You should read the following discussion and analysis of financial condition and results of operations in conjunction with the consolidated financial statements and related notes appearing elsewhere in this Report.
We were originally incorporated in
On
We provide armed protection and transportation, banking, compliance and training
services for businesses engaged in the legal cannabis industry. During the six
months ended
It is estimated that the total market for marijuana, legal or otherwise, will
exceed the economic value of corn and wheat combined. Marijuana is widely
considered the largest cash crop in
Cultivation facilities are the producers of legal cannabis that eventually make its way to consumers. Growers' operations typically span a large geographic footprint, making them susceptible to theft, as are shipments from the growers to testing laboratories or to retail dispensaries. Additionally, due to current federal marijuana legislation and banking environment, growers are finding it increasingly difficult to secure their cash, purchase equipment and obtain financing for expansion.
Dispensaries are the retail face of the legal cannabis industry. All legal sales of cannabis products are transacted through dispensaries that are state-licensed. To maintain their licenses, dispensaries must comply with a variety of state-mandated reporting requirements, including reporting every gram of cannabis passing in and out of the store. Dispensaries also face financing and banking challenges similar to those that growers encounter.
We do not grow, test, transport or sell marijuana.
Armed Protection and Transportation
Fundamental to the legal cannabis industry is the protection of product and cash throughout the distribution channel. Growers ship product from their cultivation facilities to independent laboratories where it is tested for compliance with state-mandated parameters. From the labs, the product is then delivered to the retail dispensaries, where it is sold to the public.
Due to the current banking and regulatory environments, payments between each step in the distribution network are made in cash: from the customer back to the grower. Therefore, these businesses are forced into having to transport bags of money between growers and dispensaries and their own vaults or storage facilities.
The risk of theft of cash and product is present at every stage, even when they are not in transit. Accordingly, all cannabis businesses require security measures to prevent theft, mitigate risk to employees and maintain regulatory compliance.
We began our security and protection operations in
We also offer security monitoring, asset vaulting, and VIP and dignitary protection.
4 Results of Operations Material changes in line items in our Statement of Operations for the three months endedJune 30, 2022 as compared to the same period last year, are discussed below: Increase (I) or Item Decrease (D) Reason Revenue D Accrual of revenue and decrease in services Interest expense D Decrease in borrowings Gain (loss) on change in fair D Reduction in debt and lower value of derivative securities stock prices Material changes in line items in our Statement of Operations for the six months endedJune 30, 2022 as compared to the same period last year, are discussed below: Increase (I) or Item Decrease (D) Reason Revenue D Accrual of revenue and decrease in services Interest expense D Decrease in borrowings Gain (loss) on change in fair D Reduction in debt and lower value of derivative securities stock prices
Capital Resources and Liquidity
Our material sources and
2022 2021
Cash provided (used) by operations
As of
Other than as disclosed above, we do not anticipate any material capital
requirements for the twelve months ending
Other than as disclosed above, we do 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; or ? any significant changes in our expected sources and uses of cash.
We do not have any commitments or arrangements from any person to provide us with any equity capital.
During the next twelve months, we anticipate that we will incur approximately
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements.
5 Critical Accounting Policies
Management considers the following policies critical because they are both important to the portrayal of our financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters.
Accounts receivable. Accounts receivable are stated at the amount we expect to collect from outstanding balances and do not bear interest. We provide for probable uncollectible amounts through an allowance for doubtful accounts, if an allowance is deemed necessary. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. On a periodic basis, management evaluates our accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days. Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote.
Revenue recognition. In
We adopted these standards at the beginning of the first quarter of fiscal 2018
using the modified retrospective method. The adoption of these standards did not
have an impact on our Statements of Operations for the six months ended
Stock-based compensation. We record stock based compensation in accordance with the guidance in ASC Topic 505 and 718, which requires us to recognize expenses related to the fair value of our employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. We recognize the cost of all share-based awards on a graded vesting basis over the vesting period of the award.
Equity Instruments. We account for equity instruments issued in exchange for the receipt of goods or services from non-employees in accordance with FASB ASC 718-10.
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