Resonate Blends, Inc. [KOAN] Filings

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to ________

Commission file number: 000-21202

Resonate Blends, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number: (786) 369-9696

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Title of each class

Common Stock, par value of $0.0001

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter was $6,732,534.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 96,179,058 common shares as of April 16, 2024.

Documents Incorporated by Reference

Amendment to Current Report on Form 8-K filed April 16, 2024.

TABLE OF CONTENTS

PART I

Forward-Looking Statements

This Annual Report on Form 10-K contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Item 1. Business

Recent Acquisition, Change in Control and Change in Business Plan

Change in Control. Effective March 14, 2024, Geoffrey Selzer, our former Chief Executive Officer and Director, and Jim Morrison, our current President and Director, entered into a Securities Purchase Agreement (the “Control Agreement”), pursuant to which Mr. Selzer sold all 2,000,000 outstanding shares of the Company’s Series C Preferred Stock to Mr. Morrison for $10.00 in cash. Mr. Morrison now possesses voting control of the Company. See Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

EMGE Acquisition Transaction. On February 26, 2024, we entered into entered into a Share Exchange Agreement, as amended (the “Exchange Agreement”), with Emergent Health Corp., a publicly-traded (symbol: EMGE) Wyoming corporation (“EMGE”), and the holders (the “EMGE Preferred Shareholders”) of Series Class A Preferred Stock and the Series C Convertible Non-Voting Preferred Stock (collectively, the “EMGE Equity Interests”).

On March 14, 2024, the parties closed the Exchange Agreement. At the closing of the Exchange Agreement: (a) the EMGE Preferred Shareholders exchanged all of their respective EMGE Equity Interests for an equal number of shares of the Company’s to-be-designated Series F Convertible Preferred Stock that shall convert into 93% of the common stock of the Company on a fully-diluted basis (the “Series F Preferred Stock”), which shares of Series F Preferred Stock are currently issuable to the EMGE Preferred Shareholders and are to be issued upon the Company’s filing of a Certificate of Designation with the State of Nevada; (b) the Company consummated the Conveyance Agreement; and (c) all persons serving as directors and officers of the Company prior to the consummation of the Exchange Agreement resigned and appointed four new members of the Company’s Board of Directors.

Conveyance Agreement. On March 14, 2024, in conjunction with our acquisition of EMGE, we entered into an Agreement of Conveyance, Transfer and Assignment of Subsidiary (the “Conveyance Agreement”) with two of our then-wholly-owned subsidiaries, Resonate Blends, LLC, a California limited liability company, and Entourage Labs, LLC, a California limited liability company (collectively, Resonate Blends, LLC and Entourage Labs, LLC are referred to as the “Subsidiary”), and our former Chief Executive Officer and Director, Geoffrey Selzer. Pursuant to the Conveyance Agreement, we assigned our ownership in the Subsidiary to Mr. Selzer. In consideration of our assignment of the Subsidiary, Mr. Selzer (a) assumed and agreed to pay, perform and discharge, fully and completely, all liabilities of the Subsidiary, (b) indemnified us for any loss arising from or in connection with any of such liabilities and (c) agreed to pay us (i) 20% of any proceeds from the sale of the Subsidiary that occurs prior to the one-year anniversary of the Conveyance Agreement and (ii) 10% of any proceeds from the sale of the Subsidiary that occurs after the one-year anniversary and prior to the two-year anniversary of the Conveyance Agreement.

New Business Plan. The business plan and operations of EMGE now represent the entirety of our company’s business operations. References to “the Company,” “our company,” “ours,” “us,” “we” and similar words are to Resonate Blends, Inc., EMGE and the subsidiaries of EMGE. The information below includes historical information about EMGE.

Overview

Our company engages in the discovery, development and marketing of products designed to better mankind. We believe we are positioning our company as a leader in the field of Regenerative Medicine defined by the National Institute of Health using nutritionally designed products. Intended products are to be marketed under third-party label exemptions. We are focusing our current efforts on marketing licensed patent-pending natural stem cell mobilizing agents capable of enhancing each individual’s ability to mobilize their own adult stem cells from their bone marrow. Also, we are licensed under a patent-pending application to market a dual acting all natural diet aid designed to help control hunger through normal body signals to the brain and stomach. Products are being developed for consumer and professional markets. Research and development activities center on exploring other areas, such as Secretogues that can naturally enhance a person’s own growth hormone production and similar all natural bioactive formulations to enhance human performance safely, ethically, legally and utilizing known body mechanisms without the use of drugs.

Additional information about our new business plan and historical operations of EMGE is included in our Amendment to Current Report on Form 8-K filed April 16, 2024, which is incorporated herein by reference.

Item 1A. Risk Factors

The report of our independent auditors indicates uncertainty concerning our ability to continue as a going concern and this may impair our ability to raise capital to fund our business. In its opinion on our financial statements for the year ended December 31, 2023, our independent auditors raised substantial doubt about our ability to continue as a going concern. We cannot assure you that this will not impair our ability to raise capital on attractive terms. Additionally, we cannot assure you that we will ever achieve significant revenues and therefore remain a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We have incurred losses in prior periods, and losses in the future could cause the quoted price of our common stock to decline or have a material adverse effect on our financial condition, our ability to pay our debts as they become due, and on our cash flows. We have incurred losses in prior periods. Any losses in the future could cause the quoted price of our common stock to decline or have a material adverse effect on our financial condition, our ability to pay our debts as they become due, and on our cash flows.

There is doubt about our ability to continue as a viable business. We have not earned a profit from our operations during recent financial periods. There is no assurance that we will ever earn a profit from our operations in future financial periods.

We may be unable to obtain sufficient capital to implement our full plan of business. Currently, we do not have sufficient financial resources with which to establish our new business strategies. There is no assurance that we will be able to obtain sources of financing, including in this offering, in order to satisfy our working capital needs.

Additional risk factors concerning our company, including risk factors related to EMGE, its business and financial condition, are included in our Amendment to Current Report on Form 8-K filed April 16, 2024, which is incorporated herein by reference.

Item 1B. Unresolved Staff comments

None.

Item 2. Properties

Currently, we do not own any real estate. Our principal executive offices are located at One Marine Plaza, Suite 305A, North Bergen, New Jersey 04047. We pay rent of $5,400 per month at this location. We believe that our properties are adequate for our current needs, but growth potential may require larger facilities due to anticipated addition of personnel. We do not have any policies regarding investments in real estate, securities or other forms of property.

Item 3. Legal Proceedings

We have no current legal proceedings.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is quoted under the symbol “KOAN” on the OTCQB. Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder may be unable to resell his securities in our company.

The following table lists the high and low closing sale prices for our stock for each quarter for the last two fiscal years as reported on the OTCQB. Because our stock is traded on the OTCQB, these quotations reflect inter-dealer prices, without retail markup, markdown or commission and may not represent actual transactions.

The ability of individual stockholders to trade their shares in a particular state may be subject to various rules and regulations of that state. A number of states require that an issuer’s securities be registered in their state or appropriately exempted from registration before the securities are permitted to trade in that state. Presently, we have no plans to register our securities in any particular state. Further, our shares may be subject to the provisions of Section 15(g) and Rule 15g-9 of the Exchange Act, commonly referred to as the “penny stock” rule. Section 15(g) sets forth certain requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.

Holders of Our Common Stock

As of April 16, 2024, we had 96,179,058 shares of our common stock issued and outstanding, held by approximately 175 shareholders of record at our transfer agent, with approximately 47 additional shareholders holding our shares in street name.

Dividends

We currently intend to retain future earnings for the operation of our business. We have never declared or paid cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.

In the event that a dividend is declared, common stockholders on the record date are entitled to share ratably in any dividends that may be declared from time to time on the common stock by our board of directors from funds legally available.

There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

Securities Authorized for Issuance under Equity Compensation Plans

On March 19, 2019, our Board of Directors adopted the 2019 Equity Incentive Plan (the “Plan”). The purpose of the Plan is to attract and retain the best available personnel for positions of substantial responsibility with us, to provide additional incentive to employees, directors and consultants, and to promote our success. Under the Plan, we are currently able to issue up to an aggregate total of 10,000,000 incentive or non-qualified options to purchase our common stock, stock awards and other offerings.

Equity Compensation Plans as of December 31, 2023

Recent Sales of Unregistered Securities

During the three months ended December 31, 2023, we did not issue any unregistered securities not previously reported.

Subsequent to December 31, 2023, we have issued unregistered securities not previously reported, as follows:

In March 2024, we issued a $280,000 face amount promissory note (with $28,000 in OID) to an investor, in consideration of loan which netted our company $252,000 in proceeds. This note bears interest at 12% per annum, with principal and interest payable on September 4, 2024. Should we be in default, which shall not have been cured, this note is convertible into shares of our common stock at a conversion price that shall equal the volume weighted average trading price (a) during the previous 20 trading-day period ending on the date of issuance of the AJB Note or (b) during the previous 20 trading-day period ending on the relevant conversion date, whichever is lower. This note is secured by all assets of our company. In addition, we issued this investor a pre-funded common stock purchase warrant to purchase 3,428,571 shares of our common stock, with a nominal exercise price of $.00001 per share. This warrant may be exercised on a cashless basis.

Also in March 2024, we issued a $280,000 face amount promissory note (with $30,000 in OID) to an investor, in consideration of a loan which netter our company $250,000 in proceeds. This note bears interest at 12% per annum, with principal and interest payable on September 29, 2024. This note is convertible at any time and from time to time into shares of our common stock at a conversion price that shall equal to $.035 per share; provided, however, that, upon an event of default, the per share conversion price shall be the lower of (a) $.035 or (b) the volume weighted average trading price during the previous 20 trading-day period ending on the date of issuance of this note or during the previous 20 trading-day period ending on the relevant conversion date, whichever is lower. This note is unsecured. In addition, we issued this investor pre-funded common stock purchase warrant to purchase 7,200,000 shares of our common stock, with a nominal exercise price of $.00001 per share. This warrant may be exercised on a cashless basis. We also entered into a make-whole agreement that assures that this investor shall derive not less than $250,000 in net proceeds from its sales of our common stock underlying the warrant.

These securities were issued pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder. Each investor is an accredited investor and each represented its intention to acquire the securities for investment only and not with a view towards distribution. Such investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. The securities issued to such investors were affixed with an appropriate restrictive legend.

Item 6. Selected Financial Data

Not required under Regulation S-K for “smaller reporting companies.”

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Recent Acquisition, Change in Control and Change in Business Plan

Change in Control. Effective March 14, 2024, Geoffrey Selzer, our former Chief Executive Officer and Director, and Jim Morrison, our current President and Director, entered into a Securities Purchase Agreement (the Control Agreement), pursuant to which Mr. Selzer sold all 2,000,000 outstanding shares of the Company’s Series C Preferred Stock to Mr. Morrison. Mr. Morrison now possesses voting control of the Company. See Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

EMGE Acquisition Transaction. On February 26, 2024, we entered into entered into a Share Exchange Agreement, as amended (the Exchange Agreement), with Emergent Health Corp., a publicly-traded (symbol: EMGE) Wyoming corporation (EMGE), and the holders (the EMGE Preferred Shareholders) of Series Class A Preferred Stock and the Series C Convertible Non-Voting Preferred Stock (collectively, the EMGE Equity Interests).

On March 14, 2024, the parties closed the Exchange Agreement. At the closing of the Exchange Agreement: (a) the EMGE Preferred Shareholders exchanged all of their respective EMGE Equity Interests for an equal number of shares of the Company’s to-be-designated Series F Convertible Preferred Stock that shall convert into 93% of the common stock of the Company on a fully-diluted basis (the Series F Preferred Stock), which shares of Series F Preferred Stock are currently issuable to the EMGE Preferred Shareholders and are to be issued upon the Company’s filing of a Certificate of Designation with the State of Nevada; (b) the Company consummated the Conveyance Agreement; and (c) all persons serving as directors and officers of the Company prior to the consummation of the Exchange Agreement resigned and appointed four new members of the Company’s Board of Directors.

Conveyance Agreement.

On March 14, 2024, in conjunction with our acquisition of EMGE, we entered into an Agreement of Conveyance, Transfer and Assignment of Subsidiary (the Conveyance Agreement) with two of our then-wholly-owned subsidiaries, Resonate Blends, LLC, a California limited liability company, and Entourage Labs, LLC, a California limited liability company (collectively, Resonate Blends, LLC and Entourage Labs, LLC are referred to as the “Subsidiary”), and our former Chief Executive Officer and Director, Geoffrey Selzer. Pursuant to the Conveyance Agreement, we assigned our ownership in the Subsidiary to Mr. Selzer. In consideration of our assignment of the Subsidiary, Mr. Selzer (a) assumed and agreed to pay, perform and discharge, fully and completely, all liabilities of the Subsidiary, (b) indemnified us for any loss arising from or in connection with any of such liabilities and (c) agreed to pay us (i) 20% of any proceeds from the sale of the Subsidiary that occurs prior to the one-year anniversary of the Conveyance Agreement and (ii) 10% of any proceeds from the sale of the Subsidiary that occurs after the one-year anniversary and prior to the two-year anniversary of the Conveyance Agreement.

New Business Plan.

The business plan and operations of EMGE now represent the entirety of our company’s business operations. The discussion below concerning our company’s results of operations for the years ended December 31, 2023 and 2022, and the financial condition of our company at December 31, 2023, relates only to our company prior to the consummation of the Exchange Agreement with the EMGE Preferred Shareholders. None of the information in the discussion below should be considered to be an indication of our company’s operating results for the year ending December 31, 2024, and beyond.

Current Status

In connection with the EMGE transaction, we obtained a loan from a third party and, subsequent to the closing of the EMGE transaction, we have obtained an additional loan from another third party. We remain, nevertheless, dependent on additional investment capital to continue our survival. Historically, we have raised money through convertible debt, almost always on unfavorable terms. There is no guarantee that any capital, including through convertible loan transactions, will be available to us in the future or, if available, on terms acceptable to us. The terms of the recently obtained loans are discussed below.

AJB Capital Investments, LLC. In March 2024, the Company obtained a loan from AJB Capital Investments, LLC (“AJB”) which netted the Company $252,000 in proceeds. In consideration of such loan, the Company issued a $280,000 face amount promissory note (the “AJB Note”), with OID of $28,000, bearing interest at 12% per annum, with principal and interest payable on September 4, 2024. The Company has the right to repay the AJB Note at any time. Should the Company be in default, which shall not have been cured, the AJB Note is convertible into shares of the Company’s common stock at a conversion price that shall equal the volume weighted average trading price (a) during the previous 20 trading-day period ending on the date of issuance of the AJB Note or (b) during the previous 20 trading-day period ending on the relevant conversion date, whichever is lower.

The AJB Note is secured by all assets of our company.

In addition, we issued to AJB a pre-funded common stock purchase warrant (the “AJB Warrant”) to purchase 3,428,571 shares of our common stock, with a nominal exercise price of $.00001 per share. The AJB Warrant may be exercised on a cashless basis,

Ray Vollintine. In March 2024, the Company obtained a loan from Ray Vollintine (“Vollintine”) which netted the Company $250,000 in proceeds. In consideration of such loan, the Company issued a $280,000 face amount promissory note (the “Vollintine Note”), with OID of $30,000, bearing interest at 12% per annum, with principal and interest payable on September 29, 2024. The Company has the right to repay the Vollintine Note at any time. The Vollintine Note is convertible at any time and from time to time into shares of the Company’s common stock at a conversion price that shall equal to $.035; provided, however, that, upon an event of default, the conversion price shall be the lower of (a) $.035 or (b) the volume weighted average trading price during the previous 20 trading-day period ending on the date of issuance of the Vollintine Note or during the previous 20 trading-day period ending on the relevant conversion date, whichever is lower.

The Vollintine Note is unsecured.

In addition, we issued to Vollintine a pre-funded common stock purchase warrant (the “Vollintine Warrant”) to purchase 7,200,000 shares of our common stock, with a nominal exercise price of $.00001 per share. The Vollintine Warrant may be exercised on a cashless basis, As further consideration for Vollintine’s purchasing the Vollintine Note, we entered into a make-whole agreement that assures that Vollintine shall derive not less than $250,000 in net proceeds from Vollintine’s sales of the common stock underlying the Vollintine Warrant.

Results of Operations for the Years Ended December 31, 2023 and 2022

Revenues

We generated $16,468 in revenues for the year ended December 31, 2023, as compared with revenues of $49,501 for the year ended December 31, 2022, during which year we launched our first line of cordial products in California.

Due to our acquisition of EMGE and divestiture of the Subsidiary on March 14, 2024, any revenues reported during the first quarter of 2024 will be attributed to the Subsidiary through March 14, 2024; thereafter, any revenues reported by our company would be attributable to the business operations of EMGE. There are no assurances that we will be successful in the implementation of our EMGE-centered business plan or become financially viable and continue as a going concern.

Gross Profit

We accrued $114,140 in cost of revenues for the year ended December 31, 2023, resulting in a gross profit of ($97,762) for the year then ended. We accrued $33,068 in cost of revenues for the year ended December 31, 2022, resulting in a gross profit of $16,433 for the year then ended. Our negative gross margin was due to promotions and the write down of products.

Due to our acquisition of EMGE and divestiture of the Subsidiary on March 14, 2024, the gross margin reported during the first quarter of 2024 will be attributed to the Subsidiary through March 14, 2024; thereafter, gross margin reported by our company would be attributable to the business operations of EMGE.

Operating Expenses

Our operating expenses were $301,551 for the year ended December 31, 2023, as compared with $1,405,828 for the year ended December 31, 2022.

The main drivers for the overall decrease in operating expenses in 2023 were the reduction of legal, professional fees and salaries, as well as a significant decrease in non-cash management fees.

We spent $354,934 less on advertising for year ended December 31, 2023, than for the year ended December 31, 2022. We spent more on advertising for the year ended December 31, 2022, to introduce our Koan Cordials to the California retail channel, perform Search Engine Optimization (SEO), conduct Programmatic advertising, hire a professional agency to promote our Cordials on social media channels and other general advertising methods.

Legal and professional fees decreased by $91,352 for the year ended December 31, 2023, over the year ended December 31, 2022. It is anticipated that, for all of 2024, legal and professional fees will be higher than 2023 levels, due to our acquisition of EMGE. However, no prediction can be made in this regard.

General and administrative expenses decreased by $46,154 for the year ended December 31, 2023, over the year ended December 31, 2022. It is anticipated that, for all of 2024, general and administrative expenses will be higher than 2023 levels, due to our acquisition of EMGE. However, no prediction can be made in this regard.

Officer compensation decreased by $405,375 for the year ended December 31, 2023, over the year ended December 31, 2022. Our officer compensation declined as we suspended payments of officer salaries during 2023, but we expect that officer compensation will increase for all of 2024, following our acquisition of EMGE.

Non-cash management fees decreased by $206,462 for the year ended December 31, 2023, over the year ended December 31, 2022. Our non-cash management fees were less in 2023 compared to 2022, as we did not issue shares for services during 2023. It is possible, however, that non-cash management fees may increase for all of 2024, in light of our acquisition of EMGE. However, no prediction can be made in this regard.

Other Income / Expense

We had other expense of $1,016,759 and other income of $2,043,022 for the years ended December 31, 2023 and 2022, respectively.

Our other expense for the year ended December 31, 2023, was mainly attributable to a loss on the change in derivative liability, interest expense and the amortization of debt issuance costs.

Our other income for the year ended December 31, 2022, was mainly attributable to the gain on revaluation of derivative liabilities.

We are unable to predict our other income/expense for all of 2024.

Net Income / Loss

We had a net loss of $1,415,979 and net income of $653,627 for the years ended December 31, 2023 and 2022, respectively.

It is expected that, for all of 2024, we will report a net loss. However, we are unable to make any prediction, in this regard.

Liquidity and Capital Resources

In connection with the EMGE transaction, we obtained a loan from a third party and, subsequent to the closing of the EMGE transaction, we have obtained an additional loan from another third party. We remain, nevertheless, dependent on additional investment capital to continue our survival. Historically, we have raised money through convertible debt, almost always on unfavorable terms. There is no guarantee that any capital, including through convertible loan transactions, will be available to us in the future or, if available, on terms acceptable to us. The terms of the recently obtained loans are discussed below.

AJB Capital Investments, LLC. In March 2024, the Company obtained a loan from AJB Capital Investments, LLC (AJB) which netted the Company $252,000 in proceeds. In consideration of such loan, the Company issued a $280,000 face amount promissory note (the AJB Note), with OID of $28,000, bearing interest at 12% per annum, with principal and interest payable on September 4, 2024. The Company has the right to repay the AJB Note at any time. Should the Company be in default, which shall not have been cured, the AJB Note is convertible into shares of the Company’s common stock at a conversion price that shall equal the volume weighted average trading price (a) during the previous 20 trading-day period ending on the date of issuance of the AJB Note or (b) during the previous 20 trading-day period ending on the relevant conversion date, whichever is lower.

The AJB Note is secured by all assets of our company.

In addition, we issued to AJB a pre-funded common stock purchase warrant (the AJB Warrant) to purchase 3,428,571 shares of our common stock, with a nominal exercise price of $.00001 per share. The AJB Warrant may be exercised on a cashless basis,

Ray Vollintine. In March 2024, the Company obtained a loan from Ray Vollintine (Vollintine) which netted the Company $250,000 in proceeds. In consideration of such loan, the Company issued a $280,000 face amount promissory note (the Vollintine Note), with OID of $30,000, bearing interest at 12% per annum, with principal and interest payable on September 29, 2024. The Company has the right to repay the Vollintine Note at any time. The Vollintine Note is convertible at any time and from time to time into shares of the Company’s common stock at a conversion price that shall equal to $.035; provided, however, that, upon an event of default, the conversion price shall be the lower of (a) $.035 or (b) the volume weighted average trading price during the previous 20 trading-day period ending on the date of issuance of the Vollintine Note or during the previous 20 trading-day period ending on the relevant conversion date, whichever is lower.

The Vollintine Note is unsecured.

In addition, we issued to Vollintine a pre-funded common stock purchase warrant (the Vollintine Warrant) to purchase 7,200,000 shares of our common stock, with a nominal exercise price of $.00001 per share. The Vollintine Warrant may be exercised on a cashless basis, As further consideration for Vollintine’s purchasing the Vollintine Note, we entered into a make-whole agreement that assures that Vollintine shall derive not less than $250,000 in net proceeds from Vollintine’s sales of the common stock underlying the Vollintine Warrant.

As of December 31, 2023, we had total current assets of $976,938 consisting of $6,938 in cash and $970,000 in an advance to Pegasus Specialty Vehicles. Our total current liabilities as of December 31, 2023, were $3,127,913. We had a working capital deficit of $2,150,975 as of December 31, 2023, compared with a working capital deficit of $1,170,940 as of December 31, 2022.

Cash Flows Provided by / Used in Operating Activities

Operating activities provided $11,166 in cash for the year period ended December 31, 2023, compared with cash used of $1,428,467 for the year ended December 31, 2022. Our positive operating cash flow for the year ended December 31, 2023, was largely the result of an increase in accounts payable and accrued expenses. Our negative operating cash flow for the year ended December 31, 2022, was largely the result of our unrealized gain on derivative liability of $2,213,527, offset by our net income of $653,627.

In light of the EMGE acquisition, we are unable to predict cash flows from operating activities for all of 2024.

Cash Flows Used in Investing Activities

For the year ended December 31, 2023, we used $805,000 in investing activities as an advance to Pegasus Specialty Vehicles. We did not use cash for investing activities for the year ended December 31, 2022.

In light of the EMGE acquisition, we are unable to predict cash flows from investing activities for all of 2024.

Cash Flows Provided by Financing Activities

Cash flows provided by financing activities during the year ended December 31, 2023, amounted to $736,353, compared with cash flows provided by financing activities of $1,479,973 for the year ended December 31, 2022. Our positive cash flows for the year ended December 31, 2023, consisted of net proceeds from convertible debentures of $791,200, proceeds from the sale of warrants of $30,000, proceeds from the sale of common stock of $10,000 offset by the repayment of related party advances of $94,847. Our positive cash flows for the year ended December 31, 2022, consisted of proceeds from issuance of common stock of $91,173 and proceeds from convertible notes payable of $1,388,800.

In light of the EMGE acquisition, we are unable to predict cash flows from financing activities for all of 2024.

Going Concern

As of December 31, 2023, we have an accumulated deficit of $26,736,403. Our ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and our ability to achieve and maintain profitable operations. While we are expanding our best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations. These conditions raise substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty.

Off Balance Sheet Arrangements

As of December 31, 2023, there were no off-balance sheet arrangements.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. There have been no material changes to our critical accounting policies as described in the footnotes to our financial statements included in our annual report on Form 10-K for the year ended December 31, 2022; however, we consider our critical accounting policies to be those related to determining the amount of revenue to be billed, the timing of revenue recognition, stock-based compensation, capitalization and related amortization of intangible assets, impairment of assets, and the fair value of liabilities.

Recent Accounting Pronouncements

No new accounting pronouncements issued or effective during the fiscal year has had or is expected to have a material impact on the financial statements.

Item 8. Financial Statements and Supplementary Data

Please see our Financial Statements beginning on page F-1 of this Annual Report.

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

On November 11, 2022, Boyle CPA, LLC resigned as our independent registered public accounting firm and we engaged Victor Mokuolu, CPA PLLC as our independent registered public accounting firm. The engagement of Victor Mokuolu, CPA PLLC was approved by our Board of Directors.

The information required by Item 304(b) of Regulation S-K concerning the above change in accounting firm is set forth in the Current Report on Form 8-K we filed on November 14, 2022, with the SEC.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report, December 31, 2023. This evaluation was carried out under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial and Accounting Officer.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial and Accounting Officer, to allow timely decisions regarding required disclosure.

Based upon that evaluation, including our Principal Executive Officer and Principal Financial and Accounting Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this Annual Report.

Management’s Annual Report on Internal Control over Financing Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of December 31, 2023, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this Annual Report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending December 31, 2024: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act that was enacted in 2010.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The following table sets forth the name and positions of our executive officer and director as of the date of this Annual Report.

Set forth below is a brief description of the background and business experience of our executive officer and director:

Jim Morrison – President, Chief Executive Officer, Principal Accounting Officer and Director

Jim Morrison is considered by many to be one of the leading personal care strategists in the world, as well as one of the top executives. From August 2022 to March 2024, Mr. Morrison served as CEO and a Director of Emergent Health Corp. (“EMGE”), a publicly-traded company involved in the health and wellness industry (symbol: EMGE). Mr. Morrison is currently CEO of Integrity Wellness Inc., a dynamic company in the wellness and regenerative biologics space. He has most recently been CEO of StarShop, which was the first celebrity-driven video shopping app that was launched in a partnership with Sprint. His track record of leadership and accomplishment in the personal care products space has been unparalleled. Mr. Morrison was President of L’Oréal for over nine years. He was responsible for many acquisitions, including both Redken and Matrix, and top-line growth that averaged over 20% during his tenure. Prior to L’Oréal, Mr. Morrison was President and CEO of Graham Webb, one of the most successful startups in the hair care space. After leaving L’Oréal, Mr. Morrison was CEO and owner of Sexy Hair Concepts for four years. In 2006, Business Week Magazine wrote, “Over the last two decades Mr. Morrison has had a profound impact on the American Beauty Industry. In the industry’s history no other executive has had the level of financial responsibility or breadth of organizational experience as Jim. His devotion to, and success within the industry is unmatched.”

Sandy P. Lipkins – Director

Sandy P. Lipkins served as Director of Business Development of EMGE from August 2023 through March 2024. Mr. Lipkins has over 20 plus years of venture capital, finance and sales experience. For the last 14 years, he has focused on the anti-aging/wellness sector. He has started numerous successful enterprises in the regenerative medical space which have required multiple levels of expertise in business development and strategic planning, as well as capital formation and executive management. Mr. Lipkins is passionate about promoting anti-aging, healthy lifestyle and bringing cutting edge regenerative medicine to the critical masses domestically and internationally. He has taken companies from incubation to revenues to setting up for sale or other liquidity events.

Lance Liberti – Director

Lance Liberti served as COO of EMGE from August 2023 through March 2024. As CEO and founder of Integrative Practice Solutions, Lance Liberti brings a lifetime of experience and demonstrated excellence to the executive team. After founding a nationwide healthcare advertising agency in his collegiate years, Mr. Liberti assumed the role of Chief Operating Officer of Spinal Aid Centers of America. During his tenure he expanded the national franchise network from 67 to 162 locations and recognition as the #2 medical service franchise in the world and the 91st fastest growing franchise of the new millennium (as rated by Entrepreneur Magazine in the 2007 Franchise 500 edition). It was at this time that Mr. Liberti suffered his own run-in with “bone-on-bone” contact osteoarthritis, the result of a high school football injury and failed prior reconstructive knee surgery. One of his Chiropractic clients introduced him to his father, a D.O. performing Hyalgan injections that saved his knee and eliminated the need for further surgical intervention. Amazed by the miraculous results and lack of awareness in the medical community that this treatment option even existed, Mr. Liberti partnered with this physician to open the first stand-alone Osteoarthritis specialty practice in southern NJ in 2009. In this facility Mr. Liberti co-developed the now patented Advanced Arthritis Relief Protocol (AARP Program), as well as the patient marketing and administrative business practices that drive the clinical and financial success of this protocol in the more than 200+ licensed locations in 40+ US states today.

James W. Zimbler – Director

James W. Zimbler has served as Vice President of Corporate Finance of EMGE since July 1, 2020; he served as a Director of EMGE from November 2017 to November 2021. From December 2017 until June 2019, he served as President and a director of the predecessor iteration of a public company that is now Enzolytics, Inc., a drug development company. In December 2016 he founded Emerging Growth Advisors, Inc., a consulting firm providing advisory services related to mergers and acquisitions for corporations including us, where he has served as President since its formation. Prior to founding Emerging Growth Advisors, Inc., Mr. Zimbler served in a managerial role at other consulting firms, each specializing in mergers and acquisitions, roll-ups and turn-around work.

Term of Office

Our directors are elected to hold office until the next annual meeting of the shareholders and until their respective successors have been elected and qualified. Our executive officers are appointed by our board of directors and hold office until removed by our board of directors or until their successors are appointed.

Family Relationships

There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.

Significant Employees

We have no significant employees.

Involvement in Certain Legal Proceedings

During the past 10 years, none of our current directors, nominees for directors or current executive officers has been involved in any legal proceeding identified in Item 401(f) of Regulation S-K, including:

1. Any petition under the Federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing;

2. Any conviction in a criminal proceeding or being named a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

3. Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities:

i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;

ii. Engaging in any type of business practice; or

iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;

4. Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any type of business regulated by the Commodity Futures Trading Commission, securities, investment, insurance or banking activities, or to be associated with persons engaged in any such activity;

5. Being found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;

6. Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;

7. Being subject to, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:

i. Any Federal or State securities or commodities law or regulation; or

ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or

iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

8. Being subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Audit Committee

We do not have a separately designated standing audit committee. The entire board of directors performs the functions of an audit committee, but no written charter governs the actions of the board of directors when performing the functions of that would generally be performed by an audit committee. The board of directors approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the board of directors reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor.

We do not have an audit committee financial expert because of the size of our company and our board of directors at this time. We believe that we do not require an audit committee financial expert at this time because we retain outside consultants who possess these attributes as needed.

For the fiscal year ending December 31, 2023, the board of directors:

Based upon the board of directors’ review and discussion of the matters above, the board of directors authorized inclusion of the audited financial statements for the year ended December 31, 2023, to be included in this Annual Report on Form 10-K and filed with the SEC.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent beneficial shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To the best of our knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments thereof) received by us, no persons have failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange Act during fiscal year ended December 31, 2023.

Code of Ethics

As of December 31, 2023, we had not adopted a Code of Ethics. We believe that the small number of board and management members do not yet warrant the adoption of a Code of Ethics.

Item 11. Executive Compensation

The table below summarizes all compensation awarded to, earned by, or paid to our former or current executive officers for the fiscal years ended December 31, 2023 and 2022.

(1) Mr. Morrison did not become Chief Executive Officer of our company until March 2024.

Narrative to Summary Compensation Table

Jim Morrison. We have not yet entered into an employment agreement with, or otherwise compensated, our new President, Jim Morrison. It is expected that, in the near future, we will enter into an employment agreement with Mr. Morrison, the terms of which have not been determined.

David Thielen. On March 1, 2017, we appointed David Thielen as our Chief Operating Officer. We did not have an employment agreement with Mr. Thielen at the time. He was CEO of Aspire in which we used to own a 49% equity interest. We paid Mr. Thielen an annual salary of $60,000 until October 25, 2019, when Mr. Thielen resigned as COO and accepted a new role as Chief Investment Officer (CIO) and Director. Mr. Thielen now has an employment agreement and is paid $120,000 annually. He can also receive equity shares through assigned revenue and company milestones set by the Board of Directors. His initial term of employment is for two years. He may request to terminate his employment contract and forfeit all benefits and equity grants, if provided, with a 30-day notice. Should he terminate his employment before two years, he will forfeit the right to earn any future milestone achievement benefits entirely regardless of how close the company may be to achieving them. However, should a change of control occur resulting in the sale of the business anytime within 9 months of termination, all milestone achievements shall be deemed accomplished and all rights to the shares shall immediately vest prior to the close of such Change of Control event.

Geoffrey Selzer. With the merger of Resonate Blends LLC and Entourage Labs LLC on October 25, 2019, Mr. Selzer was announced as Chief Executive Officer of the holding company. His annual salary is $180,000 and his team has 10% non-dilutive stock, with Mr. Selzer controlling 51% of this amount. Mr. Selzer also has equity milestones in place for meeting preassigned revenue and market valuation goals.

Mr. Selzer’s term of employment is for two years. He may request to terminate his employment contract and forfeit all benefits and equity grants, if provided, with a 30-day notice. Should he terminate his employment before two years, he will forfeit the right to earn any future milestone achievement benefits entirely regardless of how close the company may be to achieving them. However, should a change of control occur resulting in the sale of the business anytime within 9 months of termination, all milestone achievements shall be deemed accomplished and all rights to the shares shall immediately vest prior to the close of such Change of Control event.

At the end of his employment term, an option to continue employment at an annual contract or at-will employment will be available if agreed upon by both parties. The Company may not terminate his employment without Cause.

Pamela Kerwin. Pamela Kerwin was announced as our Chief Operating Officer on October 25, 2019. Ms. Kerwin’s salary is $120,000 annually and she also participates in the 10% of non-dilutive stock of the holding company.

Her term of employment is for two years. She may request to terminate her employment contract and forfeit all benefits and equity grants, if provided, with a 30-day notice. Should she terminate her employment before two years, she will forfeit the right to earn any future milestone achievement benefits entirely regardless of how close the company may be to achieving them. However, should a change of control occur resulting in the sale of the business anytime within 9 months of termination, all milestone achievements shall be deemed accomplished and all rights to the shares shall immediately vest prior to the close of such Change of Control event.

Outstanding Equity Awards at Fiscal Year-End

The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officers as of December 31, 2023.

(1) This person resigned all positions with our company in March 2024.

(2) Mr. Morrison did not become an officer of our company until March 2024.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

Series F Convertible Preferred Stock

In the EMGE Acquisition, we acquired the EMGE Equity Interests for an equal number of shares of our to-be-designated Series F Convertible Preferred Stock that shall convert into 93% of the common stock of our company on a fully-diluted basis, which is to say that the holders of our common stock immediately prior to the consummation of the EMGE Acquisition will, upon the conversion of the Series F Convertible Preferred Stock, own 7% of the then-outstanding shares of our common stock. The shares of Series F Convertible Preferred Stock are currently issuable to the EMGE Preferred Shareholders and are to be issued upon our filing of a Certificate of Designation with the State of Nevada.

The table below under “Common Stock and Series C Preferred Stock” does not take into account the conversion rights of the Series F Convertible Preferred Stock.

Common Stock and Series C Preferred Stock

The following table sets forth, as of April 16, 2024, certain information as to shares of our common stock owned by (i) each person known by us to beneficially own more than 5% of our outstanding common stock, (ii) each of our directors, and (iii) all of our executive officers and directors as a group. Unless otherwise stated, the address for each beneficial owner is One Marine Plaza, Suite 305A, North Bergen, New Jersey 04047.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Other than described below or the transactions described under the heading “Executive Compensation” (or with respect to which such information is omitted in accordance with SEC regulations), there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.

Change in Control

Effective March 14, 2024, Geoffrey Selzer, our former Chief Executive Officer and Director, and Jim Morrison, our current President and Director, entered into a Securities Purchase Agreement (the “Control Agreement”), pursuant to which Mr. Selzer sold all 2,000,000 outstanding shares of the Company’s Series C Preferred Stock to Mr. Morrison for $10.00 in cash. Mr. Morrison now possesses voting control of the Company. See Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

EMGE Acquisition Transaction

On February 26, 2024, we entered into entered into a Share Exchange Agreement, as amended (the “Exchange Agreement”), with Emergent Health Corp., a Wyoming corporation (EMGE), and the holders (the “EMGE Preferred Shareholders”) of Series Class A Preferred Stock and the Series C Convertible Non-Voting Preferred Stock (collectively, the “EMGE Equity Interests”).

On March 14, 2024, the parties closed the Exchange Agreement. At the closing of the Exchange Agreement: (a) the EMGE Preferred Shareholders exchanged all of their respective EMGE Equity Interests for an equal number of shares of the Company’s to-be-designated Series F Convertible Preferred Stock that shall convert into 93% of the common stock of the Company on a fully-diluted basis (the “Series F Preferred Stock”), which shares of Series F Preferred Stock are currently issuable to the EMGE Preferred Shareholders and are to be issued upon the Company’s filing of a Certificate of Designation with the State of Nevada; (b) the Company consummated the Conveyance Agreement; and (c) all persons serving as directors and officers of the Company prior to the consummation of the Exchange Agreement resigned and appointed four new members of the Company’s Board of Directors.

Conveyance Agreement

On March 14, 2024, in conjunction with our acquisition of EMGE, we entered into an Agreement of Conveyance, Transfer and Assignment of Subsidiary (the “Conveyance Agreement”) with two of our then-wholly-owned subsidiaries, Resonate Blends, LLC, a California limited liability company, and Entourage Labs, LLC, a California limited liability company (collectively, Resonate Blends, LLC and Entourage Labs, LLC are referred to as the “Subsidiary”), and our former Chief Executive Officer and Director, Geoffrey Selzer. Pursuant to the Conveyance Agreement, we assigned our ownership in the Subsidiary to Mr. Selzer. In consideration of our assignment of the Subsidiary, Mr. Selzer (a) assumed and agreed to pay, perform and discharge, fully and completely, all liabilities of the Subsidiary, (b) indemnified us for any loss arising from or in connection with any of such liabilities and (c) agreed to pay us (i) 20% of any proceeds from the sale of the Subsidiary that occurs prior to the one-year anniversary of the Conveyance Agreement and (ii) 10% of any proceeds from the sale of the Subsidiary that occurs after the one-year anniversary and prior to the two-year anniversary of the Conveyance Agreement.

Other Transactions

On May 22, 2020, the Company entered into a Separation and Release Agreement (the “Separation Agreement”) with Wais Asefi. Pursuant to the Separation Agreement, Mr. Asefi agreed to separate from all officer positions and as a director of the Company and to further accept the payment of $200,000 from the Company’s future fundraising as consideration of all debts outstanding under Mr. Asefi’s employment agreement with the Company. Mr. Asefi further agreed to cancel his 4,000,000 shares of Series A Preferred Stock and to transfer his 2,000,000 shares of Series C Preferred Stock to Geoffrey Selzer, the Company’s current CEO and Director. Mr. Asefi further released the Company of all claims.

On May 22, 2020, the 4,000,000 shares of Series A Preferred Stock were returned to the Company’s transfer agent and cancelled and on May 22, 2020 the 2,000,000 shares of Series C Preferred Stock were transferred to Mr. Selzer. The parties to the Separation Agreement agreed to a payment schedule of $200,000 based on future monies raised by the Company - and not on a specific date – as follows:

On May 13, 2021, we amended the Separation Agreement to state the parties desire to reduce the total amount payable to Wais Asefi from $200,000 USD to $142,500 USD. In addition to the earlier payments made to Mr. Asefi, a payment of $40,000 was made on May 14, 2021 and another payment on June 27, 2021 for $40,000. The final payment was made on August 11, 2021 for $25,000. The final payment on August 11, 2021 settled this agreement in full. Further under the amendment, Mr. Asefi nominated Textmunication, Inc., our prior subsidiary, as the recipient of the funds due under the Separation Agreement. As of December 31, 2022, the Company made all of its required payments to Mr. Asefi.

The outstanding balances as of December 31, 2023, and December 31, 2022, are $70,099 and $38,500, respectively. The remaining balance as of December 31, 2022, is due to Mr. Selzer, the former CEO of Resonate, as he has provided several loans to the Company.

Item 14. Principal Accounting Fees and Services

Below are tables of Audit Fees (amounts in US$) billed by our auditors in connection with the audit of the Company’s annual financial statements and review of the quarterly financial statements for the years ended:

Victor Mokuolu, CPA PLLC

PART IV

Item 15. Exhibits, Financial Statements Schedules

The following financial statements and schedules listed below are included in this Form 10-K.

Financial Statements (See Item 8)

Item 16. Form 10-K Summary

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

INDEX TO FINANCIAL STATEMENTS

Resonate Blends, Inc.

Audited Consolidated Financial Statements for the Years Ended December 31, 2023 and 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors,

Resonate Blends, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Resonate Blends, Inc. (“the Company”) as of December 31, 2023, and December 31, 2022, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years ended December 31, 2023, and December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of years ended December 31, 2023, and December 31, 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company’s ability to continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring operating losses, has working capital deficit of $2,150,975 and $1,170,940, as of December 31, 2023, and December 31, 2022, respectively. The Company also had accumulated deficit of $26,736,403 and $25,320,424 as of December 31, 2023, and December 31, 2022, respectively. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Convertible Note Payable

As described in Note 4, Convertible Note Payable and Note 5, Derivative Liabilities, to the consolidated financial statements, the Company had convertible note payable that required accounting considerations and significant estimates.

The Company determined that variable conversion features issued in connection with certain convertible debentures required derivative liability classification. These variable conversion features were initially measured at fair value and subsequently have been remeasured to fair value at each reporting period. The Company determined the fair value of the embedded derivatives using the Binomial option pricing model. The value of the embedded derivative liabilities related to the convertible note payable was $166,861 as of December 31, 2023.

We identified the accounting considerations and related valuations, including the related fair value determinations of the embedded derivative liabilities of such as a critical audit matter. The principal considerations for our determination were: (1) the accounting consideration in determining the nature of the various features (2) the evaluation of the potential derivatives and potential bifurcation in the instruments, and (3) considerations related to the determination of the fair value of the various debt and equity instruments and the conversion features that include valuation models and assumptions utilized by management. An audit of these elements is especially challenging and requires auditor judgement due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed.

Our audit procedures related to management’s conclusion on the evaluation and related valuation of embedded derivatives, included the following, among others: (1) evaluating the relevant terms and conditions of the various financings, (2) assessing the appropriateness of conclusions reached by the Company with respect to the accounting for the convertible debt, and the assessment and accounting for potential derivatives and (3) independently recomputing the valuations determined by Management.

Victor Mokuolu, CPA PLLC
We have served as the Company’s auditor since 2023.
Houston, Texas
April 16, 2024 PCAOB ID: 6771

Resonate Blends, Inc.

Consolidated Balance Sheets

The accompanying notes are an integral part of these consolidated financial statements.

Resonate Blends, Inc.

Consolidated Statements of Operations

The accompanying notes are an integral part of these consolidated financial statements.

Resonate Blends, Inc.

Consolidated Statement of Stockholders’ Deficit