10-K: Accredited Solutions Inc. Reports Full Year 2023 Results, Navigates Operational Shifts

Accredited Solutions Inc. reports its full year 2023 results, highlighting a revenue increase driven by Diamond Creek water sales, alongside a net loss and ongoing efforts to secure additional funding.

Summary

• Accredited Solutions Inc. reported a revenue of $688,875 for the year ended December 31, 2023, compared to $483,036 in 2022, primarily due to the recovery of Diamond Creek water sales from inflationary pressures.
• The company experienced a net loss of $1,488,595 in 2023, a significant increase from the $31,688 loss in 2022.
• Operating expenses were $286,856 in 2023, slightly down from $301,444 in 2022, mainly due to reduced payroll expenses.
• The company's cash balance was $919 with a negative working capital of $5,233,610 as of December 31, 2023.
• The company sold its Good Hemp-related assets in February 2023 to JanBella Group, LLC, controlled by William Alessi, in exchange for forgiveness of $5,000 of debt.
• The acquisition of Petro X Solutions, Inc. (PXS) was rescinded in June 2023, and PXS is now treated as discontinued operations.
• The company is focused on expanding its Diamond Creek Water business but requires additional capital to do so.
• The company estimates it will need $100,000 in the next 12 months to cover public company expenses and general administration, excluding revenue-related expenses and salaries.

Sentiment

Score: 3

Explanation: The document presents a mixed picture with some positive revenue growth but significant financial losses and risks. The need for additional capital and the material weaknesses in internal controls are concerning, leading to a low sentiment score.

Positives

• The company experienced a significant increase in revenue in 2023 compared to 2022, indicating a recovery in sales.
• Operating expenses saw a slight decrease in 2023, suggesting some cost management efforts.
• The company is focusing on the Diamond Creek Water business, which has shown growth potential.
• The company is actively seeking strategic acquisitions and partnerships in the beverage sector.

Negatives

• The company reported a substantial net loss of $1,488,595 in 2023, a significant increase from the previous year.
• The company has a very low cash balance of $919 and a substantial negative working capital of $5,233,610.
• The rescission of the PXS acquisition indicates a setback in the company's strategic plans.
• The company's ability to expand its Diamond Creek Water business is contingent on securing additional capital.
• The company has identified material weaknesses in its internal control over financial reporting.

Risks

• The company's ability to continue as a going concern is dependent on obtaining adequate capital.
• The company faces risks related to its reliance on a single co-packer for manufacturing.
• The company's sales are seasonal and subject to fluctuations.
• The company has not yet implemented a formal cybersecurity risk management program.
• The company has material weaknesses in its internal control over financial reporting.
• The company has a history of losses and negative working capital.

Future Outlook

The company plans to expand its Diamond Creek Water business and is seeking strategic acquisitions and partnerships in the beverage sector. However, this expansion is contingent on securing additional capital.

Management Comments

• Management plans include raising capital in the debt and equity markets.
• Management believes that they have adequate sources of raw materials.
• Management is committed to developing products that are distinct, meet a quantifiable need, are proprietary, lend themselves to a markup on production costs of least a 60%, project a quality and healthy image, and can be distributed through existing distribution channels.

Industry Context

The non-alcoholic beverage market is a large and competitive industry, with bottled water being a significant growth area. The company's focus on alkaline water aligns with the trend towards health and wellness beverages. The market is dominated by two major players, Coca-Cola and PepsiCo, making it challenging for smaller companies to gain market share.

Comparison to Industry Standards

• The global bottled water market is expected to reach USD 505.19 billion by 2028, with a CAGR of 11.1% from 2021 to 2028, indicating a strong growth trend in the industry.
• The company's revenue of $688,875 is very small compared to the overall market size, and the company will need to significantly increase sales to compete effectively.
• The company's reliance on a single co-packer is not uncommon in the industry, but it does present a risk that needs to be managed.
• The company's strategy of using DSD and direct-to-retail channels is a standard approach in the beverage industry.
• The company's focus on health, wellness, and natural refreshment aligns with current consumer trends.

Management Changes

Corporate Governance

Legal Proceedings

• As of December 31, 2023, and as of the date of this Annual Report, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the Company's results of operations.

Related Party Transactions

• The company has significant related party transactions, including loans from officers and directors.
• The company sold its Good Hemp-related assets to JanBella Group, LLC, a company controlled by the company's controlling shareholder, William Alessi, in exchange for forgiveness of $5,000 of debt.
• The company entered into securities exchange agreements with former officers and directors, exchanging common stock for preferred stock.
• The company's office space is provided free of charge by its controlling shareholder, William Alessi.

Stakeholder Impact

• Shareholders face significant risks due to the company's financial losses, negative working capital, and dependence on additional funding.
• Employees are impacted by the company's financial instability and the potential for layoffs or reduced compensation.
• Customers may be affected by potential disruptions in product supply due to the company's reliance on a single co-packer.
• Suppliers may face risks related to the company's ability to pay for goods and services.
• Creditors face risks related to the company's ability to repay its debts.

Next Steps

• The company plans to expand its US distribution reach.
• The company intends to secure additional chain, convenience, and key account distributors.
• The company will increase its warehouse direct-to-retail channel.
• The company is looking for strategic acquisitions and partnerships in the beverage sector.
• The company intends to implement a cybersecurity risk management program before the end of 2024.

Key Dates

Keywords

Diamond Creek Water, beverage industry, alkaline water, financial results, capital raise, acquisitions, distribution, Good Hemp, Petro X Solutions, convertible debt