BOOR HLDG PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Report contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "Company believes," "management believes" and similar language. These forward-looking statements can be identified by the use of words such as "believes," "estimates," "could," "possibly," "probably," "anticipates," "projects," "expects," "may," "will," or "should," or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management's current expectations and are inherently uncertain. The forward-looking statements are based on the current expectations ofBoomer Holdings. Inc. and are inherently subject to certain risks, uncertainties and assumptions, including those set forth in the discussion under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report. Actual results may differ materially from results anticipated in these forward-looking statements. Investors are also advised to refer to the information in our previous filings with theSecurities and Exchange Commission (SEC), especially on Forms 10-K, 10-Q and 8-K, in which we discuss in more detail various important factors that could cause actual results to differ from expected or historic results. It is not possible to foresee or identify all such factors. As such, investors should not consider any list of such factors to be an exhaustive statement of all risks and uncertainties or potentially inaccurate assumptions. Impact of COVID-19 The Company's operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic spreading throughoutthe United States and the world. Due to the timing of initial and evolving governmental orders and guidelines impacting the Company's financial operations inNew York , andWest Virginia , as well as other contributors to the process of financial statement preparation in otherU.S. states, relating to social distancing, stay in place orders, travel and other restrictions on business, necessary and immediate access of personnel, records and information have been adversely effected as set forth throughout this report. Corporate History
Boomer Holdings Inc. was incorporated asRemaro Group Corp. under the laws of theState of Nevada onMarch 31, 2016 . OnJanuary 7, 2020 , the Company, then namedRemaro Group Corp. , executed and consummated an Agreement of Merger and Plan of Share Exchange (the "Exchange Agreement"), withBoomer Natural Wellness, Inc. ("BNW"),Boomer Naturals Holdings, Inc. , aNevada corporation ("Boomer"), Boomer Naturals, and the shareholders of Boomer (the "Exchange"). Upon consummation of the transactions set forth in the Exchange Agreement (the "Closing"), the Company adopted the business plan of Boomer Naturals. Pursuant to the terms of the Exchange Agreement, the Company agreed to acquire all of the outstanding shares of Boomer in exchange for the issuance of an aggregate 120,980,739 shares (the "Exchange Shares") of the Company's Common Stock and BNW agreed to retire 24,000,000 shares of the Company's Common Stock. Also onJanuary 7, 2020 , the Company approved an amendment to its Articles of Incorporation (the "Amendment") to: change the name of the Company toBoomer Holdings Inc. ; effect a forward stock split on the basis of three-to-one (3:1); and to increase the number of authorized shares of capital stock to 210,000,000 of which 200,000,000 shares shall be Common Stock and 10,000,000 shares will be blank-check preferred stock, par value$0.001 per share.
Description of Our Business
Our mission is to develop and sell products of superior quality which improve
the overall wellness of our customers. We are currently engaged in two principal
product lines: (i) Boomer Botanics, our line of wellness products that contains
our proprietary formula combining five natural and powerful ingredients that
target the body's endocannabinoid system (ECS) which is the first FDA-compliant
CBD alternative; and (ii) our line of face masks and other personal protection
equipment.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Boomer Botanics We are engaged in the research, development, acquisition, licensing and sales of specialized natural products which have FDA compliant ingredients and are impactful on the endocannabinoid system. These products powered by natural terpenes, include, edible and topical offerings. We are engaged in marketing and branding within the alternative CBD/THC space, including our trademark "CB5" brand which is a proprietary formula and currently patent pending. Boomer Naturals currently operates a retail store inLas Vegas Nevada and is currently negotiating a lease on the company's flagship store inManhattan New York . Boomer Natural products are also available inGolf Pro Shops , Specialty Stores, Chiropractic Offices and Nail Salons across the countries. Boomer Naturals has a robust online presence and enjoys material sales through its website at BoomerNaturals.com. Our Strategy
With our CB5 formula we believe are in a unique position to brand our line. Our FDA compliant product will give us access to advertising on national television and social media platforms like Facebook and Google. In addition we expect to air promotional/educational content throughout 2020 onPBS affiliates across the country as well as a corporate sponsorship atMadison Square Garden and the
MSG network. However, as a result of COVID-19 Pandemic, there can be no assurance that we will be able to increase any retail sales of our CB5 products. Most of the stores that sell our CB5 products are non-essential retail stores so the ability to generate sales will be subject to these stores re-opening sufficiently in the near future and consequently remaining open, of which we can offer no predictions or assurances. Online Sales
Through its websites and internet advertising, Boomer will be able to brand its products while informing consumers of the attributes of CB5. This direct to consumer interaction could pave the way for significant online sales through the Boomer Naturals website. National Retail Chains.
As a result of the Pandemic, most non-essential retail stores were required to be closed sinceMarch 2020 . Further, many National Retail Chains are hesitant to introduce CBD related products on a national scale and thus far have only offered topical products in regional test markets. We believe as stores reopen, the FDA compliant ingredients in CB5 will allow these chains to offer Boomer Natural products in both topical and ingestible forms nation-wide. Golf As a result of the Pandemic, most golf courses and non-essential retail stores that sold golf-related products were required to be closed sinceMarch 2020 . As stores reopen and items are phased in, we plan to continue to grow our distribution network in the golf space in part through our relationship withPGA Magazine and the PGA Merchandising Show. With access to vendors through these mediums and the ability to advertise we will be able to best utilize of our wide-ranging wholesale sales network. We are in a unique position to capture a significant share of the expansive golf market. Overseas opportunities
Boomer has begun discussions with distributors in over 7 countries to carry the Boomer Naturals CB5 product line. These distributors see a unique opportunity to fulfill consumer demand via CB5 where CBD is not available to sell.
In addition, we intend to seek new branding and licensing opportunities for our intellectual property and we will seek strategic corporate and product acquisitions.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Boomer Medical Products Upon mostU.S. States issuing some level of Stay-At-Home orders arising from the COVID-19 pandemic, the short-term business strategy of Boomer Naturals shifted. Boomer Naturals received its first round ofTommy Bahama orders duringMarch 2020 and expected thatTommy Bahama would be reordering on a monthly basis to replenish stock at all of its brick and mortar retail locations. In addition, we believeTommy Bahama intended to launch an aggressive e-commerce campaign commencing with email advertisements to its significant database of customers. Once the Stay-At-Home orders took effect,Tommy Bahama was required to close its retail stores for several months and further elected to delay any major e-commerce marketing initiatives due to their belief that consumers were primarily spending money on food and other necessities as opposed to engaging in significant discretionary spending during the Pandemic. It would have been reasonably expected that said actions byTommy Bahama would have caused a significant delay in revenues to the Company. However, management saw an opportunity to remain consistent with its health and wellness brand strategy by expanding its offerings to face coverings and other products within the Personal Protective Equipment category. Commencing inApril 2020 , Boomer Naturals began to offer for online retail sale at its website a variety of face coverings and sanitizers. During this period, Boomer Naturals began running advertisements on television, radio and various digital platforms featuring face coverings. Due the overwhelming demand for such items, e-commerce sales have grown to over 1,000 orders per day as ofApril 30, 2020 . This increased revenue stream was able to replace the anticipated revenue arising from the Tommy Bahama relationship. In addition, while the e-commerce PPE vertical continued to grow, Boomer Naturals began to receive some interest in wholesale purchases of face coverings and other protective equipment. Boomer Naturals is in the early-stages of growing a wholesale PPE division. While no assurance can be given regarding the performance of the Boomer Medical products division, the Company anticipates that this division will continue to generate revenues for the next three to six months to accompany the expected reemergence of the CB5 division uponTommy Bahama retail stores reopening and increase overall brand awareness from the retail focused advertising campaign. Although the margins on protective equipment are lower than CB5 products, it is anticipated that this division will still yield material top line revenue and profits to assist Boomer Naturals in meeting or exceeding its 2020 Guidance. In the event both divisions prosper simultaneously, 2020 Guidance could foreseeably be exceeded; however, due to the uncertainty of the PPE division arising from uncertainty of medical trends in prevention and treatment from COVID-19, management believes the most accurate and transparent position with respect to its financial affairs is to maintain its current 2020 Guidance. 21 Results of Operations Three Months EndedApril 30, 2020 (Unaudited) Compared to Three Months EndedApril 30, 2019 (Unaudited): Three Months Ended April 30, 2020 2019 Changes % of % of Amount Revenue Amount Revenue Amount % Net revenue$ 1,249,373 100.0 % $ - 0.0 %$ 1,249,373 100.0 % Cost of Goods Sold 782,982 62.7 % - 0.0 % 782,982 62.7 % Gross profit 466,391 37.3 % - 0.0 % 466,391 37.3 % Operating expenses: Advertising and marketing 427,743 34.2 % - 0.0 % 427,743 34.2 % General and administrative 552,904 44.3 % - 0.0 % 552,904 44.3 % Payroll and payroll taxes 662,656 53.0 % - 0.0 % 662,656 53.0 % Professional fees 582,875 46.7 % - 0.0 % 582,875 46.7 % Research and development 539 0.0 % - 0.0 % 539 0.0 %
Depreciation and amortization 11,536 0.9 % -
0.0 % 11,536 0.9 %
Rent 144,910 11.6 % - 0.0 % 144,910 11.6 % Total operating expenses 2,383,163 190.7 % -
0.0 % 2,382,163 190.7 %
Loss from operations (1,916,772 ) -153.4 % -
0.0 % (1,916,772 ) -153.4 %
Other Income (Expense): Interest expense (91,274 ) -7.3 % - 0.0 % (91,274 ) -7.3 % Other income 1,790 0.1 % - 0.0 % 1,790 0.1 % Total other income (expense) (89,484 ) -7.2 % -
0.0 % (89,484 ) -7.2 %
Loss before provision for income taxes (2,006,256 ) -160.6. % - 0.0 % (2,006,256 ) -160.6 % Provision for income taxes - 0.0 % - 0.0 % - 0.0 % Net loss$ (2,006,256 ) -160.6 % $ - 0.0 %$ (2,006,256 ) -160.6 % Revenue
Our revenue during the three months endedApril 30, 2020 we had$1,249,373 in revenues, coming from PPE products, sales, retail, and wholesale income from customers that purchased our CB5 wellness products, compared to$0 from these revenue sources for the same period one year ago. We expect the revenue we receive from PPE and CB5 wellness products to continue to grow as sales increase. Cost of Goods Sold
Our Cost of Goods Sold ("COGS") for sales of PPE and CB5 wellness products
consists of the cost of acquiring and manufacturing the product to the customer.
For the three months ended April 30, 2020 , our COGS associated with PPE products
and CB5 wellness was $782,982 . Most orders are delivered directly to the
customer, without any handling, storage or processing by us. We did not have any
COGS for the three months ended April 30, 2019 as we did not have any revenue
during that same period.
Operating Expenses
Overall, operating expenses increased for the three months ended
Non-Operating Expenses
We incurred interest expense related to notes payable and lines of credit in the
amount of
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Results of Operations
Nine Months Ended April 30, 2020 (Unaudited) Compared to Nine Months Ended April
30, 2019 (Unaudited):
Nine Months Ended April 30,
2020 2019 Changes
% of % of
Amount Revenue Amount Revenue Amount %
Net revenue $ 1,676,936 100.0 % $ - 0.0 % $ 1,676,936 100.0 %
Cost of Goods Sold 936,369 55.8 % - 0.0 % 936,369 55.8 %
Gross profit 740,567 44.2 % - 0.0 % 740,567 44.2 %
Operating expenses:
Advertising and marketing 1,067,396 63.7 % - 0.0 % 1,067,396 63.7 %
General and administrative 1,083,610 64.6 % - 0.0 % 1,083,610 64.6 %
Payroll and payroll taxes 1,566,840 93.4 % - 0.0 % 1,566,840 93.4 %
Professional fees 1,550,257 92.4 % - 0.0 % 1,550,257 92.4 %
Research and development 17,024 1.0 % - 0.0 % 17,024 1.0 %Depreciation and amortization 19,834 1.2 % -
0.0 % 19,834 1.2 %
Rent 343,005 20.5 % - 0.0 % 343,005 20.5 %
Total operating expenses 5,647,966 336.8 % - 0.0 % 5,647,966 336.8 %
Loss from operations (4,907,399 ) -292.6 % - 0.0 % (4,907,399 ) -292.6 %
Other Income (Expense):
Interest expense (175,864 ) -10.5 % - 0.0 % (175,864 ) -10.5 %
Other income 3,280 0.2 % - 0.0 % 3,280 0.2 %
Total other income (expense) (172,584 ) -10.3 % - 0.0 % (172,584 ) -10.5 %
Loss before provision for income
taxes (5,079,983 ) -302.9 % - 0.0 % (5,079,983 ) -302.9 %
Provision for income taxes - 0.0 % - 0.0 % - 0.0 %
Net loss $ (5,079,983 ) -302.9 % $ - 0.0 % $ (5,079,983 ) -302.9 %
Revenue
Our revenue during the nine months ended April 30, 2020 we had $1,676,936 in
revenues, coming from PPE products, sales, retail, and wholesale income from
customers that purchased our CB5 wellness products, compared to $0 from these
revenue sources for the same period one year ago. We expect the revenue we
receive from PPE and CB5 wellness products to continue to grow as sales
increase.
Cost of Goods Sold
Our Cost of Goods Sold ("COGS") for sales of PPE and CB5 wellness products
consists of the cost of acquiring and manufacturing the product to the customer.
For the nine months ended April 30, 2020 , our COGS associated with PPE products
and CB5 wellness was $936,369 . Most orders are delivered directly to the
customer, without any handling, storage or processing by us. We did not have any
COGS for the nine months ended April 30, 2019 as we did not have any revenue
during that same period.
Operating Expenses
Overall, operating expenses increased for the nine months ended
Non-Operating Expenses
We incurred interest expense related to notes payable and lines of credit in the
amount of
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Liquidity and Capital Resources
Our principal liquidity requirements are for working capital and capital expenditures. We fund our liquidity requirements primarily through cash on hand, cash flows from operations and borrowings from through debt. We endedApril 30, 2020 with$128,115 of cash compared with$152,667 as ofJuly 31, 2019 . The following table summarizes our cash flows from operating, investing, and financing activities: Nine Months EndedApril 30, 2020 2019
Net cash provided by (used in) operating activities
$ -
Net cash provided by (used in) investing activities (114,538 )-
Net cash provided by (used in) financing activities 5,500,032
-
Net increase (decrease) in cash $ (24,552 )
-
Operating Activities - For the nine months ended
Investing Activities - Cash used in investing activities primarily consisted of purchases of property and equipment.
Financing Activities - Net cash provided by or used in financing activities
primarily consisted of net borrowings from notes payable and lines of credit of
CRITICAL ACCOUNTING POLICIES Our critical accounting estimates are included in our significant accounting policies as described in Note 2 of the consolidated financial statements of this Form 10-Q. Those consolidated financial statements were prepared in accordance with GAAP. Critical accounting estimates are those that we believe are most important to the portrayal of our financial condition and results of operations. The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expense. Our estimates are evaluated on an ongoing basis and drawn from historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. Actual results may differ from our estimates. Management believes that the following accounting estimates reflect the more significant judgments and estimates we use in preparing our consolidated financial statements. Revenue Recognition The Company recognizes revenue when persuasive evidence of an arrangement exists, the price is fixed or determinable, and collectability is reasonably assured, and delivery has occurred or services have been rendered. The Company offers the CB5 proprietary formula various channels, e-commerce, and brick
and mortar retail
The Company includes shipping and handling costs in cost of sales. Amounts billed for shipping and handling are included with revenues in the statement of operation.
The Company recognizes an allowance for estimated future sales returns in the period revenue is recorded, based on pending returns and historical return data, among other factors. Management did not believe any allowance for sales returns was required atApril 30, 2020 . Advertising Expense
Advertising costs are expensed as incurred. Advertising expense amounted to
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Accounts Receivable
Accounts receivable are carried at original invoice amount less the allowance
for doubtful accounts based on a review of all outstanding amounts at year end.
Management determines the allowance for doubtful accounts based on a combination
of write-off history, aging analysis, and any specific known troubled accounts.
Trade receivables are written off when deemed uncollectible.
Inventories
Inventories primarily consist of finished goods and are stated at the lower of cost (first-in-first-out) or market. The Company maintains an allowance for potentially excess and obsolete inventories and inventories that are carried at costs that are higher than their estimated net realizable values.
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