agreement, the Company issued the lender 350,000 5-year warrants with an exercise price of $1.00. On January 19, 2021, we issued the lender an additional 100,000 warrants on the same terms as the previous warrants, as a penalty pursuant to the agreement. Subsequently, on April 2, 2021, the Company and lender entered into a pay-off letter agreement in the amount of $252,875.00 and the Company paid the amount on April 6, 2021. The note has been paid in full.
The prior majority shareholder, Bryan Glass contributed $26,864 for expenses and fees to reinstate the Company. This money was booked as a capital contribution.
On March 25, 2021, the Company entered into a 11% secured convertible promissory note with a third-party with a total commitment of $1,666,667 and the first tranche advanced on that date of $777,778. Pursuant to the agreement, the Company issued the lender 116,667 shares of common stock, 116,667 5-year warrants with an exercise price of $1.50 and 116,667 5-year warrants with an exercise price of $2.00. The note had an original issue discount of $77,778. |
WARRANTS |
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NOTE 8 - WARRANTS | On November 30, 2020, we issued 350,000 five-year common stock warrants exercisable at $1.00 per share.
On November 30, 2020, we issued 40,000 five-year common stock warrants exercisable at $.264 per share.
On January 19, 2021, we issued 100,000 five-year common stock warrants exercisable at $1.00 per share.
On March 25, 2021, we issued 116,667 five-year common stock warrants exercisable at $1.50 per share.
On March 25, 2021, we issued 116,667 five-year common stock warrants exercisable at $2.00 per share.
On March 26, 2021, we issued 16,971 five-year common stock warrants exercisable at $3.30 per share.
The following is the outstanding warrant activity:
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SUBSEQUENT EVENTS |
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SUBSEQUENT EVENTS | |
NOTE 9 - SUBSEQUENT EVENTS | On November 30, 2020, the Company entered into a 6% secured convertible promissory note with a third-party in the amount of $203,000.00. Pursuant to the agreement, the Company issued the lender 350,000 5-year warrants with an exercise price of $1.00. On January 19, 2021, we issued the lender an additional 100,000 warrants on the same terms as the previous warrants, as a penalty pursuant to the agreement. Subsequently, on April 2, 2021, the Company and lender entered into a pay-off letter agreement in the amount of $252,875.00 and the Company paid the amount on April 6, 2021. The note has been paid in full.
On April 8, 2021, the Company established a wholly owned subsidiary with the Oregon Secretary of State, Bloomios Labs, LLC, an Oregon limited liability company.
On April 12, 2021, XLR Medical Corp (the “Company”), acquired CBDBP. XLR issued 10,000 shares of its Series A Preferred Stock and 800 shares of its Series B Preferred Stock as the purchase price.
On April 16, 2021, we received notification from the U.S. Small Business Administration (“SBA”) that our Paycheck Protection Program Loan Forgiveness Application was approved, and our Paycheck Protection Program loan has been paid in full.
On April 19, 2021, the Company established a wholly owned subsidiary with the Florida Secretary of State, Bloomios Private Label, LLC, a Florida limited liability company.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||||||||||||||||||||||
Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 revenue and expenses during the reporting period. Such estimates may be materially different from actual financial results. Significant estimates include the recoverability of long-lived assets, the collection of accounts receivable and valuation of inventory and reserves. |
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Cash and Cash Equivalents | We maintain the majority of our cash accounts at a commercial bank. The total cash balance is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per commercial bank, at times we may exceed the FDIC limits. For purposes of the statement of cash flows we consider all cash and highly liquid investments with initial maturities of one year or less to be cash equivalents. |
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Accounts Receivable | We grant credit to our customers and do not require collateral. Our ability to collect receivables is affected by economic fluctuations in the geographic areas and industries served by us. Reserves for un-collectable amounts are provided, based on past experience and a specific analysis of the accounts. Although we expect to collect amounts due, actual collections may differ from the estimated amounts. As of March 31, 2021, and December 31, 2020, we had a reserve for potentially un-collectable accounts of $26,000 and $0 respectively. Historically, our bad debt write-offs related to these trade accounts have been insignificant. |
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Inventory | Inventories are valued at the lower of weighted average cost or market value. Our industry experiences changes in technology, changes in market value and availability of raw materials, as well as changing customer demand. We make provisions for estimated excess and obsolete inventories based on regular audits and cycle counts of our on-hand inventory levels and forecasted customer demands and at times additional provisions are made. Any inventory write offs are charged to the reserve account. As of March 31, 2021, and December 31, 2020, we had a reserve for potentially obsolete inventory of $0. |
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Property and Equipment | Property and equipment are recorded at cost. Assets held under capital leases are recorded at lease inception at the lower of the present value of the minimum lease payments or the fair market value of the related assets. The cost of ordinary maintenance and repairs is charged to operations. Depreciation and amortization are computed on the straight-line method over the following estimated useful lives of the related assets:
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Long -Lived Assets | Our management assesses the recoverability of its long-lived assets by determining whether the depreciation and amortization of long-lived assets over their remaining lives can be recovered through projected undiscounted future cash flows. The amount of long-lived asset impairment if any, is measured based on fair value and is charged to operations in the period in which long-lived assets impairment is determined by management. There can be no assurance however, that market conditions will not change or demand for our services will continue, which could result in impairment of long-lived assets in the future. |
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Revenue Recognition | The Company recognizes revenue under ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASC 606”).
Performance Obligations Satisfied Over Time
FASB ASC 606-10-25-27 through 25-29, 25-36 through 25-37, 55-5 through 55-10
An entity transfers control of a good or service over time and satisfies a performance obligation and recognizes revenue over time if one of the following criteria is met:
a. The customer receives and consumes the benefits provided by the entity’s performance as the entity performs (as described in FASB ASC 606-10-55-5 through 55-6).
b. The entity’s performance creates or enhances an asset (for example, work in process) that the customer controls as the asset is created or enhanced (as described in FASB ASC 606-10-55-7).
c. The entity’s performance does not create an asset with an alternative use to the entity (see FASB ASC 606-10-25-28), and the entity has an enforceable right to payment for performance completed to date (as described in FASB ASC 606-10-25-29).
Performance Obligations Satisfied at a Point in Time
FASB ASC 606-10-25-30
If a performance obligation is not satisfied over time, the performance obligation is satisfied at a point in time. To determine the point in time at which a customer obtains control of a promised asset and the entity satisfies a performance obligation, the entity should consider the guidance on control in FASB ASC 606-10-25-23 through 25-26. In addition, it should consider indicators of the transfer of control, which include, but are not limited to, the following:
a. The entity has a present right to payment for the asset
b. The customer has legal title to the asset
c. The entity has transferred physical possession of the asset
d. The customer has the significant risks and rewards of ownership of the asset
e. The customer has accepted the asset
The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. In addition, a) the Company also does not have an alternative use for the asset if the customer were to cancel the contract, and b.) has a fully enforceable right to receive payment for work performed (i.e., customers are required to pay as various milestones and/or timeframes are met)
Also, from time to time we require deposits from our customers. As of March 31, 2021, and December 31, 2020 we had $139,014 and $149,966 of deferred revenue respectively. |
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Fair Value of Financial Instruments | The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures” for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:
The Company’s financial instruments consist of cash, prepaid expenses, inventory, accounts payable, convertible notes payable, and advances from related parties. The estimated fair value of cash, prepaid expenses, investments, accounts payable, convertible notes payable and advances from related parties approximate their carrying amounts due to the short-term nature of these instruments.
The carrying amounts of accounts payable and accrued expenses are considered to be representative of their respective fair values because of the short-term nature of these financial instruments. |
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Other Comprehensive Income | We have no material components of other comprehensive income (loss) and accordingly, net loss is equal to comprehensive loss in all periods.
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Net Profit (Loss) per Common Share | Basic profit / (loss) per share is computed on the basis of the weighted average number of common shares outstanding. At March 31, 2021, we had outstanding common shares of 12,624,678 used in the calculation of basic earnings per share. Basic Weighted average common shares and equivalents for the three months ended March 31, 2021 and 2020 were 12,515,789 and 12,508,011 respectively. As of March 31, 2021, we had convertible notes to potentially convert into approximately 1,011,500 of additional common shares and 740,305 common stock warrants convertible into an additional 740,305 common shares. Fully diluted weighted average common shares and equivalents were withheld from the calculation as they were considered anti-dilutive. |
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Research and Development | We had no amounts of research and development expense during the three and nine months ended March 31, 2021 and 2019.
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Share-Based Compensation | The Company has adopted the use of Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (SFAS No. 123R) (now contained in FASB Codification Topic 718, Compensation-Stock Compensation), which supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and its related implementation guidance and eliminates the alternative to use Opinion 25’s intrinsic value method of accounting that was provided in Statement 123 as originally issued. This Statement requires an entity to measure the cost of employee services received in exchange for an award of an equity instruments, which includes grants of stock options and stock warrants, based on the fair value of the award, measured at the grant date (with limited exceptions). Under this standard, the fair value of each award is estimated on the grant date, using an option-pricing model that meets certain requirements. We use the Black-Scholes option-pricing model to estimate the fair value of our equity awards, including stock options and warrants. The Black-Scholes model meets the requirements of SFAS No. 123R; however, the fair values generated may not reflect their actual fair values, as it does not consider certain factors, such as vesting requirements, employee attrition and transferability limitations. The Black-Scholes model valuation is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. We estimate the expected volatility and estimated life of our stock options at grant date based on historical volatility. For the “risk-free interest rate,” we use the Constant Maturity Treasury rate on 90-day government securities. The term is equal to the time until the option expires. The dividend yield is not applicable, as the Company has not paid any dividends, nor do we anticipate paying them in the foreseeable future. The fair value of our restricted stock is based on the market value of our free trading common stock, on the grant date calculated using a 20-trading-day average. At the time of grant, the share-based compensation expense is recognized in our financial statements based on awards that are ultimately expected to vest using historical employee attrition rates and the expense is reduced accordingly. It is also adjusted to account for the restricted and thinly traded nature of the shares. The expense is reviewed and adjusted in subsequent periods if actual attrition differs from those estimates.
We re-evaluate the assumptions used to value our share-based awards on a quarterly basis and, if changes warrant different assumptions, the share-based compensation expense could vary significantly from the amount expensed in the past. We may be required to adjust any remaining share-based compensation expense, based on any additions, cancellations or adjustments to the share-based awards. The expense is recognized over the period during which an employee is required to provide service in exchange for the award—the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. For the years ended December 31, 2020 and 2019, the Company had no share-based expense. |
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Income Taxes | Federal Income taxes are not currently due since we have had losses since inception.
On December 22, 2018 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018. The Company will compute its income tax expense for the months ended September 30, 2020 using a Federal Tax Rate of 21%.
Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes – Recognition. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard required by ASC 740-10-25-5.
Deferred income tax amounts reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes.
As of March 31, 2021, we had a net operating loss carry-forward of approximately $(5,892,536) and a deferred tax asset of $1,237,433 using the statutory rate of 21%. The deferred tax asset may be recognized in future periods, not to exceed 20 years. However, due to the uncertainty of future events we have booked valuation allowance of $(1,237,433). FASB ASC 740 prescribes recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At March 31, 2021, the Company had not taken any tax positions that would require disclosure under FASB ASC 740.
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Reclassification | Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported income, total assets, total liabilities or stockholders’ equity as previously reported.
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Recently Issued Accounting Pronouncements | The Company is reviewing the effects of following recent updates. The Company has no expectation that any of these items will have a material effect upon the financial statements.
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit Losses [codified as Accounting Standards Codification Topic (ASC) 326]. ASC 326 adds to US generally accepted accounting principles (US GAAP) the current expected credit loss (CECL) model, a measurement model based on expected losses rather than incurred losses. Under this new guidance, an entity recognizes its estimate of expected credit losses as an allowance, which the FASB believes will result in more timely recognition of such losses. This will become effective in January 2023 and the impact on the Company is under evaluation.
Update 2020-06—Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This was issued in August of 2020 and will become effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. We are in the process of evaluating the impact to the Company. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||||||||||||||||||||||
Schedule of estimated useful lives |
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Schedule of Income Taxes |
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WRITEOFF OF PAYABLES RELATED PARTY TRANSACTIONS AND ACCRUED INTEREST OCCURRING PRIOR TO THE COMPANY ABANDONMENT (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WRITEOFF OF PAYABLES RELATED PARTY TRANSACTIONS AND ACCRUED INTEREST OCCURRING PRIOR TO THE COMPANY ABANDONMENT (Tables) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of all existing liabilities |
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WARRANTS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANTS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of outstanding warrant activity |
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GOING CONCERN (Details Narrative) - USD ($) |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
GOING CONCERN | ||||
Accumulated Deficit | $ (5,892,536) | $ (4,324,061) | ||
Net Income (Loss) | (1,568,475) | $ (105,716) | (1,170,666) | |
Stockholder's equity | $ (1,474,141) | $ (1,264,016) | $ (472,871) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) |
3 Months Ended |
---|---|
Mar. 31, 2021 | |
Furniture And Fixtures [Member] | Minimum [Member] | |
Estimated useful life | 3 years |
Furniture And Fixtures [Member] | Maximum [Member] | |
Estimated useful life | 7 years |
Euipments [Member] | Maximum [Member] | |
Estimated useful life | 10 years |
Leasehold Improvements [Member] | |
Estimated useful life | 7 years |
Euipment [Member] | Minimum [Member] | |
Estimated useful life | 7 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Deferred tax assets | $ 1,237,433 | $ 908,053 |
Valuation allowance | (1,237,433) | (908,053) |
Deferred tax assets (Net) | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Dec. 31, 2020 |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Potentially un-collectable accounts | $ 26,000 | $ 0 | |
Inventory | 0 | 0 | |
Deferred revenue | 139,014 | $ 149,966 | |
Net operating loss carry-forward | $ (5,892,536) | ||
Common stock shares outstanding | 12,624,678 | 12,508,011 | |
Weighted average common shares basic | 12,515,789 | 12,508,011 | |
Additional common shares | 740,305 | ||
Valuation allowance | $ (1,237,433) | $ (908,053) | |
Conversion of notes into common share | 1,011,500 | ||
Additional common warrants | 740,305 | ||
Statutory tax rate | 21.00% | ||
Deferred tax assets | $ 1,237,433 | $ 908,053 | |
FDIC insured amount | $ 250,000 |
WRITEOFF OF PAYABLES RELATED PARTY TRANSACTIONS AND ACCRUED INTEREST OCCURRING PRIOR TO THE COMPANY ABANDONMENT (Details) - USD ($) |
Mar. 31, 2021 |
Dec. 31, 2020 |
Oct. 31, 2007 |
Jan. 31, 2007 |
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WRITEOFF OF PAYABLES RELATED PARTY TRANSACTIONS AND ACCRUED INTEREST OCCURRING PRIOR TO THE COMPANY ABANDONMENT | ||||
Accounts payable | $ 1,949,235 | $ 1,747,852 | $ 94,888 | $ 85,225 |
Accrued liabilities | 25,347 | 18,935 | ||
Due to related parties | 100,800 | 120,800 | 293,931 | 248,636 |
Loans payable | 409,000 | 397,000 | ||
Total Liabilities | $ 5,433,728 | $ 4,457,673 | $ 823,166 | $ 749,796 |
WRITEOFF OF PAYABLES RELATED PARTY TRANSACTIONS AND ACCRUED INTEREST OCCURRING PRIOR TO THE COMPANY ABANDONMENT (Details Narrative) |
Jan. 31, 2017
USD ($)
|
---|---|
WRITEOFF OF PAYABLES RELATED PARTY TRANSACTIONS AND ACCRUED INTEREST OCCURRING PRIOR TO THE COMPANY ABANDONMENT | |
Write off other liabilities | $ 823,160 |
EQUITY (Details Narrative) - USD ($) |
1 Months Ended | |||
---|---|---|---|---|
Nov. 30, 2018 |
Mar. 31, 2021 |
Mar. 26, 2021 |
Dec. 31, 2020 |
|
Commitment shares for issuance | 116,667 | |||
Common stock, shares par value | $ 0.00001 | $ 0.00001 | ||
Common stock, shares authorized | 950,000,000 | 950,000,000 | ||
Common stock, shares issued | 12,624,678 | 12,508,011 | ||
Common stock, shares outstanding | 12,624,678 | 12,508,011 | ||
Mr. Glass [Member] | ||||
Stock issued during the period, shares | 12,000,000 | |||
Stock issued during the period, value | $ 120 |
MATERIAL EVENTS (Details Narrative) - USD ($) |
1 Months Ended | ||
---|---|---|---|
Mar. 25, 2021 |
Nov. 30, 2018 |
Nov. 30, 2020 |
|
Aggregate principal amount | $ 1,666,667 | ||
Original issue discount | 166,667 | ||
Purchase price of note | 1,500,000 | ||
Initial tranche, amount | 700,000 | ||
Debt conversion face amount | $ 777,778 | ||
Anti dilutive securities description | The Warrants have a term of 60 months, and contain full-ratchet anti-dilution protection provisions, and have an exercise price of $1.50 per share for 50% of the Warrants, and $2.00 per share for 50% of the Warrants | ||
Benefically ownership percantage | 4.99% | ||
Mr. Glass [Member] | |||
Stock issued during the period, shares | 12,000,000 | ||
Stock issued during the period, value | $ 120 | ||
Mr. Michael Hill [Member] | |||
Monthy compensation amount | $ 25,000 | ||
Investors [Member] | |||
Stock issued during the period, shares | 116,667 | ||
Interest rate description | The Note provides that the Investor may not convert any amount of the Note that would result in the beneficial ownership of greater than 4.99% of the outstanding shares of the Company, with the exception that the beneficial ownership limitation may be waived up to a maximum of 9.99% at the election of the Investor, with not less than 61 days prior notice |
NOTES PAYABLE (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 02, 2021 |
Jul. 08, 2020 |
Jun. 11, 2020 |
Jun. 08, 2020 |
Jun. 05, 2020 |
Jun. 04, 2020 |
May 05, 2020 |
Mar. 25, 2021 |
Jan. 19, 2021 |
Nov. 30, 2020 |
Jul. 27, 2020 |
Feb. 29, 2020 |
Mar. 31, 2019 |
Feb. 19, 2019 |
Mar. 31, 2021 |
Dec. 31, 2020 |
|
Interest rate | 3.75% | 8.00% | 8.00% | 1.00% | 6.00% | 9.00% | 8.00% | |||||||||
Maturity Date | Aug. 15, 2022 | Sep. 11, 2020 | Sep. 08, 2020 | Aug. 15, 2022 | Aug. 15, 2022 | Feb. 19, 2020 | ||||||||||
Promissory note issued to related party | $ 150,000 | $ 10,000 | $ 10,000 | $ 310,000 | $ 203,000 | $ 300,000 | $ 17,000 | |||||||||
Accounts receivable | $ 103,685 | $ 36,274 | ||||||||||||||
Debt Convertible price per share | $ 1.00 | $ 1.00 | ||||||||||||||
Additionally warrants | 100,000 | 350,000 | ||||||||||||||
Aggregate principal amount | $ 1,666,667 | |||||||||||||||
Debt conversion face amount | 777,778 | |||||||||||||||
Letter Agreement [Member] | ||||||||||||||||
Amount paid | $ 252,875 | |||||||||||||||
Mr. Glass [Member] | ||||||||||||||||
Contribution for expenses and fees | 26,864 | |||||||||||||||
Third Party [Member] | ||||||||||||||||
Aggregate purchase price | 16,666,667 | |||||||||||||||
Debt conversion face amount | $ 7,777,778 | |||||||||||||||
Agreement description | the Company entered into a 11% secured convertible promissory note with a third-party with a total commitment of $1,666,667 and the first tranche advanced on that date of $777,778. Pursuant to the agreement, the Company issued the lender 116,667 shares of common stock, 116,667 5-year warrants with an exercise price of $1.50 and 116,667 5-year warrants with an exercise price of $2.00. The note had an original issue discount of $77,778 | |||||||||||||||
Promissory Note [Member] | ||||||||||||||||
Interest rate | 8.00% | 9.90% | 8.00% | |||||||||||||
Maturity Date | Sep. 05, 2020 | Jan. 01, 2021 | Mar. 31, 2020 | |||||||||||||
Promissory note issued to related party | $ 20,000 | $ 531,000 | $ 9,300 | |||||||||||||
Accounts receivable | 0 | |||||||||||||||
Promissory Note 1 [Member] | ||||||||||||||||
Interest rate | 8.00% | 8.00% | 8.00% | |||||||||||||
Maturity Date | Mar. 31, 2020 | Mar. 30, 2020 | ||||||||||||||
Promissory note issued to related party | $ 10,000 | $ 60,000 | $ 14,500 | |||||||||||||
Accounts receivable | $ 0 |
WARRANTS (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Mar. 26, 2021 |
Mar. 25, 2021 |
Jan. 19, 2021 |
Nov. 30, 2020 |
Mar. 31, 2021 |
|
Warrants issued | $ 969,849 | ||||
Exercise price | $ 1.00 | $ 1.00 | |||
Five-Year Common Stock [Member] | |||||
Warrants issued | $ 16,971 | $ 11,667 | $ 100,000 | $ 350,000 | |
Exercise price | $ 3.30 | $ 1.50 | $ 1.00 | $ 1.00 | |
Five-Year Common Stock One [Member] | |||||
Warrants issued | $ 11,667 | $ 40,000 | |||
Exercise price | $ 2.00 | $ 0.264 |
SUBSEQUENT EVENTS (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | ||||
---|---|---|---|---|---|---|
Jan. 19, 2021 |
Nov. 30, 2020 |
Mar. 31, 2021 |
Apr. 12, 2021 |
Apr. 06, 2021 |
Dec. 31, 2020 |
|
Warrants issued | $ 969,849 | |||||
Convertible promissory note | $ 980,078 | $ 202,300 | ||||
Exercise price | $ 1.00 | $ 1.00 | ||||
Subsequent Event [Member] | Series A Preferred Stock [Member] | CBD Brand Partners [Member] | ||||||
Preferred stock shares issued | 10,000 | |||||
Subsequent Event [Member] | Series B Preferred Stock [Member] | CBD Brand Partners [Member] | ||||||
Preferred stock shares issued | 800 | |||||
6% Secured Convertible Promissory Note [Member] | ||||||
Warrants issued | $ 100,000 | $ 350,000 | ||||
Convertible promissory note | $ 203,000 | |||||
Debt term | 5 years | |||||
Exercise price | $ 1.00 | |||||
Debt [Member] | Subsequent Event [Member] | ||||||
Debt settlement | $ 252,875 |
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