Resonate Blends, Inc. (KOAN)
Resonate Blends, Inc. is an early‐stage regenerative medicine company focused on nutritionally designed products—including patent-pending stem cell mobilizing agents and an all-natural diet aid—for consumer and professional markets. After acquiring Emergent Health Corp. (EMGE) in March 2024, the ...
Resonate Blends, Inc. 2024 10-K Review
Investment Score: 3.0 / 10
Warren.AI 💰 3.0 / 10
Resonate Blends, Inc. (OTCQB: KOAN) is positioning itself as a leader in regenerative medicine through nutritionally designed products. In its latest 10-K, the company reports its first meaningful revenue following the March 2024 acquisition of Emergent Health Corp. (EMGE), but also stacks up significant losses and a challenging balance sheet. Below we dive into the critical highlights of the Company’s business model, financial performance, risk factors, and outlook.
1. Business Overview
Core focus:
- Natural stem cell mobilizing agents to enhance the body’s own adult stem cells
- A dual-acting, all-natural diet aid that regulates hunger signals
- Research into bioactive formulations for growth hormone enhancement and human performance
Market positioning:
- Regenerative Medicine as defined by the NIH
- Products to be marketed under third-party label exemptions in consumer and professional channels
Recent changes:
- Change in leadership: In March 2024, James Morrison stepped down as CEO; James W. Zimbler, with decades in M&A consulting and corporate finance, succeeded him.
- Acquisition of EMGE on March 14, 2024, via a share exchange that issued new Series F Preferred Stock convertible into 93% of the Company’s outstanding shares on a fully diluted basis.
- Divestiture of historic assets: Transfer of earlier subsidiaries (Resonate Blends, LLC and Entourage Labs) to former CEO Geoffrey Selzer.
2. Financial Performance (Fiscal 2024 vs. 2023)
2.1 Revenue Traction
- 2024 Revenue: $1,896,215
- 2023 Revenue: $16,468
- Drivers: All 2024 sales stem from EMGE operations post-acquisition.
- Gross Profit (2024): $1,236,191 (65% gross margin)
- Gross Profit (2023): $–97,672
2.2 Operating Expenses & Net Loss
| Item | 2024 | 2023 |
|---|---|---|
| General & Admin | $1,201,260 | $187,675 |
| Sales Commissions | $683,491 | $0 |
| Consulting | $917,796 | $28,750 |
| Legal & Professional | $69,395 | $85,126 |
| R&D | $61,875 | $0 |
| Total OpEx | $2,933,817 | $301,551 |
- Operating Loss (2024): $(1,697,626)
- Operating Loss (2023): $(399,223)
- Other Expense (Interest, derivatives): $(435,582) vs. $(1,016,756)
- Net Loss (2024): $(2,133,208)
- Net Loss (2023): $(1,415,979)
2.3 Balance Sheet & Liquidity
| Metric | Dec 31, 2024 | Dec 31, 2023 |
|---|---|---|
| Cash & Equivalents | $8,048 | $6,938 |
| Accounts Receivable | $49,731 | $0 |
| Advances to Pegasus* | $970,000 | $970,000 |
| Total Assets | $1,854,461 | $992,341 |
| Current Liabilities | $5,054,040 | $3,127,913 |
| Convertible Notes (net) | $1,751,037 | $1,845,734 |
| Derivative Liability | $0 | $166,861 |
| Shareholders’ Deficit | $(3,199,579) | $(2,135,572) |
*Advance on anticipated deal with Pegasus Specialty Vehicles (currently on hold)
- Working Capital: $(4.02M)
- Debt Load: Significant convertible notes, related-party loans, senior notes.
- Going Concern Warning: Auditors highlight substantial doubt.
2.4 Cash Flows
- Operating: $(1,029,062)
- Investing: $(358,261) (Deposits on acquisitions)
- Financing: $1,388,433 (Debt raised)
- Net Change: +$1,110 in cash
3. Key Risk Factors
3.1 Capital & Liquidity Risk
- Ongoing net losses and negative cash flows
- Heavy reliance on convertible debt at steep discounts
- Going concern risk creates dilutive financing pressure
3.2 Business & Execution Risk
- Unproven commercial track record outside EMGE integration
- Dependency on FDA environment for nutraceutical claims and labeling
- No guaranteed sales pipeline; limited marketing scale thus far
3.3 Intellectual Property & Regulatory Risk
- Patent-pending status for core products
- Third-party label exemptions expose pricing/leverage risk
- Regulatory changes could delay or restrict commercialization
3.4 Corporate Governance Risk
- Recent turnover in executive leadership and board makeup
- Material internal control weaknesses flagged by auditors
4. Outlook & Conclusion
Resonate Blends has taken the critical first step of generating revenue following EMGE’s acquisition, achieving nearly $1.9 million in top-line sales. Its nutraceutical focus addresses a growing interest in regenerative health solutions. However, the Company remains heavily lossmaking and reliant on debt. Strong execution, additional capital at non-punitive terms, and progress toward profitability are required before Resonate can clear the going concern hurdle.
Short-Term Catalysts
- Successful roll-out of stem cell mobilizers and diet aid products in new channels
- Patent grants and third-party label partnerships
- Completion of planned capital raise on favorable terms
Major Concerns
- Continued net losses increasing shareholder dilution
- Dependence on high-cost convertible notes and warrants
- Execution risk in product development and marketing scale
Fair Value Opportunity? Resonate’s shares trade under $0.01 with nearly 200 million shares outstanding. Strong upside requires successful financing and execution; failure to raise funds or achieve sales growth could further erode value.
Our Verdict (3.0/10): Early revenue is encouraging but outweighed by high risk—ongoing heavy losses, poor liquidity, and material control weaknesses. Only investors with high risk tolerance and conviction in regenerative nutraceuticals should consider a speculative position.