OVERVIEW
We are a development stage corporation with limited operations and no revenues
from our business operations. We do not anticipate that we will generate
significant revenues until we have raised significant funds. There is no
assurance we will ever generate revenue even if we raised all necessary funds.
GOING CONCERN
Our financial statements are prepared using generally accepted accounting
principles in the United States of America applicable to a going concern, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business. We are in start-up stage operations and have not
generated any revenues. Our auditors have issued a going concern opinion. This
means that our auditors believe there is substantial doubt that we can continue
as an on-going business for the next twelve months.
We cannot guarantee we will be successful in our business operations. Our
business is subject to risks inherent in the establishment of a new business
enterprise, including limited capital resources and possible cost overruns due
to price and cost increases in services and products.
We have no assurance that future financing will be available to us on acceptable
terms. If financing is not available on satisfactory terms, we may be unable to
continue, develop or expand our operations. Equity financing could result in
additional dilution to existing shareholders.
COVID-19
In December 2019, a novel strain of COVID-19 was reported in China. Since then,
the COVID-19 has spread globally including across North America and the United
States. The spread of COVID-19 from China to other countries has resulted in the
World Health Organization (WHO) declaring the outbreak of COVID-19 as a
"pandemic," or a worldwide spread of a new disease, on March 11, 2020.
Specifically, we caution that our business could be materially and adversely
affected by the risks, or the public perception of the risks, related to the
outbreak of COVID-19. To date, COVID has directly impacted the ability we have
to participate in trade show events and other in-person marketing. Although
retailers which may carry our products may be considered essential businesses
and therefore be allowed to remain operational, they may experience
significantly reduced demand. The risk of a pandemic, or public perception of
the risk, could cause customers to avoid public places, including retail
properties, and could cause temporary or long-term disruptions in our supply
chains and/or delays in the delivery of our inventory to our customers. Further,
such risks could also adversely affect retail customers' financial condition,
resulting in reduced spending on our products, which are marketed as premium
products. "Shelter-in-place" or other such orders by governmental entities could
also disrupt our operations, if our employees or the employees of our sourcing
partners who cannot perform their responsibilities from home, are not able to
report to work. Risks related to an epidemic, pandemic, or other health crisis,
such as COVID-19, could also lead to the complete or partial closure of one or
more of our co-packing facilities or operations of our sourcing partners.
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CRITICAL ACCOUTNING POLICIES
Please refer to Note 2 - Summary of Significant Accounting Policies in the
accompanying Notes to the Condensed Financial Statements.
RESULTS OF OPERATIONS
The following summary of our results of operations should be read in conjunction
with our unaudited financial statements for the period ended June 30, 2022,
which are included herein.
Our operating results for the three and six months ended June 30, 2022, and 2021
and the changes between those periods for the respective items are summarized as
follows.
Three months ended June 30, 2022, compared to three months ended June 30, 2021:
Three Months Ended
June 30,
2022 2021 Changes ($)
Revenues $ - $ - $ -
Operating expenses 28,697 11,070 17,627
Interest expense - 3,012 (3,012 )
Net loss $ 28,697 $ 14,082 $ 14,615The Company has not generated revenues for the three months ended June 30, 2022
and 2021.
Our financial statements report a net loss of $28,697 for the three months ended
June 30, 2022, compared to a net loss of $14,082 for the three months ended June
30, 2021. Operating expenses consists primarily of professional fees.
During the three months ended June 30, 2022 and 2021, the Company recognized $0
and $3,012 for interest on a convertible note.
Six months ended June 30, 2022, compared to Six months ended June 30, 2021:
Six Months Ended
June 30,
2022 2021 Changes ($)
Revenues $ - $ - $ -
Operating expenses 31,922 11,070 20,852
Interest expense - 3,012 (3,012 )
Net loss $ 31,922 $ 14,082 $ 17,840The Company has not generated revenues for the six months ended June 30, 2022
and 2021.
Our financial statements report a net loss of $31,922 for the six months ended
June 30, 2022, compared to a net loss of $14,082 for the six months ended June
30, 2021. Operating expenses consists primarily of professional fees.
During the six months ended June 30, 2022 and 2021, the Company recognized $0
and $3,012 for interest on a convertible note.
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Liquidity and Capital Resources
The following table provides selected financial data about our company as of
June 30,2022 and December 31, 2021, respectively.
Working Capital
June 30, December 31,
2022 2021 Changes ($)
Cash $ - $ - $ -
Current assets - 10,750 (10,750 )
Current liabilities 54,917 33,745 21,172
Working capital (Deficiency) $ (54,917 ) $ (22,995 ) $ (31,922 )
As at June 30, 2022 and December 31, 2021, our total current assets were $0 and
$10,750, respectively.
As at June 30, 2022, our current liabilities were $54,917 compared to $33,745 in
current liabilities as at December 31, 2021. Working capital deficiency was
$54,917 as of June 30,2022 compared to working capital deficiency of $22,995 as
of December 31, 2021. The increase in working capital deficiency was resulted
from an increase in current liabilities offset with a decrease in current
assets. The increase in current liabilities is primarily of due to related party
for payments made for operating expenses and an increase in accounts payable.
Cash Flows
Six Months Ended
June 30,
2022 2021 Changes ($)
Cash Flows used in Operating Activities $ - $ (6,480 ) $ 6,480
Cash Flows used in Investing Activities
- - -
Cash Flows provided by Financing Activities - 6,480 (6,480 )
Net Change in Cash During Period $ - $ 5,544 $ (5,544 )
Operating Activities
During the six months ended June 30, 2022 and 2021, cash flows used in operating
activities were $0 and $6,480, respectively. For the six months ended June 30,
2022, net cash flows used in operating activities was $0, consisting of a net
loss of $31,922, reduced by an increase in accounts payable of $4,993, expenses
paid by related party of $16,179 and reduced by a decrease in prepaid expenses
of $10,750. For the six months ended June 30, 2021, net cash flows used in
operating activities was $6,480, consisting of a net loss of $14,082, reduced by
an increase in accounts payable of $4,590 and accrued interest of $3,012.
PLAN OF OPERATION
Our plan of operation for the following twelve months is to transform the
Company with the following:
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On April 13, 2022, the Company entered into a definitive Share Exchange
Agreement (the "Exchange Agreement") with the stockholders of Eco Equity
Limited, a company organized under the laws of England and Wales ("EE UK").
Pursuant to the terms of the Exchange Agreement, the Company will acquire 100%
of the issued and outstanding shares of capital stock of EE UK, in exchange for
the issuance of 42,000,000 restricted newly issued, fully paid and
non-assessable shares of common stock of the Company (the "Exchange Shares") at
a ratio of 0.0763 Exchange Share for each of the surrendered shares transferred
by the EE UK stockholders, which will represent fifty-six percent (56%) of all
issued and outstanding shares of Company common stock at the time of the closing
of the transaction. The Exchange Shares were valued at $71,404 or $.0017 per
share. As the Company's stock is thinly traded, the value assigned to the
Exchange Shares to be issued under the Exchange Agreement was the last sale of
Company's common stock during October 2020 for $.0017 per share. In addition, we
will assume all assets and liabilities of EE UK, which includes EE UK's wholly
owned subsidiary, Eco-Equity Zimbabwe (Private) Limited, a Zimbabwe-registered
company ("EE Zim"). On July 13, 2022, the transactions contemplated by the
Exchange Agreement were deemed formally closed. EE UK and its wholly owned
subsidiary, EE Zim, will now operate as first- and second tier, respectively,
wholly owned subsidiaries of the Company.
The Company, though its EE ZIM subsidiary, holds a license for medicinal
cannabis cultivation and extraction and will be conducting operations in the
vicinity of Harare, the capital city of Zimbabwe. We are dedicated to making the
clean, safe, and premium quality cannabis concentrates and extracts. Our
products will consist of EU-GMP (European Union - Good Manufacturing Practice)
certified cannabis flower, concentrates, and extracts distributed through export
as wholesale transactions to qualified and licensed cannabis establishments in
the European Union (EU). Our current indoor facilities near Harare provide a
total space of approximately 975 square meters (about 10,500 square feet) with
plans to increase that to 38,000 square meters (about 408,800 square feet), all
located on 150 hectares (about 370 acres) of leased farmland. Together, the
facilities, when expanded, and the land give us the ability to increase the
capacity of our operations to meet the expected growth of our business over the
next few years through expanded sales, both within the EU, as well as in other
nations where the sale and use of medicinal cannabis is permitted by those
governments.
On October 17, 2021, the Board of Directors of the Company which, at that time,
consisted solely of Laura De Leon Castro, elected two new additional directors,
Timothy Ambrose and Jon-Paul Doran. On October 18, 2021, Laura De Leon Castro
resigned as President, Chief Executive Officer, Secretary, Treasurer, and a
Director and Chairman of the Board of Directors of the Company. Ms. De Leon
Castro's resignation was not the result of any disagreements with the Company
regarding our operations, policies, practices or otherwise. Concurrently,
Timothy Ambrose was elected as Chairman of the Board of Directors and Jon-Paul
Doran was elected as President, Chief Executive Officer, and Secretary of the
Company. The appointment of Mr. Ambrose and Mr. Doran was considered a change in
control of the Company.
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.
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CRUCIAL INNOVATIONS CORP. 
