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BLUE LINE PROTECTION GROUP, INC.

(BLPG)
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BLUE LINE PROTECTION : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (form 10-Q)

08/11/2021 | 03:58pm EDT

You should read the following discussion and analysis of financial condition and results of operations in conjunction with the consolidated financial statements and related notes appearing elsewhere in this Report.

We were originally incorporated in Nevada on September 11, 2006, under the name The Engraving Masters, Inc. (the "Company").

On May 2, 2014, we changed our name to Blue Line Protection Group, Inc.

We provide armed protection and transportation, banking, compliance and training services for businesses engaged in the legal cannabis industry. During the six months ended June 30, 2021 substantially all of our revenue was derived from transportation and currency processing services.

It is estimated that the total market for marijuana, legal or otherwise, will exceed the economic value of corn and wheat combined. Marijuana is widely considered the largest cash crop in the United States. Businesses have been positioning themselves for years, each trying to establish a leadership position in the legal marijuana industry.

Cultivation facilities are the producers of legal cannabis that eventually make its way to consumers. Growers' operations typically span a large geographic footprint, making them susceptible to theft, as are shipments from the growers to testing laboratories or to retail dispensaries. Additionally, due to current federal marijuana legislation and banking environment, growers are finding it increasingly difficult to secure their cash, purchase equipment and obtain financing for expansion.

Dispensaries are the retail face of the legal cannabis industry. All legal sales of cannabis products are transacted through dispensaries that are state-licensed. To maintain their licenses, dispensaries must comply with a variety of state-mandated reporting requirements, including reporting every gram of cannabis passing in and out of the store. Dispensaries also face financing and banking challenges similar to those that growers encounter.

We do not grow, test, transport or sell marijuana.

Armed Protection and Transportation

Fundamental to the legal cannabis industry is the protection of product and cash throughout the distribution channel. Growers ship product from their cultivation facilities to independent laboratories where it is tested for compliance with state-mandated parameters. From the labs, the product is then delivered to the retail dispensaries, where it is sold to the public.

Due to the current banking and regulatory environments, payments between each step in the distribution network are made in cash: from the customer back to the grower. Therefore, these businesses are forced into having to transport bags of money between growers and dispensaries and their own vaults or storage facilities.

The risk of theft of cash and product is present at every stage, even when they are not in transit. Accordingly, all cannabis businesses require security measures to prevent theft, mitigate risk to employees and maintain regulatory compliance.

We began our security and protection operations in Colorado in February 2014. Since then, we have become the largest legal cannabis protection services company in the state. We offer a fully integrated approach to managing the movement of cannabis and cash from growers through dispensaries via armed and armored transport, money processing, vaulting and related credit. Money processing services generally include counting, sorting and wrapping currency.

As of December 31, 2019 we discontinued our Service-Guards segment.

We also offer security monitoring, asset vaulting, and VIP and dignitary protection.



  4







Results of Operations



Material changes in line items in our Statement of Operations for the three
months ended June 30, 2021 as compared to the same period last year, are
discussed below:



                                     Increase (I) or
Item                                  Decrease (D)     Reason

Revenue                                     I          Increase in customers
Interest expense                            I          Increase in new leases
Gain (loss) on change in fair               I          Increase in the price of our
value of derivative securities                         common stock




Material changes in line items in our Statement of Operations for the six months
ended June 30, 2021 as compared to the same period last year, are discussed
below:



                                     Increase (I) or
Item                                  Decrease (D)     Reason

Revenue                                     I          Increase in customers
Interest expense                            I          Increase in new leases and
                                                       settlement on loans
Gain (loss) on change in fair               I          Increase in the price of our
value of derivative securities                         common stock




Capital Resources and Liquidity

Our material sources and <uses> of cash during the six months ended June 30, 2021 and 2020 were:




                                        2021          2020

Cash provided (used) by operations   $  317,261     $ 181,610
Purchase of equipment                  (39,779)             -
Loan proceeds                                 -        24,000
Loan payments                          (137,637 )     (49,669 )



As of June 30, 2021 we did not have any material capital commitments other than loan payments.

Other than as disclosed above, we do not anticipate any material capital requirements for the twelve months ending June 30, 2022.

Other than as disclosed above, we do not know of any:



  ? trends, demands, commitments, events or uncertainties that will result in, or
    that are reasonable likely to result in, our liquidity increasing or
    decreasing in any material way; or

  ? any significant changes in our expected sources and uses of cash.



We do not have any commitments or arrangements from any person to provide us with any equity capital.

During the next twelve months, we anticipate that we will incur approximately $1,200,000 of general and administrative expenses in order to execute our current business plan. We also plan to incur significant sales, marketing, research and development expenses during the next 12 months. We must obtain additional financing to continue our operations. We may not be able to obtain additional funding on terms that are favorable to us or at all. We may not be able to obtain sufficient funding to continue our operations, or if we do receive funding, to generate adequate revenues in the future or to operate profitably in the future. These conditions raise substantial doubt about our ability to continue as a going concern.



  5






Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements.



Critical Accounting Policies


Management considers the following policies critical because they are both important to the portrayal of our financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters.

Accounts receivable. Accounts receivable are stated at the amount we expect to collect from outstanding balances and do not bear interest. We provide for probable uncollectible amounts through an allowance for doubtful accounts, if an allowance is deemed necessary. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. On a periodic basis, management evaluates our accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days. Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote.

Revenue recognition. In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)," which supersedes the revenue recognition requirements in Accounting Standards Codification 605, "Revenue Recognition." This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASC 606-10-50-5 requires that entities disclose disaggregated revenue information in categories (such as type of good or service, geography, market, type of contract, etc.) that depict how the nature, amount, timing, and uncertainty of revenue and cash flow are affected by economic factors. ASC 606-10-55-89 explains that the extent to which an entity's revenue is disaggregated depends on the facts and circumstances that pertain to the entity's contracts with customers and that some entities may need to use more than one type of category to meet the objective for disaggregating revenue. In August 2015, the FASB issued ASU No. 2015-14, which deferred the effective date of the new revenue standard by one year, and allowed entities the option to early adopt the new revenue standard as of the original effective date. There have been multiple standards updates amending this guidance or providing corrections or improvements on issues in the guidance. The requirements for these standards relating to Topic 606 are effective for interim and annual periods beginning after December 15, 2017. This standard permitted adoption using one of two transition methods, either the retrospective or modified retrospective transition method.

We adopted these standards at the beginning of the first quarter of fiscal 2018 using the modified retrospective method. The adoption of these standards did not have an impact on our Statements of Operations for the six months ended June 30, 2021.

Stock-based compensation. We record stock based compensation in accordance with the guidance in ASC Topic 505 and 718, which requires us to recognize expenses related to the fair value of our employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. We recognize the cost of all share-based awards on a graded vesting basis over the vesting period of the award.

Equity Instruments. We account for equity instruments issued in exchange for the receipt of goods or services from non-employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measureable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.

© Edgar Online, source Glimpses

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Financials (USD)
Sales 2020 4,13 M - -
Net income 2020 -0,93 M - -
Net Debt 2020 3,28 M - -
P/E ratio 2020 -0,86x
Yield 2020 -
Capitalization 5,94 M 5,94 M -
EV / Sales 2019 1,00x
EV / Sales 2020 0,99x
Nbr of Employees 65
Free-Float 99,5%
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Managers and Directors
Evan DeVoe President, CEO, CFO, Director & CAO
Christopher E. Galvin Chairman
Doyle Knudson Independent Director
Daniel L. Alen Director
Sector and Competitors
1st jan.Capi. (M$)
BLUE LINE PROTECTION GROUP, INC.0.00%6
SECOM CO., LTD.-15.10%15 440
SECURITAS AB9.68%6 175
PROSEGUR COMPAÑÍA DE SEGURIDAD, S.A.3.94%1 588
PROSEGUR CASH, S.A.-18.38%1 129
SIS LIMITED12.63%949