GRAPEFRUIT USA, INC. Cautionary Statements
This Form 10-Q contains financial projections and other "forward-looking
statements," as that term is used in federal securities laws, about Grapefruit's
financial condition, results of operations and business. These statements
include, among others, statements concerning the potential for revenues and
expenses and other matters that are not historical facts. These statements may
be made expressly in this Form 10-
(a) volatility or decline of our stock price;
(b) potential fluctuation in quarterly results;
(c) our failure to earn revenues or profits;
(d) inadequate capital to continue the business and barriers to raising the
additional capital or to obtaining the financing needed to implement our
business plans;
(e) failure to make sales;
(f) changes in demand for our products and services;
(g) rapid and significant changes in markets;
(h) litigation with or legal claims and allegations by outside parties, causing
us to incur substantial losses and expenses;
(i) insufficient revenues to cover operating costs;
(j) dilution in the ownership of the Company through the issuance by us of
additional securities and the conversion of outstanding warrants, notes and
other securities;
We cannot assure that we will be profitable. We may not be able to develop, manage or market our products and services successfully. We may not be able to attract or retain qualified executives and technology personnel. We may not be able to obtain customers for our products or services. Our products and services may become obsolete. Government regulation may hinder our business. Additional dilution in outstanding stock ownership will be incurred due to the issuance or exercise of more shares, warrants and other convertible securities.
Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. We caution you not to place undue reliance on the statements, which speak only as of the date of this Form 10-Q. The cautionary statements contained or referred to in this section should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may make. We do not undertake any obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.
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The following discussion should be read in conjunction with our financial statements and notes to those statements. In addition to historical information, the following discussion and other parts of this annual report contain forward-looking information that involves risks and uncertainties.
Results of Operations for the Three Months Ended
Three months ended Three months ended
September 30, 2021 September 30, 2020
Net revenues $ 153,476 $ 1,306,201
Cost of goods sold 346,073 1,123,717
Gross income (loss) (192,597 ) 182,484
Sales expense 3,800 67,479
Stock based compensation 25,980 -
Stock option expenses 32,877 -
General and administrative expense 352,462 289,767
Loss from operations (607,716 ) (174,762 )
Change in value of derivatives 13,877 (7,014,164 )
Interest and other income (expense) (388,273 ) (500,768 )
Net loss before income taxes (982,112 ) (7,689,694 )
Tax provision - -
Net loss (982,112 ) (7,689,694 )
Loss attributable to noncontrolling interest (270 ) -
Net loss attributable to
The following sets forth selected items from our statements of operations for
three months ended
Revenue for the three months ended
Cost of goods sold for the three months ended
Our resulting gross loss for the three months ended
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Sales expense for the three months ended
Our resulting net loss from operations for the three months ended
Our resulting net loss attributable to
Results of Operations for the Nine Months Ended
Nine Months Ended Nine Months Ended
September 30, 2021 September 30, 2020
Net revenues $ 586,780 $ 2,580,412
Cost of goods sold 926,671 2,385,804
Gross income (loss) (339,891 ) 194,608
Sales expense 5,760 106,594
Stock based compensation 265,024 -
Stock option expenses 65,754 -
General and administrative expense 1,011,199 974,925
Loss from operations (1,687,628 ) (886,911 )
Change in value of derivatives 91,210 (7,946,046 )
Interest and other income (expense) (2,149,021 ) (1,237,279 )
Net loss before income taxes (3,745,439 ) (10,070,236 )
Tax provision - -
Net loss (3,745,439 ) (10,070,236 )
Loss attributable to noncontrolling interest (270 ) -
Net loss attributable to
The following sets forth selected items from our statements of operations for
nine months ended
Revenue for the nine months ended
Cost of goods sold for the nine months ended
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Our resulting gross loss for the nine months ended
Sales expense for the three months ended
Our resulting net loss from operations for the nine months ended
As part of the reverse merger in
Included in interest and other expense for the nine months ended
Our resulting net loss attributable to
Development of hi-tech cultivation facility.
During 2018 we reviewed various facilities and identified a suitable, compliant
cannabis facility located in the city of
Grapefruit intends to build out its real property into a distribution, manufacturing and high-tech cultivation facility in two phases to further its goal to become a seed to sale, fully vertically integrated Cannabis and CBD product Company. Grapefruit's plans include an indoor 40,000 square foot multi-tiered canopy and adjoining tissue culture rooms divided into two separate buildings on our Coachillin property. The development of the lot will take place in two phases.
On
In order for us to obtain
24 COVID-19 Impact
During the nine months ended
The full extent to which COVID-19 may impact our business, including our operations and the market for our securities and our financial condition, will depend on future developments, which are highly uncertain and cannot be predicted at this time. These include the duration, severity and scope of the pandemic, the development and availability of effective treatments and vaccines, and further action taken by the government and other third parties in response to the pandemic. In particular, COVID-19 and government efforts to curtail COVID-19 could impede our production facilities, increase operating expenses, result in loss of sales, affect our supply chains, impact performance of contractual obligations and require additional expenditures to be incurred.
Liquidity and Capital Resources
Our cash position decreased to
Our total current liabilities increased to
During the nine months ended
During the nine months ended
We expect our working capital requirements in the next year to be met primarily by the proceeds of issuance of debt, equity and other securities to our existing creditors, shareholders, and other investors, as well as from cash flow from operations. We also expect that, as in the past, significant amounts of our convertible debt with a major lender will be converted into equity. We expect to need additional working capital from outside sources to cover our anticipated operating expenses. There is no assurance that the Company will be able to raise sufficient additional capital or financing to continue in business or to effectively execute its business plan.
Going Concern Qualification
Our consolidated financial statements have been prepared on a going concern
basis which assumes we will be able to realize our assets and discharge our
liabilities in the normal course of business for the foreseeable future. During
the nine months ended
Off-Balance Sheet Arrangements
None.
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