ALLIED CORP. The following discussion relates to the historical operations and financial
statements of
Forward-Looking Statements
The following Management's Discussion and Analysis should be read in conjunction
with our financial statements and the related notes thereto included elsewhere
in this Annual Report. The Management's Discussion and Analysis contains
forward-looking statements that involve risks and uncertainties, such as
statements of our plans, objectives, expectations and intentions. Any statements
that are not statements of historical fact are forward-looking statements. When
used, the words "believe," "plan," "intend," "anticipate," "target," "estimate,"
"expect," and the like, and/or future-tense or conditional constructions
("will," "may," "could," "should," etc.), or similar expressions, identify
certain of these forward-looking statements. These forward-looking statements
are subject to risks and uncertainties that could cause actual results or events
to differ materially from those expressed or implied by the forward-looking
statements in this Annual Report. Our actual results and the timing of events
could differ materially from those anticipated in these forward-looking
statements. Factors that could cause or contribute to such differences in
results and outcomes include, without limitation, those specifically addressed
under the heading "Risks Factors" in our various filings with the
As a result of the Reorganization Agreement and the change in business and
operations of the Company, a discussion of the past financial results of the
Company, formally known as
The following discussion highlights the Company's results of operations and the
principal factors that have affected its consolidated financial condition as
well as its liquidity and capital resources for the periods described, and
provides information that management believes is relevant for an assessment and
understanding of the Company's consolidated financial condition and results of
operations presented herein. The following discussion and analysis are based
Overview
Allied (or "Allied" or "the Company") is a public
Allied has expanded internationally into
Led by a team of experienced Industry experts, Allied will use that valuable data to properly select and secure the appropriate products and business activities to ensure the company's success.
The Company's vertically integrated approach focuses on sufferers of PTSD. This market includes:
· Canadian Veterans, with initially an approximate 6,000 veterans available
for first contact and onboarding, and a veteran base of approximately
650,000 in Canada from the War Service and Canadian Armed Forces
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· An additional 2,000,000+ Canadian veterans who also suffer in certain
numbers from PTSD, including estimates of:
· 740,000 RCMP/Police Officers
· 925,000 Correctional Services Canada/Canadian Border Services
Agency/Canadian Peace Officers
· 280,000 Firefighters (not including volunteers)
· 75,000 Paramedics
· Potential South American market
· Potential United States market: approximately 15 million veterans.
The Company's additional focus is on neutraceutical products for veterans and
general public through bringing hemp derived nano-technology products to market
in
Critical Accounting Policies Basis of presentation
These unaudited condensed consolidated interim financial statements and related
notes are presented in accordance with accounting principles generally accepted
in
These unaudited condensed consolidated interim financial statements have been
prepared in accordance with US GAAP for interim financial information and with
the instructions to
The unaudited condensed consolidated interim financial statements included
herein are unaudited; however, they contain all normal recurring accruals and
adjustments that, in the opinion of management, are necessary to present fairly
the Company's financial position at
The significant accounting policies followed are:
a. Principles of consolidation
The unaudited condensed consolidated interim financial statements include
accounts of
b. Cash and cash equivalents
Cash is comprised of cash on hand, cash held in trust accounts and demand
deposits. Cash equivalents are short-term, highly liquid investments with
maturities within nine months when acquired. The Company did not have any cash
equivalents as of
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c. Property and Equipment
Property and equipment are stated at cost. The Company depreciates the cost of property and equipment over their estimated useful lives at the following annual rates:
Equipment 10 years straight-line basis
Office and computer equipment 5 years straight-line basis Agricultural equipment 10 years straight-line basis
d. Inventory
Inventories are stated at the lower of cost or market. As of
e. Intangible assets
At
The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives.
For long-lived assets, impairment losses are only recorded if the asset's carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value.
f. Long-lived assets
In accordance with ASC 360, Property, Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.
g. Foreign currency translation and functional currency conversion
Items included in these unaudited condensed consolidated interim financial statements of each of the Company's entities are measured using the currency of the primary economic environment in which the entities operate (the "functional currency").
Prior to
The Company re-assessed its functional currency and determined as at
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For periods commencing
The Company assessed the functional currency for Allied Columbia S.A.S.
(previously MediColombia), a wholly owned subsidiary acquired by the Company on
The functional currency for
h. Share issuance costs
Costs directly attributable to the raising of capital are charged against the related share capital. Costs related to shares not yet issued are recorded as deferred share issuance costs. These costs are deferred until the issuance of the shares to which the costs relate, at which time the costs will be charged against the related share capital or charged to operations if the shares are not issued.
i. Revenue recognition
The Company's revenue is comprised of sales of cannabis products
The Company's revenue-generating activities have a single performance obligation and revenue is recognized at the point in time when control of the product transfers and the Company's obligations have been fulfilled. This generally occurs when the product is shipped or delivered to the customer, depending upon the method of distribution and shipping terms set forth in the customer contract. Revenue is measured as the amount of consideration the Company expects to receive in exchange for the sale of the Company's product. Certain of the Company's customer contracts may provide the customer with a right of return. In certain circumstances the Company may also provide a retrospective price adjustment to a customer. These items give rise to variable consideration, which is recognized as a reduction of the transaction price based upon the expected amounts of the product returns and price adjustments at the time revenue for the corresponding product sale is recognized. The determination of the reduction of the transaction price for variable consideration requires that the Company make certain estimates and assumptions that affect the timing and amounts of revenue recognized.
Sales of products are for cash or otherwise agreed-upon credit terms. The Company's payment terms vary by location and customer; however, the time period between when revenue is recognized and when payment is due is not significant. The Company estimates and reserves for its bad debt exposure based on its experience with past due accounts and collectability, write-off history, the aging of accounts receivable and an analysis of customer data.
j. Research and development costs
Research and development costs are expensed as incurred.
k. Net income (loss) per common share
Net income (loss) per share is calculated in accordance with ASC 260, "Earnings per Share." The weighted-average number of common shares outstanding during each period is used to compute basic earning or loss per share. Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding to the extent the effect would not be antidilutive. Dilutive potential common shares are additional common shares assumed to be exercised.
Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding.
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l. Income taxes
The Company accounts for income taxes under ASC 740 "Income Taxes." Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
m. Related party transactions
Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company. The Company discloses related party transactions that are outside of normal compensatory agreements, such as salaries. Related party transactions are measured at the exchange amounts.
n. Significant accounting estimates and judgments
The preparation of the financial statements in conformity with US GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Although management uses historical experience and its best knowledge of the amount, events or actions to for the basis for judgments and estimates, actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods.
Significant estimates and assumptions included in these financial statements relate to the valuation assumptions related to the estimated useful lives and recoverability of long-lived assets, stock-based compensation, and deferred income tax assets and liabilities. Judgments are required in the assessment of the Company's ability to continue to as going concern.
o. Financial instruments
ASC 825, "Financial Instruments," requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 825 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
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Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The financial instruments consist principally of cash, accounts receivable, due from related parties, accounts payable, note payable, loan payable to Allied, due to related party and convertible note payable. The fair value of cash when applicable is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all other financial instruments which are categorized as loans and receivables approximate their current fair values because of their nature and respective relatively short maturity dates or current market rates of interest for similar instruments.
p. Leases
In
The Company determines if an arrangement contains a lease in whole or in part at the inception of the contract. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset for the lease term while lease liabilities represent our obligation to make lease payments arising from the lease. All leases with terms greater than twelve months result in the recognition of a ROU asset and a liability at the lease commencement date based on the present value of the lease payments over the lease term. Unless a lease provides all of the information required to determine the implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments. The Company uses the implicit interest rate in the lease when readily determinable.
Our lease terms include all non-cancelable periods and may include options to extend (or to not terminate) the lease when it is reasonably certain that we will exercise that option. Leases with terms of twelve months or less at the commencement date are expensed on a straight-line basis over the lease term and do not result in the recognition of an asset or liability.
q. Reclassification
Certain reclassifications have been made to conform the prior period's consolidated financial statements and notes to the current year's presentation.
r. Recent accounting pronouncements
The Company does not expect that recent accounting pronouncements or changes in
accounting pronouncements during the three months ended
Financial Condition and Results of Operations
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company incurred a net loss for
the three months ended
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Results of Operations
Three Months Ended
For the three month period ended
During the three month period ended
As a result of the changes described above, net loss from operations after
income taxes increased to
Liquidity and Capital Resources
As of
On
On
On
On
On
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On
On
On
In connection with its proposed business plan and currently ongoing and proposed acquisitions, the Company will be required to complete substantial and significant additional capital formation. Such formation could be through additional equity offerings, debt, bank financings or a combination of any source of financing. There can be no assurance that the Company will be successful in completion of such financings.
Capital Expenditures
As of
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MediColombias Acquisition (Colombia Licensed Producer)
On
This acquisition includes a team of experts and significant expenditures spent
on an irrigation holding pond, security towers, fencing, etc. to meet the
Pursuant to the agreement the Company acquired all of the issued and outstanding
shares of Medicolombia in exchange for
Assumption of contract of purchase and sale of
On
The total commitment for the two parcels of land is
In
During the three months ended
Natural Health Products Acquisition
In
Xtreme Cubes construction has begun
In
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Commitments and Contractual Obligations
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Off-balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Going Concern
As reflected in the accompanying financial statements, the Company had an
accumulated deficit of approximately
The Company does not yet have a history of financial stability. Historically, the principal source of liquidity has been the issuance of equity securities. In addition, the Company is in the development stage and has generated no revenues since inception. These factors raise substantial doubt about the Company's ability to continue as a going concern.
The ability of the Company to continue operations is dependent on the success of Management's plans, which include the raising of capital through the issuance of equity securities, until such time that funds provided by operations are sufficient to fund working capital requirements.
The Company will require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. The Company believes its current available cash will be sufficient to meet its cash needs for the near future. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.
The accompanying 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. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Risks
As a "smaller reporting company," as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.
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