Certain statements in this Report constitute "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Factors that might cause such a difference include, among others, uncertainties relating to general economic and business conditions; industry trends; changes in demand for our products and services; uncertainties relating to customer plans and commitments and the timing of orders received from customers; announcements or changes in our pricing policies or that of our competitors; unanticipated delays in the development, market acceptance or installation of our products and services; changes in government regulations; availability of management and other key personnel; availability, terms, and deployment of capital; relationships with third-party equipment suppliers; and worldwide political stability and economic growth. The words "believe," "expect," "anticipate," "intend" and "plan" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.
Results of Operations
Prior to
Three Months EndedSeptember 30, 2022 , compared with the Three Months EndedSeptember 30, 2021 Three Months Ended A B A-B September September 30, 2022 30, 2021 Change Change % REVENUE$ 383,079 $ 463,040 $ (79,961 ) -17 % Cost of revenues 149,943 174,814 (24,871 ) -14 % Cost of sales % of total sales 39 % 38 % 1 % Gross profit 233,136 288,226 (55,090 ) -19 % Gross profit % of sales 61 % 62 % -1 % OPERATING EXPENSES Professional fees 208,515 132,315 76,200 58 % Depreciation and amortization 39,440 42,700 (3,260 ) -8 % Wages and salaries 188,622 179,136 9,486 5 % Advertising 1,599 47,044 (45,445 ) -97 % General and administrative 177,658 259,451 (81,793 ) -32 % Total operating expenses 615,834 660,646 (44,812 ) -7 % NET LOSS FROM CONTINUING OPERATIONS (382,698 ) (372,420 ) (10,278 ) 3 %
Revenues declined 17% in the three months ended
2
Gross profit margins for our services, as a percentage of sales, were
essentially unchanged in the three months ended
Total operating costs decreased significantly in the third quarter of 2022
compared to the same period in 2021. We substantially reduced advertising, and
general and administrative costs. The cost decreases were primarily the result
of our efforts to limit losses while exploring acquisition and growth
activities. Our targeted acquisition activities did not result in consummated
transactions in the three months ended
Net operating loss for the three-month period ended
Nine Months EndedSeptember 30, 2022 , compared with the Nine Months EndedSeptember 30, 2021 Nine Months Ended A B A-B September September 30, 30, 2022 2021 Change Change % REVENUE$ 1,262,868 $ 1,452,279 $ (189,411 ) -13 % Cost of revenues 479,173 553,236 (74,063 ) -13 % Cost of sales % of total sales 38 % 38 % 0 % Gross profit 783,695 899,043 (115,348 ) -13 % Gross profit % of sales 62 % 62 % 0 % OPERATING EXPENSES Professional fees 419,923 453,236 (33,313 ) -7 % Depreciation and amortization 124,147 128,463 (4,316 ) -3 % Wages and salaries 559,533 516,534 42,999 8 % Advertising 33,128 280,475 (247,347 ) -88 % General and administrative 534,022 855,637 (321,615 ) -38 % Total operating expenses 1,670,753 2,234,345 (563,592 ) -25 % NET LOSS FROM CONTINUING OPERATIONS (887,058 ) (1,335,302 ) 448,244 -34 %
Revenues declined 13% in the nine months ended
Gross profit margins for our services, as a percentage of sales, were
essentially unchanged in the nine months ended
3
Total operating costs decreased significantly in the first nine months of 2022
compared to the same period in 2021. We substantially reduced professional fees,
advertising, and general and administrative costs. The cost decreases were
primarily the result of our efforts to limit losses while exploring acquisition
and growth activities. Our targeted acquisition activities did not result in
consummated transactions in the nine-month period ended
Net operating loss for the nine-month period ended
Discontinued Operations.
In
Period Ended Discontinued OperationsApril 22, 2021 REVENUE 75,866 Cost of revenues 91,316 Cost of sales % of total sales 120 % Gross profit (15,450 ) Gross profit % of sales -20 % OPERATING EXPENSES Depreciation and amortization 5,861 Wages and salaries 106,224 Advertising 1,693 General and administrative 102,833 Interest expense 2,144 Total operating expenses 218,755
NET LOSS FROM DISCONTINUED OPERATIONS (234,205 )
GKMP and iBud generated losses from operations during the periods they were operated by the Company. In the second quarter of 2021, management determined that the time and effort required to turn these businesses around would be a significant drain on resources and would limit expansion of our PrestoCorp operations. The sale of our interests in GKMP and iBud eliminates this concern.
Liquidity and Capital Resources
Net cash used in operating activities for the nine-month period ended
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We also reported stock-based compensation of
The accompanying condensed consolidated financial statements have been prepared
assuming that the Company will continue as a going concern, which contemplates
the realization of assets and the liquidation of liabilities in the normal
course of business. We incurred net losses attributable to
Management is currently evaluating fund-raising alternatives including private placement of equity securities, a secondary public offering, and various debt instruments. In addition, key members of management have indicated a willingness to provide additional operating capital from time to time. We are also currently selling a portion of our investment securities to generate cash for operations, and we have restructured our intercompany loans to PrestoCorp with a monthly amortization schedule and required monthly payments that will begin to address ongoing operating expenses that must be paid in cash. Based on all these considerations, we believe we will have sufficient capital to operate the business for the next twelve months. It will be important for the Company to be successful in its efforts to raise capital if it is going to be able to further its business plan in an aggressive manner. Raising capital in this manner will cause dilution to current shareholders.
In the event the Company consummates the Merger with MJ Harvest, Inc., it is expected that the nature of the business, the cash flow, and access to additional operating capital, will change. The effect of the of the change and the impact on future operations cannot be determined at this time.
COVID-19
COVID-19 has been declared a pandemic by the
In addition, the economic disruptions caused by COVID-19 could also adversely impact the impairment risks for certain long-lived assets, equity method investments and goodwill. Management evaluated these impairment considerations and determined that no such impairments occurred through the date of this report.
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Off Balance Sheet Arrangements
None
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