The following discussion should be read in conjunction with the financial
information included elsewhere in this Quarterly Report on Form 10-Q (this
"Report"), including our unaudited condensed consolidated financial statements
and the related notes and with our audited consolidated financial statements and
related notes included in our Annual Report on Form 10-K for the year ended
References in this Quarterly Report on Form 10-Q to "us", "we", "our" and
similar terms refer to
Cautionary Note Regarding Forward-Looking Statements
This discussion includes forward-looking statements, as that term is defined in the federal securities laws, based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Words such as "anticipate", "estimate", "plan", "continuing", "ongoing", "expect", "believe", "intend", "may", "will", "should", "could" and similar expressions are used to identify forward-looking statements.
We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.
Critical Accounting Policies
There have been no changes to our significant accounting policies described in
our Annual Report on Form 10-K for the year ended
Recent Accounting Pronouncements
See Note 1 to the accompanying notes to unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further details regarding this topic.
Results of Operations
Results of Operation for Three Months Ended
Revenue and cost of revenue
Revenue increased by approximately
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Cost of revenue for 2022 was approximately
Operating expenses
Our operations were primarily directed towards increasing sales and expanding our distribution network.
Our general and administrative expenses increased by 106%, or approximately
Three months Three months ended ended March 31, March 31, 2022 2021 Change Percent Personnel costs 499,658 311,556 188,102 60 % Stock-based compensation 28,036 (34,585 ) 62,621 181 % Shipping and storage 437,434 143,735 293,699 204 % Legal, professional and consulting fees 179,922 76,172 103,750 136 % Marketing and selling 75,502 42,955 32,547 76 % Director fees 62,500 77,130 (14,630 ) -19 % Research and development 30,644 68,141 (37,498 ) -55 % Other general and administrative expenses 235,343 66,497 168,845 254 % 1,549,039 751,601 797,438 106 %
Personnel cost represents the cost of employees including salaries, bonuses,
employee benefits and employment taxes and continues to be our largest cost.
Personnel cost increased by approximately
Stock based compensation is used as an incentive to attract new employees and to
compensate existing employees. Stock based compensation includes stock issued
and options granted to employees and non-employees. Stock based compensation for
the three months ended
Shipping and storage expense increased approximately
Legal, professional, and consulting fees increased approximately
Marketing and selling expenses increased approximately
Director fees decreased approximately
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Research and development expenses decreased approximately
Other expenses increased approximately
We had operating losses of approximately
The change in the value of the derivative liability is based upon the
Black-Scholes model from one period to another. The gain of approximately
Interest expense was approximately
We had net losses of approximately
Liquidity and Capital Resources
As of
During the three months ended
Our liquidity needs will depend on how quickly we are able to profitably ramp up sales, as well as our ability to control and reduce variable operating expenses, and to continue to control fixed overhead expense.
Our operations to date have been financed by the sale of securities, the issuance of convertible debt and the issuance of short-term debt, including related party advances. If we are unable to generate sufficient cash flow from operations with the capital raised, we will be required to raise additional funds either in the form of equity or debt. There are no assurances that we will be able to generate the necessary capital to carry out our current plan of operations.
We have entered into a direct lease for premises covering the period
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
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