UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒

Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, ~~2021~~2022

☐

Transition Report pursuant to 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)

Nevada

58-1588291

(State or other jurisdiction

of incorporation or organization)

(IRS Employer

~~incorporation or organization)~~

Identification No.)

26565 Agoura Road, Suite 200

Calabasas, CA 91302

(Address of principal executive offices)

571-888-0009

(Registrant’s telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark 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 and posted 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 and post such files). ☒ Yes☐ No

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

	☐ Large accelerated filer	☐ Accelerated filer
	☒ Non-accelerated filer	☒Smaller reporting company
		☐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. ☐

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

Securities registered pursuant to Section 12(b) of the Act: None

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~44,770,912~~ 69,840,665common shares as of August ~~16, 2021~~19, 2022

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION		3

Item 1:	Financial Statements	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	117
Item 4:	Controls and Procedures	118

PART II – OTHER INFORMATION		12

Item 1:	Legal Proceedings	129
Item 1A:	Risk Factors	129
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	139
Item 3:	Defaults Upon Senior Securities	139
Item 4:	Mine Safety Disclosures	139
Item 5:	Other Information	139
Item 6:	Exhibits	139

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Our condensed consolidated financial statements included in this Form 10-Q are as follows:

	F-1	Condensed Consolidated Balance Sheets as of June 30, ~~2021~~2022 (unaudited) and December 31, ~~2020;~~2021;
	F-2	Condensed Consolidated Statements of Operations ~~for the~~ for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited);
	F-3	Condensed Consolidated Statement of Stockholders’ Equity (Deficit) for the period ended June 30, ~~2021~~2022 (unaudited);
	F-4	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited); and
	F-5	Notes to Condensed Consolidated Financial Statements.

These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended June 30, ~~2021~~2022 are not necessarily indicative of the results that can be expected for the full year.

RESONATE BLENDS, INC.

CondensedConsolidated Balance Sheets

As of June 30, 2022 (unaudited) and December 31, 2021


	June 30,2022			December 31, 2021
ASSETS
Current assets
Cash and cash equivalents	$	34,823		$	12,913
Advances to Suppliers		14,551			10,830
Inventories		266,172			245,776
Total current assets		315,546			269,519
Fixed assets, net		26,626			31,337
Derivative Valuation allowance		-			-
Investment in equity method investee		100			100
TOTAL ASSETS		342,272			300,956

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities		247,154			206,873
Due to related parties		54,500			45,000
Convertible notes payable, net of discount		2,503,800			1,865,000
Derivative liability		598,902			2,286,014
Settlement liability
Current liabilities of discontinued operations					-
Total current liabilities		3,404,356			4,402,887
Total liabilities		3,404,356			4,402,887
Stockholders’ deficit
Preferred stock, 10,000,000 shares authorized, $0.0001 par value, 0 shares issued.
Series C Preferred stock, 2,000,000 shares authorized, $0.0001 par value, 2,000,000 issued and outstanding		200			200
Preferred stock, value
Common stock; $0.0001 par value; 200,000,000 shares authorized; 47,846,859 and 45,046,637 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.		4,784			4,504
Stock subscription receivable		(261,059	)
Additional paid-in capital		22,466,272			21,867,416
Accumulated deficit		(25,272,281	)		(25,974,051	)
Total Stockholders’ deficit		(3,062,084	)		(4,101,931	)
TOTAL LIABILITIES AND STOCKHOLDER’S DEFICIT	$	342,272		$	300,956

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

F-1

RESONATE BLENDS, , INC.

~~(FORMERLY TEXTMUNICATION HOLDINGS, INC.)~~

~~CONSOLIDATED BALANCE SHEETS~~

Condensed Consolidated Statements of Operations

June 30,2021 December 31, 2020
ASSETS
Current assets
Cash and cash equivalents $ 975,869 $ 114,325
Advances to Suppliers 54,599
Inventories 170,886 -
Total current assets 1,146,755 168,924
Fixed assets, net 21,063 -
Investment in equity method investee 100 100
TOTAL ASSETS 1,167,918 169,024

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities 122,494 198,936
Due to related parties 25,000 187,500
Convertible notes payable, net of discount 1,870,000 504,793
Derivative liability 4,281,046 274,134
Settlement liability
Current liabilities of discontinued operations -
Total current liabilities 6,298,540 1,165,363
Total liabilities 6,298,540 1,165,363
Stockholders’ deficit
Preferred stock, 10,000,000 shares authorized, $0.0001 par value, 2,000,000 shares issued.
Series B - Preferred stock, 66,667 shares authorized, $0.0001 par value, 0 issued. - -
Series C - Preferred stock, 2,000,000 shares authorized, $0.0001 par value, 2,000,000 issued and outstanding 200 200
Series D Preferred stock 40,000 shares authorized, $0.0001 par value 0 issued and outstanding - -
Common stock; $0.0001 par value; 200,000,000 shares authorized; 44,270,912 and 29,769,627 shares issued and outstanding as of June 30, 2021 December 31, 2020 , respectively. 4,427 2,976
Additional paid-in capital 22,405,737 20,101,480
Accumulated deficit (27,540,986 ) (21,100,995 )
Total Stockholders’ deficit (5,130,622 ) (996,339 )
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY $ 1,167,918 $ 169,024

For the six and three months ended June 30, 2022 and 2021

(unaudited)


	Six Months Ended						Three Months Ended
	June 30 2022			June 30 2021			June 30 2022			June 30 2021
REVENUES	$	30,488		$	-		$	2,836			-
COST OF REVENUES		15,278			-			2,421			-
Gross profit		15,210			-			415			-
Operating expenses
Advertising		235,277			210,919			69,806			157,544
General and administrative expenses		99,290			133,162			75,943			(14,791	)
Legal and Professional fees		73,338			410,494			47,663			93,350
Officer Compensation		324,250			239,114			89,250			105,364
Salaries and Related		-			193,750			-			68,750
Depreciation and amortization		4,711			-			1,707			-
Office Rent		2,502			1,465			1,337			675
Impairment of inhouse software		-			-			-			-
Non cash management fees		206,462			986,121			4,505			986,121
Total operating expenses		945,830			2,175,025			290,211			1,397,013
Loss from operations		(930,620	)		(2,175,025	)		(289,796	)		(1,397,013	)
Other Income (expense)
Other Income		-			844			-			532
Interest expense		(22,801	)		(58,728	)		(344	)		(37,198	)
Gain (Loss) on change of derivative liability		1,687,112			(4,130,456	)		520,273			(3,881,807	)
Amortization of debt discount		-			(10,583	)		-			-
Amortization of issuance costs		(31,795	)		(123,543	)		-			(123,543	)
(Loss) Gain on settlement of notes payable		(126	)		57,500			(18,403	)		57,500
Total other Income (expense)		1,632,390			(4,264,966	)		501,526			(3,984,516	)
Income (loss) from investment in equity method investee		-			-			-			-
NET INCOME (LOSS) from continuing operations		701,770			(6,439,991	)		211,730			(5,381,529	)
NET INCOME (LOSS) from discontinued operations					-						-
NET INCOME (LOSS)		701,770			(6,439,991	)		211,730			(5,381,529	)

Basic weighted average common shares outstanding		47,846,859			31,085,610			47,846,859			31,085,610
Net Income (loss) per common share: basic and diluted	$	0.01		$	(0.21	)	$	0.00			(0.17	)

The accompanying notes are an integral part of these ~~unaudited~~condensed consolidated financial statements

~~F-1~~

F-2

RESONATE BLENDS, INC.

CondensedConsolidated Statement of Stockholders’ Equity (Deficit)

~~RESONATE BLENDS , INC.~~

~~(FORMERLY TEXTMUNICATION HOLDINGS, INC.)~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS~~For the periods ended June 30, 2022 and 2021

(unaudited)

1 2 3 4
Six Months Ended Three Months Ended
June 30 2021 June 30 2020 June 30 2021 June 30 2020
REVENUES $ - $ - $ - $ -
COST OF REVENUES - - - -
Gross profit - - - -
Operating expenses
Advertising 210,919 6,697 157,544 197
General and administrative expenses 133,162 335,088 (14,791 ) 126,077
Legal and Professional fees 410,494 297,116 93,350 103,716
Officer Compensation 239,114 - 105,364 -
Salaries and Related 193,750 240,900 68,750 99,400
Sales Commission - -
Office Rent 1,465 - 675 -
Impairment of inhouse software - - -
Non cash management fees 986,121 198,514 986,121 198,514
Total operating expenses 2,175,025 1,079,315 1,397,013 527,904
Loss from operations (2,175,025 ) (1,079,315 ) (1,397,013 ) (527,904 )
Other Income (expense)
Other Income 844 532 -
Interest expense (58,728 ) (19,802 ) (37,198 ) (12,805 )
Loss on change of derivative liability (4,130,456 ) (617,768 ) (3,881,807 ) (699,999 )
Amortization of debt discount (10,583 ) (13,559 ) - (13,559 )
Amortization of debt issuance costs (123,543 ) (123,543 )
Gain (loss) on settlement of derivative liabilities - -
Legal settlement - -
Gain on settlement of notes payable 57,500 31,961 57,500 31,961
Total other expense (4,264,966 ) (619,168 ) (3,984,516 ) (694,402 )
Income (loss) from investment in equity method investee - - - -
NET INCOME (LOSS) from continuing operations (6,439,991 ) (1,698,483 ) (5,381,529 ) (1,222,306 )
NET INCOME (LOSS) from discontinued operations (92,428 ) 40,223
NET INCOME (LOSS) (6,439,991 ) (1,790,911 ) (5,381,529 ) (1,182,083 )

Basic weighted average common shares outstanding
Net Income (loss) per common share: basic and diluted 31,085,610 17,727,765 31,085,610 22,583,232
$ (0.21 ) $ (0.10 ) $ (0.17 ) $ (0.05 )

	Shares		Amount		Shares		Amount		APIC		Receivable			Deficit			Deficit
	Preferred stock - Series C				Common Stock				APIC		Subscription Receivable			Accumulated			Total Stockholders’
Balance, December 31, 2021		2,000,000	$	200		45,046,637	$	4,504	$	21,867,416	$	-		$	(25,974,051	)	$	(4,101,931	)
Stock issuance in private placement						1,065,556		107		260,952		(261,059	)					-
Stock issuance for debt conversion						780,000		78		131,447		-						131,525
Stock issuance for services						904,666		90		201,957		-						202,047
Net income for the quarter				-				-				-			490,040			490,040
Balances March 31, 2022		2,000,000	$	200		47,796,859	$	4,779	$	22,461,772	$	(261,059	)	$	(25,484,011	)	$	(3,278,319	)
Stock issuance for services						50,000		5		4,500		-						4,505
Net income for the quarter				-				-				-			211,730			211,730
Balance June 30, 2022		2,000,000	$	200		47,846,859	$	4,784	$	22,466,272	$	(261,059	)	$	(25,272,281	)	$	(3,062,084	)

	Preferred stock - Series C				Common Stock						Subscription
	Shares		Amount		Shares		Amount		APIC		Receivable		Deficit			Deficit
Balance December 31, 2020		2,000,000	$	200		29,769,627	$	2,976	$	20,101,480		-	$	(21,100,995	)	$	(996,339	)
Common stock issuance						11,633,260		1,163		1,721,338		-					1,722,501
Net income for the quarter				-				-				-		(1,058,462	)		(1,058,462	)
Balance March 31, 2021		2,000,000	$	200		41,402,887	$	4,139	$	21,822,818	$	-	$	(22,159,457	)	$	(332,300	)
Common stock issuance						2,868,025		288		582,919		-					583,207
Net income for the quarter				-				-				-		(5,381,529	)		(5,381,529	)
Balance June 30, 2021		2,000,000	$	200		44,270,912	$	4,427	$	22,405,737	$	-	$	(27,540,986	)	$	(5,130,622	)

The accompanying notes are an integral part of these ~~unaudited~~condensed consolidated financial statements

~~F-2~~

F-3

RESONATE BLENDS, INC.

~~RESONATE BLENDS , INC.~~

~~(FORMERLY TEXTMUNICATION, INC.)~~

~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT~~

~~FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020~~Condensed Consolidated Statements of Cash Flows

Preferred Stock Series A Preferred stock
- Series C Common Stock Additional Accumulated Total Stockholders’
Balance, December 31, 2020 - - 2,000,000 $ 200 29,769,627 $ 2,976 $ 20,101,480 $ (21,100,995 ) $ (996,339 )
Common stock issuance - - - - 11,633,260 1,163 1,721,338 - 1,722,501
Preferred stock issuance - -
Non-Cash Compensation
Non-Cash Compensation, shares
Conversion of notes payable
Conversion of notes payable, shares
Net loss for the quarter - - (1,058,462 ) (1,058,462 )
Balance, March 30, 2021 - - 2,000,000 $ 200 41,402,887 $ 4,139 $ 21,822,818 $ (22,159,457 ) $ (332,300 )
Net loss for the quarter $ (5,381,529 ) $ (5,381,529 )
Issuance of common stock - - - - 2,868,025 288 $ 582,919 - $ 583,207
Balances June 30, 2021 - - 2,000,000 $ 200 44,270,912 $ 4,427 $ 22,405,737 $ (27,540,986 ) $ (5,130,622 )

As of June 30, 2020 Shares Amount Shares Amount Shares Amount Paid-in Capital Deficit Deficit
Balance December 31, 2019 4,000,000 $ 400 2,000,000 $ 200 17,133,936 $ 1,715 $ 18,570,178 $ (19,159,721 ) $ (587,228 )
Net Loss for the quarter (608,828 ) (608,828 )
Common stock issuance - - - - 2,571,778 255 275,440 275,696
Balance March 31, 2020 4,000,000 $ 400 2,000,000 $ 200 19,705,714 $ 1,970 $ 18,845,618 $ (19,768,549 ) $ (920,360 )
Net Loss for the quarter $ (1,182,083 ) (1,182,083 )
Non-Cash Compensation 2,495,129 250 249,265 249,515
Conversion of notes payable 750,000 75 74,925 75,000
Common stock issue - - - - 1,000,000 100 99,900 100,000
Balance June 30, 2020 4,000,000 400 2,000,000 200 23,950,843 2,395 19,269,708 (20,950,632 ) (1,677,929 )

For the six months ended June 30, 2022 and 2021

(unaudited)


	June 30, 2022			June 30, 2021
Cash Flows from Operating Activities
Net Income (loss)	$	701,770		$	(6,439,991	)
Net loss from discontinued operations
Adjustments to reconcile
Amortization and depreciation		4,711			10,583
(Gain) Loss on derivative liability		(1,687,112	)		4,130,456
Non cash interest expense					16,142
Stock subscription receivable		(261,059	)
Share professional fees/ compensation		206,462			82,473
Share-based compensation		-			986,121
Gain on settlement of Derivative liabilities		-			(57,500	)
Changes in assets and liabilities
Inventories		(20,396	)		(170,886	)
Advances to suppliers		(3,721	)		(54,599	)
Accounts payable and accrued expenses		40,281			(199,986	)
Derivative liabilities		-
Due to Related party		9,500			(105,000	)
Net cash used by operating activities		(1,009,564	)		(1,802,187	)
Net cash provided by discontinued operations		-			-
Net Cash Provided By Used In Operating Activities		(1,009,564	)		(1,802,187	)
Cash Flows from investing activities
Purchase of fixed assets		-			(21,063	)
Net cash used by investing activities		-			(21,063	)
Cash Flows from Financing Activities
Proceeds from subscription		392,674			1,319,587
Proceeds from convertible notes (net)		788,800			1,870,000
Payments on convertible notes payable		(150,000	)		(504,793	)
Net cash provided by financing activities		1,031,474			2,684,794
Net increase in cash		21,910			861,544
Cash, beginning of period		12,913			114,325
Cash, end of period	$	34,823		$	975,869

Supplemental disclosure of cash flow information
Cash paid for interest	$	-		$	58,728
Non-Cash investing and financing transactions
Conversion of debt for common stock	$	150,000		$	-

The accompanying notes are an integral part of these ~~unaudited~~condensed consolidated financial statements

~~F-3~~

RESONATE BLENDS, ~~, INC.~~

~~(FORMERLY TEXTMUNICATION, INC.)~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020~~

1 2
2021 2020
Cash Flows from Operating Activities
Net Income (loss) $ (6,439,991 ) $ (1,790,911 )
Net loss from discontinued operations - -
Adjustments to reconcile -
Amortization and depreciation 10,583 13,559
Loss on derivative liability 4,006,912 616,768
Non cash interest expense 16,142 18,303
Share professional fees 82,473 251,695
Share based compensation 986,121 198,514
Gain (Loss) on the settlement of debt (57,500 ) (31,961 )
Gain on settlement of derivative liabilities (143,293 )
Changes in assets and liabilities -
Receivables 6,006
Inventories (170,886 )
Advances to suppliers (54,599 )
Accounts payable and accrued expenses (76,442 ) 99,088
Due to Related party (105,000 ) (29 )
Net cash used by operating activities (1,802,187 ) (762,261 )
Net cash provided by discontinued operations -
Net cash used in operations (1,802,187 ) (762,261 )
Cash Flows from investing activities
Purchase of fixed assets (21,063 ) -
Net cash used by investing activities (21,063 ) -
Cash Flows from Financing Activities
Proceeds from subscription 1,319,587 150,000
Proceeds from convertible notes (net) 1,870,000 581,000
Proceeds from notes payables - 187,619
Payments on preferred stocks buy back -
Payments on convertible notes payable (504,793 ) (27,757 )
Net cash provided by financing activities 2,684,794 890,862
Net increase in cash 861,544 128,601
Cash, beginning of period 114,325 53,139
Cash, end of period $ 975,869 $ 181,740

Supplemental disclosure of cash flow information
Cash paid for interest $ 58,728 $ -
Cash paid for tax - -
Non-Cash investing and financing transactions
Conversion of debt for common stock $ 306,858 $ 85,000

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

~~F-4~~

~~TEXTMUNICATION HOLDINGS,~~ INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE QUARTER ENDED June 30, ~~2021~~2022

(UNAUDITED)

NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS

The Company

Resonate Blends, Inc. formerly Textmunication Holdings, Inc. (the “Company”) was incorporated on in October 1984 in the State of Georgia as Brock Control Systems. Founded by Richard T. Brock, the Company was in the sales automation market and an early developer of enterprise customer management systems. The Company went public at the end of March of 1993. In February of 1996, the Company changed its name to Brock International Inc., and in March of 1998, the Company again changed our name to Firstwave Technologies, Inc.

On November 16, 2013, the Company entered into a Share Exchange Agreement (SEA) with Textmunication, Inc. a California corporation, whereby the sole shareholder of the Company received 65,640,207 new shares of common stock of the Company in exchange for 100% of the Textmunication’s issued and outstanding shares.

Textmunication is an online mobile marketing platform service that will connect merchants with their customers and allow them to drive loyalty and repeat business in a non-intrusive, value-added medium. For merchants we provide a mobile marketing platform where they can always send the most up-to-date offers/discounts/alerts/events schedule, such as happy hours, trivia night, and other campaigns. The consumer can also access specials and promotions that merchants choose to distribute through Textmunication by opting into keywords designated to the merchant’s keywords.

On June 25, 2019, the Company issued a press release announcing it plans to change its business direction from its current SMS technology business to focus on the emerging national cannabis market. The Company planned on using its mobile texting platform to enhance communication efforts with the potential acquisitions.

On October 25, 2019, the Company entered into a Membership Interest Purchase Agreement (the “Resonate Purchase Agreement”) with Resonate Blends, LLC, a California limited liability company (“Resonate”), and the members of Resonate. As a result of the transaction, Resonate became a wholly owned subsidiary of the Company. In accordance with the terms of the Purchase Agreement, at the closing an aggregate of 5% of the Company’s outstanding shares of common stock for a total of 665,072 shares were issued to the holders of Resonate in exchange for their membership interests of Resonate. These shares have anti-dilution protection. We have also agreed as part of the purchase price to issue: (ii) such number of shares of Series E Preferred Stock that will convert into 5% of the outstanding shares of common stock in the Company on a fully-diluted basis upon an annualized revenue run rate of Ten Million Dollars ($10,000,000.00) for any three (3) consecutive month trailing period; and (iii) such number of shares of Series E Preferred Stock that will convert into 5% of the outstanding shares of common stock in the Company on a fully-diluted basis upon the occurrence of the Company’s public market value reaching One Hundred Million US Dollars ($100,000,000). The shares in (ii) and (iii) shall have anti-dilution protections, except that this provision only applies for 2.5% of the outstanding shares acquired under each subsection.

Also, on October 25, 2019, the Company entered into a Membership Interest Purchase Agreement (the “Entourage Labs Purchase Agreement”) with Entourage Labs, LLC, a California limited liability company (“Entourage Labs”), and the members of Entourage Labs. As a result of the transaction, Entourage Labs became a wholly owned subsidiary of the Company. In accordance with the terms of the Purchase Agreement, at the closing an aggregate of 5% of the Company’s outstanding shares of common stock for a total of 665,072 shares were issued to the holders of Entourage Labs in exchange for their membership interests of Entourage Labs. These shares have anti-dilution protection. We have also agreed as part of the purchase price to issue: (ii) such number of shares of Series E Preferred Stock that will convert into 5% of the outstanding shares of common stock in the Company on a fully-diluted basis upon an annualized revenue run rate of Ten Million Dollars ($10,000,000.00) for any three (3) consecutive month trailing period; and (iii) such number of shares of Series E Preferred Stock that will convert into 5% of the outstanding shares of common stock in the Company on a fully-diluted basis upon the occurrence of the Company’s public market value reaching One Hundred Million US Dollars ($100,000,000). The shares in (ii) and (iii) shall have anti-dilution protections, except that this provision only applies for 2.5% of the outstanding shares acquired under each subsection.

In addition, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the “Conveyance Agreement”) with Mark S. Johnson and the Company’s 49% owned subsidiary, Aspire Consulting Group, LLC, a Virginia limited liability company. Pursuant to the Conveyance Agreement, the Company transferred all assets and business operations associated with its IT consulting solutions, including all of the capital stock of Aspire Consulting, to Mr. Johnson. In exchange, Mr. Johnson agreed to cancel 20,000 shares of common stock in the Company and to assume and cancel all liabilities relating to the Company’s former business.

The Company entered into Employment Agreements with the following persons: (i) Geoffrey Selzer as Chief Executive Officer (CEO) of the Company with an annual salary of $180,000; and (ii) Pamela Kerwin as Chief Operating Officer (COO) of the Company with an annual salary of $120,000. Both are eligible for salary increases upon milestone achievements and other benefits. The Employment Agreement for the CEO has a term of 2 years and can’t be terminated without cause. Severance of six (6) weeks is available for termination of the COO without cause before one-year of service and eight (8) weeks after one-year of service.

On December 16, 2019 the Company filed Articles of Merger with the Secretary of State of Nevada in order to effectuate a merger with its wholly owned subsidiary; Resonate Blends, Inc. Shareholder approval was not required under Section 92A.180 of the Nevada Revised Statutes. As part of the merger, the Company’s board of directors authorized a change in our name to “Resonate Blends, Inc.” and the Company’s Articles of Incorporation have been amended to reflect this name change.

In connection with the name change, the Company’s symbol was changed to “KOAN” that more resembles the Company’s new business focus.

On January 20, 2020, Wais Asefi resigned as Chairman and as a member of our Board of Directors. Mr. Asefi’s resignation is in support of Resonate Blends strategic direction of becoming a pure play cannabis company. The Company does not believe that Mr. Asefi has any disagreements on matters relating to our operations, policies or practices. Also, on January 20, 2020, our Board of Directors appointed Geoffrey Selzer as our Chairman.

~~In connection with the name change, the Company’s symbol was changed to “KOAN” that more resembles the Company’s new business focus.~~

On May 22, 2020, Resonate Blends, Inc. (the “Company”) entered into a Stock Purchase Agreement (the “SPA”) with Wais Asefi, Nick Miniello, Juleon Asefi, and Curt Byers (collectively, the “Asefi Group”) to sell to the Asefi Group its subsidiary, Textmunication, Inc., a California corporation (“Textmunication”). Textmunication operates the Company’s SMS business activities. The Company will retain its cannabis operations based in Calabasas, California.

~~The consideration for the sale of Textmunication consists of the cancellation by the Asefi Group of~~ ~~4,822,029~~ ~~shares of common stock (the “Shares”) of the Company. The Shares have a market value of $337,542, based on our last sales price of $0.07~~ ~~per share as of May 26, 2020. Upon the cancellation of the Shares, the Company agreed to execute a general release in favor of Mr. Asefi.~~

Also 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 $200,000from 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 4,000,000shares of Series A Preferred Stock and to transfer his 2,000,000shares of Series C Preferred Stock to Geoffrey Selzer, the Company’s current CEO and Director. Mr. Asefi further released the Company of all claims.

~~Also on~~On May 22, 2020, ~~Mr. Selzer signed~~the Company entered into a ~~Voting~~Stock Purchase Agreement (the “SPA”) with Wais Asefi, Nick Miniello, Juleon Asefi, and ~~agreed~~Curt Byers (collectively, the “Asefi Group”) to ~~vote his newly acquired~~ ~~2,000,000~~ ~~shares of Series C Preferred Stock in favor of the sale of Textmunication~~sell to the Asefi ~~Group.~~Group its subsidiary, Textmunication, Inc., a California corporation (“Textmunication”). Textmunication operates the Company’s SMS business activities.

On July 20, 2020, the parties closed on the transactions contained in the SPA. The Asefi Group cancelled 4,822,029shares of common stock (the “Shares”) of the Company. The Shares have a market value of $332,842, based on our last sales price of $0.07per share as of May 26, 2020. The Company also executed a general release in favor of Mr. Asefi.

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 and 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.

~~F-5~~

F-6

Basis of Presentation

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

Going concern

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As of June 30, ~~2021,~~2022, the Company has an accumulated deficit of $~~27,540,986~~25,272,281. The company’s ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations. While the Company is expanding its 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 the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. These consolidated financial statements do not include any adjustments that might arise from this uncertainty.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. AsHowever, as of June 30, ~~2021,~~2022, the company balances ~~exceeded~~were below the federally insured limit by approximately $~~1,250,000~~ 215,177~~deposited under one institution.~~ Management is making certain arrangements to mitigate this risk during the next quarter.

Revenue Recognition

~~The Company did not have any revenues from continuing operations for the periods presented.~~ The Company’s policy is that revenues will be recognized when control of the product is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

Fair Value of Financial Instruments

The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items.

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

~~F-6~~

The three levels of the fair value hierarchy are described below:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs that is observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

F-7

Financial assets and liabilities measured at fair value on a recurring basis are summarized below for the quarter ended June 30, ~~2021~~2022 and year ended December 31, ~~2020.~~2021.

SUMMARY OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS

As of June 30, 2022

Level 1

Level 2

Level 3

Total

Liabilities

Derivative Liabilities

598,902

As of June 30, 2021 Level 1 Level 2 Level 3 Total
Liabilities
Derivative Liabilities - - 4,281,046 4,281,046

As of December 31, 2020	Level 1		Level 2		Level 3		Total

As of December 31, 2021									Level 1		Level 2		Level 3		Total
Liabilities
Derivative Liabilities		-		-		274,134		274,134		-		-		2,286,014		2,286,014

Net income (loss) per Common Share

Basic net income (loss) per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

Property and equipment

Property and equipment are stated at cost, less accumulated depreciation provided on the straight-line method over the estimated useful lives of the assets, which range from three to seven years.. Expenditures for renewals or betterments are capitalized, and repairs and maintenance are charged to expense as incurred the cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts, and any gain or loss thereon is reflected in operations. Company ~~policy~~policies capitalize property and equipment for cost over $1,000, asset acquired under $1,000are charge to operations.

Income Taxes

Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. Because the Company has no net income, the tax benefit of the accumulated net loss has been fully offset by an equal valuation allowance.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

~~F-7~~

F-8

Stock-Based Compensation

The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered.

The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees. In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over the period during which services are rendered.

NOTE 3 – RELATED PARTY 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 $200,000from 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 4,000,000shares of Series A Preferred Stock and to transfer his 2,000,000shares 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 4,000,000shares of Series A Preferred Stock were returned to the Company’s transfer agent and cancelled and on May 22, 2020 the 2,000,000shares of Series C Preferred Stock were transferred to Mr. Selzer. The parties to the Separation Agreement agreed to a payment schedule of $200,000based on future monies raised by the Company - and not on a specific date – as follows:

	●	$12,500when the initial $250,000is raised by the Company;
	●	$12,500when a total of $500,000is raised by the Company;
	●	$10,000when a total of $750,000is raised by the Company;
	●	$35,000when a total of $1,750,000is raised by the Company;
	●	$35,000when a total of $2,750,000is raised by the Company;
	●	$35,000when a total of $3,750,000is raised by the Company;
	●	$35,000when a total of $4,750,000is raised by the Company; and
	●	$25,000when a total of $5,750,000is raised by the Company.

On May 13, 2021, we amended the Separation Agreement to state the parties desire to reduce the total amount payable to Wais Asefi from $200,000USD to $142,500USD. In addition to the earlier payments made to Mr. Asefi, a payment of $40,000was made on May 14, 2021 and another payment on June 27, 2021 for $40,000. The final payment ~~due~~was made on August 11, 2021 is for $25,000~~. The final payment due on August 11, 2021 will settle~~ and 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.

The outstanding balances as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 are $~~25,000~~54,500 and $~~187,500~~ 45,000~~respectively.~~, respectively which are owed to our CEO for funding certain corporate initiatives.

~~F-8~~

F-9

NOTE 4 - CONVERTIBLE NOTE PAYABLE

Convertible notes payable consists of the following as of June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:

SCHEDULE OF CONVERTIBLE NOTES PAYABLE

June 30, 2021 December 31, 2020
Convertible notes face value $ 1,870,000 $ 517,544
Less: Discounts - (12,751 )
Less: Debt issuance cost -
Net convertible notes $ 1,870,000 $ 504,793

~~Explanation of Derivative Liability Loss:~~

	June 30, 2022		December 31, 2021
Convertible notes face value	$	2,503,800	$	1,865,000
Less: Discounts		-		-
Less: Debt issuance cost		-		-
Net convertible notes		2,503,800	$	1,865,000

The convertible notes as of June 30, ~~2021~~2022 are 8% Unsecured Convertible Promissory Notes (“Notes”) from various accredited investors issued from January 1, 2021 to June 30, ~~2021.~~2022. All notes have an automatic conversion into equity on the maturity date, which is ~~January 2,~~July 3, 2022, or if a Qualified Financing (QF) of $5,000,000 is achieved, whichever occurs first. The maturity date pricing is ~~the lesser of $.10 or 75% of the VWAP with a 20-day lookback.~~$0.10. A QF converts into equity at the lesser of $1.00 or 75% of the average selling price of the aggregate offering. The ~~derivative liability loss~~outstanding balance as of June 30, 2022 for this Unsecured Convertible Promissory Notes amounts to $1,715,000. On January 2, 2022, Certain Noteholders elected to convert collectively $150,000 of the Notes into equity at $0.10 to reduce the outstanding principal.

On January 28, 2022, we entered into Securities Purchase Agreements (the “Purchase Agreements”) with two accredited investors, pursuant to which we issued and sold to the investors two convertible promissory notes, dated January 28, 2022, each in the principal amount of $~~4,281,046~~275,000 ~~is based on the stock conversion occurring at the floor~~for an aggregate principal amount of $~~.10~~550,000~~, but~~. We received $500,000 from the ~~conversion terms could be at a higher price if a QF event takes place.~~Notes after applying the original issue discount to the Notes.

The ~~three~~Purchase Agreements allow for additional notes to be issued to investors up to $750,000. On February 4, 2022, we issued and sold to two accredited investors (the “Investors”) convertible promissory notes in the principal amount of $55,000 under a Securities Purchase Agreement of the same date. We received $150,000 from the Notes after applying the original issue discount to the Notes.

On March 3, 2022, we issued and sold to an accredited investor a convertible promissory note the principal amount of $55,000 under a Securities Purchase Agreement of the same date. We received $50,000 from the Note after applying the original issue discount to the Note.

The maturity date for repayment of the Notes is nine months from issuance and the Notes bear interest at 10% per annum. We may prepay the Notes provided that we shall make payment to the investors of an amount in cash equal to the sum of the then outstanding principal amount of this Notes, plus interest on the unpaid principal amount of the Notes, plus any Default Interest on the amounts, plus any amounts owed to the Investor pursuant to the Purchase Agreement.

All principal and accrued interest on the Notes are convertible into shares of our common stock. The conversion price shall equal a fixed price of $0.15 per share or, at the option of the Investor in the event that we fail to complete a Qualified Offering before the five (5) month anniversary of the issue date, the Registration Conversion Price. The “Registration Conversion Price” shall mean 75% multiplied by the volume weighted average of the Common Stock during the twenty (20) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. The Investors shall be entitled to add to the principal amount of the Note $750.00 for each conversion to cover investor’s deposit fees associated with each Notice of Conversion. “Qualified Offering” means any offer and sale by us of an original issuance of equity securities, comprised of either Common Stock or preferred stock of the Company, in a single transaction to investors pursuant to which at least an aggregate of $2,000,000.00 gross proceeds are received by the Company.

In the event that by the five (5) month anniversary of the issue date a Qualified Offering (as defined above) has not occurred, then we shall file with the SEC a registration statement on Form S-1 covering the resale of the maximum number of Registrable Securities, defined as the Commitment Shares, Conversion Shares and Warrant Shares.

In connection with the investment, we issued Commitment Shares to the Investors in the amount of 650,000 shares collectively and we also issued a warrant (the “Warrant”) to the Investors to purchase 812,500 shares collectively of our common stock at an exercise price of $0.40 per share. In the event that there is no effective registration statement five months from the issue date registering the shares underlying the Warrant, then the Investors may exercise the Warrant using a cashless feature.

The Securities Purchase Agreement contain a most favored nation provision that allows the Investor to claim any lower price from any future securities six months after this closing and a blocker on issuing variable rate investments.

Finally, on June 27, 2022, we issued and sold to an accredited investor a convertible promissory note the principal amount of $138,800 under a Securities Purchase Agreement of the same date. We received $128,500 from the Note after applying the original issue discount to the Note.

F-10

The Notes are convertible into shares of common stock, $0.0001 par value per share, of the Company upon the terms and subject to the limitations and conditions set forth in such Note. On the Closing Date (i) the Buyer shall pay the purchase price for the Note to be issued and sold to it at the Closing (as defined below) (the “Purchase Price”) by wire transfer of immediately available funds to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Note in the principal amount equal to the Purchase Price as is set forth immediately below the Buyer’s name on the signature pages hereto, and (ii) the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase Price.

The six months ended June 2022 and 2021 interest accrued for the convertible notes payable at $~~12,263~~22,178~~, $12,671~~ and $~~12,263~~ 58,728respectively.

Under U.S. GAAP, convertible debt is considered a “hybrid” financial instrument consisting of interest-bearing debt, referred to as the “host”, and certain embedded features requiring evaluation for bifurcation and separate accounting from the host instrument. ASC 815-15-25-1 provides the following guidance for determining whether an embedded feature should be accounted for separately as a derivative:

~~An embedded derivative shall be separated from the host contract and accounted for as a derivative instrument pursuant to Subtopic 815-10 if and only if all of the following criteria are met:~~

~~The economic characteristics and risks of the embedded derivative are not clearly and closely related to the economic characteristics and risks of the host contract.~~

~~The hybrid instrument is not remeasured at fair value under otherwise applicable generally accepted accounting principles (GAAP) with changes in fair value reported in earnings as they occur.~~

~~A separate instrument with the same terms as the embedded derivative would, pursuant to Section 815-10-15, be a derivative instrument subject to the requirements of this Subtopic.~~

If an issuer concludes that any of the embedded features should be bifurcated and accounted for as derivatives, the issuer should determine the fair value of these features upon issuance and record them on the balance sheet as a derivative liability with a corresponding amount recorded as debt discount. This discount should be amortized to interest expense using the effective interest method. Any changes in fair value of the derivative liability subsequent to issuance should be recognized in the income statement in the period in which the change occurs.

The Company accounts for the fair value of the conversion features of its convertible debt in accordance with ASC Topic No. 815-15 “Derivatives and Hedging; Embedded Derivatives” (“Topic No. 815-15”). Topic No. 815-15 requires the Company to bifurcate and separately account for the conversion features as an embedded derivative contained in the Company’s convertible debt. The Company is required to carry the embedded derivative on its balance sheet at fair value and account for’ any unrealized change in fair value as a component of results of operations. The Company values the embedded derivatives using the Black-Scholes pricing model.

NOTE 5 – COMMITMENTS AND CONTINGENCIES

Office Lease

On October 16, 2019, the Company signed a lease agreement that expires on thirty days’ notice.Rent expense was approximately $~~675~~ 2,502and $0 1,465for the ~~quarter~~six-months period ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

Executive Employment Agreement

On October 25, 2019, the Company entered into Employment Agreements with the following persons: (i) Geoffrey Selzer as Chief Executive Officer (CEO) of the Company with an annual salary of $180,000; (ii) Pamela Kerwin as Chief Operating Officer (COO) of the Company with an annual salary of $120,000: and David Thielen as Chief Investment Officer (CIO) with an annual salary of $120,000. All are eligible for salary increases upon milestone achievements and other benefits. The Employment Agreement for the CEO has a term of 2 years and can’t be terminated without cause. Severance of six (6) weeks is available for termination of the COO and CIO without cause before one-year of service and eight (8) weeks after one-year of service.

~~Other~~

~~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 $40,000~~ ~~was made on June 27, 2021. The final payment was made on August 11, 2021, for $25,000~~ ~~to settle 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.~~

NOTE 6 – STOCKHOLDERS’ EQUITY

During the second quarter of ~~2021~~2022, the ~~company~~Company issued a total of ~~2,868,025~~50,000 shares of common stock to vendors for compensation and services rendered. The fair market value of the shares ~~issues~~issued accounted as expenses as follows:

SCHEDULE OF COMPENSATION AND SERVICES RENDERED


Professional Fees	$	583,409	$	4,505
Convertible promissory notes		-		-
Total	$	583,409	$	4,505

NOTE 7 – DISCONTINUED OPERATIONS

On July 20, 2020, the Company finalized a Stock Purchase Agreement (the “SPA”) with Wais Asefi, Nick Miniello, Juleon Asefi, and Curt Byers (collectively, the “Asefi Group”) to sell to the Asefi Group its subsidiary, Textmunication, Inc., a California corporation (“Textmunication”). Textmunication operates the Company’s SMS business activities. The Company retained its cannabis operations based in Calabasas, California. The Company has accounted for this spinout as a discontinued operation and retroactively reclassified all previously presented financial information. The following summarizes the results of operations for Textmunication, Inc. for the ~~six~~three months ended June 30, 2020

~~F-9~~

SCHEDULE OF DISCONTINUED OPERATIONS

	2020			2020
Revenues	$	477,734		$	305,590
Cost of Revenues		(114,237	)		(90,559	)
Operating expenses		(455,925	)		(347,565	)
Loss from operations of discontinued operations		(92,428	)		(132,534	)

NOTE 8 – SUBSEQUENT EVENTS

~~Resonate Blends was granted~~On July 15, 2022, we issued a ~~Type S: Shared Facility - Adult and Medicinal Cannabis Manufacturing License on July 23,~~total of 21,993,806 shares of common stock to certain note holders as a result of voluntary conversions of their 8% convertible notes issued in early 2021. The ~~license allows Resonate Blends to manufacture cannabis products at~~aggregate dollar amount of debt reduced by the ~~licensed facility of~~conversions was $1,917,382. The ~~Galley, QVI, Inc. in Santa Rosa, California.~~convertible notes retired were 8% Unsecured Convertible Promissory Notes from various accredited investors. All notes had an automatic conversion into equity on the maturity date, which was July 3, 2022.

~~F-10~~

F-11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

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” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe-harbor provisions. 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:~~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. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Company Overview

On October 25, 2019, ~~Resonate Blends, Inc. (formerly Textmunication Holdings Inc.)~~the Company announced its entry into the cannabis industry by acquiring Resonate Blends LLC (“~~Resonate” or the “Company”~~Resonate Blends”), a California-based cannabis wellness lifestyle product company built on a proprietary system of experiential targets. Resonate Blends is building a value-added, brand-focused cannabis organization offering premium brands of consistent quality. The Company also acquired Entourage Labs LLC (“Entourage Labs”), a sister company of ~~Resonate.~~Resonate Blends. Entourage Labs is the Intellectual Property (IP) subsidiary of ~~Resonate.~~Resonate Blends.

Based in Calabasas, California, ~~Resonate Blends, Inc.~~the Company is a cannabis holding company centered on ~~valued-added~~value-added holistic Wellness and Lifestyle brands. The Company’s strategy is to ignite future growth by building a purpose-driven portfolio of innovative, trusted national brands, emerging brands, research organizations, and a variety of retail channels. The Company’s focus is finding mutual value between product and consumer by optimizing quality, supply chain resources and financial performance. The Company offers a family of premium cannabis-based products of consistent quality based on unique formations calibrated to Resonate Blends effects system in what ~~we believe~~the Company believes is the industry gold standard in user experience.

~~The Company~~Resonate believes the greatest long-term value creation in the cannabis industry will be in the establishment of high quality and consistent consumer brands. Resonate hopes to become a national leader through its vision in creating a family of brands designed specifically to deliver reliable, effective and beneficial experiences.

Resonate is committed to helping ~~you~~people live the life ~~you love. We~~they love, but they do not make the medicinal vs. recreational distinction. This is a temporary legal separation in some states that ~~we expect will~~should soon cease to exist. ~~We believe~~The Company believes in wellness for the whole ~~person. We know that~~person, especially people with insomnia, pain or anxiety who also want to enjoy friends, concerts and have satisfying intimate experiences. ~~We are~~Resonate is designing experiences which ~~will~~should improve all areas of ~~our lives.~~ones’ life.

To accomplish this, Resonate is Mastering the Art of Experience. This is ~~our~~the Company’s mission. By integrating science, technology, education, branding, marketing, sales and delivery - with every customer interaction wethey aim to provide exceptional experiences. Cannabis has a broad range of unique characteristics, and wethey are dedicated to harnessing and amplifying those characteristics to support healthy empowered and engaged lifestyles. From product development through customer communication, wethey prefect and demystify cannabis bringing innovative products to an increasingly sophisticated market. Resonate Blends has a strong social mission and the Resonate team is building a successful business by focusing ~~our~~its knowledge, skill and energy on creating wellness-lifestyle products which will improve community by helping individuals live more satisfying, meaningful and connected lives. The need for these products ~~at this time~~currently is crucial.

To communicate the breadth of wellness products that Resonate is developing, ~~our team~~the Company created The Resonate System. The Resonate System graphically represents a spectrum of wellness products based on cannabis scaffolding. This system helps users easily select which product they want. Products based on The Resonate System deliver relaxation, freedom from pain and anxiety, boosts in focus and creativity, sensuality, human connection and joy. ~~Our~~Koan products are formulated around a system of interconnected experience targets that will allow you to know exactly what to expect when using them.

While respecting and honoring the natural power of plant medicine, Resonate also employs advanced science, leading technology and a deep understanding of how various cannabis compounds, when working in the body, simultaneously can create unique effects and benefits (referred to as the “Entourage Effect”). ~~Our product~~Product developers blend cannabinoids and terpenes to formulate products with specific, controllable and repeatable beneficial effects. Through innovation, experimentation, testing and an iterative product development strategy, ~~our~~the Koan team has unlocked new plant constituent combinations resulting in unique, enjoyable and extremely effective wellness products unlike anything else in the marketplace. Resonate has filed a provisional patent for protection of these formulations and products in the future.

Koan, the Resonate Blends product family, is based around a comprehensive system of interconnected experience targets that allow people to select the products that best fit their lifestyle and health objectives. Koan products are dedicated to the efficacy and precision of functional experience targets across a broad range of product categories.

Resonate’s initial products are a completely unique class of products called Cordials. These blends offer a wide range of experiences not currently available in the cannabis market. ~~Our~~ Cordials are water-soluble and use nano-emulsification technology to allow for quick onset and a sustained and nuanced experience. Single dose, healthful, subtle in taste, cordials are an ideal way for people to ~~gently~~ intentionally improve their well-being. They can be shipped directly or substituted for alcohol as a cocktail mixer. A significant competitive advantage is that the Cordials allow users to select both the experience they want and the beverage they choose to enjoy them in.

Resonate’s Cordials have been developed in partnership with an award-winning advanced infusion technology partner and were launched to the retail channel in late Q2 of 2021. The company is now offering ~~six~~seven unique ~~blends at its initial release~~formulations and expects to have ~~additional blends~~its Sleep Cordial in production by early Q3 2022. The Sleep Cordial has been thoroughly tested and is ready for launch once the ~~end~~multi-serve bottles are available. This blend will only come in a multi-serve bottle based on the anticipated consumer usage patterns and testing data available to the Company.

The Cordials were awarded the Golden Leaf Award as “Best New Brand of 2021” at the “Luxury Meets Cannabis Conference” held in New York City in December. Resonate also won a Cannabis Clio Award for “Brand Design” in 2021.

~~We have~~Resonate has formalized contracts with ~~our~~ logistical, sales and marketing partners ~~and are building~~to build a digital native strategy supporting ~~direct~~Direct-to-Consumer (D2C) sales. The D2C sales platform launched in October 2021 and now allows California consumers the ability to ~~consumer sales. This release will be followed with our second product line~~order on-line and have the Cordials home delivered in most metro areas within four hours. Based on customer demand, the Company is creating a “Singles” option for the Cordials which are now available. In response to customer requests, the company is now offering five popular blends in 10-serving bottles that provide a lower cost per serving and allow users to customize their servings to their personal preference. In addition, the company is ~~already in full development~~also offering a 4-pack that also lowers the cost per serving while preserving the convenience and ~~is expected for targeted commercial release before~~portability of the ~~end of 2021.~~

~~Partnerships~~

~~Product Development:~~discrete smaller bottles.

The Company signed a custom development contract with Vertosa in March of 2020, the leading provider of safe, reliable emulsion bases for infused product developers. This contract was a major milestone for the Company as it selected its strategic partners to develop innovative products and solutions.

Vertosa is an award-winning strategic partner who will assist the Company in the launch of its first unique category of six water soluble products. These multi-use products deliver specific, predictable, reliable, effects in a format that is completely unique in the industry. The first product developed collaboratively is the Cordial product line, but both companies expect several other products to be developed over time utilizing Vertosa’s emulsification technology.

The Vertosa and Resonate teams share a mission of maximizing the benefits of cannabinoids and plant medicine. Resonate selected Vertosa as a development partner because the Vertosa systems’ industry leading emulsification technology makes them highly stable, bioavailable, and water compatible. All of Vertosa’s inactive base materials are FDA approved and are lab tested for quality. Vertosa’s Hemp-derived CBD Emulsion System is now certified organic by ~~CCOF~~~~, a United States Department of Agriculture-accredited certifier and non-profit advocacy group, and the company has also received its~~ ~~Good Manufacturing Practice (GMP) certification~~~~, confirming that its offerings follow regulations promulgated by the US Food and Drug Administration and are safe, pure, and effective.~~

~~Manufacturing:~~

The Company partnered with The Galley, a California licensed Type N – Infused Products Manufacturer based in Santa Rosa, California. The Galley produces and packages premium award-winning products and has worked with some of the most popular brands in the industry. The Galley is built to FDA and CDPH standards and is focused on high demand areas of production – Edibles, Topicals, Tinctures, Chocolate, Hard Candies, Gummies, Pre-Rolls, Flower, Vapes and Beverages.

Resonate and The Galley entered into a Master Services Agreement in which The Galley will manufacture and package Resonate’s first family of products to precise specifications. The Galley also has a Bureau of Cannabis Control (BCC) issued distribution license in California and, along with other select distribution partners, will distribute Resonate’s products to retail establishments throughout the state.

The Galley and Resonate have been in frequent contact throughout Resonate’s development period and are now supporting the production of the Company’s unique family of wellness lifestyle products. Resonate’s first of its kind offerings are emulsified through the advanced infusion technology provided by award-winning Vertosa and collaboratively developed to push the state of the art in its cannabis products.

~~Distribution:~~

Because of the unique nature of Resonate’s Koan products and the recent expansion of home delivery services in the cannabis industry, Resonate has prioritized a direct-to-consumer method as their primary sales strategy. Resonate has identified a technology partner who will add an e-commerce feature to the Koan web site that will allow the Company to sell products directly to consumers using a licensed California state-wide delivery network for fulfilment.

In addition to direct sales, the company plans to offer products to select premium dispensaries throughout California. These products will be delivered to retail establishments by a leading cannabis full service distributor. The Company contracted with MARS Distribution to provide logistics and statewide distribution for Resonate’s Koan Cordials, its product line of unique experience blends currently available in California. MARS is the leading logistics and sales partner for cannabis beverages and top cannabis brands in California.

MARS was built to support the massive growth in the cannabis industry and bring efficiency and consistency to it. With a focus on beverages, MARS is the only distributor equipped to support the movement, storage, and sales of beverages in California. With hubs in Costa Mesa, Sacramento, Nevada and three more hubs under way, MARS delivers orders to retailers in 72 hours or less.

~~Resonate is also developing relationships with a variety of complementary distribution channels such as subscription box companies and other non-storefront reseller organizations.~~

~~Marketing and Sales Plan~~

The cannabis industry is changing daily in response to updated regulations, customer product education, new interest from various demographics and now the COVID-19 pandemic. As a result, we are constantly attentive to these changes as they affect the marketing of our products. Our initial marketing strategy was to launch in select dispensaries in Los Angeles and to support the launch with dispensary promotional material and location-based marketing. However, in the current market the Company has decided to modify this strategy. Paradoxically, retail restrictions and safety regulations were actually beneficial for us, as these allowed us to reprioritize our sales approach and to build a marketing plan around on-line dispensaries with wide delivery networks. Although retail restrictions will eventually be relaxed, we do not expect that storefront dispensaries will return to the dominant role they played in the cannabis industry before COVID-19 for several reasons. Dispensaries are generally small, making social distancing difficult. Limitations on a customers’ ability to touch and smell products reduces the value of in-person shopping. Restrictions on the number of people allowed in these small spaces will create waiting lines outside stores, which will be inconvenient and even embarrassing for some. Finally, we have learned that a significant number of customers, particularly in our targeted demographic, really prefer the privacy and convenience of having products delivered to their homes. For all these reasons, we have decided to focus our marketing budget for at least the next six to nine months on supporting online and delivery outlets.

In response to the sudden change in customer buying preferences, Resonate has accelerated our plan to sell directly to consumers. We are in the process of partnering with an on-line platform which will allow us to communicate the value of our products directly to consumers. This platform will connect consumers to a licensed retail and California-wide home delivery network. This direct-to-consumer approach has significant benefits for us. First, it allows us to control our brand messaging and to assure that we are able to provide the information and education customers need to make confident and informed product choices. Through this method, we also have access to customer information which is not available from dispensaries, which allows us to employ successful marketing techniques used by leading on-line retailers such as customer loyalty programs, memberships, ambassadors, etc., to build brand awareness and increase sales. It is also better for us financially as it increases our profit margin.

Therefore, our marketing budget and energy is now being channeled into appropriate programmatic advertising, developing informational materials for customers on our website, and developing professional and effective social media, search engine optimization and direct to consumer marketing campaigns. We will also offer training andoffers market support to select premium California ~~dispensaries. We expect~~dispensaries both in person and thorough the Leaf.VIP budtender training program. The Company expects that building ~~our~~its brand online will complement retail sales by increasing customer awareness and creating “pull-through” at brick-and-mortar facilities. The social media strategy was brought in-house during Q1 to both reduce overall costs and control the messaging to the appropriate audience for the Cordials.

Resonate recently hired an internal sales manager to oversee all sales efforts in Southern California and expects to hire a sales manager for Northern California in the near future. The Company implemented an in-house sales strategy in Q1 2022 to maximize both the dispensary outreach and budtender education – and to increase D2C sales platform activity. While wellness dispensaries will be a focus for the Company, the customer acquisition focus will now be towards the D2C portal. The Company has ~~partnered with Good People LLC as its statewide Koan Cordial sales team. Good People is working closely with Resonate Blends’ marketing team~~added several new retail partners in 2022 to ~~plan events, train budtenders, schedule~~include Atrium, Cornerstone Wellness, 99 High Tide, Artist Tree and ~~track relevant promotions and inform the innovation pipeline with field insights. Koan~~Canni Delivery. The Cordials ~~dispensary buyer sample kits~~ are now ~~available through Good People~~featured at West Hollywood’s The Artist Tree Studio Cannabis Lounge where music performers will be providing the entertainment events throughout the summer. The Studio Cannabis Lounge in West Hollywood is the only one of its kind in the United States and ~~dispensaries are now stocking the product in strategic geographical locations.~~this partnership should provide users an interactive experience unavailable elsewhere.

~~Future Koan Product -~~With the new in-house sales strategy in place, new wellness dispensaries are expected to grow throughout 2022 in addition to the D2C sales platform activity. Wellness dispensaries are the main target due to the demographics of the consumer and the thorough educational process these dispensaries offer to buyers in their stores. Multi-state expansion through licensing arrangements with the Cordials is also being planned. Several retailers and leading brands in multiple states have reached out to Resonate ~~Growth Plans~~requesting the Cordials to be stocked in their dispensaries. The Company is currently evaluating where and when to open new states outside of California.

~~For~~A new unique edible line is currently being developed and is expected to be released towards the ~~first 12 months, Resonate~~end of 2022. The form factor for the edible line will ~~concentrate on releasing product~~be unique in the market and ~~brand building in our home state~~also have the ability to target the desired experience of ~~California. Resonate plans~~the consumer – similar to ~~follow~~ the launch of its first six Koan products with others based on The Resonate System at regular intervals. Our formulas, combined with the proprietary Vertosa technology, will allow the Company to quickly deliver controlled, predictable, enjoyable effects in beverages, teas, and gummies. Vertosa is the leading provider of emulsification technology for cannabis manufacturers. Emulsification allows cannabinoids to become water-soluble so that they can be added to Cordials, beverages, gummies, etc. Vertosa and Resonate are engaged in joint research focusing on effects of various emulsification methods on cannabinoids. We are working on methods that improve user experience by refining effects and managing bioavailability. Vertosa will also be providing the emulsification required for formulas in Resonate’s product line.Cordials.

The cannabis industry is in its infancy. Resonate’s growth strategy is to create an innovative ecosystem of companies, investments and research that all support The Resonate System and our mission of empowering the wellness market. In addition to creating our “house” brands, the Company is also looking for other quality brands which could be incubated or targeted as either strategic partners or as acquisitions. Integrating these companies, we believe will provide consistent product quality that yields expected results and that also allows us to build a stable, successful company overall.

Resonate’s first commercial release is a family of six precisely targeted effect blends. These products are category-breaking offerings as they are neither tinctures nor beverages but have the benefits of both. They are emulsified, water soluble, single-dose formulas that can be enjoyed privately or shared socially. Resonate plans to make these available initially in California in stylish mini bottles, each containing a single dose. They can be sipped directly from the bottle or poured into beverages. Koan products offer the very high bioavailability of tinctures not possible to deliver with edibles, take effect generally within minutes and provide benefits for approximately 3 hours. Significantly, these formulas all provide a pleasant predictable experience, a gentle onset and exit and have no unpleasant sensations or aftereffects sometimes associated with cannabis products. Our current products are as follows:

~~Calm~~

~~CBD rich with a hint of THC, Calm is formulated to quiet your mind and ease you into a gentle sense of wellbeing.~~

~~Wonder~~

~~Our highest THC offering, Wonder is carefully crafted to bring back that youthful sense of wonder and awe we feel when we are fully engaged with our senses and environment.~~

~~Balance~~

~~Balance is a subtle combination of cannabinoids and terpenes formulated to bring your mind, body and spirit back to an even state of harmony and homeostasis.~~

~~Create~~

Create is formulated to stimulate your senses, spark your imagination and channel your inner muse. Led by a stimulative blend of terpenes and just the right amount of THC to inspire and facilitate the artist in you.

~~Play~~

~~We formulated Play to help you become fully immersed in the moment and the people around you. From the park to the beach to the dance floor, Play helps you find your groove and keep it going.~~

~~Delight~~

~~Put on your rose-colored glasses and give everything some extra sparkle with Delight. Designed to open up your senses, raise your spirits and brighten your day.~~

~~Competitive Landscape~~

The cannabis market still primarily consists of products of varying quality and poor branding. Much of the branding is heavy “stoner” or hospital medicinal, and differentiation between products is difficult. As a result, finding a product with controllable, consistent effects is difficult. Even products of high and reliable quality all look alike and have no shelf appeal. In addition, there is a mismatch between the fastest growing demographic and many current product offerings, which are designed to be inhaled. This is exactly why we have developed Koan Cordials, tasty, single dose, healthy cannabis products with timeless, exceptional branding. As the market matures, some companies are recognizing the importance of branding. Branded category leaders represent the 10 spots among best-selling products and sales data supports the desire among consumers for branded products. This is further supported by Headset, data (the leading industry provider of retail buying patterns), which shows that brands are leading every category in cannabis. Further, branded products command higher prices. Some branded products generate pricing as high as 151%, over industry average. The Resonate team excels in product branding.

There is no product in the marketplace exactly like our Koan products at this time. Other companies offer tinctures (which are concentrated herbal extracts made by soaking the bark, berries, leaves (dried or fresh), or roots from one or more plants in alcohol or vinegar), tea, salves, patches and cosmetics and vapes, and some of them provide effects which may be similar to those the Koan products will provide, but we believe that none are equal to ours with respect to quality, efficacy, consistency and scope. Our products are water soluble and can be enjoyed privately or poured in beverages and shared socially. We believe that the total experience offered by our products cannot be found elsewhere in the industry.

While there are a number of very fine products in the premium cannabis space, there is not yet a dominant brand in any category. Some are leading but no brand dominates. Data indicates that our targeted demographic seeks out trusted brands when making product selections. Resonate is bringing to market custom, reliable, experience-targeted products. which can be sipped or shared, offered under a well-crafted brand supported by an accessible information system. We provide The Resonate System so customers can understand what to expect and can make informed confident selections.

To summarize, we have signed and announced definitive agreements with various partners to execute on our overall business strategy. Our partner Vertosa is expected to develop our unique formulations through its advanced nano-emulsification process, The Galley is expected to assemble and package, the Good People to sell the products, MARS Distribution to distribute our products and Way To Blue is expected to actively market and deliver social media channels to the California market. This release will be followed with our second product line that is already in full development and is expected for targeted commercial release before the end of 2021.

~~Our~~ principal executive office is located at 26565 Agoura Road, Suite 200, Calabasas, CA 91302. ~~Our~~The executive telephone number is (571) 888-0009.

Results of Operation for Three and Six Months Ended June 30, ~~2021~~2022 and ~~2020~~2021

Revenues

We have generated no$2,836 and $30,488 in sales for the three and six months ended June 30, ~~2021,~~2022, respectively, as compared with no sales for the three and six months ended June 30, ~~2020~~2021 on our current product ~~line, but sales of $172,144 and $477,734 from the discontinued operations of our sold subsidiary, Textmunication, Inc., for the three and six months ended June 30, 2020.~~line. We ~~recently~~ launched our first line of ~~six~~seven Cordial products ~~to the retail channel~~ in California and ~~will start~~we have started to generate revenues from the ~~sales~~sale of these ~~products in Q3.~~products.

We anticipate increased revenues on our ~~six~~seven Cordials and newly anticipated Cordials, such as Sleep Cordial, discussed below, for the rest of ~~the year, along with~~2022. We anticipate a rollout of new packaging configurations in Q3 2022 for our ~~second product~~Cordials; to include a one-pack, a 4-pack to replace the 3-pack and a multi-dose bottle which is expected to bring the cost per dose down considerably. We also plan on launching additional Cordial formulations by late Q3 2022, to include our new Sleep Cordial - and a new line ~~before year’s end,~~of edibles in late 2022, which we hope will contribute to increasing our revenues. As we have just launched our products, ~~to the retail channel,~~ however, it may take some time for the markets to react, gain traction and result in brand awareness among our customers. There can be no assurances, however, that customers will positively react to our products.

Gross Profit

We paid $2,421 and $15,278 in cost of revenues for the three and six months ended June 30, 2022, respectively, resulting in a gross profit of $415 and $15,210 for the three and six months ended June 30, 2022, respectively. We have not had any historical data to compare our margins for the sale of our new products. Our gross margin, which is the difference between our revenues and our cost of revenues, is expected to increase in future quarters as we work to increase our efficiency and lessen costs. In addition, our gross margin percentage, which was 14.6% and 49.90% for the three and six months ended June 30, 2022, respectively, and we hope will stabilize in the 35% to 43% range as we implement cost saving measures and roll out new products to increase sales for the balance of 2022. We are also implementing new packaging configurations which we expect to stabilize our overall gross margins.

Operating Expenses

Our operating expenses were ~~$1,397,013~~$290,211 and $945,830 for the three and six months ended June 30, ~~2021,~~2022, respectively, as compared with ~~$527,904~~$1,397,013 and $2,175,025 for the three ~~months ended June 30, 2020. Our operating expenses were $2,175,025 for the~~and six months ended June 30, 2021, ~~as compared with $1,079,315~~respectively.

The main drivers for the overall decrease in operating expenses in Q2 2022 were the reduction of Legal, Professional Fees and Salaries as well as a significant decrease in non-cash management fees.

Not having these non-cash management and broker fees would reduce our operating expenses by $1,106,802 and $1,229,195 for the three and six months ended June 30, ~~2020.~~2022, respectively. Our continued focus on sales, advertising, marketing and new product development costs to support our planned growth is expected to increase throughout 2022.

~~The main reason~~We spent and $87,738 less and $24,358 more on advertising for the ~~increased operating expense~~three and six months ended June 30, 2022, respectively, than for the same periods in ~~2021 was~~2021. We spent more on advertising for the six-month ended June 30, 2022 particularly the first quarter to introduce our Koan Cordials to the California retail channel, perform Search Engine Optimization (SEO), conduct Programmatic advertising, hire a ~~result~~professional agency to promote our Cordials on social media channels and other general advertising methods. We believe our advertising efforts will pay dividends throughout 2022 as the awareness groundwork has been established to educate the market on our family of non-cash management fees in this quarter of $986,121, while in 2020 we only had $198,515 in non-cash management fees. Non-cash expenses appear on an income statement because accounting principles require them to be recorded despite not actually being paid for with cash.Cordial formulations.

~~The non-cash management~~Professional fees ~~resulted from salary deferrals~~decreased by $45,687 and $337,156 for ~~insiders from 2020~~the three and six months ended June 30, 2022, respectively, over for the same periods in 2021. Our professional fees were less for this period compared to last period, but we expect that professional fees will increase in 2022 as we ~~issued in shares of common stock. Stock-based compensation is a non-cash expense item.~~

continue to ramp up operations.

General and administrative expenses increased by $90,734 and decreased by $32,872 for the three and six months ended June 30, 2022, respectively, over for the same periods in 2021. The increased expenses resulted from establishing our internal sales team, attending strategic trade shows and bringing on consultants and financial analysts to assist in analyzing our acquisition strategy. We expect general and administrative expenses to remain fairly constant throughout 2022, but they could increase significantly if we acquire new companies as part of our overall corporate strategy.

We also expect that our operating expenses will increase in 2022 over 2021 ~~over 2020~~ as ~~a result of~~we roll out new products along with our ~~product launch~~existing products, and the increased expenses associated with ~~our increased~~ operations. ~~If we are not able to meet the salaries of our management and are required to issue out stock as compensation, these non-cash expenses will also increase our operating expenses in future quarters.~~

Other ~~Income~~Income/Expenses

We had other ~~expenses~~income of ~~$3,984,516~~$501,526 and $1,632,390 for the three and six months ended June 30, ~~2021~~2022, respectively, compared with other expenses of ~~$694,402~~$3,984,516 and $4,264,966 for the same period ended June 30, ~~2020. We had other expenses of $4,264,966 for the six months ended June 30,~~ 2021, ~~compared with other expenses of $619,168 for the same period ended June 30, 2020.~~respectively.

The main reason for our ~~increased~~other income in 2022 was the gain on revaluation of derivative liabilities. The main reason for our other expenses in 2021 was ~~a result of~~the loss on revaluation of derivative liabilities.

Net Income/Loss

We had net ~~loss~~income of ~~$5,381,529~~$211,730 and $701,770 for the three and six months ended June 30, ~~2021,~~2022, as compared with a net loss of ~~$1,182,083~~$5,381,529 and $6,439,991 for the three ~~months ended June 30, 2020. We had net loss of $6,439,991 for the~~and six months ended June 30, 2021, ~~as compared with net loss of $1,790,911 for the six months ended June 30, 2020.~~respectively.

Liquidity and Capital Resources

As of June 30, ~~2021,~~2022, we had total current assets of ~~$1,146,755~~$315,546 consisting of ~~$975,869~~$34,823 in cash, ~~and $170,886~~$14,551 in advances to ~~suppliers.~~suppliers and $266,172 in inventories. Our total current liabilities as of June 30, ~~2021~~2022 were ~~$6,298,540.~~$3,404,366. We had a working capital deficit of ~~$5,151,785~~$3,088,810 as of June 30, ~~2021,~~2022 compared with a working capital deficit of ~~$996,439~~$3,306,752 as of March 31, 2022 and $4,133,368 as of December 31, ~~2020.~~2021.

Cash Flows from Operating Activities

Operating activities used ~~$1,802,187~~$1,009,564 in cash for the six months ended June 30, ~~2021,~~2022, compared with cash used of ~~$762,261~~$1,802,187 for the six months ended June 30, ~~2020.~~2021. Our negative operating cash flow for the six months ended June 30, 2022 was largely the result of our unrealized gain on derivative liability of $1,687,112, offset by our net income of 701,770. Our negative operating cash flow for the six months ended June 30, 2021 was largely the result of our net loss of $6,439,991, offset by share based compensation of $986,121. ~~Our negative operating cash flow for the six months ended June 30, 2020 was largely the result of our net loss of $1,790,911.~~

Cash Flows from Investing Activities

WeInvesting activities used ~~$21,063~~$0 in cash ~~used in investing activities~~ for the six months ended June 30, ~~2021 for the~~2022, as compared with $21,063 to purchase ~~of fixed assets. We had no cash on investing activities~~various office furniture and equipment for the six months ended June 30, ~~2020.~~2021.

Cash Flows from Financing Activities

Cash flows provided by financing activities during the six months ended June 30, ~~2021~~2022 amounted to ~~$2,684,794~~$1,031,474, compared with cash flows provided by financing activities of ~~$890,862~~$2,684,794 for the six months ended June 30, ~~2020.~~2021. Our positive cash flows for the six months ended June 30, 2022 consisted of proceeds from issuance of common stock of $392,674, proceeds from Convertible notes payable of $788,800, offset by payments of notes payable of $150,000. Our positive cash flows for the six months ended June 30, 2021 consisted of proceeds from issuance of common stock of $1,319,587, proceeds from Convertible notes payable of $1,870,000, offset by payments of notes payable of $504,793. ~~Our positive cash flows for the six months ended June 30, 2020 consisted primarily of convertible notes, notes payable and stock subscriptions.~~

~~From December 1, 2020 through March 15, 2021, we sold units priced at $25,000 per unit where each unit consisted~~The features of ~~(i) an 8.0% Note~~the debt instruments and payables concerning our financing activities are detailed in the ~~principal amount of $25,000 convertible into Common Stock (the “Note) and (ii) a warrant for the purchase of 83,333 shares of the Company’s Common Stock (the “Warrant”).~~footnotes to our financial statements.

We ~~sold 90 Units for total proceeds of $2,265,000. After paying finder fees of $187,450 to our placement agent, we netted $2,077,550, which will be used for working capital.~~

In addition, we also entered into subscription agreements in connection with an equity placement offering of a maximum of $2,000,000 in units (the “Equity Units”) where each Equity Unit consists of one share of Common Stock at a purchase price of $0.15 and a warrant to purchase 0.5 share(s) of Common Stock at an exercise price of $0.225 per share. We sold 6,983,333 Equity Units for total proceeds of $1,047,500. After paying finder fees of $100,763 to our placement agent, we netted $946,737, which was used to pay off the remaining convertible note debt and will also be used for working capital. We also issued our placement agent 250,000 shares in restricted stock on May 21, 2020 as part of the Placement Agent and Advisory Services Agreement.

~~Until we are able to generate sufficient revenues to sustain operations, we~~ are dependent on investment capital to continue our survival. We have raised money through convertible debt, almost always on unfavorable terms. There is no guarantee that these small convertible loans will be available to us in the future or on terms acceptable to us.

We also plan to raise money in the sale of our equity and debt securities. There can be no assurance of funds from these efforts or that any other type of additional financing will be available to us on acceptable terms, or at all.

Going Concern

As of June 30, ~~2021,~~2022, we have an accumulated deficit of ~~$27,540,986.~~$25,272,281. 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 June 30, ~~2021,~~2022, 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. Our critical accounting policies are disclosed in Note 2 of our audited financial statements included in the Form 10-K filed with the Securities and Exchange Commission.

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 3. Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of June 30, ~~2021,~~2022, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of June 30, ~~2021,~~2022, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified and described below.

Our principal executive officers do not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive officers have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Remediation Plan to Address the Material Weaknesses in Internal Control over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Management identified the following three material weaknesses that have caused management to conclude that, as of June 30, ~~2021,~~2022, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level:

1.	We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act as of the period ending June 30, ~~2021.~~2022. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
2.	We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
3.	Effective controls over the control environment were not maintained. Specifically, a formally adopted written code of business conduct and ethics that governs our employees, officers, and directors was not in place. Additionally, management has not developed and effectively communicated to employees its accounting policies and procedures. This has resulted in inconsistent practices. Further, our Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

To remediate the material weakness in our documentation, evaluation and testing of internal controls we plan to engage a third-party firm to assist us in remedying this material weakness once resources become available.

We intend to remedy our material weakness with regard to insufficient segregation of duties by hiring additional employees in order to segregate duties in a manner that establishes effective internal controls once resources become available.

Changes in Internal Control over Financial Reporting

No change in our system of internal control over financial reporting occurred during the period covered by this report, the period ended June 30, ~~2021,~~2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 1A: Risk Factors

~~For our cannabis operations, see~~See risk factors included in our Annual Report on Form ~~10-K~~10-K/A for the year ended December 31, ~~2020~~2021 filed on April ~~15, 2021.~~19, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The information set forth below relates to our issuances of securities without registration under the Securities Act of 1933.

During the ~~six month ended June 30, 2021,~~second quarter of 2022, the ~~company~~Company issued a total of ~~2,868,025~~50,000 shares of common stock to vendors for compensation and services rendered.

On July 15, 2022, we issued a total of 21,993,806 shares of common stock to certain note holders as a result of voluntary conversions of their 8% convertible notes issued in early 2021. The aggregate dollar amount of debt reduced by the conversions was $1,917,382.

These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

Item 3. Defaults upon Senior Securities

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information

None

Item 6. Exhibits

Exhibit Number		Description of Exhibit

31.1**3.1		Certificate of Amendment dated July 20, 2020
31.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2**31.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101**		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2021~~2022 formatted in Extensible Business Reporting Language (XBRL).

**Provided herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Resonate Blends, Inc.

Date:	August ~~18, 2021~~22, 2022

By:	/s/ Geoffrey Selzer
	Geoffrey Selzer
Title:	President, Chief Executive Officer, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and Director

	June 30,2021			December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	975,869		$	114,325
Advances to Suppliers					54,599
Inventories		170,886			-
Total current assets		1,146,755			168,924
Fixed assets, net		21,063			-
Investment in equity method investee		100			100
TOTAL ASSETS		1,167,918			169,024

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities		122,494			198,936
Due to related parties		25,000			187,500
Convertible notes payable, net of discount		1,870,000			504,793
Derivative liability		4,281,046			274,134
Settlement liability
Current liabilities of discontinued operations					-
Total current liabilities		6,298,540			1,165,363
Total liabilities		6,298,540			1,165,363
Stockholders’ deficit
Preferred stock, 10,000,000 shares authorized, $0.0001 par value, 2,000,000 shares issued.
Series B - Preferred stock, 66,667 shares authorized, $0.0001 par value, 0 issued.		-			-
Series C - Preferred stock, 2,000,000 shares authorized, $0.0001 par value, 2,000,000 issued and outstanding		200			200
Series D Preferred stock 40,000 shares authorized, $0.0001 par value 0 issued and outstanding		-			-
Common stock; $0.0001 par value; 200,000,000 shares authorized; 44,270,912 and 29,769,627 shares issued and outstanding as of June 30, 2021 December 31, 2020 , respectively.		4,427			2,976
Additional paid-in capital		22,405,737			20,101,480
Accumulated deficit		(27,540,986	)		(21,100,995	)
Total Stockholders’ deficit		(5,130,622	)		(996,339	)
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$	1,167,918		$	169,024


	Preferred Stock Series A			Preferred stock - Series C				Common Stock				Additional		Accumulated			Total Stockholders’
Balance, December 31, 2020		-	-		2,000,000	$	200		29,769,627	$	2,976	$	20,101,480	$	(21,100,995	)	$	(996,339	)
Common stock issuance		-	-		-		-		11,633,260		1,163		1,721,338		-			1,722,501
Preferred stock issuance					-		-
Non-Cash Compensation
Non-Cash Compensation, shares
Conversion of notes payable
Conversion of notes payable, shares
Net loss for the quarter		-	-												(1,058,462	)		(1,058,462	)
Balance, March 30, 2021		-	-		2,000,000	$	200		41,402,887	$	4,139	$	21,822,818	$	(22,159,457	)	$	(332,300	)
Net loss for the quarter														$	(5,381,529	)	$	(5,381,529	)
Issuance of common stock		-	-		-		-		2,868,025		288	$	582,919		-		$	583,207
Balances June 30, 2021		-	-		2,000,000	$	200		44,270,912	$	4,427	$	22,405,737	$	(27,540,986	)	$	(5,130,622	)

As of June 30, 2020	Shares		Amount		Shares		Amount		Shares		Amount		Paid-in Capital		Deficit			Deficit
Balance December 31, 2019		4,000,000	$	400		2,000,000	$	200		17,133,936	$	1,715	$	18,570,178	$	(19,159,721	)	$	(587,228	)
Net Loss for the quarter																(608,828	)		(608,828	)
Common stock issuance		-		-		-		-		2,571,778		255		275,440					275,696
Balance March 31, 2020		4,000,000	$	400		2,000,000	$	200		19,705,714	$	1,970	$	18,845,618	$	(19,768,549	)	$	(920,360	)
Net Loss for the quarter															$	(1,182,083	)		(1,182,083	)
Non-Cash Compensation										2,495,129		250		249,265					249,515
Conversion of notes payable										750,000		75		74,925					75,000
Common stock issue		-		-		-		-		1,000,000		100		99,900					100,000
Balance June 30, 2020		4,000,000		400		2,000,000		200		23,950,843		2,395		19,269,708		(20,950,632	)		(1,677,929	)

		1			2
	2021			2020
Cash Flows from Operating Activities
Net Income (loss)	$	(6,439,991	)	$	(1,790,911	)
Net loss from discontinued operations		-			-
Adjustments to reconcile					-
Amortization and depreciation		10,583			13,559
Loss on derivative liability		4,006,912			616,768
Non cash interest expense		16,142			18,303
Share professional fees		82,473			251,695
Share based compensation		986,121			198,514
Gain (Loss) on the settlement of debt		(57,500	)		(31,961	)
Gain on settlement of derivative liabilities					(143,293	)
Changes in assets and liabilities					-
Receivables					6,006
Inventories		(170,886	)
Advances to suppliers		(54,599	)
Accounts payable and accrued expenses		(76,442	)		99,088
Due to Related party		(105,000	)		(29	)
Net cash used by operating activities		(1,802,187	)		(762,261	)
Net cash provided by discontinued operations					-
Net cash used in operations		(1,802,187	)		(762,261	)
Cash Flows from investing activities
Purchase of fixed assets		(21,063	)		-
Net cash used by investing activities		(21,063	)		-
Cash Flows from Financing Activities
Proceeds from subscription		1,319,587			150,000
Proceeds from convertible notes (net)		1,870,000			581,000
Proceeds from notes payables		-			187,619
Payments on preferred stocks buy back		-
Payments on convertible notes payable		(504,793	)		(27,757	)
Net cash provided by financing activities		2,684,794			890,862
Net increase in cash		861,544			128,601
Cash, beginning of period		114,325			53,139
Cash, end of period	$	975,869		$	181,740

Supplemental disclosure of cash flow information
Cash paid for interest	$	58,728		$	-
Cash paid for tax		-			-
Non-Cash investing and financing transactions
Conversion of debt for common stock	$	306,858		$	85,000