SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS
We believe that it is important to communicate our future expectations to our
security holders and to the public. This report, therefore, contains statements
about future events and expectations which are "forward-looking statements"
within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the
Securities Exchange Act of 1934, including the statements about our plans,
objectives, expectations and prospects under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations." You
can expect to identify these statements by forward-looking words such as "may,"
"might," "could," "would," "will," "anticipate," "believe," "plan," "estimate,"
"project," "expect," "intend," "seek" and other similar expressions. Any
statement contained in this report that is not a statement of historical fact
may be deemed to be a forward-looking statement. Although we believe that the
plans, objectives, expectations and prospects reflected in or suggested by our
forward-looking statements are reasonable, those statements involve risks,
uncertainties and other factors that may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by these forward-looking statements, and we
can give no assurance that our plans, objectives, expectations and prospects
will be achieved.
Important factors that might cause our actual results to differ materially from
the results contemplated by the forward-looking statements are contained in the
"Risk Factors" section of and elsewhere in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2020 filed on April 15, 2021, and in our
subsequent filings with the Securities and Exchange Commission. The following
discussion of our results of operations should be read together with our
financial statements and related notes included elsewhere in this report.
Company Overview and Product Brands
The Company was formed as a Nevada corporation on November 26, 2007. The Company
was involved in exploration and development of mining properties until September
30, 2013, when it discontinued operations. In June 2017, the Company's creditors
filed a petition in the District Court of Harris County, Texas for the
appointment of a receiver. In August of 2017, the court appointed a receiver
(who was subsequently appointed as an officer and director of the Company), and
in February 2018, the receiver appointed William Alessi as a director of the
Company and then resigned as a director and officer of the Company.
On February 6, 2019, the Company acquired trademarks and intellectual property,
which includes all rights and trade secrets to the hemp-derived CBD-infused line
of consumer beverages sold under the "Good Hemp" brand. Since then, the Company
has been conducting operations under the "Good Hemp" trade name and through the
http://www.goodhemplivin.com/ website. Information on this website is not a part
of this report on Form 10-Q.
On April 30, 2019, the Company acquired from Mr. Spoone the "CANNA HEMP" and
"CANNA" trademarks including all rights and trade secrets and related inventory.
At June 30, 2021, the Company had not attributed any value to these acquired
trademarks.
On August 24, 2020, with an effective date of July 1, 2020, the Company entered
into a joint venture agreement with Paul Hervey ("Hervey"), an individual, for
the purpose of cultivating hemp on approximately 9 acres of farmland and in
approximately 3,700 square feet of greenhouse space in North Carolina (referred
to as "Olin Farms"). In October 2021, Olin Farms ceased operations, and the
limited liability company joint venture entity was dissolved in North Carolina.
On February 9, 2021, the Company formed Good Hemp Wellness, LLC, a limited
liability company formed under the laws of the State of North Carolina, to sell
CBD products to customers through chiropractic offices. In October 2021, this
company was dissolved in North Carolina, and it is being treated as discontinued
operations in the consolidated financial statements. The Company plans to sell
Good Hemp Wellness CBD inventory directly.
On April 1, 2021, the Company entered into an agreement to purchase Diamond
Creek Group, LLC, a North Carolina limited liability company which sells the
Diamond Creek brand of high alkaline water products, for a total purchase price
of $643,000. On April 2, 2021, the Company closed the acquisition and paid the
initial $500,000 portion of the purchase price, and on April 23, 2021, paid the
$143,000 purchase price balance.
The Company is a North Carolina based company that is made up of industry
veterans focused on exploiting niche markets in the hemp and beverage
industries. The Company's products include high alkaline water products,
hemp-based beverage products under Good Hemp® brand, and CBD softgels under the
Good Hemp Wellness brand. Good Hemp® products include two lines of hemp-based
beverages described below. Good Hemp® products have been sold throughout the
United States since 2016 via Amazon.com, as well as local retailers.
23
Table of Contents
Products
Good Hemp® 2oh!, CANNA HEMP and CANNA are a line-up of refreshing, all-natural,
"good-for-you", ready-to-drink waters in six flavors: blueberry-blast, island
coco-lime, kiwi-strawberry, lemon-twist, mango-fandango and Q-cumbermint. Each
Good Hemp® 2oh! beverage is 16.9 fluid ounces infused with 10 mg of hemp oil
(CBD rich), 6g of prebiotic fiber, has 0 g of sugar, contains no artificial
sweeteners or artificial flavors, is gluten free, vegan, and contains 0 net
carbs.
Good Hemp® fizz is a line-up of carbonated refreshing, all-natural,
"good-for-you", "ready-to-drink carbonated beverages in three flavors:
blueberry-bam, mango-tango and citrus-twist. Each Good Hemp® fizz beverage is 12
fluid ounces infused with 10 mg of hemp oil (CBD rich), 6 g of prebiotic fiber,
contains no artificial sweeteners or artificial flavors, is gluten free and
vegan.
Good Hemp Wellness is a line of CBD soft gels that uses a proprietary super
absorption formula with the goal of minimizing the nutrients lost during the
digestive process and allowing consumers to absorb more CBD in smaller doses.
Diamond Creek High Alkaline Water is a 9.5pH high alkaline natural spring water,
sourced from the highest quality, award winning springs. Diamond Creek is
available in one gallon, one liter and half liter bottles and aids in balancing
the body's pH while providing superior hydration resulting from a proprietary
ionization process.
As of September 30, 2021, Diamond Creek water was available in over 1,500 stores
in the United States.
Our Growth Strategy
Expanding our US distribution reach to service national chain stores; increase
awareness of our brand in the United States; securing additional chain,
convenience and key account store listings for all our brands nationwide and
internationally; increasing our warehouse direct to retail channel; focusing on
full-service Class "A" distributors; and focusing on placing our products in
produce, natural and cold sets as opposed to the grocery aisles.
We will be looking for strategic acquisitions and partnerships in the beverage
and hemp sectors, such as Diamond Creek Group, LLC, to strengthen our backend
supply chain, distribution and relationships with retail customers.
Results of Operations
For the nine months ended September 30, 2021 compared to the nine months ended
September 30, 2020
Nine Months Ended September 30, Increase/
2021 2020 (Decrease)
Net Sales $ 947,553 $ 383,356 $ 564,197
Cost of Sales 885,324 290,157 595,167
Gross Profit 62,229 93,199 (30,970 )
Operating Expenses 2,552,100 456,510 2,095,590
Operating Loss (2,489,871 ) (363,311 ) (2,126,560 )
Interest Income 7 - 7
Gain on Write-off of Debt 38,910 - 38,910
Interest Expense (170,997 ) (20,360 ) (150,637 )
Loss on Derivative Liabilities (3,125,555 ) (607,495 ) (2,518,060 )
Other Expenses 149 - 149
Net Loss $ (5,747,357 ) $ (991,166 ) $ (4,756,191 )
24
Table of Contents
Revenue
During the nine months ended September 30, 2021, the Company generated $947,553
in net sales compared to $383,356 for the same period in 2020. This is largely
due to the acquisition of Diamond Creek, which had existing sales.
Cost of Sales
The Company had cost of sales of $885,324 for the nine months ended September
30, 2021, compared to $290,157 for the same period in 2020. The increase was
primarily due to increased sales of the Company's products.
Operating Expenses
The Company incurred general and administrative expenses totaling $2,552,100 for
the nine months ended September 30, 2021, compared to $456,510 for the same
period in 2020. The increase was primarily due to the amortization ($1,737,714)
of the branding agreement in 2021. The remaining increase in the operating
expenses is from the subsidiaries that were acquired during the current
six-month period.
Net Loss
The Company had a net loss of $5,747,357 for the nine months ended September 30,
2021, compared to a net loss of $991,166 for the same period in 2020. This
increase was primarily due to the amortization ($1,737,714) of the branding
agreement and the change in derivative liabilities of $3,125,555.
For the three months ended September 30, 2021 compared to the three months ended
September 30, 2020
Three Months Ended September 30, Increase/
2021 2020 (Decrease)
Net Sales $ 418,212 $ 102,010 $ 316,202
Cost of Sales 410,319 77,688 332,631
Gross Profit 7,893 24,322 (16,429 )
Operating Expenses 671,695 290,922 380,773
Operating Loss (663,802 ) (266,600 ) (397,202 )
Interest Income 3 - 3
Gain on Write-off of Debt - - -
Interest Expense (103,257 ) (3,192 ) (100,065 )
Loss on Derivative Liabilities (1,090,026 ) 119,848 (1,209,874 )
Other Expenses 149 - 149
Net Loss $ (1,856,933 ) $ (149,944 ) $ (1,706,989 )
Revenue
During the three months ended September 30, 2021, the Company generated $418,212
in net sales compared to $102,010 for the same period in 2020. This is largely
due to the acquisition of Diamond Creek, which had existing sales.
Cost of Sales
The Company had cost of sales of $410,319 for the three months ended September
30, 2021, compared to $77,668 for the same period in 2020. The increase was
primarily due to increased sales of the Company's products.
Operating Expenses
The Company incurred general and administrative expenses totaling $671,695 for
the three months ended September 30, 2021, compared to $290,922 for the same
period in 2020. The increase was primarily due to the amortization $413,265 of
the branding agreement in 2021. The remaining increase in the operating expenses
is from the subsidiaries that were acquired during the current nine-month
period.
25
Table of Contents
Net Loss
The Company had a net loss of $1,856,933 for the three months ended September
30, 2021, compared to a net loss of $149,944 for the same period in 2020. This
increase was primarily due to the amortization $413,265 of the branding
agreement and the change in derivative liabilities of $1,090,026.
Liquidity and Capital Resources
We had cash used in operations of $719,475 for the nine months ended September
30, 2021, compared to $1,455,099 for the nine months ended September 30, 2020.
The increase in cash used in operating activities for the nine months ended
September 30, 2021 is attributable to the amortization of the branding agreement
of $1,735,714 compared to $0 for the nine months ended September 30, 2021 and
2020, respectively.
We had cash used in investing activities of $736,055 for the nine months ended
September 30, 2021, and $0 for the nine months ended September 30, 2020.
We had cash provided by financing activities of $1,409,391 for the nine months
ended September 30, 2021, compared to cash provided by $1,443,151 for the nine
months ended September 30, 2020.
As of September 30, 2021, the Company had cash and cash equivalents of $13,729.
We do not have sufficient resources to effectuate our business. We expect to
incur a minimum of $200,000 in expenses during the next twelve months of
operations. We estimate that these expenses will be comprised primarily of
general expenses including overhead, inventory purchases, legal and accounting
fees.
As of September 30, 2021, and 2020, the Company has primarily been funded by Mr.
Alessi and Mr. Chumas. In addition, the Company has issued convertible notes to
unrelated third parties. As of September 30, 2021, and December 31, 2020,
related party notes totaled $510,575 and $400,575, net of discounts,
respectively, and third-party notes totaled $1,052,903 and $306,010, net of
discounts, respectively.
The Company does not know of any trends, demands, commitments, events or
uncertainties that will result in, or that are reasonable likely to result in,
our liquidity increasing or decreasing in any material way.
The Company does not know of any significant changes in expected sources and
uses of cash.
The Company does not have any commitments or arrangements from any person to
provide it with any equity capital.
Going Concern
The accompanying consolidated 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. As reflected in the financial
statements, the Company had a working capital deficit of $6,277,411 at September
30, 2021 and had a loss of $5,747,357 for the nine months ended September 30,
2021, which raises substantial doubt as to the Company's ability to continue as
a going concern for a period of one year from the issuance of these financial
statements.
Off Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that have or are reasonably
likely to have a current or future material effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.
26
Table of Contents
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires us to make a number
of estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements. Such estimates and assumptions affect the reported
amounts of revenues and expenses during the reporting period. We base our
estimates on historical experiences and on various other assumptions that we
believe to be reasonable under the circumstances. Actual results may differ
materially from these estimates under different assumptions and conditions. We
continue to monitor significant estimates made during the preparation of our
financial statements. On an ongoing basis, we evaluate estimates and assumptions
based upon historical experience and various other factors and circumstances. We
believe our estimates and assumptions are reasonable in the circumstances;
however, actual results may differ from these estimates under different future
conditions.
Reclassification of Certain Expenses
The results of operations as of September 30, 2021 were prepared on a consistent
basis with prior periods.
© Edgar Online, source Glimpses
ACCREDITED SOLUTIONS, INC. 
