The following information should be read in conjunction with our financial
statements and related notes thereto included in Part I, Item 1, above.
Forward Looking Statements
Certain matters discussed herein are forward-looking statements. Such
forward-looking statements contained in this Form 10-Q involve risks and
uncertainties, including statements as to:
·our future strategic plans
·our future operating results;
·our business prospects;
·our contractual arrangements and relationships with third parties;
·the dependence of our future success on the general economy;
·our possible future financings; and
·the adequacy of our cash resources and working capital.
These forward-looking statements can generally be identified as such because the
context of the statement will include words such as we "believe," "anticipate,"
"expect," "estimate" or words of similar meaning. Similarly, statements that
describe our future plans, objectives or goals are also forward-looking
statements. Such forward-looking statements are subject to certain risks and
uncertainties which are described in close proximity to such statements and
which could cause actual results to differ materially from those anticipated.
Shareholders, potential investors and other readers are urged to consider these
factors in evaluating the forward-looking statements and are cautioned not to
place undue reliance on such forward-looking statements. The forward-looking
statements included herein are only made as of the date of this Form 10-Q, and
we undertake no obligation to publicly update such forward-looking statements to
reflect subsequent events or circumstances.
Executive Overview
CannAssist International Corp. (formerly Iris Grove Acquisition Corporation)
(the "Company") was incorporated on May 17, 2017 under the laws of the State of
Delaware. The business purpose of the Company is to produce, sell and market its
CBD based products. The Company's corporate offices are located at 855 South
Mission Avenue, Suite #K400, Fallbrook CA 92028. The Company's email address is
info@xceptorllc.com, and its website is xceptorcbd.com. The Company's telephone
number is 760-990-3091.
CannAssist produces and sells its cannabidiol ("CBD") product, "Cibidinol,"
which is formulated based on a process developed by its founder Mark Palumbo (US
Provisional Patent Number 62/581,605). CBD is a non-psychoactive compound found
in hemp. CannAssist's initial research and development work, aimed at enhancing
the bioavailability of desired molecular structures, resulted in the creation of
a line of CBD products, most notably its CBD product, Cibidinol. Cibidinol will
be available in a line of consumable and topical products that the Company
believes will make enhanced CBD products more available and accessible to
consumers.
For the period ended December 31, 2020, the Company's independent auditors
issued a report raising substantial doubt about the Company's ability to
continue as a going concern. The continuation of the Company as a going concern
is dependent upon financial support from its principal stockholders, its ability
to obtain necessary equity financing, or its ability to sell its services to
generate consistent profitability.
Results of Operation for the Three Months Ended March 31, 2021 and 2020
Revenues
For the three months ended March 31, 2021, the Company had revenues of $217,973,
and costs of revenue of $9,792. In comparison, for the three months ended March
31, 2020, the Company had revenues of $210,087, and costs of revenue of $99,005.
The increase in revenue is not material for the purposes of comparison.
For the three months ended March 31, 2021, the Company had a gross margin of
$208,181. In comparison, the three months ended March 31, 2020, the Company had
a gross margin of $111,082. The increase in gross margin is a result of the
decrease in cost of revenue.
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General and administrative expenses
General and administrative expenses were $82,412 for the three months ended
March 31, 2021 compared to $82,377 for the three months ended March 31, 2020.
The increase in general and administrative expenses is not material for the
purposes of comparison.
Commissions
Commission expense was $0 for the three months ended March 31, 2021 compared to
$4,373 for the three months ended March 31, 2020. Commission expense was paid to
EME, LLC, a related party.
Professional fees
Professional fees were $42,370 for the three months ended March 31, 2021
compared to $32,610 for the three months ended March 31, 2020. Professional fees
consist of audit, accounting and legal fees. The increase in professional fees
are the result of increased fees related to becoming a public company.
Preferred Stock
Preferred Stock expense was $0 for the three months ended March 31, 2021
compared to $2,765,250 for the three months ended March 31, 2020. The preferred
stock was issued to Mark Palumbo, a related party, and was a one-time expense.
Net Loss
For the three months ended March 31, 2021, we realized net income of $75,243 as
compared to a net loss of $2,775,369 for three months ended March 31, 2020. The
decrease in net loss in the current period is primarily due to fact that the
expense incurred in connection with the issuance of preferred stock in 2020 was
a one-time expense.
Liquidity and Capital Resources
The accompanying unaudited condensed financial statements have been prepared on
a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has
generated revenues of $217,973 during the three months ended March 31, 2021 and
had a net income of $75,243 for the three months ended March 31, 2021. The
Company has an accumulated deficit of $3,258,159 as of March 31, 2021. The
Company requires capital for its contemplated operational and marketing
activities. The obtainment of additional financing, through an additional
capital raise, the successful development of the Company's contemplated plan of
operations, and its transition to the attainment of continued profitable
operations are necessary for the Company to continue operations.
The Company used $166,550 of cash from operations for the three months ended
March 31, 2021. Net cash provided by financing activities for the three months
ended March 31, 2021 was $13,459.
As of March 31, 2021, the Company had $22,406 in cash.
Critical Accounting Estimates and Policies
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities of the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Note 2 to the Financial Statements describes the
significant accounting policies and methods used in the preparation of the
Financial Statements. Estimates are used for, but not limited to, contingencies
and taxes. Actual results could differ materially from those estimates. The
following critical accounting policies are impacted significantly by judgments,
assumptions, and estimates used in the preparation of the Financial Statements.
We are subject to various loss contingencies arising in the ordinary course of
business. We consider the likelihood of loss or impairment of an asset or the
incurrence of a liability, as well as our ability to reasonably estimate the
amount of loss in determining loss contingencies. An estimated loss contingency
is accrued when management concludes that it is probable that an asset has been
impaired, or a liability has been incurred and the amount of the loss can be
reasonably estimated. We regularly evaluate current information available to us
to determine whether such accruals should be adjusted.
14
Off-Balance Sheet Arrangements
We have not entered into any 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 and would be considered
material to investors.
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in
effect. These pronouncements did not have any material impact on the financial
statements unless otherwise disclosed, and the Company does not believe that
there are any other new accounting pronouncements that have been issued that
might have a material impact on its financial position or results of operations.
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