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The next dialogue and evaluation of our monetary situation and outcomes of
operations needs to be learn along side the condensed consolidated
monetary statements and supplementary information referred to on this Kind 10-Q.
This dialogue incorporates forward-looking statements that contain dangers and uncertainties. Such statements, which embrace statements regarding income sources and focus, promoting, basic and administrative bills and capital assets, are topic to dangers and uncertainties, together with, however not restricted to, these mentioned elsewhere on this Kind 10-Q that would trigger precise outcomes to vary materially from these projected. Except in any other case expressly indicated, the knowledge set forth on this Kind 10-Q is as ofJune 30, 2021 , and we undertake no obligation to replace this data.New You, Inc.'s principal enterprise is the advertising of distinctive and proprietary cannabidiol ("CBD") merchandise, which embrace CBD beverage enhancers that may be added to any beverage, CBD infused espresso, and CBD oil tinctures. The Firm has 5 merchandise:
? DROPS – 220 mgs of CBD – odorless, tasteless, flavorless and may be added to
any beverage or liquid.
? CB2 & CBD 2 Plus – A Multi Spectrum Hemp-extracted CBD and Beta-Caryophyllene
(?-Caryophyllene is the first sesquiterpene contributing to the spiciness of
black pepper; additionally it is a serious constituent of cloves, hops, rosemary,
copaiba, and hashish), naturally blended coconut-derived MCT oil (produced from a
coconut fats referred to as medium-chain triglyceride) and a touch of peppermint.
? Drops for Pets – This 50 mgs CBD product is designed for use by pets.
? ENDO30 -
? CAFFE CANNA – Caffe Canna is a wealthy natural CBD-infused non-GMO darkish roast
espresso ? ABSORB - Fabricated from a Japanese root and rice flour veggie capsule.
? RELEASE – Made with natural Clove, Cascara Sagrada, Agave Inulin, Rhubarb Root
Extract, Slippery Elm Bark, Aloe Vera and different herbs.
? Drops FX -Our proprietary mix of CBD and Nutritional vitamins B3, B6, B9 & B12, that you simply
can use in any drink or liquid.
? Drops FX Sleep -A mix of CBD, GABA (Gamma-amino butyric acid is an amino
acid within the physique that acts as a neurotransmitter within the central nervous
system), Melatonin, Valerian Root.
? NanoX – A water soluble, Full Spectrum DBD made with Purified Water, NanoX™
(from Coconut)), Colloidal Silver (20ppm), Liposomal Methyl B12, Liposomal
CoQ10, Liposomal Curcumin, Stevia Leaf Extract. 20
? The Cream – A topical pores and skin cream made with Cannabidiol (1,000 mg of complete
plant CBD isolate per 60 mL), Purified Water (Aqua), Glyceryl Stearate SE,
Hashish
Macadamiate, Stearic Acid, Cetearyl Alcohol, Pentylene Glycol, Oryza Sativa
(Rice) Bran Extract, Tocopherol, Eucalyptus Globulus Leaf Oil, Origanum
majorana, Potassium Hydroxide, Hydroxypropyl Starch Phosphate, Phenoxyethanol,
Caprylyl Glycol, Tetra- sodium Glutamate Diacetate, Pentanediol.
New You, Inc. via its wholly owned subsidiary,New You LLC , markets and sells its merchandise via a multi-level advertising and direct gross sales alternative afforded to impartial enterprise house owners referred to as "Model Companions ." Commissions are earned on product gross sales toModel Companions and their clients at a price of 10% for each transaction, plus a specified unfold on recurring gross sales.Model Companions earn a 5% fee on gross sales by different group members at decrease ranges up to 9 ranges under the Model Accomplice.Model Companions can earn an extra bonus for buyer gross sales and group gross sales. The group bonus is$400 for every time the group bonus quantity reaches a specific amount in a 30 day interval.Model Companions can even earn an preliminary bonus of 20% of the transaction worth for qualifyingModel Companions within the Model Accomplice's first 30 days. There's a threat thatModel Companions could discover it troublesome to promote in a community advertising setting.Model Companions can also discover it troublesome to promote CBD associated merchandise because of the uncertainty surrounding FDA laws of CBD and hemp associated merchandise. Lastly, public notion of CBD merchandise could also be unfavorable, as such merchandise are derived from the Hemp plant. The Firm doesn't maintain any patents or logos and, consequently, could also be weak to competitors from different firms providing very comparable merchandise and product manufacturers The Firm purchases stock fromCarlsbad Naturals, LLC .Carlsbad Naturals, LLC is a principal shareholder ofNew You, Inc. , and is owned by a principal shareholder ofNew You, Inc. Consequently, we're depending on a associated get together for product stock and shouldn't have a broad base of unaffiliated suppliers. The officers and administrators of the Firm personal 34.27% of the excellent widespread shares. Accordingly, administration may have a determinative affect on issues requiring shareholder approval.
OnCould 3, 2021 , we entered into an Change Settlement with STManufacturers, Inc. (STB), aWyoming company, and the shareholders of STB. Below the Settlement, the Firm acquired the entire issued and excellent widespread inventory of STB in change for our issuance to the Shareholders of STB, shares of our newly-designated Sequence A Most well-liked Inventory. The category of Sequence A Most well-liked Inventory consists of 4,500,000 shares of most popular inventory convertible to our widespread inventory at a ratio of 100 for 1. As an entire, all designated shares of Sequence A Most well-liked are convertible to roughly the cumulative equal of ninety % (90%) of our issued and excellent share capital as ofCould 3, 2021 . The Settlement contemplates that the Firm's current enterprise and property of the Firm will stay and proceed underneath the Firm's possession following the closing of the Closing. Shares of Sequence A Most well-liked Inventory shall be issuable to the Shareholders underneath the Settlement upon every of a number of contemplated Closings, every Closing to take place upon our receipt of audited monetary statements reflecting sure ranges of annual income earned by STB and/or Acquired Materials Companies, as outlined within the Change Settlement and as described in Exhibit B within the Settlement. As much as 4,500,000 shares of Sequence A Most well-liked Inventory could also be issued to the Shareholders, with all Closings to happen on or earlier thanApril 30, 2022 . Below the Preliminary Closing on the date of the Settlement, we issued 500,000 shares of Sequence A Most well-liked Inventory to the Shareholders of STB. The issuance was exempt underneath Part 4(a)(2) of the Securities Act because the transaction didn't contain a public providing.
On
(the “Board”) of the Firm appointed
Govt Chairman of the Board.
OnCould 6, 2021 , we filed a Certificates of Designation for our newly-designated Sequence A Most well-liked Inventory with the Secretary of State of theState of Nevada (the "Secretary of State"). The category of Sequence A Most well-liked Inventory ("Sequence A") consists of 4 million 5 hundred thousand (4,500,000) shares, par worth$0.00001 per share. Key provisions embrace: Conversion: Every share of Sequence A shall be convertible on the possibility of the holders thereof, and with out the cost of extra consideration, at any time, into shares of our widespread inventory at a conversion price of 100 (100) shares of widespread inventory for each one (1) share of Sequence A held (the "Conversion Price"), topic to adjustment as set forth within the Certificates of Designation. The Conversion Price is topic to pro-rata downward adjustment primarily based on the variety of shares of widespread inventory (or widespread inventory equivalents) issued within the future by us for the acquisition of Acquired Materials Companies throughout the that means of the Settlement. The Conversion Price can also be topic to adjustment for inventory splits, reverse splits, share dividends, and comparable company actions.
Rating: Shares of Sequence A shall, with respect to rights on liquidation,
winding up and dissolution, rank pari passu to our widespread inventory, par worth
21
Voting Rights: Every share of Sequence A shall vote on an as-converted foundation with
the widespread inventory or different fairness securities, leading to 100 votes per one
share of Sequence A Most well-liked Inventory.
Dangers and Uncertainties InMarch 2020 , theWorld Well being Group declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to unfold all throughthe United States . We're presently negatively impacted via a discount in gross sales by the outbreak of COVID-19 and the associated enterprise and journey restrictions and modifications to habits supposed to scale back its unfold, and proceed to observe its affect on operations, monetary place, money flows, buyer buying developments, and the business usually, along with the affect on our staff. We have now concluded that whereas it's fairly attainable that the virus might proceed to have a unfavorable affect on the outcomes of operations, the particular affect just isn't readily determinable as of the date of those monetary statements. The monetary statements don't embrace any changes that may outcome from the end result of this uncertainty. Outcomes of Operations Revenues. For the three months endedJune 30, 2021 , we generated revenues of$302,936 , a lower of$241,664 in comparison with revenues of$544,600 for the three months endingJune 30, 2020 . Evaluating the six months endedJune 30, 2021 toJune 30, 2020 , complete income decreased$439,534 with a income of$636,589 for the six months endedJune 30, 2021 in comparison with$1,076,123 for the six months endedJune 30, 2020 . The lower was primarily attributable to not but recovering from the COVID-19 shutdown. At this stage in our growth, revenues aren't but ample to cowl ongoing working bills. Gross Revenue. Our gross revenue for the three months endedJune 30, 2021 was$283,298 , a lower of$211,295 in comparison with the three months endedJune 30, 2020 . Our gross margin share for the three months endedJune 30, 2021 was 94%, in comparison with 91% for the three months endedJune 30, 2020 . The change in gross margin within the three months endedJune 30, 2021 in comparison with the three months endedJune 30, 2020 was attributable to elevated gross sales of upper margin gadgets in the course of the interval. Evaluating the six months endedJune 30, 2021 toJune 30, 2020 , gross revenue decreased$386,573 with a gross revenue of$557,701 in the course of the six months endedJune 30, 2021 in comparison with$944,274 for the six months endedJune 30, 2020 . Our gross margin share for the six months endedJune 30, 2021 was 88%, in comparison with 88% for the six months endedJune 30, 2020 . There was no change in general margin for the interval endingJune 30, 2021 in comparison with
June 30, 2020 . Promoting, Common, and Administrative Bills. Promoting, basic, and administrative bills ("SG&A bills") for the three months endedJune 30, 2021 have been$9,067,999 , a rise of$7,909,151 in comparison with the three months endedJune 30, 2020 . For the three months endedJune 30, 2021 , the SG&A bills included: (i) a discount in fee bills; (ii) a discount in payroll bills; (iii) incremental bills ensuing from the ST Manufacturers merger; (iiii) and an lower in different SG&A bills. Together with non-cash inventory primarily based compensation for the three months endedJune 30, 2021 of$10,000 , in comparison with$695,660 in inventory primarily based compensation for the three monthsJune 30, 2020 ; and (iv) a rise in goodwill impairment of$8,138,045 . In Evaluating the six months endedJune 30, 2021 toJune 30, 2020 , SG&A bills have been$11,241,331 in comparison with$2,540,530, a rise of$8,700,801 . The primary explanation for the rise was the non-cash inventory primarily based compensation expensed in the course of the six months endedJune 30, 2021 of$1,811,619 and the merger of ST Manufacturers with a goodwill impairment of$8,138,045 . For the three For the three For the six For the six months ended months ended months ended months ended June 30, June 30, June 30, June 30, 2021 2020 2021 2020 Employees and Overhead Bills 687,482 284,259 889,366 688,857 Accounting/Authorized 152,567 16,975 239,274 81,453 Fee Expense 79,906 161,954 163,028 309,644 Goodwill Imparment 8,138,045 - 8,138,045 -
Non-Money Inventory Based mostly Compensation 10,000 695,660
1,811,619 1,460,576
9,067,999 1,158,848 11,241,331 2,540,530
22
Working Loss. We realized an working lack of$8,784,702 earlier than curiosity and earnings taxes for the three months endedJune 30, 2021 in comparison with working loss of$664,255 for the three months endedJune 30, 2020 . When evaluating the six months endingJune 30, 2021 to 2020, we realized an working lack of$10,683,631 in comparison with$1,596,256 primarily attributable to expensing the remaining quantity of Inventory Based mostly Compensation and impairing the goodwill regarding the ST Model acquisition. Curiosity Expense. Curiosity bills for the three months endedJune 30, 2021 was$1,863,119 in comparison with$491,400 for the three months endedJune 31, 2020 . The improve is a mirrored image of the addition of financing within the present interval verses the prior interval endingJune 30, 2020 . Curiosity bills for the six months endedJune 30, 2021 have been$2,116,743 in comparison with$523,333 for the six months endedJune 30, 2020 . The rise is a mirrored image of the addition of financing within the present interval verses the prior interval endingJune 30, 2020 . Web Loss. We incurred a web lack of$10,891,121 for the three months endedJune 30, 2021 in comparison with web lack of$1,155,655 for the three months endedJune 30, 2020 . The first motive for the rise in web loss is because of a rise in curiosity expense from the addition of financing and impairing the goodwill regarding the ST Model acquisition. The corporate incurred a web lack of$11,768,620 for the six months endedJune 30, 2021 in comparison with a web lack of$2,120,389 for the six months endedJune 30, 2020 . The first motive for the improve in web loss is because of an will increase in curiosity bills within the quantity of$1,593,410 and impairing the goodwill regarding the ST Model acquisition. Administration will proceed to make an effort to decrease working bills and improve income.
Liquidity and Capital Sources
We incurred a web loss for the six months endedJune 30, 2021 and had an accrued deficit of$18,935,635 atJune 30, 2021 . AtJune 30, 2021 , we had a money stability of$14,577 , in comparison with a money stability of$45,102 atDecember 31, 2020 . AtJune 30, 2021 , we had a working capital deficit of$13,899,734 , in comparison with a working capital deficit of$2,460,718 atDecember 31, 2020 . The Firm's current and obtainable capital assets aren't anticipated to be ample to fulfill our funding necessities via one 12 months from the date of this submitting within the absence of share issuances or different sources of financing. We have now not been in a position to generate ample money from working actions to fund our ongoing operations. Since our inception, now we have raised capital via personal gross sales of most popular inventory, widespread inventory, and debt securities. We shall be required to boost extra funds via public or personal financing, extra collaborative relationships or different preparations till we are in a position to elevate revenues to some extent of optimistic money movement. We're evaluating numerous choices to additional cut back our money necessities to function at a decreased price, in addition to choices to boost extra funds, together with acquiring loans and promoting widespread inventory. There isn't a assure that we can generate sufficient income and/or elevate capital to assist its operations.
Based mostly on the above elements, substantial doubt exists about our capacity to
proceed as a going concern for one 12 months from the issuance of those monetary
statements.
The issuance of extra securities could lead to a major dilution in
the fairness pursuits of our present stockholders. Acquiring loans, assuming
these loans could be obtainable, will improve our liabilities and future money
commitments. There isn't a assurance that we can get hold of additional funds
required for our continued operations or that extra financing shall be
obtainable to be used when wanted or, if obtainable, that it may be obtained on
commercially cheap phrases.
The impact of current or possible authorities laws on our enterprise just isn't
identified presently. As a result of nature of our enterprise, it's anticipated that
there could also be growing authorities regulation which will trigger us to should take
severe corrective actions or make modifications to the marketing strategy.
Money Movement
The next desk summarizes our money flows for the durations indicated under:
For the six For the Six
Months Ended Months Ended
June 30 , June 31,
2020 2019
Money utilized in (offered by) working actions (718,131 ) (114,458 ) Money offered by (utilized in) investing actions (457,500 ) - Money offered by (utilized in) financing actions 1,145,106
114,458 23
Money Utilized in Working Actions
In the course of the six months endedJune 30, 2021 money utilized in working actions of$718,131 primarily mirrored our web losses for the interval, adjusted by non-cash prices akin to depreciation and stock-based compensation, accretion of debt reductions, modifications within the honest worth of by-product liabilities, and extra goodwill impairment.
Money Utilized by Investing Actions
In the course of the six months endedJune 30, 2021 , money utilized in investing actions was$457,500 , which consisted of the acquisition of investments and property and tools from the merger of ST Manufacturers. In the course of the six months endedJune 30, 2020 there was no money utilized in investing actions.
Money Offered by Financing Actions
In the course of the six months endedJune 30, 2021 , money offered by financing actions was$1,145,106 , which consisted of proceeds from convertible notes payable acquired all through the second quarter of 2021 offset by reimbursement of associated get together debt and debt added from the merger of ST Manufacturers.
Current Accounting Pronouncements
None.
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