Engineering & Capital Goods News

CRYOMASS TECHNOLOGIES, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)


Forward-Looking Statements

This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors that may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.



Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.




In this quarterly report, unless otherwise specified, our financial statements
are expressed in United States Dollars (US$) and are prepared in accordance with
United States generally accepted accounting principles. All references to
"common shares" refer to the common shares in our capital stock.



Unless expressly indicated or the context requires otherwise, the terms
Cryomass Technologies,” the “Company,” “we,” “us,” and “our” refer to Cryomass
Technologies Inc.
, a Nevada corporation, and, where appropriate, its wholly
owned subsidiaries.



General Overview


Cryomass Technologies Inc ("Cryomass Technologies" or the "Company") began as
Auto Tool Technologies Inc., which was incorporated under the laws of the State
of Nevada on May 10, 2011. The Company's name was changed to AFC Building
Technologies Inc. effective January 10, 2014. Effective April 26, 2018, the
Company changed its name to First Colombia Development Corp. Effective October
14, 2019, the Company changed its name to Redwood Green Corp. Effective
September 1, 2020, the Company changed its name to Andina Gold Corp. On July 15,
2021, the Company entered into a plan of merger with its wholly-owned
subsidiary, Cryomass Technologies Inc a Nevada corporation, for the purpose of
changing the name of the Company to Cryomass Technologies Inc. effective August
27, 2021. Our stock trading symbol is CRYM.



The Company’s principal office is located at 1001 Bannock St., Suite 612,
Denver, CO 80204, and our telephone number is 303-416-7208. The Company’s
website is www.cryomass.com.

On May 10, 2018, the Company acquired all the issued and outstanding share
capital of First Colombia Devco S.A.S. ("Devco") a Colombian company, and began
to establish various business ventures in Colombia in the agriculture and real
estate development, tourism, and infrastructure sectors before commencing to
phase them out in April 2019.



On July 1, 2019, the Company acquired 100% of the membership interests in
General Extract, LLC ("General Extract"), a Colorado limited liability company.
General Extract was founded in 2015 as an importer, distributor, broker and
postprocessor of hemp and hemp derivatives. The Company acquired all of the
issued and outstanding membership interests, including business plans and access
to contacts.



On July 15, 2019, the Company, through its wholly owned subsidiary Good
Acquisition Co., entered into a Membership Interest Purchase Agreement to
acquire intellectual property and other assets of Critical Mass Industries LLC
DBA Good Meds ("CMI" and/or "Good Meds"), a Colorado limited liability company
("CMI Transaction"). CMI is licensed by the Marijuana Enforcement Division of
Colorado Department of Revenue. Under the terms of the Membership Interest
Purchase Agreement, CMI retained the cannabis license, inventory and accounts
receivable (the "Cannabis License Assets") and continued to operate the cannabis
business related to those assets. In consideration for the transfer of the
acquired assets, the Company delivered 13,553,233 shares of the Company common
stock, in addition to $1,999,770 in cash to CMI.



                                       21





Effective December 31, 2021, we entered into a restated and amended
administrative services agreement, terminated our license and marketing
agreements, and restated the asset purchase agreement with CMI and affiliates.
As a result of these agreements, we disposed of all CMI-related assets and
extinguished any and all related obligations. For clarity, we have no management
or operations decision-making right or responsibility, nor any access to future
economic benefits from operation of the assets. Therefore, upon commencing these
agreements, we determined that CMI no longer qualifies as a variable interest
entity ("VIE") as of December 31, 2021.



In August 2020, the Company established a wholly owned Colombian subsidiary,
Andina Gold Colombia SAS for the purpose of exploring unique opportunities for
gold exploration in Columbia. In December 2020, due to the death of the top
geologist exploring opportunities on behalf of the Company, and the effects of
the ongoing Coronavirus pandemic, the Company determined that pursuit of gold
exploration in Colombia was no longer a practical alternative.



On June 22, 2021, the Company entered into an Asset Purchase Agreement with
Cryocann USA Corp, a California corporation ("Cryocann"), pursuant to which
Company acquired substantially all the assets of Cryocann. The aggregate
purchase price was $3,500,000 million in cash and 10,000,000 shares of Company
common stock As part of the Cryocann Acquisition, we retained both Cryocann
employees, who have expert knowledge of the industry, related participants,
customers and the acquired patented technology. Under their employment
agreements, each employee may receive compensation if specific performance
targets are met in association with our future operating performance when the
Cryocann technology enters the market. The technology and assets acquired from
Cryocann are operated from the Company's subsidiary, Cryomass LLC. The patented
cryo-mechanical technology is for the separation of plant materials in the
harvesting of hemp and cannabis, and potentially other high value crops such as
hops. We believe this technology will reduce processing costs and increases the
quality of extracted compounds. We are exploring the application of the
underlying technology to a broad range of industries that handle high-value
materials and that could benefit from our precision capture methods. We
anticipate that cannabis and hemp will be the first in a series of such
industries.



To develop and commercialize the technology, we contracted with an independent
engineering and manufacturing firm to refine the design of our cryo-mechanical
system for the handling of harvested hemp, cannabis and other high-value plants.
The system exploits CryoMass's U.S.-patented process for the controlled
application of liquid nitrogen to stabilize and separate the structural elements
of gross plant material. The system, which we now call the CryoMass Trichome
Separation System is fully developed and optimized for the low-cost collection
of fully intact hemp and cannabis trichomes. It can be used within minutes after
plants have been cut and can also efficiently capture trichomes from fresh
frozen or even dried plant parts, including trim. The device's through-put
capacity is to be approximately 600 kilograms of gross plant material per hour.
The advanced design for the equipment has been completed, and testing of a
prototype machine is currently un The engineering and manufacturing firm has
indicated that it has the capacity to build 10 to 15 such devices per month. The
first functional "beta" machine has completed field testing. The Company is
currently negotiating a license arrangement with a third party to deploy twelve
trichome separation units at the prospective partner's facility in California
and other locations, with the intention of starting commercial operations
shortly thereafter.



Management believes the CryoMass system will deliver a compelling combination of
cost and time savings while enhancing product quality and quantity for
largescale cultivators and processors of hemp and cannabis. The use of
a CryoMass system - which can be trucked to and operated on the fields of most
large hemp and cannabis growers or be permanently installed at a user's
processing facility - should eliminate many of the costs that come with
traditional practices, especially the labor, fuel and capital costs of drying
and curing hemp or cannabis that is grown for the extraction of end
products. With traditional practices, harvested plants are transported to a
specially constructed drying house and then treated for a week or longer under
controlled conditions of temperature and humidity. It's a costly method. With
our system, harvested plants are simply fed into the front end of
a CryoMass trichome separation system, and minutes later fully intact trichomes
are collected at the back end of the unit. With traditional practices and their
seven-to-ten days of handling and drying, a large share of a plant's valuable
trichomes break off and are lost. Then the remaining trichomes are damaged by
long exposure to oxygen and by the evaporation of their volatile terpenes.
The CryoMass system, on the other hand, stabilizes and collects fully intact
trichomes at harvest, leaving no opportunity for such wasteful loss.
Field-captured trichomes are the cleanest element of a hemp or cannabis plant
because, unlike the rest of the plant, trichomes do not readily take up heavy
metals, pesticides or other common soil contaminants. As a product for
end-users, field-captured trichomes are closest to being contaminant free. As
feedstock for manufacturers of extracts and oils, they are the key to the purest
products possible.



                                       22




Because the trichomes collected with CryoMass technology represent only 10% or
so of a plant's weight and volume, they are cheaper to ship and store than gross
plant material. For the same reason and because trichomes are free of the waxes
and other unwanted materials found in the rest of the plant, processing
trichomes into oils and extracts can be far quicker, cheaper and easier than
processing gross plant material. Even trichomes captured from dried or frozen
plant parts deliver this cost-saving advantage to processors of oils and
extracts. The three-dimensional advantage achievable with the CryoMass system -
first-stage cost savings, product enhancement and downstream cost savings - can
as much as double a crop's wholesale value. And in some jurisdictions, users may
enjoy a reduction in excise taxes levied on cannabis and hemp harvests, which
typically are tied to the gross weight of hemp or cannabis that is removed
from
the field.



Production and processing of hemp and cannabis is a huge, worldwide industry. In
the U.S., for example, the wholesale value of the cannabis crop from just the 11
states permitting adult-use and medical cannabis exceeds $6 billion
annually. Growth in the U.S. and in the worldwide market is likely fed in part
by the growing acceptance of medicinal cannabis products and anticipated
legislative changes in various jurisdictions worldwide.



Several other high-value plants, including species that are important for health
and wellness products, wrap their valuable elements in trichomes. The technology
we are developing for hemp and cannabis may have profitable application to
those
other species as well.


In September 2021, we were granted an additional patent for our process from the
Chinese Intellectual Property Office. We currently are taking steps to gain
further protection for our intellectual property through the European Union
Intellectual Property Office and several other international jurisdictions.

On November 17, 2021, we announced the completion of a $10.3 million equity
financing. The financing and the earlier conversion of substantially all the
company's debt into common stock left the Company with adequate resources for
our planned business development. In connection with the financing, 1,010,000
shares and 760,000 shares of CryoMass Technologies common stock were purchased
by CEO Christian Noël and Chairman of the Board Delon Human, respectively,
either individually or through entities controlled by them.



Update on COVID-19



In December 2019, a novel strain of coronavirus was reported to have surfaced in
Wuhan, China, which has spread throughout the world, including the United
States. On January 30, 2020, the World Health Organization declared the outbreak
of COVID-19 a "Public Health Emergency of International Concern," and on March
11, 2020, it characterized the outbreak as a "pandemic". The impact of COVID-19
developments and uncertainty with respect to the economic effects of the
pandemic has introduced significant volatility in the financial markets.



To date, COVID-19 has surfaced in nearly all regions around the world and
resulted in travel restrictions, both domestic and international, closing of
borders and business slowdowns or shutdowns in affected areas. As a
result, COVID-19 has impacted the Company's business. Although deemed an
essential business during the pandemic, many dispensaries and cannabis
manufacturers have suspended or reduced operations on a temporary basis due to
matters associated with COVID-19. While activities resumed in full in 2022,
there are continued threats of short-notice, temporary restrictions that may
impact our business.


The COVID-19 pandemic and responses to this crisis, including actions taken by
federal, state and local governments, have had an impact on the operations of
the Company, including, without limitation, the following: reduced staffing due
to employee suspected conditions and social distancing measures; constraints on
productivity; management and staff non-essential business-related travel was
constrained due to stay-at-home orders; some employees have shifted to remote
work resulting in loss of productivity; consumers visiting dispensaries operated
under license impacted by stay-at-home orders. Management continues to monitor
the COVID-19 pandemic situation and federal, state and local recommendations and
will provide updates as appropriate.



                                       23





Our Current Business



Our business portfolio includes the accounts of Cryomass LLC (formerly known as
General Extract), which is controlled by the Company through its 100% ownership
interest. The Company dissolved its previously reported VIE relationship with
Critical Mass Industries Inc., such that we no longer report the VIE as
discontinued operations held for sale.



On June 23, 2021, the Company consummated purchase of assets of Cryocann USA
Corp through its wholly-owned subsidiary Cryomass LLC. We have finalized
research and development work of our patented technology. We have completed
commercial-scale testing of the system and have been targeting specific markets
and industries to employ this ground-breaking technology.



Management believes the CryoMass system will deliver a compelling combination of
cost and time savings while enhancing product quality and quantity for
largescale cultivators and processors of hemp and cannabis. The use of
a CryoMass system should eliminate many of the costs that come with traditional
practices, especially the labor, fuel and capital costs of drying and curing
hemp or cannabis that is grown for the extraction of end products. With
traditional practices, harvested plants are transported to a specially
constructed drying house and then treated for a week or longer under controlled
conditions of temperature and humidity. It's a costly method. With our system,
harvested plants are simply fed into the front end of a CryoMass trichome
separation system, and minutes later fully intact trichomes are collected at the
back end of the unit. With traditional practices and their seven-to-ten days of
handling and drying, a large share of a plant's valuable trichomes break off and
are lost. Then the remaining trichomes are damaged by long exposure to oxygen
and by the evaporation of their volatile terpenes. The CryoMass system, on the
other hand, stabilizes and collects fully intact trichomes at harvest, leaving
no opportunity for such wasteful loss. Field-captured trichomes are the cleanest
element of a hemp or cannabis plant because, unlike the rest of the plant,
trichomes do not readily take up heavy metals, pesticides or other common soil
contaminants. As a product for end-users, field-captured trichomes are closest
to being contaminant free. As feedstock for manufacturers of extracts and oils,
they are the key to the purest products possible.



Because the trichomes collected from CryoMass system represent only 10% or so of
a plant's weight and volume, they are cheaper to ship and store than gross plant
material. For the same reason and because trichomes are free of the waxes and
other unwanted materials found in the rest of the plant, processing trichomes
into oils and extracts can be far quicker, cheaper and easier than processing
gross plant material. Even trichomes captured from dried or frozen plant parts
deliver this cost-saving advantage to processors of oils and extracts. The
three-dimensional advantage achievable with the CryoMass system - first-stage
cost savings, product enhancement and downstream cost savings - can as much as
double a crop's wholesale value. And in some jurisdictions, users may enjoy a
reduction in excise taxes levied on cannabis and hemp harvests, which typically
are tied to the gross weight of hemp or cannabis that is removed from the field.



Results of Operations for the Three Months Ended September 30, 2022 and 2021




Our operating results for the three months ended September 30, 2022 and 2021 are
summarized as follows:



                                             For the Three Months Ended
                                                    September 30,                        Change
                                                2022              2021           Dollars       Percentage
Net sales                                  $            -     $          -     $         -               0 %
Cost of goods sold, inclusive of
depreciation                                            -                -               -               0 %
Gross profit                                            -                -               -               0 %
Total operating expenses                        1,253,826        2,056,476        (802,650 )           -39 %
Loss from operations                           (1,253,826 )     (2,056,476 )       802,650             -39 %
Total other expenses                               25,413         (567,431 )       592,844            -104 %
Net loss from continuing operations,
before taxes                                   (1,228,413 )     (2,623,907 )     1,395,494             -53 %
Income taxes                                            -                -               -               0 %

Net loss from continuing operations $ (1,228,413 ) $ (2,623,907 ) $ 1,395,494

             -53 %
Net income / (loss) from disc.
operations, net of tax                     $            -     $    250,092     $  (250,092 )          -100 %
Net loss                                   $   (1,228,413 )   $ (2,373,815 )   $ 1,145,402             -48 %




                                       24




Our operating results for the three months ended September 30, 2022 and 2021,
relating to our former variable interest entity, CMI, are classified as
discontinued operations above and summarized as follows:



                                                 For the Three Months Ended
                                                        September 30,                        Change
                                                   2022              2021           Dollars        Percentage
Net sales                                       $        -       $  1,399,505     $ (1,399,505 )          -100 %
Cost of goods sold, inclusive of depreciation            -            857,281         (857,281 )          -100 %
Gross profit                                             -            542,224         (542,224 )          -100 %
Total operating expenses                                 -            292,132         (292,132 )          -100 %
Gain / (loss) from operations                            -            250,092         (250,092 )          -100 %
Total other expenses                                     -                  -                -               0 %
Net income / (loss), before taxes                        -            250,092         (250,092 )          -100 %
Income taxes                                             -                  -                -               0 %
Net income / (loss)                             $        -       $    250,092     $   (250,092 )          -100 %



Net Sales and Cost of Goods Sold




There were no net sales related to continuing operations for the three months
ended September 30, 2022 and 2021. CMI had no net sales for the three months
ended September 30, 2022. CMI net sales were $1,399,505 for the three months
ended September 30, 2021, of which $943,012 was related to medical retail,
$456,540 was related to medical wholesale, $(47) was related to recreational
wholesale and $0 was related to other revenues. The overall decrease in CMI net
sales for the three months ended September 30, 2022 compared to the three months
ended September 30, 2021 was $1,399,505, or 100%, which is which is attributable
to the Company's disposal of its discontinued operations as of December 31,
2021.



There were no cost of goods sold related to continuing operations for the three
months ended September 30, 2022 and 2021, respectively. CMI had no cost of goods
sold for the three months ended September 30, 2022. CMI's cost of goods sold
were $857,281 for the three months ended September 30, 2021, representing a
decrease of $857,281 or 100%. This decrease is attributable to the Company's
disposal of its discontinued operations as of December 31, 2021.



Operating Expenses


Operating expenses encompass personnel costs, general and administrative
expenses, and legal and professional fees. Total operating expenses were
$1,253,826 for the three months ended September 30, 2022 as compared to
$2,056,476 for the three months ended September 30, 2021. The decrease of
$802,650, or 39%, was primarily attributable to the following changes in
operating expenses of:



  ? Personnel costs - $471,388 decrease




  ? General and administrative expenses - $183,760 decrease



The decrease of $471,388, or 39%, in personnel costs is primarily due to a large
employee signing bonus and consulting contracts for investor relations and
equipment testing in 2021. The decrease of $183,760, or 38%, in general and
administrative expenses is primarily due to the fact that the Company incurred
significant stock options costs during the three months ending September 30,
2021.



CMI operating expenses encompass personnel costs, general and administrative,
legal and professional fees, and amortization expense. Total operating expenses
for CMI were $0 and $292,132 for the three months ending September 30, 2022 and
2021, respectively, representing a decrease of $292,132, or 100%. This decrease
was attributable to the Company's disposal of its discontinued operations as of
December 31, 2021.



Other Expense



Other expense for the three months ending September 30, 2022 consisted of
$19,636 interest expense and $45,049 gain on foreign exchange. Other expense for
the three months ending September 30, 2021 consisted of $590,601 interest
expense and $23,170 gain on foreign exchange. The decrease in interest expense
was a result of fully converting $4,900,000 of notes payable into common shares
during Q4 2021. The loss on foreign exchange relates to a payable agreement
with
Cryomass LLC's supplier.


CMI had no other expense for the three months ending September 30, 2022 and
2021.




Net Loss



For the foregoing reasons, we had a net loss of $1,228,413 for the three months
ending September 30, 2022, or $0.01 net loss per common share – basic and
diluted, compared to a net loss of $2,373,815 for the three months ending
September 30, 2021, or $0.02 net loss per common share – basic and diluted.



                                       25




Results of Operations for the Nine Months Ended September 30, 2022 and 2021



Our operating results for the nine months ended September 30, 2022 and 2021 are
summarized as follows:



                                             For the Nine Months Ended
                                                   September 30,                        Change
                                               2022              2021           Dollars       Percentage
Net sales                                  $           -     $          -     $         -               0 %
Cost of goods sold, inclusive of
depreciation                                           -                -               -               0 %
Gross profit                                           -                -                               0 %
Total operating expenses                       4,797,859        5,689,625  
     (891,766 )           -16 %
Loss from operations                          (4,797,859 )     (5,689,625 )       891,766             -16 %
Total other expenses                             (13,276 )     (1,106,150 )     1,092,874             -99 %
Net loss from continuing operations,
before taxes                                  (4,811,135 )     (6,795,775 )     1,984,640             -29 %
Income taxes                                           -                -               -               0 %
Net loss from continuing operations        $  (4,811,135 )   $ (6,795,775 )   $ 1,984,640             -29 %
Net income from discontinued operations,
net of tax                                 $           -     $    605,394     $  (605,394 )          -100 %
Net loss                                   $  (4,811,135 )   $ (6,190,381 )   $ 1,379,246             -22 %




Our operating results for the nine months ended September 30, 2022 and 2021,
relating to our former variable interest entity, CMI, are included above and
summarized as follows:



                                                    For the Nine Months Ended
                                                          September 30,                           Change
                                                   2022                2021              Dollars        Percentage
Net sales                                       $        -       $       4,713,077     $ (4,713,077 )          -100 %
Cost of goods sold, inclusive of depreciation            -               2,982,974       (2,982,974 )          -100 %
Gross profit                                             -               1,730,103       (1,730,103 )          -100 %
Total operating expenses                                 -               1,074,906       (1,074,906 )          -100 %
Gain / (loss) from operations                            -                 655,197         (655,197 )          -100 %
Total other expenses                                     -                 (49,803 )        (49,803 )          -100 %
Net income, before taxes                                 -                
605,394         (605,394 )          -100 %
Income taxes                                             -                       -                -               0 %
Net income                                      $        -       $         605,394     $   (605,394 )          -100 %



Net Sales and Cost of Goods Sold




There were no net sales related to continuing operations for the nine months
ended September 30, 2022 and 2021. CMI contributed no net sales for the nine
months ended September 30, 2022. CMI net sales were $4,713,077 for the nine
months ended September 30, 2021, of which $3,196,912 was related to medical
retail, $1,525,132 was related to medical wholesale, $8,963 was related to
recreational wholesale, and $(17,930) was related to other revenues. The overall
decrease in CMI net sales for the nine months ended September 30, 2022 compared
to the nine months ended September 30, 2021 was $4,713,077, or 100%.



There were no cost of goods sold related to continuing operations for the nine
months ended September 30, 2022 and 2021. CMI contributed no cost of goods sold
for the nine months ended September 30, 2022. CMI's cost of goods sold were
$2,982,974 for the nine months ended September 30, 2021, representing a decrease
of $2,982,974 or 100%. This decrease is attributable to the Company's disposal
of its discontinued operations as of December 31, 2021.



Operating Expenses


Operating expenses encompass personnel costs, general and administrative
expenses, and legal and professional fees. Total operating expenses were
$4,797,859 for the nine months ended September 30, 2022 as compared to
$5,689,625 for the nine months ended September 30, 2021. The decrease of
$891,766, or 16%, was primarily attributable to the following:



  ? General and administrative expenses - $2,025,786 decrease




  ? Legal and professional fees - $1,539,371 increase



The $2,025,786, or 71%, decrease in general and administrative expenses is
primarily due to the fact that the Company incurred additional stock-based
compensation expense during the nine months ending September 30, 2021 related to
new CEO Christian Noel's employment agreement and stock options granted for the
Cryocann Acquisition. The 1,539,371, or 193%, increase in legal and professional
fees primarily resulted from the fact that the Company incurred a number of
large expenses for its primary investor relations consultant.



                                       26





CMI operating expenses encompass personnel costs, general and administrative,
legal and professional fees, and amortization expense. Total operating expenses
for CMI were $0 and $782,774, respectively, for the nine months ended September
30, 2022 and 2021, which represents a decrease of $782,774 or 100%.



Other Expense



Other expense for the nine months ending September 30, 2022 consisted of $90,894
interest expense and $77,618 gain on foreign exchange. Other expense for the
nine months ending September 30, 2021 consisted of $1,152,858 interest expense
and $46,708 gain on foreign exchange. The decrease in interest expense was a
result of fully converting $4,900,000 of notes payable into common shares during
Q4 2021. The loss on foreign exchange relates to a payable agreement with
Cryomass LLC's supplier.



CMI contributed no other expense for the nine months ending September 30, 2022.
CMI's other expense during the three months ending September 30, 2021 consisted
of $49,803 interest expense, which primarily relates to the related party note.



Net Loss


For the foregoing reasons, we had a net loss of $4,811,135 for the nine months
ending September 30, 2022, or $0.02 net loss per common share – basic and
diluted, compared to a net loss of $6,190,381 for the nine months ending
September 30, 2021, or $0.04 net loss per common share – basic and diluted.

Liquidity, Capital Resources and Cash Flows

The Company believes it has sufficient cash available, in addition to cash
expected to be available from lease payments and royalty payments in connection
with future revenue generation, to fund its anticipated level of operations for
at least the next twelve months. As of September 30, 2022, the Company had
working capital of $2,031,369 and cash balance of $3,129,736. The Company
estimates that it needs approximately $4,000,000 to cover overhead costs over
the next twelve months. The Company has capital expenditure requirements ranging
from zero to $6,600,000 depending on how many trichome separation units are
ordered over the next twelve months, but upfront lease payments are expected to
offset each unit ordered. However, if needed, the Company also has available to
it a facility that can be used to put shares to an investment fund in return for
cash. The dollar amount of each put is determined by a formula which is based on
trading volumes and prices of our shares. Based on current trading volumes and
prices, we estimate that approximately $100,000 could be available every two
weeks until we reach the facility limit of $10,000,000 or the end of 2023,
whichever comes first. We believe that the combination of available cash, lease
payments and royalty payments from revenue generation and the facility described
above will be sufficient to meet our anticipated costs going forward.



COVID-19 has resulted in, and may continue to result in, significant disruption
of financial markets, which may reduce the Company's ability to access capital
or its customers' ability to pay the Company for past or future purchases, which
could negatively affect the Company's liquidity. The Company believes that the
cash balances and cash from operations will be sufficient to satisfy its cash
needs for the next few months until it can obtain new long-term financing or
other sources of capital. If we are unable to attain additional financing, we
will have to seek additional strategic alternatives and relief from our
additional liabilities accumulated during COVID-19.



The impact of COVID-19 developments and uncertainty with respect to the economic
effects of the pandemic have introduced significant volatility in the financial
markets. The uncertainties associated with COVID-19 related to our industry
present risk and doubt about the Company's ability to continue as a going
concern.



Going Concern


Management believes it has sufficient cash available to support an anticipated
level of operations for at least 12 months following the date of this report.




Capital Resources



The following table summarizes total current assets, liabilities and working
capital for the periods indicated:



                       September 30,       December 31,
                           2022                2021
Current assets        $     3,266,373     $    6,530,222
Current liabilities         1,235,004          1,882,419
Working capital       $     2,031,369     $    4,647,803



As of September 30, 2022 and December 31, 2021, we had a cash balance of
$3,129,736 and $5,772,839, respectively.

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