UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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 September 30, 2022
For the quarterly period ended December 31, 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: 000-55704

Right On Brands, Inc.

(Exact name of registrant as specified in its charter)

Nevada		45-1994478
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

6501 Dalrock Road, Suite 100, Rowlett, TX 75089

(Address of principal executive offices)

(214) 736-7252 (Registrant'’s telephone number) N/A (Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

Indicated 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 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). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☐	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 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

As of ~~November~~February 1820, ~~2022~~2023, there were 56,~~773~~223,087,526 shares of common stock, par value $0.001 per share, outstanding.

TABLE OF CONTENTS

		Page	~~Page~~
PART I - FINANCIAL INFORMATION
Item 1:	Financial Statements	3	3
Item 2:	Management'’s Discussion and Analysis of Financial Condition and Results of Operations	4	4
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	8	8
Item 4:	Controls and Procedures	8	8
PART II - OTHER INFORMATION
Item 1:	Legal Proceedings	9	9
Item 1A:	Risk Factors	9	9
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	9	9
Item 3:	Defaults Upon Senior Securities	9	9
Item 4:	Mine Safety Disclosures	9	9
Item 5:	Other Information	9	9
Item 6:	Exhibits	10	10

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

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

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

These 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 ~~September~~December 3031, 2022, are not necessarily indicative of the results that can be expected for the full year.

Table of Contents

RIGHT ON BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	December 31,			March 31,
	2022			2022

Assets
Current assets
Cash	$	14,960		$	28,056
Prepaid expenses		12,000			6,000
Inventory		95,365			114,944
Other current assets		3,221			3,221
Total current assets		125,546			152,221

Non-current assets
Property and equipment, net of depreciation		11,285			15,485
Right of use asset		48,400			66,425
Total non-current assets		59,685			81,910

Total assets	$	185,231		$	234,131

Liabilities and Stockholders' Deficit

Current liabilities
Accounts payable	$	74,206		$	56,723
Accrued interest payable		25,206			32,883
Accrued expenses		122,847			93,189
Lease liability, current portion		23,524			23,937
Notes payable, net of discount		287,065			94,945
Convertible debt, net of discount		165,000			296,788
Derivative liability		-			159,106
Total current liabilities		697,848			757,571

Lease liability, non-current		24,876			42,488

Total liabilities		722,724			800,059

Commitments and contingencies (Note 10)

Stockholders' deficit
Series A Preferred stock; 10,000,000 shares authorized of $0.001 par value; 5,000,000 shares issued, respectively		5,000			5,000
Common stock; par value $0.001; 12,000,000,000 shares authorized, 5,773,087,526 and 5,924,801,561 shares issued, respectively		5,773,088			5,924,802
Additional paid-in capital		9,386,514			9,197,980
Common stock issuable		15,000			51,820
Accumulated deficit		(15,741,532	)		(15,769,967	)
Total Right On Brands stockholders' deficit		(561,930	)		(590,365	)
Noncontrolling interest		24,437			24,437
Total stockholders' deficit		(537,493	)		(565,928	)

Total liabilities and stockholders' deficit	$	185,231		$	234,131

	September 30,			March 31,
	2022			2022
Assets
Current assets
Cash	$	12,312		$	28,056
Prepaid expenses		12,000			6,000
Inventory		156,241			114,944
Other current assets		3,221			3,221
Total current assets		183,774			152,221
Non-current assets
Property and equipment, net of depreciation		12,685			15,485
Right of use asset		54,334			66,425
Total non-current assets		67,019			81,910
Total assets	$	250,793		$	234,131
Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable	$	74,199		$	56,723
Accrued interest payable		22,361			32,883
Accrued expenses		86,992			93,189
Lease liability, current portion		23,661			23,937
Notes payable, net of discount		316,082			94,945
Convertible debt, net of discount		165,000			296,788
Derivative liability		-			159,106
Total current liabilities		688,295			757,571
Lease liability, non-current		30,673			42,488
Total liabilities		718,968			800,059
Commitments and contingencies (Note 10)
Stockholders' deficit
Series A Preferred stock; 10,000,000 shares authorized of $0.001 par value; 5,000,000 shares issued, respectively		5,000			5,000
Common stock; par value $0.001; 12,000,000,000 shares authorized, 5,773,087,526 and 5,924,801,561 shares issued, respectively		5,773,088			5,924,802
Additional paid-in capital		9,386,514			9,197,980
Common stock issuable		15,000			51,820
Accumulated deficit		(15,672,214	)		(15,769,967	)
Total Right On Brands stockholders' deficit		(492,612	)		(590,365	)
Noncontrolling interest		24,437			24,437
Total stockholders' deficit		(468,175	)		(565,928	)
Total liabilities and stockholders' deficit	$	250,793		$	234,131

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

F-1

Table of Contents

RIGHT ON BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the three months ended						For the nine months ended
	December 31,						December 31,
	2022			2021			2022			2021

Revenues	$	259,918		$	339,194		$	809,383		$	716,734
Cost of goods sold		150,231			207,527			416,347			421,378
Gross profit		109,687			131,667			393,036			295,356

Operating expenses
General and administrative		139,736			79,799			410,324			228,409
Advertising and promotion		4,499			8,240			11,778			25,744
Legal and professional		27,150			18,776			104,491			101,581
Depreciation and amortization		1,400			1,400			4,200			4,200
Total operating expenses		172,785			108,215			530,793			359,934

Income (loss) from operations		(63,098	)		23,452			(137,757	)		(64,578	)

Other income and (expense)
Interest expense		(2,845	)		(2,676	)		(8,720	)		(23,974	)
Amortization of debt discount		(3,375	)		-			(13,129	)		-
Change in fair value of derivative liability		-			(47,977	)		51,994			99,566
Gain (loss) on settlement of liabilities		-			(136,798	)		140,297			(274,938	)
Financing costs		-			-			(4,250	)		-
Total other income (expense)		(6,220	)		(187,451	)		166,192			(199,346	)

Net income (loss) including noncontrolling interest	$	(69,318	)	$	(163,999	)	$	28,435		$	(263,924	)
Net income (loss) attributable to noncontrolling interest		-			-			-			-
Net income (loss) attributable to Right on Brands, Inc.	$	(69,318	)	$	(163,999	)	$	28,435		$	(263,924	)

Income (loss) per share - basic	$	0.00		$	0.00		$	0.00		$	0.00
Income (loss) per share - diluted							$	0.00

Weighted average shares outstanding - basic		5,773,087,526			6,171,058,656			5,852,841,058			5,908,813,601
Weighted average shares outstanding - diluted								5,887,424,391

	For the three months ended						For the six months ended
	September 30,						September 30,
	2022			2021			2022			2021
Revenues	$	241,111		$	237,009		$	549,465		$	377,540
Cost of goods sold		138,785			187,505			266,116			213,851
Gross profit		102,326			49,504			283,349			163,689
Operating expenses
General and administrative		144,009			84,465			270,588			148,610
Advertising and promotion		1,164			12,035			7,279			17,504
Legal and professional		35,880			41,226			77,341			82,805
Depreciation and amortization		1,400			1,400			2,800			2,800
Total operating expenses		182,453			139,126			358,008			251,719
Loss from operations		(80,127	)		(89,622	)		(74,659	)		(88,030	)
Other income and (expense)
Interest expense		(3,407	)		(10,706	)		(5,875	)		(21,298	)
Amortization of debt discount		(8,264	)		-			(9,754	)		-
Change in fair value of derivative liability		-			122,372			51,994			147,543
Gain (loss) on settlement of liabilities		-			-			140,297			(138,140	)
Financing costs		(4,250	)		-			(4,250	)		-
Total other income (expense)		(15,921	)		111,666			172,412			(11,895	)
Net income (loss) including noncontrolling interest	$	(96,048	)	$	22,044		$	97,753		$	(99,925	)
Net income (loss) attributable to noncontrolling interest		-			-			-			-
Net income (loss) attributable to Right on Brands, Inc.	$	(96,048	)	$	22,044		$	97,753		$	(99,925	)
Income (loss) per share - basic	$	0.00		$	0.00		$	0.00		$	0.00
Income (loss) per share - diluted	$	0.00		$	0.00		$	0.00		$	0.00
Weighted average shares outstanding - basic		5,861,294,524			5,986,083,801			5,892,935,728			5,776,974,559
Weighted average shares outstanding - diluted		5,861,294,524			6,316,374,066			5,927,519,061			5,776,974,559

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

F-2

Table of Contents

RIGHT ON BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’' DEFICIT

FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

											Additional			Common
	Preferred Stock				Common Stock						Paid in			Stock			Accumulated			Noncontrolling
	Shares		Amount		Shares			Amount			Capital			Issuable			Deficit			Interest		Total

Balances, March 31, 2021		5,000,000	$	5,000		5,474,978,826		$	5,474,979		$	8,546,492		$	51,820		$	(15,512,951	)	$	24,437	$	(1,410,223	)

Settlement of accounts payable		-		-		13,000,000			13,000			16,900			-			-			-		29,900

Settlement of warrant dispute		-		-		38,114,035			38,114			41,886			-			-			-		80,000

Settlement of debt dispute		-		-		83,333,333			83,333			341,667			-			-			-		425,000

Issuance of common stock for cash		-		-		299,999,999			300,000			(236,000	)		-			-			-		64,000

Net loss		-		-		-			-			-			-			(121,969	)		-		(121,969	)

Balances, June 30, 2021		5,000,000	$	5,000		5,909,426,193		$	5,909,426		$	8,710,945		$	51,820		$	(15,634,920	)	$	24,437	$	(933,292	)

Issuance of common stock for cash		-		-		83,333,333			83,333			(58,333	)		-			-			-		25,000

Issuance of common stock for service		-		-		1,500,000			1,500			1,500			-			-			-		3,000

Net income		-		-		-			-			-			-			22,044			-		22,044

Balances, September 30, 2021		5,000,000	$	5,000		5,994,259,526		$	5,994,259		$	8,654,112		$	51,820		$	(15,612,876	)	$	24,437	$	(883,248	)

Settlement of debt		-		-		225,910,000			225,910			248,501			-			-			-		474,411

Net loss		-		-		-			-			-			-			(163,999	)		-		(163,999	)

Balances, December 31, 2021		5,000,000	$	5,000		6,220,169,526		$	6,220,169		$	8,902,613		$	51,820		$	(15,776,875	)	$	24,437	$	(572,836	)

Balances, March 31, 2022		5,000,000	$	5,000		5,924,801,561		$	5,924,802		$	9,197,980		$	51,820		$	(15,769,967	)	$	24,437	$	(565,928	)

Issuance of common stock payable		-		-		1,400,000			1,400			35,420			(36,820	)		-			-		-

Net income		-		-		-			-			-			-			193,801			-		193,801

Balances, June 30, 2022		5,000,000	$	5,000		5,926,201,561		$	5,926,202		$	9,233,400		$	15,000		$	(15,576,166	)		24,437	$	(372,127	)

Rescission of shares		-		-		(153,114,035	)		(153,114	)		153,114			-			-			-		-

Net loss		-		-		-			-			-			-			(96,048	)		-		(96,048	)

Balances, September 30, 2022		5,000,000	$	5,000		5,773,087,526		$	5,773,088		$	9,386,514		$	15,000		$	(15,672,214	)		24,437	$	(468,175	)

Net loss		-		-		-			-			-			-			(69,318	)		-		(69,318	)

Balances, December 31, 2022		5,000,000	$	5,000		5,773,087,526		$	5,773,088		$	9,386,514		$	15,000		$	(15,741,532	)		24,437	$	(537,493	)

(UNAUDITED)

	Preferred Stock				Common Stock						Additional			Common
	Shares		Amount		Shares			Amount			Paid in Capital			StockIssuable			AccumulatedDeficit			NoncontrollingInterest		Total
Balances, March 31, 2021		5,000,000	$	5,000		5,474,978,826		$	5,474,979		$	8,546,492		$	51,820		$	(15,512,951	)	$	24,437	$	(1,410,223	)
Settlement of accounts payable		-		-		13,000,000			13,000			16,900			-			-			-		29,900
Settlement of warrant dispute		-		-		38,114,035			38,114			41,886			-			-			-		80,000
Settlement of debt dispute		-		-		83,333,333			83,333			341,667			-			-			-		425,000
Issuance of common stock for cash		-		-		299,999,999			300,000			(236,000	)		-			-			-		64,000
Net loss		-		-		-			-			-			-			(121,969	)		-		(121,969	)
Balances, June 30, 2021		5,000,000	$	5,000		5,909,426,193		$	5,909,426		$	8,710,945		$	51,820		$	(15,634,920	)	$	24,437	$	(933,292	)
Issuance of common stock for cash		-		-		83,333,333			83,333			(58,333	)		-			-			-		25,000
Issuance of common stock for service		-		-		1,500,000			1,500			1,500			-			-			-		3,000
Net income		-		-		-			-			-			-			22,044			-		22,044
Balances, September 30, 2021		5,000,000	$	5,000		5,994,259,526		$	5,994,259		$	8,654,112		$	51,820		$	(15,612,876	)	$	24,437	$	(883,248	)
Balances, March 31, 2022		5,000,000	$	5,000		5,924,801,561		$	5,924,802		$	9,197,980		$	51,820		$	(15,769,967	)	$	24,437	$	(565,928	)
Issuance of common stock payable		-		-		1,400,000			1,400			35,420			(36,820	)		-			-		-
Net income		-		-		-			-			-			-			193,801			-		193,801
Balances, June 30, 2022		5,000,000	$	5,000		5,926,201,561		$	5,926,202		$	9,233,400		$	15,000		$	(15,576,166	)		24,437	$	(372,127	)
Rescission of shares		-		-		(153,114,035	)		(153,114	)		153,114			-			-			-		-
Net loss		-		-		-			-			-			-			(96,048	)		-		(96,048	)
Balances, September 30, 2022		5,000,000	$	5,000		5,773,087,526		$	5,773,088		$	9,386,514		$	15,000		$	(15,672,214	)		24,437	$	(468,175	)

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

F-3 Table of ~~Contents~~Contentsty

RIGHT ON BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the nine months ended
	December 31,
	2022			2021
OPERATING ACTIVITIES
Net income (loss)	$	28,435		$	(263,924	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		4,200			4,200
Financing costs		4,250			-
Shares issued for services		-			3,000
Amortization of debt discount		13,129			-
Change in fair value of derivative liability		(51,994	)		(99,566	)
(Gain) loss on settlement of liabilities		(140,297	)		274,938
Changes in operating assets and liabilities:
Prepaid expenses		(6,000	)		-
Inventory		19,579			7,858
Accounts payable		17,483			(53,059	)
Accrued interest payable		8,720			23,974
Accrued expenses		29,658			19,079
NET CASH USED IN OPERATING ACTIVITIES		(72,837	)		(83,500	)

INVESTING ACTIVITIES
NET CASH USED IN INVESTING ACTIVITIES		-			-

FINANCING ACTIVITIES
Proceeds from notes payable		202,101			-
Repayment of notes payable		(142,360	)		-
Proceeds from issuance of common stock		-			89,000
NET CASH PROVIDED BY FINANCING ACTIVITIES		59,741			89,000

NET DECREASE IN CASH	$	(13,096	)	$	5,500
CASH, BEGINNING OF PERIOD		28,056			45,780
CASH, END OF PERIOD	$	14,960		$	51,280

CASH PAID FOR INCOME TAXES	$	-		$	-
CASH PAID FOR INTEREST	$	-		$	-

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of shares for common stock issuable	$	36,820		$	-
Principal and interest settled	$	33,185		$	-
Issuance of shares for settlement of liabilities	$	-		$	1,009,311
Original issuance discount on notes payable	$	16,991		$	-
Recission of shares	$	153,114		$	-

	For the six months ended
	September 30,
	2022			2021
OPERATING ACTIVITIES
Net income (loss)	$	97,753		$	(99,925	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		2,800			2,800
Financing costs		4,250			-
Shares issued for services		-			3,000
Amortization of debt discount		9,754			-
Change in fair value of derivative liability		(51,994	)		(147,543	)
(Gain) loss on settlement of liabilities		(140,297	)		138,140
Changes in operating assets and liabilities:
Prepaid expenses		(6,000	)		-
Inventory		(41,297	)		(9,206	)
Accounts payable		17,476			(31,760	)
Accrued interest payable		5,875			21,298
Accrued expenses		(6,197	)		4,550
NET CASH USED IN OPERATING ACTIVITIES		(107,877	)		(118,646	)
INVESTING ACTIVITIES
NET CASH USED IN INVESTING ACTIVITIES		-			-
FINANCING ACTIVITIES
Proceeds from advances payable		-			-
Proceeds from notes payable		202,101			-
Repayment of notes payable		(109,968	)		-
Proceeds from issuance of common stock		-			89,000
NET CASH PROVIDED BY FINANCING ACTIVITIES		92,133			89,000
NET DECREASE IN CASH	$	(15,744	)	$	(29,646	)
CASH, BEGINNING OF PERIOD		28,056			45,780
CASH, END OF PERIOD	$	12,312		$	16,134
CASH PAID FOR INCOME TAXES	$	-		$	-
CASH PAID FOR INTEREST	$	-		$	-
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of shares for common stock issuable	$	36,820		$	-
Principal and interest settled	$	33,185		$	308,760
Original issuance discount on notes payable	$	16,991		$	-

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

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RIGHT ON BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

Formation and Business Activity

Right on Brands, Inc. (“we” or “the Company” or “Right on Brands”) was incorporated under the laws of the State of Nevada on April 1, 2011, as HealthTalk Live, Inc. On August 10, 2017, the Company amended is articles of incorporation and changed its name to Right On Brands, Inc. On August 31, 2017 the Company common shares commenced trading under the new stock symbol RTON. The Company’s primary business is the sale of health and wellness products.

The Company has the following wholly owned subsidiaries:

	·	Endo Brands, Inc.
	·	Humble Water Company

The Company has the following majority owned subsidiaries:

	·	Endo & Centre Venture LLC (51% owner)
	·	Spring Hill Water Company, LLC (49% owner – see Note 7)

The Company, through its subsidiaries Humble Water Company and Endo & Centre Venture LLC, had joint ventures with no activity. The Company has discontinued these joint ventures and Humble Water Company and Endo & Centre Venture LLC contain no assets, liabilities, or operations.

On April 16, 2018, the Company entered into an operating agreement with Centre Manufacturing, Inc. ("“Centre"”) and agreed to form an LLC. The LLC is owned 51% by the Company and 49% owned by Centre, but all income and losses will be split evenly. The owner of Centre is the former CEO of the Company. On June 19, 2018, the Company formed a majority owned subsidiary, Endo & Centre Venture LLC. No significant activity has occurred to date. At ~~September~~December 3031, 2022 and March 31, 2022, the Company owed Centre $14,154, respectively, which is included in accounts payable on the accompanying condensed consolidated balance sheets.

The Company continues to sell health and wellness products focused in the hemp marketplace through online and in-person retail sales.

NOTE 2 – GOING CONCERN

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. For the period ended ~~September~~December 3031, 2022, the Company had an accumulated deficit of approximately $15,~~672~~742,000, had net income of approximately $9828,000, and net cash used in operating activities of approximately $~~108~~73,000, with approximately $~~549~~809,000 revenue earned, and a lack of profitable operational history. These matters, among others, raise substantial doubt about the Company'’s ability to continue as a going concern.

While the Company is attempting to generate greater revenues, the Company'’s cash position may not be significant enough to support the Company'’s daily operations. Management intends to raise additional funds by way of additional public and/or private offerings of its stock. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company'’s ability to further implement its business plan and generate revenues.

The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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RIGHT ON BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and the interim reporting rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments (unless otherwise indicated), necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Principles of Consolidation

The condensed consolidated financial statements of the Company include the accounts of Right On Brands, Inc. and its wholly owned subsidiaries and majority owned business (Endo Brands, Inc., Humble Water Company, Springhill Water Co, and Endo & Centre Venture LLC). Intercompany accounts and transactions have been eliminated upon consolidation.

Use of Estimates

The preparation of consolidated 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 of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of reporting cash flows, the Company has defined cash and cash equivalents as all cash in banks and highly liquid investments available for current use with an initial maturity of three months or less to be cash equivalents. The Company had no cash equivalents at ~~September~~December 3031, 2022 or March 31, 2022.

The Company maintains its cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”). The FDIC provides coverage of up to $250,000 per depositor, per financial institution, for the aggregate total of depositors'’ interest and non-interest-bearing accounts. At ~~September~~December 3031, 2022, none of the Company'’s cash balances were in excess of FDIC limits. The Company has not experienced any losses on these accounts and management does not believe that the Company is exposed to any significant risks.

Accounts Receivable

The Company performs periodic credit evaluations of its customers’ financial condition and extends credit to virtually all of its customers on an uncollateralized basis. Credit losses to date have been insignificant and within management’s expectations. The Company provides an allowance for doubtful accounts that is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal accounts receivable are due 30 to 45 days after the issuance of the invoice. Receivables past due more than 60 days are considered delinquent. Delinquent receivables are evaluated for collectability based on individual credit evaluation and specific circumstances of the customer. As of ~~September~~December 3031, 2022, and March 31, 2022, the Company’s allowance for doubtful accounts was $0, respectively. The Company did not write off any accounts receivable against the allowance for doubtful accounts during the periods ended ~~September~~December 3031, 2022 and 2021, respectively.

Inventory

Inventories are stated at the lower of cost (average cost) or market (net realizable value). Cost includes materials related to the purchase of finished goods to be sold to retail customers. We regularly review inventory quantities on hand, future purchase commitments with our suppliers, and the estimated utility of our inventory. If our review indicates a reduction in utility below carrying value, we reduce our inventory to a new cost basis through a charge to cost of revenue.

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RIGHT ON BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided by the straight-line method over the useful lives of the related assets, ranging from one to five years.

The cost of building the Company'’s website has been capitalized and amortized over a period of three years. Expenditures for minor enhancements and maintenance are expensed as incurred.

Recoverability of Long-Lived Assets

The Company'’s long-lived assets and other assets (consisting of property and equipment) are reviewed for impairment in accordance with the guidance of the FASB Topic ASC 360, "“Property, Plant, and Equipment,"” and FASB ASC Topic 205 "“Presentation of Financial Statements"”. The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management'’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial positions. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Through ~~September~~December 3031, 2022, and 2021, the Company had not experienced impairment losses on its long-lived assets. However, there can be no assurances that demand for the Company'’s products or services will continue, which could result in an impairment of long-lived assets in the future.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when management assesses that it is probable that a liability has been incurred and the amount can be reasonable estimated.

Share Based Compensation

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718. Costs are measured at the estimated fair value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 718.

Income Taxes

In accordance with FASB ASC Topic 740, "“Income Taxes,"” the Company provides for the recognition of deferred tax assets if realization of such assets is more likely than not. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

In addition, the Company’s management performs an evaluation of all uncertain income tax positions taken or expected to be taken in the course of preparing the Company’s income tax returns to determine whether the income tax positions meet a “more likely than not” standard of being sustained under examination by the applicable taxing authorities. This evaluation is required to be performed for all open tax years, as defined by the various statutes of limitations, for federal and state purposes. If the Company has interest or penalties associated with insufficient taxes paid, such expenses are reported in income tax expense.

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RIGHT ON BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Revenue Recognition

We recognize revenue when our performance obligation is satisfied. Our primary performance obligation (the distribution and sales of hemp products) is satisfied upon the shipment or delivery of products to our customers, which is also when control is transferred. The transfer of control of products to our online customers is typically based on sales terms that do not allow for a right of return after 7 days from the date of purchase. The transfer of control of products to our in-store customers is typically based on sales terms that do not allow for a right of return.

Our products are sold for cash with payments received at pickup or before shipping.

Fair Value Measurement

ASC Topic 820, “Fair Value Measurement”, requires that certain financial instruments be recognized at their fair values at our balance sheet dates. However, other financial instruments, such as debt obligations, are not required to be recognized at their fair values, but Generally Accepted Accounting Principles in the United States (“GAAP”) provides an option to elect fair value accounting for these instruments. GAAP requires the disclosure of the fair values of all financial instruments, regardless of whether they are recognized at their fair values or carrying amounts in our balance sheets. For financial instruments recognized at fair value, GAAP requires the disclosure of their fair values by type of instrument, along with other information, including changes in the fair values of certain financial instruments recognized in income or other comprehensive income. For financial instruments not recognized at fair value, the disclosure of their fair values is provided below under “Financial Instruments.”

Nonfinancial assets, such as property, plant and equipment, and nonfinancial liabilities are recognized at their carrying amounts in the Company’s balance sheets. GAAP does not permit nonfinancial assets and liabilities to be remeasured at their fair values. However, GAAP requires the remeasurement of such assets and liabilities to their fair values upon the occurrence of certain events, such as the impairment of property, plant and equipment. In addition, if such an event occurs, GAAP requires the disclosure of the fair value of the asset or liability along with other information, including the gain or loss recognized in income in the period the remeasurement occurred.

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

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

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).

The Company did not have any Level 1 or Level 2 assets and liabilities at ~~September~~December 3031, 2022 or March 31, 2022. The Derivative liabilities are Level 3 fair value measurements.

The following is a summary of activity of Level 3 liabilities during the ~~six~~nine months ended ~~September~~December 3031, 2022:

Balance at March 31, 2022	$	159,106
Settlement		(107,112	)
Change in fair value		(51,994	)
Balance at September 30, 2022	$	-
Balance at December 31, 2022	$	-

The following is a summary of activity of Level 3 liabilities during the ~~six~~nine months ended ~~September~~December 3031, 2021:

Balance at March 31, 2021	$	472,471
Change in fair value		(147,543	)
Settlement		(213,156	)
Balance at September 30, 2021	$	324,928
Change in fair value		(99,566	)
Balance at December 31, 2021	$	159,749

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RIGHT ON BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

During prior years, the Company entered into several convertible note agreements (Note 6). These notes are convertible at a fraction of the stock closing price near the conversion date. Additionally, the conversion price, as well as other terms including interest rates, adjust if any future financings have more favorable terms. The conversion features of these notes meet the definition of a derivative which therefore requires bifurcation and are accounted for as a derivative liability.

At March 31, 2022, the Company estimated the fair value of the conversion feature derivatives embedded in the convertible promissory notes based on assumptions used in the Cox-Ross-Rubinstein binomial pricing model using the following inputs: the price of the Company’s common stock of $0.0007; a risk-free interest rate of 1.06%, and expected volatility of the Company’s common stock of 180%, various estimated exercise prices, and terms under one year.

Financial Instruments

The Company’s financial instruments include cash and cash equivalents, receivables, payables, and debt and are accounted for under the provisions of ASC Topic 825, “Financial Instruments”. The carrying amount of these financial instruments, with the exception of discounted debt, as reflected in the consolidated balance sheets approximates fair value.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 "“Derivatives and Hedging Activities"”.

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. Proceeds from these convertible notes are reported under the financing section of the statements of cash flows. Changes to the fair value of the derivative liability are reported as adjustments to reconcile net loss to net cash used in operating activities in the accompanying statement of cash flows.

Basic and Diluted Loss Per Share

Basic net loss/income per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options, warrants and convertible notes. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for periods presented.

Recently Issued Accounting Standards

During the period ended ~~September~~December 3031, 2022, and subsequently, there were several new accounting pronouncements issued by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

Subsequent Events

The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration.

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RIGHT ON BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Subsequent Events

The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration.

NOTE 4 – INVENTORY

AtThe ~~September~~Company’s ~~30,~~inventory ~~2022~~consisted ~~and~~of ~~March~~the ~~31,~~following ~~2022,~~at ~~inventory~~the ~~consisted~~respective ofbalance ~~the~~sheet ~~following~~dates:

	September 30, 2022		March 31, 2022
	December 31, 2022		March 31, 2022
Finished goods		~~156~~95,~~241~~365		114,944
	$	~~156~~95,~~241~~365	$	114,944

NOTE 5 – PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS

The Company’s property and equipment consisted of the following at the respective balance sheet dates:

	September 30, 2022			March 31, 2022
	December 31, 2022			March 31,2022
Website development	$	88,965		$	88,965
Automobile		31,596			31,596
Studio and office equipment		11,910			11,910
Tenant improvements		11,135			11,135
Intangible assets		1,024			1,024
		144,630			144,630
Accumulated depreciation and amortization		(~~131~~133,~~945~~345	)		(129,145	)
	$	1211,~~685~~285		$	15,485

Depreciation expense of property and equipment for the ~~six~~nine months ended ~~September~~December 3031, 2022 and 2021 was $24,~~800~~200, respectively.

NOTE 6 – DEBT

Notes Payable

On November 22, 2019, the Company issued a $50,000 promissory note to a third-party lender for a $25,000 cash borrowing. Accordingly, a $25,000 discount was recorded at issuance, all of which was amortized by March 31, 2020. The non-interest-bearing note is secured by inventory, matured February 20, 2020, and remains in default at ~~September~~December 3031, 2022.

During December 2021, the Company was listed as defendant on a complaint from Noteholder 10 seeking repayment of amounts due under a February 2020 convertible note payable. The Company has recorded all unpaid principal and interest due to Noteholder 10 through March 31, 2022. On April 15, 2022, the Company and Noteholder 10 entered into a settlement agreement whereby the Company will repay Noteholder 10 a total of $115,000 consisting of $25,000 paid on April 18, 2022, $5,000 to be paid monthly from May 15, 2022 to October 15, 2022, $6,250 to be paid monthly from November 15, 2022 to April 15, 2023, and $7,500 to be paid monthly from May 15, 2023 to July 15, 2023. As a result of the settlement, the Company reclassified the note from convertible debt to notes payable and recorded a gain on settlement of liabilities totaling $140,297, including $107,112 from the elimination of the derivative liability associated with the note. On ~~September~~December 3031, 2022, the balance of the note totaled $7060,000.

On January 31, 2022, the Company entered into a loan agreement totaling $73,450, consisting of cash proceeds totaling $65,000 and loan fees totaling $8,450. The note is to be repaid on an ongoing basis by deducting 19.75% of daily sales and applying against the loan balance. The note matures on July 1, 2023 but will be paid off during the year ending March 31, 2023, based on current daily sales. On July 21, 2022, the $6,999 balance of the note was rolled into the July 21, 2022 note below.

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RIGHT ON BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On July 21, 2022, the Company entered into a note payable agreement totaling $89,581, consisting of cash proceeds totaling $72,101, repayment of the January 31, 2022 loan balance totaling $6,999, and loan fees totaling $10,481. The note is to be repaid on an ongoing basis by deducting 19.75% of daily sales and applying against the loan balance. The note matures on January 21, 2024,. On ~~September~~December 3031, 2022, the balance of the note totaled $8176,~~562~~585.

On August 4, 2022, the Company entered into a note payable agreement for $80,000 received as advances during the three months ended June 30, 2022. The note is to be repaid in $3,000 monthly installments beginning on September 10, 2022, with the remaining balance due at maturity on December 31, 2022. On ~~September~~December 3031, 2022, the balance of the note totaled $75,286 and was in default.

On August 11, 2022, the Company entered into a 12% note payable agreement totaling $60,760, consisting of cash proceeds totaling $50,000, financing costs of $4,250, and an original discount totaling $6,510. The note requires monthly payments of $6,805 beginning on September 30, 2022 until maturity on August 11, 2023. On ~~September~~December 3031, 2022, the balance of the note totaled $5336,~~955~~540.

During the ~~six~~nine months ended ~~September~~December 3031, 2022, the Company incurred $~~911~~1,261 in interest expenses related to notes payable.

Convertible Debt

At ~~September~~December 3031, 2022, the Company'’s convertible debt and derivative liability related to the notes which can be converted at variable discounted rates are summarized as follows:

Noteholder	Origination	Maturity	~~Interest rate~~Interestrate			Fixed ~~conversion rate~~conversionrate	~~Principal balance~~Principalbalance		~~Debt discount~~Debtdiscount		Net ~~amount~~amountof of liabilities presented		Corresponding ~~derivative balance~~derivativebalance
Noteholder 9	7/7/2016	9/30/2019		6.00%	%	$0.10/Share	$	25,000	$	-	$	25,000	$	-
Noteholder 13	2/16/2021	8/16/2021		6.00%	%	$0.015/Share		140,000		-		140,000		-
							$	165,000	$	-	$	165,000	$	-

At March 31, 2022, the Company'’s convertible debt and derivative liability related to the notes which can be converted at variable discounted rates are summarized as follows:

Noteholder	Origination	Maturity	Interest rate			Variable conversion discount		Principal balance	~~Principal balance~~		Debt discount	~~Debt discount~~		Net amount of liabilities presented	~~Net amount of liabilities presented~~		Corresponding derivative balance	~~Corresponding derivative balance~~
Noteholder 10	2/27/2020	2/26/2021		10.00%	%	40.00	~~40.00~~%	$	$131,788	~~131,788~~		-	-	$	$131,788	~~131,788~~	$	$159,045	~~159,045~~
								$	$131,788	~~131,788~~	$	$-	-	$	$131,788	~~131,788~~	$	$159,045	~~159,045~~
Noteholder	Origination	Maturity	Interest rate			Fixed conversion rate			Principal balance			Debt discount			Net amount of liabilities presented			Corresponding derivative balance
Noteholder 9	7/7/2016	9/30/2019		6.00%		$0.10/Share			$	25,000		$	-		$	25,000		$	-
Noteholder 13	2/16/2021	8/16/2021		6.00%		$0.015/Share				140,000			-			140,000			61
									$	165,000		$	-		$	165,000		$	61

During the six months ended September 30, 2022, the Company incurred interest expenses related to convertible debt totaling $4,964.

Noteholder	Origination	Maturity	Interest rate			Fixed conversion rate	Principal balance		Debt discount		Net amount of liabilities presented		Corresponding derivative balance
Noteholder 9	7/7/2016	9/30/2019		6.00	%	$0.10/Share	$	25,000	$	-	$	25,000	$	-
Noteholder 13	2/16/2021	8/16/2021		6.00	%	$0.015/Share		140,000		-		140,000		61
							$	165,000	$	-	$	165,000	$	61

~~The~~During ~~convertible~~the ~~debt~~nine ~~held~~months byended ~~noteholders~~December 931, ~~and~~2022, 13the ~~are~~Company inincurred ~~default~~interest atexpenses ~~September~~related ~~30,~~to ~~2022~~convertible debt totaling $7,459.

The convertible debt held by noteholders 9 and 13 are in default at December 31, 2022.

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RIGHT ON BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Future Maturities

The Company’s future maturities of notes payable and convertible debt are as follows:

Year ending
March 31,	Amount
2023	$	~~471~~439,~~499~~107
2024		24,304
	$	~~495~~463,~~803~~411

Amortization of Debt Discount

During the ~~six~~nine months ended ~~September~~December 3031, 2022 ~~and 2021~~, the Company recorded amortization of debt discounts totaling $913,~~754 and $-0-, respectively~~129.

NOTE 7 – NONCONTROLLING INTEREST

Investments in partnerships, joint ventures and less-than-majority-owned subsidiaries in which we have significant influence are accounted for under the equity method.

As of March 31, 2018, the Company'’s consolidated financial statements includes a venture for the development of a commercial bottled water operation near Browning, Montana. The new venture will be operated through Spring Hill Water Company, LLC, a Nevada limited liability company ("“Spring Hill"”). Spring Hill is 49% owned by our newly-formed subsidiary corporation, Humble Water Company, and 51% owned by Doore, LLC. Doore, LLC, which serves as the manager of Spring Hill, has contributed the land and water source to be used in the new operation through a Land & Water Lease Agreement under which Spring Hill will have the use of 2 acres of land and no less than 5 acre-feet of water for an initial term of 25 years and at a lease rate of $1 per year. Through Humble Water Company, our initial capital contribution to Spring Hill was approximately $100,000 to be used in commencing operations. In addition, we have committed to provide additional capital to be used for a bottling facility and equipment, in an amount up to $530,000, within the next 2 years. Should we fail to provide this additional capital within the next 2 years, our ownership percentage in Spring Hill will be reduced from 49% to 20%. Although we hold a minority ownership percentage in Spring Hill, we will have voting control over the company with 75% of the voting membership units. Further, 100% of the losses, expenditures, and deductions from Spring Hill will be allocated to our subsidiary, Humble Water Company. The activity of Spring Hill is accounted for under the voting interest method, and we consolidate 100% of the business activity and record 25% of noncontrolling interest on the balance sheet and 0% of the net losses based on the terms of the agreement.

As of ~~September~~December 3031, 2022 and March 31, 2022, the noncontrolling interest was $24,437 in the accompanying consolidated financial statements. As of ~~September~~December 3031, 2022 and March 31, 2022, our total investment into Spring Hill to date was $101,470. During the ~~six~~nine months ended ~~September~~December 3031, 2022 and 2021, there have been no significant operations or expenditures in the joint venture.

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RIGHT ON BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 8 – EARNINGS PER SHARE

FASB ASC Topic 260, “Earnings Per Share,” requires a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share (EPS) computations.

Basic earnings (loss) per share are computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed similar to basic earnings 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.

The Company had no potential additional dilutive securities outstanding at ~~September~~December 3031, 2022 or March 31, 2022, except as follows:

	September 30, 2022		March 31, 2022
	December 31, 2022		March 31, 2022
Preferred stock		25,000,000		25,000,000
Convertible debt		9,583,333		339,053,333
Total		34,583,333		364,053,333

NOTE 9 – STOCKHOLDERS’ EQUITY

Series A Preferred Stock

The Series A Preferred Stock is convertible to common stock at a rate of five shares for every share held and the holder(s) have the right to cast a total of fifty-percent (50%) plus one votes on all matters submitted to a vote of holder of the Company’s common stock. Our Series A Preferred Stock ranks equally, on an as-converted basis, to our common stock with respect to rights upon winding up, dissolution, or liquidation.

On June 6, 2019 the Board of Directors agreed to amend the certificate of designation for the Series A Preferred stock to have the right to cast a total of fifty-percent (50%) plus one votes on all matters submitted to a vote of holder of the Company’s common stock, including the election of directors, and all other matters as required by law. There is no right to cumulative voting in the election of directors. The holders of Series A Preferred Stock shall vote together with all other classes and series of common stock of the Company as a single class on all actions to be taken by the common stock holders of the Company except to the extent that voting as a separate class or series is required by law. Our Series A Preferred Stock does not have any special dividend rights.

Common Stock

During December 2017, the Company entered into a three-year consulting agreement with Dr. Ashock Patel, the Company’s former CEO, to serve as Director of Product Development. Consideration for services under the agreement provided for the issuance of 700,000 shares of common stock of the Company at the time of execution of the agreement, and the following two anniversaries of the agreement. Since the shares were yet to be issued at March 31, 2022, they were reported in common stock payable in the accompanying consolidated statement of stockholders’ deficit. During June 2022, the Company issued 1,400,000 shares of common stock to settle the common stock payable to Dr. Patel.

During August 2022, Crown Bridge Partners LLC (“CBP”), one of the Company’s former lenders, settled charges with the Securities and Exchange Commission (“SEC”) for failing to register with the SEC as a securities dealer. As part of the agreement, CBP agreed to surrender any shares it held which were acquired through its convertible notes and related activities. As a result, on August 22, 2022, 153,114,035 shares of the Company’s common stock were returned and cancelled.

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RIGHT ON BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 10 – COMMITMENTS AND CONTINGENCIES

On March 17, 2021, the Company entered into a storefront lease agreement in Rowlett, Texas. At the inception of the lease, the Company recorded a right of use asset and lease liability of $93,000, respectively. The Company records rent on straight-line basis over the terms of the underlying lease. Minimum lease payments under the lease are as follows:

Year Ending March 31,	Amount
2023	$	136,~~008~~533
2024		26,659
2025		25,025
Total remaining lease payments	$	6458,~~692~~217
Less: imputed interest		(109,~~358~~817	)
Present Value of remaining lease payments	$	5448,~~334~~400
Current	$	23,~~661~~524
Noncurrent	$	3024,~~673~~876
Remaining lease term (years)		2.4216
Discount rate		5.00	%

NOTE 11 – SUBSEQUENT EVENTS

Private Placements

During February 2023, the Company sold 450,000,000 common shares for proceeds totaling $45,000.

Convertible Note

During February 2023, the Company entered into a Convertible Promissory Note totaling $17,050 with Christine Guthrie, the daughter of the Company’s CEO, Jerry Grisaffi. Proceeds from the note were used to pay operating expenses. The note, which is convertible into common stock at a fixed rate of $0.0001 per share, bears an interest rate of 6% with principal and interest due at maturity on August 20, 2023.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes thereto included elsewhere in this report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions, such as our plans, objectives, expectations, and intentions. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic, and competitive uncertainties, and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclose any obligation to update forward-looking statements. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

Overview

Right On Brands is at the intersection of health and wellness. We create lasting brands with emerging functional ingredients, and our focus right now is industrial hemp and hemp derived products. Our business has historically been conducted through our wholly owned subsidiaries, Endo Brands and Humble Water Company. Humble Water Company is in a partnership with Springhill Water Co. to develop a line of High Alkaline, Natural Mineral Water, and a bottling and packaging facility, but it is no longer active. Endo Brands creates and markets a line of cannabinoid-based consumer products. All of our current business is through Endo Brands.

Results of Operations

Three Months Ended ~~September~~December 3031, 2022, Compared to the Three Months Ended ~~September~~December 3031, 2021:

Revenues

Revenues for the three months ended ~~September~~December 3031, 2022, were approximately $~~241~~260,000, as compared to approximately $~~237~~339,000 for the three months ended ~~September~~December 3031, 2021, ana ~~increase~~decrease of approximately $479,000, or 223%.

This ~~increase~~decrease in revenues can be attributed to ~~the~~a ~~opening~~slowing ofeconomy during the ~~retail~~current ~~store~~period, ~~front~~resulting in ~~north~~decreased ~~Texas which continued to gain traction during the current period~~demand. We expect our revenues to improve in future periods as we plan to open new locations and expand our offerings.

Gross Profit and Margins

Gross profit for the three months ended ~~September~~December 3031, 2022, was approximately $~~102~~110,000, as compared to approximately $50132,000 for the three months ended ~~September~~December 3031, 2021. The $5322,000 ~~increase~~decrease, or ~~107~~17%, in gross profit is less than the decrease in revenues and is the result of our retail store front focusing on selling more profitable products in 2022 as compared to sales during the comparative period in 2021. Gross profit margin for the three months ended ~~September~~December 3031, 2022, was approximately 42%, as compared to approximately 2139% for the three months ended ~~September~~December 3031, 2021. This change in gross profit margin resulted from management identifying and focusing sales efforts on the most popular and highest margin products during 2022. We believe that, subject to factors outside of our control, gross margins of approximately 40% are likely to be the norm.

Operating Expenses

Operating expenses for the three months ended ~~September~~December 3031, 2022, were approximately $~~182~~173,000, as compared to approximately $~~139~~108,000 for the three months ended ~~September~~December 3031, 2021. The increase was primarily due to an increase in staffing. We expect that operating expenses will increase over the next 12 months as our long-term growth strategy will require increases in personnel staffing and facility expansion.

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Profit/Loss from Operations and Total Net Loss

Loss from operations for the three months ended ~~September~~December 3031, 2022, was approximately $8063,000, as compared to a gain from operations of approximately $9023,000 for the three months ended ~~September~~December 3031, 2021, a decrease of approximately $1087,000. The ~~increase~~decrease in revenues ~~and gross margin~~ during the current period were ~~offset~~compounded by an increase in staffing costs.

Total net loss for the three months ended ~~September~~December 3031, 2022, was approximately $9669,000, as compared to a total net ~~income~~loss of approximately $22164,000 for the three months ended ~~September~~December 3031, 2021, a change of approximately $~~118~~95,000. The change for the three months ended ~~September~~December 3031, 2022, was as a result of (i) the change in operations discussed above, (ii) a loss on settlement of liabilities in the prior period of approximately $137,000, (iii) interest expenses of approximately $3,000 in the current period compared to approximately $113,000 in the prior period, (~~iii~~iv) amortization of debt discounts of $83,000 in the current period compared to $-0- in the prior period, and (ivv) non-cash gains of approximately $-0- related to the derivative liability compared to non-cash ~~gains~~losses of approximately $~~122~~48,000 in the prior period. Derivative liabilities are associated with ~~loans~~ that are convertible and have variable pricing on the equivalent shares of Common Stock. At the end of each period, these derivative liabilities are valued, and the net change is recorded as a gain or loss in other expense and income.

We do not expect to realize significant net income in the near term as anticipated operational expenses are expected to increase as our long-term growth strategy will require increases in personnel and facilities. Despite management’s focus on ensuring operating efficiencies, we expect to continue to operate at a loss through fiscal ~~2023~~2024.

~~Six~~Nine Months Ended ~~September~~December 3031, 2022, Compared to the ~~Six~~Nine Months Ended ~~September~~December 3031, 2021:

Revenues

Revenues for the ~~six~~nine months ended ~~September~~December 3031, 2022, were approximately $~~549~~809,000, as compared to approximately $~~378~~717,000 for the ~~six~~nine months ended ~~September~~December 3031, 2021, an increase of approximately $~~172~~92,000, or 4613%.

This increase in revenues can be attributed to the opening of the retail store front in north Texas which continued to gain traction during the current period. We expect our revenues to improve in future periods as we plan to open new locations and expand our offerings.

Gross Profit and Margins

Gross profit for the ~~six~~nine months ended ~~September~~December 3031, 2022, was approximately $~~283~~393,000, as compared to approximately $~~164~~295,000 for the ~~six~~nine months ended ~~September~~December 3031, 2021. The $~~119~~98,000 increase, or 7333%, in gross profit is the result of our retail store front focusing on selling more profitable products in 2022 as compared to sales during the comparative period in 2021. Gross profit margin for the ~~six~~nine months ended ~~September~~December 3031, 2022, was approximately 5249%, as compared to approximately 4341% for the ~~six~~nine months ended ~~September~~December 3031, 2021. This change in gross profit margin resulted from management identifying and focusing sales efforts on the most popular and highest margin products during 2022. We believe that, subject to factors outside of our control, gross margins of approximately 40% are likely to be the norm.

Operating Expenses

Operating expenses for the ~~six~~nine months ended ~~September~~December 3031, 2022, were approximately $~~358~~531,000, as compared to approximately $~~252~~360,000 for the ~~six~~nine months ended ~~September~~December 3031, 2021. The increase was primarily due to an increase in staffing. We expect that operating expenses will increase over the next 12 months as our long-term growth strategy will require increases in personnel staffing and facility expansion.

Profit/Loss from Operations and Total Net Loss

Loss from operations for the ~~six~~nine months ended ~~September~~December 3031, 2022, was approximately $75138,000, as compared to approximately $8865,000 for the ~~six~~nine months ended ~~September~~December 3031, 2021, aan ~~decrease~~increase of approximately $1373,000. The increase in revenues and gross margin during the current period were offset by an increase in staffing costs.

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Total net income for the ~~six~~nine months ended ~~September~~December 3031, 2022, was approximately $9828,000, as compared to a total net loss of approximately $~~100~~264,000 for the ~~six~~nine months ended ~~September~~December 3031, 2021, a change of approximately $~~198~~292,000. The change for the ~~six~~nine months ended ~~September~~December 3031, 2022, was as a result of (i) the change in operations discussed above, (ii) a loss on settlement of liabilities in the prior period of approximately $~~138~~275,000 compared to a gain on settlement of liabilities in the current period of approximately $140,000, (iii) interest expenses of approximately $69,000 in the current period compared to approximately $2124,000 in the prior period, (iv) amortization of debt discounts of $1013,000 in the current period compared to $-0- in the prior period, and (v) non-cash gains of approximately $52,000 related to the derivative liability compared to non-cash gains of approximately $~~148~~100,000 in the prior period. Derivative liabilities are associated with loans that are convertible and have variable pricing on the equivalent shares of Common Stock. At the end of each period, these derivative liabilities are valued, and the net change is recorded as a gain or loss in other expense and income.

Liquidity and Capital Resources

Going Concern

We have incurred significant operating losses since inception and have negative cash flow from operations. As of ~~September~~December 3031, 2022, we had a stockholders’ deficit of approximately $15,~~672~~742,000, a working capital deficit of approximately $~~505~~572,000, and incurred net income of approximately $9828,000 for the ~~six~~nine months ended ~~September~~December 3031, 2022. Additionally, our operations utilized approximately $~~108~~73,000 in cash during the ~~six~~nine months ended ~~September~~December 3031, 2022, while we received approximately $9260,000 in net cash from financing activities. As a result, our continuation as a going concern is dependent on our ability to obtain additional financing until we can generate sufficient cash flows from operations to meet our obligations. We intend to continue to seek additional debt or equity financing to continue our operations, but there can be no assurance that such financing will be available on terms acceptable to us, if at all.

Our condensed consolidated financial statements have been prepared on a going concern basis, which implies we may not continue to meet our obligations and continue our operations for the next fiscal year. The continuation of our Company as a going concern is dependent upon our ability to obtain necessary debt or equity financing to continue operations until we begin generating positive cash flow.

As of ~~September~~December 3031, 2022 and March 31, 2022, we had cash of approximately $1215,000 and $28,000, respectively. We estimate our operating expenses for the near- and mid-term may continue to exceed the revenues that we may generate, and we may need to raise capital through either debt or equity offerings to continue operations. We are in the early stages of our business. We are required to fund growth from financing activities, and we intend to rely on a combination of equity and debt ~~financings~~financing. Due to market conditions and the early stage of our operations, there is a considerable risk that we will not be able to raise such ~~financings~~financing at all, or on terms that are not overly dilutive to our existing stockholders. We can offer no assurance that we will be able to raise such funds. If we are unable to raise the funds we require for all of our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and we may be forced to reduce or discontinue operations.

There is no assurance that we will ever be profitable or that debt or equity financing will be available to us in the amounts, on terms, and at times deemed acceptable to us, if at all. The issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, would increase our liabilities and future cash commitments. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business, as planned, and as a result may be required to scale back or cease operations for our business, the result of which would be that our stockholders would lose some or all of their investment. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern.

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Cash Flows – Operating Activities

For the ~~six~~nine months ended ~~September~~December 3031, 2022, our cash used in operating activities amounted to an outflow of approximately $~~108~~73,000, compared to cash used during the ~~six~~nine months ended ~~September~~December 3031, 2021, of approximately $~~119~~84,000. The decrease in cash used in our operating activities is due to the positive performance of the retail store front in the current period.

Cash Flows – Investing Activities

For the ~~six~~nine months ended ~~September~~December 3031, 2022 and 2021, there was no cash used in investing activities.

Cash Flows – Financing Activities

For the ~~six~~nine months ended ~~September~~December 3031, 2022, our cash provided by financing activities amounted to approximately $9260,000, which includes approximately $202,000 in proceeds from notes payable and repayments of notes payable totaling approximately $~~110~~142,000. Our cash provided by financing activities for the ~~six~~nine months ended ~~September~~December 3031, 2021, amounted to approximately $89,000, which includes approximately $89,000 in proceeds from the issuance of common stock.

Off Balance Sheet Arrangements

As of ~~September~~December 3031, 2022, and March 31, 2022, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to stockholders.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

There have been no changes from the Summary of Significant Accounting Policies described in our Annual Report on Form 10-K for the year ended March 31, 2022, filed with the Securities and Exchange Commission on July 11, 2022.

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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

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of ~~September~~December 3031, 2022. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer, Jerry Grisaffi. Based upon that evaluation, our Chief Executive Officer concluded that, as of ~~September~~December 3031, 2022, our disclosure controls and procedures are not effective. There have been no changes in our internal controls over financial reporting during the period ended ~~September~~December 3031, 2022.

Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC'’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. 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 by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

During December 2021, the Company was listed as defendant on a complaint from Noteholder 10 seeking repayment of amounts due under the February 2020 convertible note payable (Note 6). The Company has recorded all unpaid principal and interest due to Noteholder 10 through March 31, 2022. On April 15, 2022, the Company and Noteholder 10 entered into a settlement agreement whereby the Company will repay Noteholder 10 a total of $115,000 consisting of $25,000 paid on April 18, 2022, $5,000 to be paid monthly from May 15, 2022 to October 15, 2022, $6,250 to be paid monthly from November 15, 2022 to April 15, 2023, and $7,500 to be paid monthly from May 15, 2023 to July 15, 2023.

Effective July 29, 2022, in accordance with Nevada Revised Statutes §§ 78.320 and 78.335, the shareholders of Right On Brands, Inc. voted to remove A. David Youssefyeh and David Lewis as directors of the Company by an affirmative vote of 67.8%. The remaining director, Jerry Grisaffi, immediately voted to remove Mr. Youssefyeh as the Chief Financial Officer of the Company, in accordance with its By-Laws. Mr. Youssefyeh objected. The Company commenced a civil action against Mr. Youssefyeh in Dallas County District Court, alleging breaches of fiduciary duties of care and loyalty, and seeking declaratory and injunctive relief; this action was withdrawn as part of a settlement with Mr. Youssefyeh by which the parties confirmed his removal and provided mutual releases. No consideration was paid by the Company in connection with the settlement.

Item 1A. Risk Factors

A smaller reporting company is not required to include this information. For a description of the risk factors applicable to our business and operations, please refer to our Annual Report on Form 10-K for the year ended March 31, 2022, filed with SEC on July 11, 2022.

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

On or about June 22, 2022, the Company issued 1,400,000 shares of the Company’s common stock to a former officer of the Company to settle common stock payable totaling $36,820.

The issuances of the foregoing securities were made in reliance on the exemption from registration provided by Rule 506(c) promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended, as the shareholders were accredited and/or financially sophisticated, as well as Section 4(a)(2) of the Securities Act of 1933, as amended, as the transactions with the shareholders did not involve a public offering.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit Number		Description of Exhibit
ExhibitNumber		Description of Exhibit
3.1		Articles of Incorporation (incorporated by reference to Registration Statement on Form S-1 filed July 1, 2013)
3.2		Certificate of Designation (incorporated by reference to Current Report on Form 8-K filed October 5, 2016)
3.3		Articles of Merger (changing name) (incorporated by reference to Current Report on Form 8-K filed August 31, 2017)
3.4		Bylaws (incorporated by reference to Registration Statement on Form S-1 filed July 1, 2013)
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		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		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		Materials from the Company’s Quarterly Report on Form 10-Q for the period ended ~~September~~December 3031, 2022 formatted in Extensible Business Reporting Language (XBRL)

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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.

	Right On Brands, Inc.
Date: November 18, 2022	By:	/s/ Jerry Grisaffi
Date: February 21, 2023	By:	/s/ Jerry Grisaffi
	Name:	Jerry Grisaffi
	Title:	Chief Executive Officer

Date: November 18, 2022	By:	/s/ Jerry Grisaffi
Date: February 21, 2023	By:	/s/ Jerry Grisaffi
	Name:	Jerry Grisaffi
	Title:	Chief Financial Officer

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