MYDX, INC. The following discussion and analysis should be read in conjunction with, and is
qualified in its entirety by, MyDx's audited annual financial statements and the
related notes thereto as filed with the
We believe that our assumptions are based upon reasonable data derived from and known about our business and operations and the business and operations of the Company. No assurances are made that actual results of operations or the results of our future activities will not differ materially from its assumptions. Factors that could cause differences include, but are not limited to, expected market demand for the Company's products and services and competition.
Overview
MyDx is a science and technology company that develops and deploys products and services in the following focus areas:
1) Consumer Products - smart devices and consumables
2) Data Analytics - pre-clinical chemical analysis and patient feedback
ecosystem
3) Biopharmaceuticals - identifying 'green Active Pharmaceutical
IngredientsTM, (gAPITM) and corresponding formulations
4) Software as a Service (SaaS) - Software services for prescribers, patient
groups, cultivators, and regulators
We are committed to addressing areas of critical national need to promote public safety, transparency and regulation in the various markets we serve.
The Company's first product, MyDx®, also known as "My Diagnostic", is a multiuse hand-held chemical analyzer made for consumers and professional users which feeds our data analytics platform and SaaS business. MyDx is intended to allow consumers to Trust & Verify® what they put into their mind and body by using our science and technology to test for pesticides in food, chemicals in water, toxins in the air, and the safety and potency of cannabis samples, which is our initial focus.
Business Plan
The Company is currently focused on 4 key business segments to service the
cannabis industry.
1. Consumer Products
Smart Devices & Consumables
1) CannaDxTM
? The cannabis industry's first hand-held cannabis sensor and analyzer
with disposable single use inserts.
? Comes with a mobile app that acts as a 'virtual budtender'.
? Analyzes cannabis sample and provides a Total Canna ProfileTM (TCP),
a more complete chemical profile to include THC and the most
prevalent cannabinoids and terpenes found in cannabis plants.
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? Cannabinoids such as THC and CBD have been reported to bind the CB1
and CB2 receptors found throughout the human body and have been
reported to provide relief to an array of symptoms, including pain,
nausea, and inflammation to name a few. Terpenes, which have been
reported to compound the effects of cannabinoids on the body via an
"Entourage Effect", are also important in determining the overall
physiological effects various cannabis chemical profiles.
? Enables users to log their ailments and side effects and tie those
back to the exact chemical profile.
? Provides strain recommendations based on desired "relief" input
based on crowdsourced community feedback.
2) Eco Smart PenTM and Other Delivery Devices
? MyDx plans to develop additional smart hardware that gather user
data, such as the Eco Smart Pen. MyDx plans to release the Eco Smart
Pen once the development is complete and the market conditions are
favorable to do so.
? Integrated with Bluetooth as well as other technologies that will
allow for mobile-app control, dose restrictions, safety controls,
and usage statistics.
? We plan to OEM these product to third-party customers.
3) MyDx Tablet Edition
? MyDx plans to develop he first touchscreen kitchen tablet in the
market with integrated MyDx sensor reading capability.
? Sensor lineup to include OrganaDx, AquaDx, and AeroDx.
? Company plans to offer CannaDx data portal management ability in
MyDx Tablet Edition.
MyDx plans to evaluate the 510K FDA device approval process to leverage its consumer products and the ability of insurance companies to support sales of its smart devices and generate HIPPA compliant crowdsourced data.
2. Data Analytics
Pre-Clinical Chemical Analysis and Patient Feedback Ecosystem.
MyDx has four classes of data and algorithms:
1) User Data
? When users download the CannaDx mobile app, we may ask them put in
personal details such as gender, location, height, weight, age etc.
that we maintain while complying with HIPAA.
2) Chemical Composition Data
? This information is sourced from a number of inputs including the
CannaDx Handheld's Total Canna Profile (TCP), partner laboratories
analyses, and branded pre-tested concentrates.
3) User Feedback
? Provided by users in our CannaDx mobile app as they try various
products and record their experiences with those products.
4) Usage Statistics
? We plan to capture type, frequency, dosage, ailments relieved, and
side effects.
MyDx plans to leverage this data, which combined is referred to as the Total Canna ProfileTM (TCP), combined with our proprietary algorithms, to develop key insights into user behavior based on unique chemical profiles. Our goal is to track how a specific sample is expected to help relieve certain ailments and to validate the results.
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3. Biopharmaceutical
Identifying 'green Active Pharmaceutical IngredientsTM' (gAPITM) and corresponding formulations
1) Sale and License of Product Formulations
? MyDx plans to work with third party customers to license
crowdsourced formulated chemical profiles that are expected to
address a specific "relief" desired using its own proprietary
formulas derived from our extensive dataset and algorithms.
2) Sale of green Active Pharmaceutical Ingredients (gAPITM)
? This division will also look to provide an organic source of
extracted green Active Pharmaceutical Ingredients (gAPITM), such as
a predefined terpene formulation, for consumer and industrial use.
? Given that certain classes of gAPI's such hemp derived CBD and
terpenes might offer "relief" without the "high" THC provides, MyDx
intends to partner with leaders in the industry to offer branded
products without THC, akin to a "virgin" cocktail, if it finds that
these formulations offer the benefits desired and the legal
framework to sell them is viable.
4. SaaS (Software as a Service)
Software services for prescribers, patient groups, cultivators, and regulators
1) MyDx App
? Available in iOS and Android and controls the MyDx Analyzer.
? Tracks patient tested samples and physiological feedback.
? Prints a Certificate of Analysis, which includes patient feedback.
? Offers patients groups and their doctors with OEM software to track
what the community is experiencing.
? Centrally hosted in our secure cloud based server.
? Will offer in App purchases for additional software subscription
features.
2) MYDX360
? MyDx360 is a Software As A Service (SAAS)-based community engagement
platform designed to help entrepreneurs develop, launch and track
the effects of new formulated products on consumers to help
penetrate their target markets more effectively.
? As part of the service, companies will choose from among MyDx's many
chemical formulations that best align with the physiological
response its target demographic is seeking. From there, MyDx will
outsource the delivery of those formulations through licensed
concentrate manufacturing facilities and provide customer-engagement
support via its SAAS platform and MyDx smart devices such as the
EcoSmartPen to acquire and analyze user feedback.
? Collectively, this suite of services will be called MyDx360.
3) Software to Support Laboratory Marketing, Customer Service and Data
Aggregation
? MyDx will offer what we believe will be the premier lead generator
and outsourced services provider for cannabis testing labs.
? Through certain assets MyDx expects to develop or acquire, as well
as leads generated from our handheld analysis and smart devices, we
believe MyDx will be positioned to become a world leader in cannabis
laboratory marketing and services and as the largest "data holder"
of tested cannabis and the associated chemical profiles tied to the
ailment therapy.
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Change in Officers and Directors
On
Pursuant to, and in accordance with the terms and conditions of the Mr. Cannabis
Consulting Agreement, the Consultant was issued a common stock purchase warrant
(the "Warrant") to purchase twenty two and one half percent (22.5%) of the
issued and outstanding shares of the Company's common stock, par value
In connection with the Mr. Cannabis Consulting Agreement, Mr.
Effective
Effective as of
Results of Operations
As shown in the accompanying consolidated financial statements, the Company
incurred a net income of
Comparison of The Three Months Ended
Revenue
For the three months ended
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Cost of Goods Sold and Gross Profit
Gross profit as a percentage of net revenues for the three months ended
Operating Expenses
For the three months ended
Research and Development Expenses
Research and development expenses primarily consist of engineering and product
development, incurred in the design, development, testing and enhancement of our
products. For the three months ended
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of consulting fees for
third-party services and general marketing expenses. For the three months ended
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, wages and benefits, consulting fees, legal fees, accounting fees and general administrative expenses.
For the three months ended
Other income (expense)
Other expenses decreased by approximately
Comparison of The Nine months ended
Revenue
For the nine months ended
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Cost of Goods Sold and Gross Profit
Gross profit as a percentage of net revenues for the nine months ended
Operating Expenses
For the nine months ended
Research and Development Expenses
Research and development expenses primarily consist of engineering and product
development, incurred in the design, development, testing and enhancement of our
products. For the nine months ended
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of consulting fees for
third-party services and general marketing expenses. For the nine months ended
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, wages and benefits, consulting fees, legal fees, accounting fees and general administrative expenses.
For the nine months ended
Other income (expense)
Other income increased by
Liquidity and Capital Resources
Since its inception, capital raised by the Company has been used primarily for
the Company's research and development efforts and to support its operations. As
of
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It is anticipated that we will continue to report negative operating cash flow in future periods, likely until one or more of our products generate sufficient revenue to cover our operating expenses. If any of the warrants are exercised, all net proceeds of the warrant exercise will be used for working capital to fund negative operating cash flow.
Our cash balance of
To the extent, we raise additional capital by issuing equity securities or obtaining borrowings convertible into equity, ownership dilution to existing stockholders will result and future investors may be granted rights superior to those of existing stockholders. The incurrence of indebtedness or debt financing would result in increased fixed obligations and could also result in covenants that would restrict our operations. Our ability to obtain additional capital may depend on prevailing economic conditions and financial, business and other factors beyond our control. The Company cannot provide any assurances that it will be able to raise the additional capital needed to fund its operations, or if the Company is able to raise such additional capital, that any such financing will be on terms which are beneficial to the existing shareholders.
Working Capital
September 30, December 31,
2019 2018
Current assets $ 334,123 $ 216,729
Current liabilities 9,181,612 12,643,275
Working Capital Deficit $ (8,847,489 ) $ (12,426,546 ) Current assets for
Current liabilities for
Cash Flows
Nine months ended
September 30,
2019 2018
- -
Net Cash Provided by Financing Activities 469,000 160,000 Net Change
$ 72,979 $ (88,429 )
Our primary uses of cash from operating activities include payments to consultants for research and development, compensation and related costs, legal and professional fees and other general corporate expenditures.
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Cash used in operating activities consist of net loss adjusted for certain
non-cash items, primarily equity-based compensation expense, common stock issued
in exchange for services, and the change in fair value of derivative liabilities
due primarily to the mark to market of the Company's derivatives embedded in the
convertible notes, and a gain of settlement of liabilities during the nine
months ended
For the nine months ended
Net Cash Provided by Financing Activities
For the nine months ended
Going Concern
At
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.
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