2023 Q1 Form 10-K Financial Statement

#000121390023022859 Filed on March 24, 2023

View on sec.gov

Income Statement

Concept 2023 Q1 2022 Q4 2022
Revenue $0.00
YoY Change
Cost Of Revenue $0.00
YoY Change
Gross Profit $0.00
YoY Change
Gross Profit Margin
Selling, General & Admin $640.0K $4.948M $8.125M
YoY Change -63.5% 359.17% 71.38%
% of Gross Profit
Research & Development $123.00 $0.00 $20.52K
YoY Change -99.28%
% of Gross Profit
Depreciation & Amortization $10.13K $91.50K $5.400K
YoY Change -53.6% 319.15% -87.63%
% of Gross Profit
Operating Expenses $1.532M $5.514M $10.31M
YoY Change -28.02% 139.51% 29.03%
Operating Profit -$1.532M -$5.514M -$10.31M
YoY Change -28.02% 139.51% 29.03%
Interest Expense $53.66K -$119.4K $147.0K
YoY Change -318.94% -88.48% -106.86%
% of Operating Profit
Other Income/Expense, Net -$66.97K -$132.7K
YoY Change 173.18% -93.81%
Pretax Income -$1.600M -$5.633M -$10.44M
YoY Change -25.66% 68.72% 3.06%
Income Tax -$21.79K -$21.79K
% Of Pretax Income
Net Earnings -$1.599M -$5.612M -$10.42M
YoY Change -25.73% -15.86% -18.95%
Net Earnings / Revenue
Basic Earnings Per Share -$0.01 -$0.05
Diluted Earnings Per Share -$0.01 -$0.03 -$0.05
COMMON SHARES
Basic Shares Outstanding 204.2M shares 202.5M shares 200.9M shares
Diluted Shares Outstanding 204.0M shares 200.9M shares

Balance Sheet

Concept 2023 Q1 2022 Q4 2022
SHORT-TERM ASSETS
Cash & Short-Term Investments $664.0K $2.016M $2.016M
YoY Change -81.53% -65.08% -65.08%
Cash & Equivalents $664.0K $2.016M
Short-Term Investments
Other Short-Term Assets $114.6K $150.4K $150.4K
YoY Change 56.55% -80.14% -80.14%
Inventory
Prepaid Expenses $92.77K $128.7K
Receivables
Other Receivables
Total Short-Term Assets $778.5K $2.166M $2.167M
YoY Change -78.77% -66.82% -66.82%
LONG-TERM ASSETS
Property, Plant & Equipment $737.3K $525.9K $525.9K
YoY Change 215.57% 133.71% 133.72%
Goodwill $1.190M $1.190M
YoY Change 0.0%
Intangibles $3.981M
YoY Change
Long-Term Investments $10.30M
YoY Change
Other Assets
YoY Change
Total Long-Term Assets $5.807M $5.696M $5.696M
YoY Change -39.88% -37.08% -37.08%
TOTAL ASSETS
Total Short-Term Assets $778.5K $2.166M $2.167M
Total Long-Term Assets $5.807M $5.696M $5.696M
Total Assets $6.586M $7.863M $7.863M
YoY Change -50.58% -49.54% -49.54%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $1.431M $1.288M $1.288M
YoY Change 4.86% -31.52% -31.52%
Accrued Expenses
YoY Change
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $1.431M $1.288M $1.288M
YoY Change 4.86% -31.55% -31.55%
LONG-TERM LIABILITIES
Long-Term Debt $2.000M $2.000M $2.000M
YoY Change 860.02% 1029.43% 1029.43%
Other Long-Term Liabilities
YoY Change
Total Long-Term Liabilities $2.000M $2.000M $2.000M
YoY Change 860.02% 1029.43% 1029.43%
TOTAL LIABILITIES
Total Short-Term Liabilities $1.431M $1.288M $1.288M
Total Long-Term Liabilities $2.000M $2.000M $2.000M
Total Liabilities $3.431M $3.288M $3.288M
YoY Change 118.1% 59.67% 59.67%
SHAREHOLDERS EQUITY
Retained Earnings -$40.61M -$39.01M
YoY Change 36.46%
Common Stock $204.8K $202.7K
YoY Change 2.9%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $3.155M $4.574M $4.574M
YoY Change
Total Liabilities & Shareholders Equity $6.586M $7.863M $7.863M
YoY Change -50.58% -49.54% -49.54%

Cashflow Statement

Concept 2023 Q1 2022 Q4 2022
OPERATING ACTIVITIES
Net Income -$1.599M -$5.612M -$10.42M
YoY Change -25.73% -15.86% -18.95%
Depreciation, Depletion And Amortization $10.13K $91.50K $5.400K
YoY Change -53.6% 319.15% -87.63%
Cash From Operating Activities -$1.338M -$913.5K -$4.767M
YoY Change -17.96% -63.9% -14.89%
INVESTING ACTIVITIES
Capital Expenditures $13.74K $222.1K $300.9K
YoY Change -259.03% -346.74% -233.71%
Acquisitions
YoY Change
Other Investing Activities $0.00 $0.00 -$618.8K
YoY Change -100.0% -100.0% -76.0%
Cash From Investing Activities -$13.74K -$222.1K -$1.019M
YoY Change -97.81% 58.63% -63.66%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $256.9K
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 21.87K $2.029M
YoY Change -99.73% -85.35%
NET CHANGE
Cash From Operating Activities -$1.338M -913.5K -$4.767M
Cash From Investing Activities -$13.74K -222.1K -$1.019M
Cash From Financing Activities 21.87K $2.029M
Net Change In Cash -$1.352M -1.114M -$3.757M
YoY Change -37.94% -120.12% -169.02%
FREE CASH FLOW
Cash From Operating Activities -$1.338M -$913.5K -$4.767M
Capital Expenditures $13.74K $222.1K $300.9K
Free Cash Flow -$1.352M -$1.136M -$5.068M
YoY Change -16.67% -53.47% -5.73%

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>1. NATURE OF THE BUSINESS</b> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Cryomass Technologies Inc (“Cryomass Technologies” or the “Company”) designs, manufactures and is developing the strategy to commercialize patented cryo-mechanical systems for the harvesting and refinement of hemp, cannabis, and potentially other high value crops such as hops. The system exploits CryoMass’s U.S.-patented process for the controlled application of liquid nitrogen to stabilize and separate the structural elements of gross plant material. The device currently under development can be operated at a cultivation site or be installed at a processing facility and is being optimized for the collection of fully intact hemp and cannabis trichomes. The first functional “beta” machine has completed field testing. The Company recently signed a license and lease arrangement with a third party to deploy multiple CryoMass trichome separation units at the prospective partner’s facility in California and other locations, with the intention of starting commercial operations shortly.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company’s principal office is located at 1001 Bannock St., Suite 612, Denver, CO 80204, and its telephone number is 303-416-7208. The Company’s website is www.cryomass.com. Information appearing on the website is not incorporated by reference into this prospectus.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company over its history has explored a number of different business opportunities.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 10, 2018, the Company began to establish various business ventures in Colombia through its Colombian subsidiary, First Colombia Devco S.A.S (“Devco”).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 1, 2019, the Company acquired 100% of the membership interests in General Extract, LLC, a Colorado limited liability company, in exchange for the shares of Devco. The name of this subsidiary was subsequently changed to Cryomass LLC.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 15, 2019, the Company entered into a Membership Interest Purchase Agreement to acquire cannabis-related intellectual property and certain other assets, but not cannabis licenses, of Critical Mass Industries LLC (“CMI”), a Colorado limited liability company.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Effective December 31, 2021, the Company disposed of all CMI-related assets and extinguished any and all related obligations. Therefore, we determined that CMI no longer qualifies as a variable interest entity (“VIE”) as of December 31, 2021.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In August 2020, the Company established a wholly owned Colombian subsidiary, Andina Gold Colombia SAS for this purpose acquiring gold properties in Colombia. However, due to the untimely death of our top geologist, the Company determined that pursuit of gold exploration in Colombia was no longer a practical alternative. In Q1 2022 the respective subsidiary was closed.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 22, 2021, the Company entered into an Asset Purchase Agreement with Cryocann USA Corp, a California corporation (“Cryocann”), pursuant to which Company acquired substantially all the assets of Cryocann. The aggregate purchase price was $3,500,000 million in cash and 10,000,000 shares of Company common stock As part of the Cryocann Acquisition, we retained both Cryocann employees, who have expert knowledge of the industry, related participants, customers and the acquired patented technology. Under their employment agreements, each employee may receive compensation if specific performance targets are met in association with our future operating performance when the Cryocann technology enters the market. The technology and assets acquired from Cryocann are operated from the Company’s subsidiary, Cryomass LLC. The patented cryo-mechanical technology is for the separation of plant materials in the harvesting of hemp and cannabis, and potentially other high value crops such as hops. We believe this technology will reduce processing costs and increases the quality of extracted compounds. We are exploring the application of the underlying technology to a broad range of industries that handle high-value materials and that could benefit from our precision capture methods. We anticipate that cannabis and hemp will be the first in a series of such industries.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To develop and commercialize the technology, we contracted with an independent engineering and manufacturing firm to refine the design of our cryo-mechanical system for the handling of harvested hemp, cannabis and other high-value plants. The system exploits CryoMass’s U.S.-patented process for the controlled application of liquid nitrogen to stabilize and separate the structural elements of gross plant material. The device currently under development is scaled for highway transportability and is being optimized for the low-cost collection of fully intact hemp and cannabis trichomes. It can be used within minutes after plants have been cut and can also efficiently capture trichomes from fresh frozen or even dried plant parts, including trim. The device’s through-put capacity is expected to be approximately 600 kilograms of gross plant material per hour. The advanced design for the equipment has been completed, and testing of a prototype machine is currently underway. The engineering and manufacturing firm has indicated that it has the capacity to build 10 to 15 such devices per month.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The first functional “beta” machine has completed field testing. The Company recently signed a license and lease arrangement with a third party to deploy multiple CryoMass trichome separation units at the prospective partner’s facility in California and other locations, with the intention of starting commercial operations shortly.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">  </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Management believes the CryoMass system will deliver a compelling combination of cost and time savings while enhancing product quality and quantity for largescale cultivators and processors of hemp and cannabis. The use of a CryoMass system – which can be trucked to and operated on the fields of most large hemp and cannabis growers or be permanently installed at a user’s processing facility – should eliminate many of the costs that come with traditional practices, especially the labor, fuel and capital costs of drying and curing hemp or cannabis that is grown for the extraction of end products. With traditional practices, harvested plants are transported to a specially constructed drying house and then treated for a week or longer under controlled conditions of temperature and humidity. It’s a costly method. With our system, harvested plants are simply fed into the front end of a CryoMass machine, and minutes later fully intact trichomes are collected at the back end of the machine. With traditional practices and their seven-to-ten days of handling and drying, a large share of a plant’s valuable trichomes break off and are lost. Then the remaining trichomes are damaged by long exposure to oxygen and by the evaporation of their volatile terpenes. The CryoMass system, on the other hand, stabilizes and collects fully intact trichomes at harvest, leaving no opportunity for such wasteful loss. Field-captured trichomes are the cleanest element of a hemp or cannabis plant because, unlike the rest of the plant, trichomes do not readily take up heavy metals, pesticides or other common soil contaminants. As a product for end-users, field-captured trichomes are closest to being contaminant free. As feedstock for manufacturers of extracts and oils, they are the key to the purest products possible.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Because the trichomes collected with CryoMass technology represent only 10% or so of a plant’s weight and volume, they are cheaper to ship and store than gross plant material. For the same reason and because trichomes are free of the waxes and other unwanted materials found in the rest of the plant, processing trichomes into oils and extracts can be far quicker, cheaper and easier than processing gross plant material. Even trichomes captured from dried or frozen plant parts deliver this cost-saving advantage to processors of oils and extracts. The three-dimensional advantage achievable with the CryoMass system – first-stage cost savings, product enhancement and downstream cost savings – can as much as double a crop’s wholesale value. And in some jurisdictions, users may enjoy a reduction in excise taxes levied on cannabis and hemp harvests, which typically are tied to the gross weight of hemp or cannabis that is removed from the field.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Production and processing of hemp and cannabis is a huge, worldwide industry. In the U.S., for example, the wholesale value of the cannabis crop from just the 11 states permitting adult-use and medical cannabis exceeds $6 billion annually. Growth in the U.S. and in the worldwide market is likely fed in part by the growing acceptance of medicinal cannabis products and anticipated legislative changes in various jurisdictions worldwide.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">And that may only be chapter one of the Company’s story. Several other high-value plants, including species that are important for health and wellness products, wrap their valuable elements in trichomes. The technology we are developing for hemp and cannabis may have profitable application to those other species as well. We intend to find out.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In September, we were granted an additional patent for our process from the Chinese Intellectual Property Office. We currently are taking steps to gain further protection for our intellectual property through the European Union Intellectual Property Office and several other international jurisdictions.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 17<sup>th</sup> we announced the completion of a $10.3 million equity financing. The financing and the earlier conversion of substantially all the company’s debt into common stock left the Company with a strong balance sheet and adequate resources for our planned business development during the coming twelve months. In connection with the financing, 1,010,000 shares and 760,000 shares of CryoMass Technologies common stock were purchased by CEO Christian Noël and Chairman of the Board Delon Human, respectively.</p>
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