UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________ to _______________.
Commission
file number:
(Exact name of registrant as specified in its charter)
|
|
(Address of principal executive offices) |
(Zip Code) |
(
Registrant’s telephone number, including area code
| (Former address, if changed since last report) |
| (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 | None | None |
Securities registered pursuant to Section 12(g) of the Act:
Common
Stock, $0.001 par value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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 such files).
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 o | Accelerated filer o | |
| Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o
Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:
Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o
Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 12, 2023 there were shares of common stock, $0.00001 par value, issued and outstanding.
1
WEED, INC.
TABLE OF CONTENTS
2
PART I – FINANCIAL INFORMATION
This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider,” or similar expressions are used.
Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.
3
| ITEM 1 | Consolidated Financial Statements |
The consolidated balance sheets as of March 31, 2023 (unaudited) and December 31, 2022, the consolidated statements of operations and comprehensive loss for the three months ended March 31, 2023 and 2022, the consolidated statement of changes in stockholders’ equity (deficit) for the three months ended March 31, 2023 and 2022, and the consolidated statements of cash flows for the three months ending March 31, 2023 and 2022, follow. The unaudited interim financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. All such adjustments are of a normal and recurring nature.
4
| WEED, INC. AND SUBSIDIARY |
| CONSOLIDATED FINANCIAL STATEMENTS |
| March 31, 2023 |
| TABLE OF CONTENTS |
5
| WEED, INC. |
| CONSOLIDATED BALANCE SHEETS |
| (Unaudited) | ||||||||
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Other current asset | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Land | ||||||||
| Building | ||||||||
| Computers & Equipment | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | ||||||||
| Grower License | ||||||||
| Trademark | ||||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | ||||||||
| ROU asset | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expense | ||||||||
| Accrued officer compensation | ||||||||
| Accrued interest | ||||||||
| Notes payable, related parties | ||||||||
| Notes payable - in default | ||||||||
| Lease liability | ||||||||
| Due to officer | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| TOTAL LIABILITIES | ||||||||
| STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Common stock, $ par value, authorized, and issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Subscription payable | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss: | ||||||||
| Foreign currency translation | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| TOTAL LIABILITIES & STOCKERHOLDERS’ EQUITY (DEFICIT) | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements
6
| WEED, INC. |
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
| (Unaudited) |
| For the Three Months | ||||||||
| Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| REVENUE | $ | $ | ||||||
| COST OF GOOD SOLD | ||||||||
| GROSS PROFIT | ||||||||
| OPERATING EXPENSES | ||||||||
| General and administrative expenses | ||||||||
| Professional fees | ||||||||
| Depreciation & amortization | ||||||||
| Total operating expenses | ||||||||
| NET OPERATING LOSS | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Other income (expense) | ( | ) | ||||||
| TOTAL OTHER EXPENSE, NET | ( | ) | ( | ) | ||||
| NET LOSS | ( | ) | ( | ) | ||||
| OTHER COMPREHENSIVE INCOME (LOSS) | ( | ) | ( | ) | ||||
| COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | ||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES | ||||||||
| Outstanding - basic and fully diluted | ||||||||
| Net loss per share - basic and fully diluted | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of the consolidated financial statements
7
| WEED, INC. |
| CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) |
| For the Three Months ended March 31, 2023 |
| (Unaudited) |
| Common Stock | Total | |||||||||||||||||||||||||||
| Additional | Subscriptions | Accumulated | Other | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Paid-In Capital | Payable | Deficit | Comprehensive | Equity | ||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | ( | ) | ( | ) | $ | ||||||||||||||||||||
| Common stock sold for cash | ||||||||||||||||||||||||||||
| Common stock issued for services | ||||||||||||||||||||||||||||
| Stock issuance for acquisition of Hempriical Genetics | ||||||||||||||||||||||||||||
| Imputed Interest on RP Loans | - | |||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Other comprehensive income, net | - | |||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | ( | ) | ( | ) | $ | ||||||||||||||||||||
| Common stock sold for cash | - | |||||||||||||||||||||||||||
| Common stock issued for services | - | |||||||||||||||||||||||||||
| Imputed Interest on RP Loans | - | |||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Other comprehensive income, net | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | ( | ) | ( | ) | $ | ||||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements
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| WEED, INC. |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (Unaudited) |
| For the Three | ||||||||
| Months Ended | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile to net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Debt discount amortization | ||||||||
| Imputed Interest on RP Loans | ||||||||
| Estimated fair value of stock based compensation | ||||||||
| Estimated fair value of shares issued for services | ||||||||
| Decrease (increase) in assets | ||||||||
| Prepaid expenses and deposits | ||||||||
| Increase (decrease) in liabilities | ||||||||
| Accounts Payable | ( | ) | ( | ) | ||||
| Accrued expenses | ( | ) | ||||||
| NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property and equipment | ( | ) | ||||||
| NET CASH USED IN INVESTING ACTIVITIES | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from the sale of common stock | ||||||||
| Proceeds from notes payable - related party | ||||||||
| Repayments on notes payable - related party | ( | ) | ( | ) | ||||
| Repayments on notes payable | ( | ) | ||||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | ( | ) | ||||||
| NET CHANGE IN CASH | ( | ) | ||||||
| EFFECT OF EXCHANGE RATE ON CASH | ( | ) | ( | ) | ||||
| CASH, BEGINNING OF PERIOD | ||||||||
| CASH, END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash paid during the years ended December 31: | ||||||||
| Income taxes | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements
9
| WEED, INC. |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
| March 31, 2023 |
| (Unaudited) |
Note 1 – Nature of Business and Significant Accounting Policies
Nature of Business
WEED, Inc. (the “Company”), (formerly United Mines, Inc.) was incorporated under the laws of the State of Arizona on August 20, 1999 (“Inception Date”) as Plae, Inc. to engage in the exploration of gold and silver mining properties. On November 26, 2014, the Company was renamed from United Mines, Inc. to WEED, Inc. and was repurposed to pursue a business involving the purchase of land, and building Commercial Grade “Cultivation Centers” to consult, assist, manage & lease to Licensed Dispensary owners and organic grow operators on a contract basis, with a concentration on the legal and medical marijuana sector. The Company’s plan is to become a True “Seed-to-Sale” company providing infrastructure, financial solutions and real estate options in this new emerging market. The Company, under United Mines, was formerly in the process of acquiring mineral properties or claims located in the State of Arizona, USA. The name was previously changed on February 18, 2005 to King Mines, Inc. and then subsequently changed to United Mines, Inc. on March 30, 2005. The Company trades on the OTC Pink Sheets under the stock symbol: BUDZ.
On April 20, 2017, the Company acquired Sangre AT, LLC, a Wyoming company doing business as Sangre AgroTech. (“Sangre”). Sangre is a plant genomic research and breeding company comprised of top-echelon scientists with extensive expertise in genomic sequencing, genetics-based breeding, plant tissue culture, and plant biochemistry, utilizing the most advanced sequencing and analytical technologies and proprietary bioinformatics data systems available. No work is being conducted now until further funds are available.
On May 2, 2022, the Company acquired Hempirical Genetics, LLC, a Arizona company.
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein.
The Company has a calendar year end for reporting purposes.
Basis of Presentation:
The accompanying consolidated balance sheet at December 31, 2022, has been derived from audited consolidated financial statements and the unaudited condensed consolidated financial statements as of March 31, 2023 and 2022 ( the “financial statements”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and related footnotes. It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments), have been made which are necessary for a fair financial statements presentation. The consolidated financial statements include all material adjustments (consisting of normal recurring accruals) necessary to make the consolidated financial statements not misleading as required by Regulation S-X, Rule 10-01. Interim result are not necessarily indicative of results for a full year.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the following entities, all of which are under common control and ownership:
| State of | Abbreviated | |||||
| Name of Entity | Incorporation | Relationship (1&3) | Reference | |||
| Nevada | Parent | WEED | ||||
| Wyoming | Subsidiary | Sangre | ||||
| Arizona | Subsidiary | Hempirical Generics |
| (1) |
| (2) |
| (3) |
The consolidated financial statements herein contain the operations of the wholly-owned subsidiary listed above. All significant inter-company transactions have been eliminated in the preparation of these financial statements. The parent company, WEED and subsidiary, Sangre will be collectively referred to herein as the “Company”, or “WEED”. The Company’s headquarters are located in Tucson, Arizona and its operations are primarily within the United States, with minimal operations in Australia.
These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein.
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Note 1 – Nature of Business and Significant Accounting Policies (continued)
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, prepaid expenses and accrued expenses reported on the balance sheet are estimated by management to approximate fair value primarily due to the short term nature of the instruments.
Impairment of Long-Lived Assets
Long-lived assets held and used by the Company are reviewed for possible impairment whenever events or circumstances indicate the carrying amount of an asset may not be recoverable or is impaired. Recoverability is assessed using undiscounted cash flows based upon historical results and current projections of earnings before interest and taxes. Impairment is measured using discounted cash flows of future operating results based upon a rate that corresponds to the cost of capital. Impairments are recognized in operating results to the extent that carrying value exceeds discounted cash flows of future operations.
The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.
Under FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.
Revenue Recognition
The Company is using the revenue recognition standard ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, and using the cumulative effect (modified retrospective) approach. Modified retrospective adoption requires entities to apply the standard retrospectively to the most current period presented in the financial statements, requiring the cumulative effect of the retrospective application as an adjustment to the opening balance of retained earnings at the date of initial application. No cumulative-effect adjustment in retained earnings was recorded as the Company’s has no historical revenue. The impact of the adoption of the new standard was not material to the Company’s consolidated financial statements. The Company did not earn revenue during the periods ended March 31, 2023 and 2022. When the Company earns revenue, it will be recognized in accordance with FASB ASC 606 – Revenue from Contracts with Customers.
The primary change under the new guidance is the requirement to report the allowance for uncollectible accounts as a reduction in net revenue as opposed to bad debt expense, a component of operating expenses. The adoption of this guidance did not have an impact on our condensed consolidated financial statements, other than additional financial statement disclosures. The guidance requires increased disclosures, including qualitative and quantitative disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.
The Company operates as one reportable segment.
Sales on fixed price contracts are recorded when services are earned, the earnings process is complete or substantially complete, and the revenue is measurable and collectability is reasonably assured. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue from sales in which payment has been received, but the earnings process has not occurred. Sales have not yet commenced.
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Note 1 – Nature of Business and Significant Accounting Policies (continued)
Advertising and Promotion
All
costs associated with advertising and promoting products are expensed as incurred. These expenses were $
Foreign Currency Transactions
Expenses are translated at the exchange rates in effect at the date of the transaction. Foreign currency denominated payables are translated at the rates of exchange at the balance sheet date. The resulting transaction gains and losses are recorded in the statement of income in the period incurred.
Assets
and liabilities of those operations are translated at exchange rates in effect at the balance sheet date. Income and expenses are translated
using the exchange rates on the transaction date for the reporting period. Translation adjustments, if any, are reported as a separate
component of accumulated other comprehensive income. Transaction gain (loss) on foreign currency exchange rate was ($
Note 2 – Going Concern
As
shown in the accompanying financial statements, the Company has no revenues, incurred net losses from operations resulting in an accumulated
deficit of $
The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 3 – Related Party
Notes Payable
From
time to time, the Company has received short term loans from officers and directors as disclosed in Note 8 below. The Company has a total
of $
Services
Nicole M. Breen receives $1,500 a week in cash compensation for her services rendered to the Company.
Glenn E. Martin receives $8,000 a month in cash compensation for his services rendered to the Company.
Accrued Compensation
A
total of $
12
Note 4 – Fair Value of Financial Instruments
Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.
The Company has certain financial instruments that must be measured under the new fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of March 31, 2023 and December 31, 2022, respectively:
Fair Value Measurements at December 31, 2022
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets | ||||||||||||
| Cash | $ | $ | $ | |||||||||
| Intangible assets, net | $ | $ | $ | |||||||||
| Total assets | $ | $ | $ | |||||||||
| Liabilities | ||||||||||||
| Notes payable, related parties | $ | |||||||||||
| Notes payable | $ | $ | $ | |||||||||
| Total liabilities | $ | $ | $ | |||||||||
Fair Value Measurements at March 31, 2023
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets | ||||||||||||
| Cash | $ | $ | $ | |||||||||
| Intangible assets, net | $ | $ | $ | |||||||||
| Total assets | $ | $ | $ | |||||||||
| Liabilities | ||||||||||||
| Notes payable, related parties | $ | |||||||||||
| Notes payable | $ | $ | $ | |||||||||
| Total liabilities | $ | $ | $ | |||||||||
The fair values of our related party debts are deemed to approximate book value and are considered Level 2 inputs as defined by ASC Topic 820-10-35.
There were no transfers of financial assets or liabilities between Level 1, Level 2 and Level 3 inputs for the three months ended March 31, 2023 and the year ended December 31, 2022.
13
Note 5 – Property and Equipment
Property and equipment consist of the following at March 31, 2023 and December 31, 2022, respectively:
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Property improvements | $ | $ | ||||||
| Automobiles | ||||||||
| Office equipment | ||||||||
| Furniture & Fixtures | ||||||||
| Lab equipment | ||||||||
| Construction in progress | ||||||||
| Land | ||||||||
| Property | ||||||||
| Property and equipment, gross | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
On
May 12, 2022, the Company sold the La Veta property for $
Depreciation
expense totaled $
Note 6 – Intangible Assets
Goodwill
Goodwill represents the excess of the cost of a company acquired over the fair value of its net assets at the date of acquisition. Goodwill is assigned to specific reporting units and is reviewed for possible impairment at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. On May 02, 2022, WEED acquired the entire interests in Hempirical Genetics, LLC. which resulted in $480,801 of goodwill. The acquired company did not bring any business activities to the Company and the inventory was flooded in Arizona at the end of 2022, which result in the questionable future value. Goodwill impairment was $480,801 for the year ended December 31, 2022.
Intangibles
In accordance with FASB ASC 350, “Intangibles-Goodwill and Other”, the Company evaluates the recoverability of identifiable intangible assets whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its fair value. The US and Europe trademarks were acquired for $40,000 and $50,000, respectively, for the year ended December 31, 2018. Trademarks are initially measured based on their fair value and amortized by 10 and 25 years.
Acquisition intangible assets arising out of the acquisition of Hempirical Genetics, LLC. That should, in accordance with GAAP, be classified as intangibles, include goodwill.
On March 31, 2023, Intangibles consists of the following:
| March 31, 2023 | December 31, 2022 | |||||||
| Trademark | ||||||||
| Grower License | ||||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Total other intangibles, Net | ||||||||
| Goodwill, Net | ||||||||
| Total Intangibles, Net | ||||||||
Amortization
expense totaled $
14
Note 7 – Notes Payable, Related Parties
Notes payable, related parties consist of the following at March 31, 2023 and December 31, 2022, respectively:
| March 31, 2023 | December 31, 2022 | |||||||
| On April 12, 2010, the Company received an unsecured, non-interest-bearing loan in the amount of $2,000, due on demand from Robert Leitzman. Interest is being imputed at the Company’s estimated borrowing rate, or 10% per annum. The largest aggregate amount outstanding was $2,000 during the periods ended December 31, 2019 and December 31, 2018. Mr. Leitzman owns less than 1% of the Company’s common stock, however, the Mr. Leitzman is deemed to be a related party given the non-interest-bearing nature of the loan and the materiality of the debt at the time of origination. | $ | |||||||
| Over various dates in 2011 and 2012, the Company received unsecured loans in the aggregate amount of $10,000, due on demand, bearing interest at 10%, from Sandra Orman. The largest aggregate amount outstanding was $10,000 during the periods ended December 31, 2019 and December 31, 2018. Mrs. Orman owns less than 1% of the Company’s common stock, however, Mrs. Orman is deemed to be a related party given the nature of the loan and the materiality of the debt at the time of origination. | $ | |||||||
| Over various dates from April 2019 to March 2022, the company received a net amount of $356,700 of advances, bearing interest at 5%, from Nicole Breen. On October 28, 2019, the company’s vehicles valued at $93,000 were used as a repayment. | ||||||||
| On November 2, 2021, the company received an unsecured loan in the amount of $300,000, bearing interest at 5%, from Glenn Martin. The loan was paid off on March 1, 2022. | ||||||||
| On March 1, 2022, the company received an unsecured loan in the amount of $500,000, bearing interest at 9.25%, from Glenn Martin. | $ | |||||||
| On May 2, 2022, the company acquired Hempirical Genetics, LLC with a note payable to the executive officer Jeffrey Miller | $ | |||||||
| Notes payable, related parties | $ | $ | ||||||
| Less: Loan fee, net of amortization | ||||||||
| Notes payable, related parties | $ | |||||||
The
Company recorded interest expense in the amount of $ and $ for the three months ended March 31, 2023 and 2022, respectively,
including imputed interest expense in the amount of $
15
Note 8 – Notes Payable
Note payable consist of the following at March 31, 2023 and December 31, 2022, respectively:
| March 31, 2023 | December 31, 2022 | |||||||
| On August 5, 2019, the Company entered into a promissory note, whereby the Company promises to pay Snell & Wilmer L.L.P the principal amount of $250,000, bearing interest at 2.5% per annum. The note is to be paid in consecutive monthly installments in the amount of $25,000, including accrued interest commencing on August 30, 2019, until the final balloon payment is paid on January 30, 2020. The note is in default. The promissory note is secured by the Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing with respect to the real property owned by Sangre located on 1390 Mountain Valley Road, La Veta, Colorado 81055. As of March 2022, $337,664 has been paid to Snell & Wilmer. | $ | |||||||
| On various dates, the Company received advances from consultant, Patrick Brodnik, with 0% interest in 2022. | $ | |||||||
| $ | $ | |||||||
The
Company recognized interest expense of $
Note 9 – Commitments and Contingencies
Operating Leases
We account for our lease under ASC 842. Under this guidance, arrangements meeting the definition of a lease are classified as operating and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term.
The rate implicit in lease is not readily determinable, and we therefore use incremental borrowing rate to determine the present value of the lease payments. The incremental borrowing rate used to determine the initial value of right-of-use (“ROU”) assets and lease liabilities during the period ended March 31, 2023, was 5.0%.
In
May, 2022, we entered into a lease agreement of a hemp drying facility in Huachuca City, Arizona for $1,200 per month. The lease term
began May 2, 2022 and ends May 2, 2026. As of March 31, 2023, we had lease liability of $
Legal Proceedings
The Company may be subject to legal proceedings and claims arising from contracts or other matters from time to time in the ordinary course of business. Management is not aware of any pending or threatened litigation where the ultimate disposition or resolution could have a material adverse effect on its financial position, results of operations or liquidity.
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Note 10 – Business Combination
On
May 02, 2022, Weed acquired 100% of the interest in Hempirical Genetics LLC. The consideration was paid in a total of 2,000,000 shares
of its common stock, cash to the seller and promissory note to Hempirical’s owner. The total consideration paid to acquire Hempirical
Genetics LLC amounted $
Based on the qualified valuation report, the consideration is valued as follows:
| Valuation Date: 5/2/2022 | At Closing | Forward Agreement | Cash | |||||||||
| Consideration Shares (Common) | - | |||||||||||
| Consideration Cash | - | - | $ | |||||||||
| Market price | $ | $ | - | |||||||||
| Fair Value of Consideration | $ | $ | $ | |||||||||
| Purchase Price | $ | |||||||||||
Pro forma information related to the operations of Hempirical are not disclosed as such operations were insignificant for the historical periods.
The following summarized the estimate fair value of the acquired assets as of the date of the transaction:
| Inventory | $ | |||
| Equipment | ||||
| Total assets acquired | ||||
| Grower License | ||||
| Goodwill | ||||
| Total Consideration | $ |
Note 11 – Stockholders’ Equity
Preferred Stock
On December 5, 2014, the Company amended the Articles of Incorporation, pursuant to which shares of “blank check” preferred stock with a par value of $ were authorized. No series of preferred stock has been designated to date.
Common Stock
On December 5, 2014, the Company amended the Articles of Incorporation, and increased the authorized shares to shares of $ par value common stock.
2023 Common Stock Activity
Common Stock Sales (2023)
No stocks were issued during the quarter ended March 31, 2023.
Common Stock Issued for Services (2023)
During
the quarter ended March 31, 2023, 150,000 shares of common stocks valued at $
Common Stock Cancellations
No common stocks were cancelled during the quarter ended March 31, 2023.
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2022 Common Stock Activity
Common Stock Sales (2022)
During
the year ended December 31, 2022, the Company issued shares of common stock for proceeds of $
Common Stock Issued for Services (2022)
During the year ended December 31, 2022, the Company agreed to issue an aggregate of to consultants for services performed. The total fair value of common stock was $558,600 based on the closing price of the Company’s common stock earned on the measurement date.
Common Stock Issued for Acquisition (2022)
During the period ended June 30, 2022, the Company issued shares of common stock for acquisition of Hempirical Genetics, LLC. The total fair value of common stock was $200,000 based on the closing price of the Company’s common stock earned on the measurement date. Based on the purchase agreement, the Company owned 1,000,000 shares of common stocks from one year of the closing date, which is May 2, 2023. Also, on May 2, the Company entered into an employment agreement with Jeffrey Miller which the Company will issue 25,000 shares as salary, and such amount has been included in subscriptions payable.
Common Stock Cancellations
No common stocks were cancelled during the quarter ended December 31, 2022.
Note 12 – Common Stock Warrants and Options
Common Stock Warrants Granted (2023)
No common stock warrants were granted during the quarter ended March 31, 2023.
Warrants Exercised (2023)
No warrants were exercised during the quarter ended March 31, 2023.
2022 Common Stock Warrant Activity
Common Stock Warrants Granted (2022)
No common stock warrants were granted during the quarter ended March 31, 2022.
Warrants Exercised (2022)
No warrants were exercised during the quarter ended March 31, 2022.
The stock option will expire on the tenth anniversary of the granted date, which is February 1, 2028. As of March 31, 2023, the stock option will expire in 58 months.
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| For the year Ended December 31, 2022 | ||||||||
| Number of | Average | |||||||
| Shares | Price | |||||||
| Outstanding at the beginning of period | $ | $ | ||||||
| Granted | ||||||||
| Exercised/Expired/Cancelled | ||||||||
| Outstanding at the end of period | $ | |||||||
| Exercisable at the end of period | $ | |||||||
| For the quarter Ended March 31, 2023 | ||||||||
| Number of | Average | |||||||
| Shares | Price | |||||||
| Outstanding at the beginning of period | $ | $ | ||||||
| Granted | ||||||||
| Exercised/Expired/Cancelled | ||||||||
| Outstanding at the end of period | $ | |||||||
| Exercisable at the end of period | $ | |||||||
Note 13 – Income Tax
The Company accounts for income taxes under FASB ASC 740-10, which requires use of the liability method. FASB ASC 740-10-25 provided that deferred tax assets and liabilities, are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences.
For
the three months ended March 31, 2023 and the year ended December 31, 2022, the Company incurred a net operating loss and, accordingly,
no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of
the realization of any tax assets. At March 31, 2023 and December 31, 2022, the Company had approximately $
The components of the Company’s deferred tax assets are as follows:
| March 31, 2023 | ||||
| Deferred tax assets: | ||||
| Net operating loss carry forward as of 12/31/2022 | ||||
| Estimate Tax Loss March 31, 2023 | ||||
| NOL Carry Forward Cumulative as of 3/31/2023 | ||||
| Statutory Tax Rate | ||||
| Deferred Tax Asset | ||||
| Valuation | ( | ) | ||
| Net Deferred Tax Asset | ||||
Based on the available objective evidence, including the Company’s history of losses, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at March 31, 2023 and December 31, 2022, respectively.
Note 14 – Subsequent Events
We have evaluated subsequent events through the filing date of this Form 10-Q and determined that no subsequent events have occurred that would require recognition in the consolidated financial statements or disclosures in the notes thereto.
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| ITEM 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations Disclaimer Regarding Forward Looking Statements |
Our Management’s Discussion and Analysis or Plan of Operations contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.
Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
Overview
Currently, WEED and its subsidiaries are working on or planning for several different business opportunities in the cannabis & hemp field, including, but not limited to: both indoor and outdoor “grows”, cultivations & harvest for research, product development, processing and manufacturing of both Pharma & non-Pharma products, services, therapeutics, and treatments on a global basis for both the Medical Cannabis & Hemp (<.03 thc) global market space. Long terms goals include hopeful cures for many diseases and ailments for both man & animals utilizing the Cannabaceae plant and its derivatives. We will need additional financing to attempt to accomplish these goals.
Second, on November 22, 2021, WEED completed the purchase of the Sugar Hill Golf course property located in the town of Portland, New York. WEED’s acquisition of this ~43 acre property with ~2000 ft. of Lake Erie waterfront also comes with the “unlimited water extractions rights” from Lake Erie related to the property, along with a complete wastewater management plant. WEED’s initial plan is to utilize the property to access the hemp and infused beverage markets as our property in the middle of the largest concord grape producing region of the United States. In the future, WEED may look to use the unique property infrastructure to build a luxury condos & resort development in the most natural settings to be ESG compliant in conjunction to WEEDs forming its Social Equity Advisory Council (SEAC) to create Diversity & Equality in our industry. This project is only in its conceptual stage, no funding or plans have been developed other than the proposed name: The Four Winds Luxury condos & resort to be “Cannabis Friendly” which would be a “FIRST” in the nation. The New York property is now owned by Four Winds of Lake Erie, LLC, a wholly-owned subsidiary of WEED, Inc.
Third, WEED established WEED Australia Ltd. and it’s wholly owned Cannabis Institute of Australia (C.I.A.) in Australia in March of 2017, for the purpose of conducting cannabis and hemp research and potentially developing products and educational services in and for Australians as stated above. C.I.A. is a non-profit entity formed for the purpose of conducting cannabis and hemp research with universities and other non-profits to protect all intellectual rights, properties and usage in our highly regulated industry. The C.I.A. has the potential to develop products in Australia for domestic research and development of products, services and educational purposes to all seven States and territories, including Tasmania, to be marketed globally. WEED Australia is also our gateway to the Oceania & Asia emerging legal cannabis marketplace.
Fourth, on May 2, 2022, we entered into a Share Exchange Agreement (the “Exchange Agreement”) with Hempirical Genetics, LLC, an Arizona limited liability company (“Hempirical”), under which we acquired all of the issued and outstanding membership interests of Hempirical from Jeffery Miller in exchange for $603,284 payable in Two Million (2,000,000) shares of our common stock (the “WEED Shares”), valued at $394,302 based on the value of our common stock, and $250,000 in cash to be paid over four years. With this acquisition, our newly acquired inventory includes over 200 High THC strains plus 15 “PURE” Landrace strains including Panama Red, Acapulco Gold, Red Bud Colombian, Santa Marta Gold, and ThaiSticks. Along with 30+ CBD & CBG strains. WEED believes that multiple combinations of precise cannabinoid strains will achieve the precise medical outcome desired.
Our first business opportunity was, and continues to be, through our wholly-owned subsidiary, Sangre AT, LLC (“Sangre”), where we are focused on the development and application of cannabis-derived compounds for the treatment of human disease and animal ailments. To that end Sangre, was working on a planned five-year Cannabis Genomic Study to complete a genetic blueprint of the Cannabis plant genus, by creating a global genomic classification of the entire plant. Sangre completed a 1-2 year Pilot Study in 2017 & 2018 at the University of Texas-Galveston thru Industrial Metagenomics at a cost of nearly $1 million USD. Sangre completed the pilot study with 30 cultivars from strains collected worldwide that included 30 strains (twenty-four female and six male). These results are highly proprietary and the basis of future studies to come. We need to raise additional funds to continue the next steps in our Cannabis Genomic Study.
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On May 14th, 2018, the 70th Anniversary of the statehood of Israel, WEED formed its wholly owned subsidiary, WEED Israel Cannabis Ltd., with the goal of completing and adding to the noted studies above. As such, WEED Israel worked with the Hebrew University in Jerusalem and with the top scientists globally in the field of Cannabis & hemp. To that effect, WEED Israel looked to conduct clinical trials and product development that would be the quality and acceptability of the FDA in the United States. Due to current laws and conditions in the USA, all research results and product development for both Pharma & Non-Pharma products, cannot be introduced the United States marketplace. Since starting in 2018, the USA has made vast improvements and advancements in the legalization of both Cannabis and hemp. As of the end of 2021 there are 37 States that have approved a State level medical cannabis and hemp programs, along with the District of Colombia. In addition, there are 17 States that have implemented or approved the “Adult Use” i.e. recreational psychoactive aspects of high THC usage of cannabis.
In conjunction with WEED Israel Cannabis Ltd., we made arrangements with Professor Elka Touitou to be available to be the head of WEEDs Israeli Advisory Board to lead and assist us with clinical trials in cannabis & hemp research studies in Israel. Professor Touitou was the Head of the Innovative Dermal, Transdermal and Transmucosal Delivery Lab at the Institute of Drug Research, The School of Pharmacy, HUJ, now retired but still has HUJ clinical trial & independent studies/lab privileges. Professor Touitou is an internationally renowned authority in the field of drug delivery and design of new technologies for efficient administration of drugs and development of new products. Professor Touitou has been involved in Cannabinoid research since 1988 at The Hebrew University of Jerusalem, (HUJ) Jerusalem, Israel. Previously, WEED was in the process of buying Professor Touitou’s various patents to include the bioavailability aspects of the cannabaceae plant. However, after expending over $500,000 USD to acquire the Professor Touitou’s patents, we had to terminate the agreement in 2019 due to the downturn of the Cannabis marketplace, and specifically as to public cannabis companies, which could not be resumed due to the Covid pandemic that was/is still ongoing globally. We have kept in constant contact with Professor Touitou thru our Managing Director of WEED Israel, Mr. Elliot Kwestel. As of 2022, Dr. Touitou still has interest in working with WEED to complete the purchase of her patents and begin clinical trials upon proper funding. WEED looks to achieve that funding thru offerings of our securities.
Corporate Overview
We were originally incorporated under the name Plae, Inc., in the State of Arizona on August 20, 1999. At the time we operated under the name Plae, Inc., no business was conducted. No books or records were maintained and no meetings were held. In essence, nothing was done after incorporation until Glenn E. Martin took possession of Plae, Inc. in January 2005. On February 18, 2005, the corporate name was changed to King Mines, Inc. and then subsequently changed to its current name, United Mines, Inc., on March 30, 2005. No shares were issued until the Company became United Mines, Inc. From 2005 until 2015, we were an exploration stage mineral exploration company that owned a number of unpatented mining claims and Arizona State Land Department claims.
On November 26, 2014, our Board of Directors approved the redomestication of our company from Arizona to Nevada (the “Articles of Domestication”), and approved Articles of Incorporation in Nevada, which differed from then-Articles of Incorporation in Arizona, primarily by (a) changing our name from United Mines, Inc. to WEED, Inc., (b) authorizing Twenty Million (20,000,000) shares of preferred stock, with blank check rights granted to our Board of Directors, and (c) authorizing Two Hundred Million (200,000,000) shares of common stock (the “Nevada Articles of Incorporation”). On December 19, 2014, the holders of a majority of our outstanding common stock approved the Articles of Domestication and the Nevada Articles of Incorporation at a Special Meeting of Shareholders. On January 16, 2015, the Articles of Domestication and the Nevada Articles of Incorporation went effective with the Secretary of State of the State of Nevada. On February 2, 2015, our name change to WEED, Inc., and a corresponding ticker symbol change to “BUDZ” went effective with FINRA and was reflected on the quotation of our common stock on OTC Markets.
These changes were affected in order to make our corporate name and ticker symbol better align with our short-term and long-term business focus. Our current, short-term goals relate to the Cannabis Genomic Study and the resulting development of a variety of new cannabis strains, and, over the next 5 years, we plan to process those results in order to become an international cannabis research and product development company, with a globally-recognized brand focusing on building and purchasing labs, land and building commercial grade “Cultivation Centers” to consult, assist, manage & lease to universities, state governments, licensed dispensary owners and organic grow operators on a contract basis with a concentration on the legal and medical cannabis sector.
Our long-term plan is to become a true “Seed-to-Sale” global holding company providing infrastructure, financial solutions, product development, and real estate options in this new emerging market. Our long term growth may also come from the acquisition of synergistic businesses, such as distilleries, to make anything from infused beverages to super oxygenated water with CBD and THC. Currently, we have formed WEED Australia Ltd., registered as an unlisted public company in Australia to address this Global demand. We have also formed WEED Israel Cannabis Ltd., an Israeli corporation, to address future global demand. We will look to conduct future research, marketing, import/exporting, and manufacturing of our proprietary products on an international level.
On April 20, 2017, we entered into a Share Exchange Agreement with Sangre AT, LLC, a Wyoming limited liability company, under which we acquired all of the issued and outstanding limited liability company membership units of Sangre in exchange for Five Hundred Thousand (500,000) shares of our common stock, restricted in accordance with Rule 144. As a result of this agreement, Sangre is a wholly-owned subsidiary of WEED, Inc.
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This discussion and analysis should be read in conjunction with our financial statements included as part of this Quarterly Report.
Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022
Results of Operations
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue | $ | - | $ | - | ||||
| Operating expenses: | ||||||||
| General and administrative | 133,782 | 136,790 | ||||||
| Professional fees | 26,096 | 359,401 | ||||||
| Depreciation and amortization | 24,030 | 34,949 | ||||||
| Total operating expenses | 183,908 | 531,140 | ||||||
| Net operating loss | (183,908 | ) | (531,140 | ) | ||||
| Other income (expense) | ||||||||
| Interest expense | (13,106 | ) | (46,081 | ) | ||||
| Other income (expense) | - | (13,750 | ) | |||||
| Total other expense | $ | (13,106 | ) | $ | (59,831 | ) | ||
| Net (loss) Income | $ | (197,014 | ) | $ | (590,971 | ) | ||
| Other Comprehensive Loss | (113 | ) | (756 | ) | ||||
| Comprehensive Loss | $ | (197,127 | ) | $ | (591,727 | ) | ||
Operating Loss; Net (Loss) Income
Our comprehensive loss decreased by $394,600, from ($591,727) to ($197,127), from the three months ended March 31, 2022 compared to the three months ended March 31, 2023. Our operating loss decreased by $347,232, from ($531,140) to ($183,908) for the same period. The decrease in net loss compared to the same period of the prior year is primarily a result of a decreases in general and administrative expenses, professional fees, depreciation and amortization, and other expenses. These changes are detailed below.
Revenue
We have not had any revenues since our inception. Once we have sufficient funding, we plan to research and possibly enter the hemp and infused beverage industry through our newly acquired property in New York, and conduct Sangre’s Cannabis Genomic Study and process those result. In the long-term we plan to be a company focused on purchasing land and building commercial grade “Cultivation Centers” to consult, assist, manage & lease to licensed dispensary owners and organic grow operators on a contract basis, with a concentration on the legal and medical marijuana (Cannabis) sector. Our long-term plan is to become a True “Seed-to-Sale” company providing infrastructure, financial solutions and real estate options in this new emerging market, worldwide. We plan to make our brand global and therefore we will look for opportunities to conduct future research, marketing, import and exporting, and manufacturing of any proprietary products on an international level.
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General and Administrative Expenses
General and administrative expenses decreased by $3,008, from $136,790 for the three months ended March 31, 2022 to $133,782 for the three months ended March 31, 2023, primarily due to slight decreases in marketing expense.
Professional Fees
Our professional fees decreased by $333,305 during the three months ended March 31, 2023 compared to the three months ended March 31, 2022. Our professional fees were $26,096 for the three months ended March 31, 2023 and $359,401 for the three months ended March 31, 2022. These fees are largely related to fees paid for legal and accounting services, along with compensation to independent contractors, and decreased significantly primarily as a result of decreases in the value of stock-based compensation awards due to issuing shares for services during the period. We expect these fees to vary quarter-to-quarter as our business and stock price fluctuate if we continue to use stock-based compensation. In the event we undertake an unusual transaction, such as an acquisition, securities offering, or file a registration statement, we would expect these fees to substantially increase during that period.
Depreciation and Amortization
During the three months ended March 31, 2023 we had depreciation and amortization expense of $24,030, compared to $34,949 in the three months ended March 31, 2022. Our depreciation and amortization expense primarily relates to our property and trademark acquisitions.
Interest Expense
Interest expense decreased from ($46,081) for the three months ended March 31, 2022 to ($13,106) for the three months ended March 31, 2023. Our interest expense primarily relates to notes payable from attorneys and related parties.
Other Expense
During the three months ended March 31, 2023, our other expense was $0 compared to $13,750 for the three months ended March 31, 2022. The other expense during the three months ended March 31, 2022 primarily related to broker commissions.
Liquidity and Capital Resources
Introduction
During the three months ended March 31, 2023, because of our operating losses, we did not generate positive operating cash flows. Our cash on hand as of March 31, 2023 was $95,751 and our monthly cash flow burn rate was approximately $45,000. Our cash on hand was primarily proceeds from the sales of our securities and the sale of our residential property near La Veta, Colorado. We currently do not believe we will be able to satisfy our cash needs from our revenues for many years to come.
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Our cash, current assets, total assets, current liabilities, and total liabilities as of March 31, 2023 and December 31, 2022, respectively, are as follows:
| March 31, 2023 | December 31, 2022 | Change | ||||||||||
| Cash | $ | 95,571 | $ | 315,826 | $ | (220,075 | ) | |||||
| Total Current Assets | 119,459 | 342,075 | (222,616 | ) | ||||||||
| Total Assets | 1,396,675 | 1,633,818 | (237,143 | ) | ||||||||
| Total Current Liabilities | 1,395,564 | 1,464,022 | (68,458 | ) | ||||||||
| Total Liabilities | 1,395,564 | 1,464,022 | (68,458 | ) | ||||||||
Our total assets decreased by $237,143 as of March 31, 2023 as compared to December 31, 2022. The decrease in our total assets between the two periods was attributed to decreases in our cash, prepaid expenses, and computers and equipment, partially offset by an increase in our computers and equipment.
Our current liabilities and total liabilities decreased by $68,458, as of March 31, 2023 as compared to December 31, 2022. This decrease was primarily due to decreases in accounts payable, accrued officer compensation, notes payable - related party, and lease liability, partially offset by increases in accrued expenses and accrued interest.
In order to pay our obligations in full or in part when due, we will be required to raise capital from other sources. There is no assurance, however, that we will be successful in these efforts.
Cash Requirements
We had cash available of $95,751 and $315,826 as of March 31, 2023 and December 31, 2022, respectively. Based on our lack of revenues, our cash on hand and current monthly burn rate of approximately $45,000, we will need to continue borrowing from our shareholders and other related parties, and/or raise money from the sales of our securities, to fund operations.
Sources and Uses of Cash
Operations
We had net cash used in operating activities of $177,173 for the three months ended March 31, 2023, as compared to $181,826 for the three months ended March 31, 2022. For the period in 2023, the net cash used in operating activities consisted primarily of our net loss of ($197,014), adjusted by depreciation and amortization of $24,030, debt discount amortization of $0, estimated fair value of shares issued for services of $22,500, and imputed interest on RP loans of $5,942, and further adjusted by decreases in assets related to prepaid expenses and deposits of $2,540, and decreases in liabilities consisting of accounts payable of $25,900 and accrued expenses of $9,271. For the period in 2022, the net cash used in operating activities consisted primarily of our net loss of ($590,971), adjusted by depreciation and amortization of $34,949, debt amortization of $25,018, estimated fair value of shares issued for services of $314,200, and imputed interest on RP loans of $9,127, and adjusted by decreases in prepaid expenses and deposits of $3,502 and accounts payable of $13,001, and increases in accrued expenses of $35,350.
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Investments
For the three months ended March 31, 2023, we had cash flows from investing activities of ($10,000), all related to purchases of property and equipment. For the three months ended March 31, 2022, we did not have cash flows from investing activities.
Financing
Our net cash used in financing activities for the three months ended March 31, 2023 was ($32,789), compared to cash provided by financing activities of $196,816 for the three months ended March 31, 2022. For the period in 2023, our financing activities related entirely of repayments of notes payable-related party of ($32,789). For the period in 2022, our financing activities related to proceeds from the sale of common stock of $30,000, proceeds from notes payable-related party of $480,857, partially offset by repayments on notes payable of $14,041 and repayments of notes payable-related party of $300,000.
Off Balance Sheet Arrangements
We have no off balance sheet arrangements.
| ITEM 3 | Quantitative and Qualitative Disclosures About Market Risk |
As a smaller reporting company, we are not required to provide the information required by this Item.
| ITEM 4 | Controls and Procedures |
(a) Evaluation of Disclosure Controls Procedures
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure and control procedures are also designed to ensure that such information is accumulated and communicated to management, including the chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures.
As of March 31, 2023, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer (our Principal Executive Officer) and chief financial officer (our Principal Financial Officer), of the effectiveness of the design and operation of our disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment. We also do not have an audit committee. Based on the evaluation described above, and as a result, in part, of not having an audit committee and having one individual serve as our chief executive officer and chief financial officer has concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective as of March 31, 2023 to the same extent they were not effective as of December 31, 2022.
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In addition to the deficiencies previously reported, we do not have formal processes related to the identification and approval of related party transactions.
As funds become available to us, we expect to implement additional measures to improve disclosure controls and procedures.
(b) Changes in Internal Controls over Financial Reporting
There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
(c) Officer’s Certifications
Appearing as an exhibit to this quarterly report on Form 10-Q are “Certifications” of our Chief Executive and Financial Officer. The Certifications are required pursuant to Sections 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of the quarterly report on Form 10-Q contains information concerning the Controls Evaluation referred to in the Section 302 Certifications. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
PART II – OTHER INFORMATION
| ITEM 1 | Legal Proceedings |
In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.
| ITEM 1A | Risk Factors |
As a smaller reporting company, we are not required to provide the information required by this Item.
| ITEM 2 | Unregistered Sales of Equity Securities and Use of Proceeds |
During the three months ended March 31, 2023, we issued the following unregistered securities:
Common Stock Sales
We did not sell any shares of our common stock during the three months ended March 31, 2023.
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Common Stock Issued to Consultants
During the three months ended March 31, 2023, we agreed to issue an aggregate of 150,000 shares of common stock to consultants for services performed. The total fair value of common stock was $22,500 based on the closing price of our common stock earned on the measurement date. The issuances were made in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended. To make that determination we relied on the representations of the purchasers contained in the agreements signed by the purchasers and the fact the consultants did work for the company and was familiar with the company, its operations and its management.
| ITEM 3 | Defaults Upon Senior Securities |
There have been no events which are required to be reported under this Item.
| ITEM 4 | Mine Safety Disclosures |
There have been no events which are required to be reported under this Item.
| ITEM 5 | Other Information |
None.
| ITEM 6 | Exhibits |
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| 21.1 (6) | Subsidiaries of WEED, Inc. | |
| 31.1 | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith). | |
| 31.2 | Rule 13a-14(a)/15d-14(a) Certification of Chief Accounting Officer (filed herewith). | |
| 32.1 | Section 1350 Certification of Chief Executive Officer (filed herewith). | |
| 32.2 | Section 1350 Certification of Chief Accounting Officer (filed herewith). |
| 101.INS ** | Inline XBRL Instance Document | |
| 101.SCH ** | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL ** | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF ** | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB ** | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE ** | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104** | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
| * | Filed herewith. |
| ** | XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
| (1) | Incorporated by reference from our Registration Statement on Form S-1 filed with the Commission on August 11, 2017. |
| (2) | Incorporated by reference from the Amendment No. 1 to our Registration Statement on Form S-1 filed with the Commission on November 16, 2017. |
| (3) | Incorporated by reference from the Amendment No. 2 to our Registration Statement on Form S-1 filed with the Commission on February 1, 2018. |
| (4) | Incorporated by reference from the Amendment No. 3 to our Registration Statement on Form S-1 filed with the Commission on April 30, 2018. |
| (5) | Incorporated by reference from the Current Report on Form 8-K filed with the Commission on March 7, 2019. |
| (6) | Incorporated by reference from the Annual Report on Form 10-K filed with the Commission on April 16, 2019. |
| (7) | Incorporated by reference from the Current Report on Form 8-K filed with the Commission on December 10, 2021. |
| (8) | Incorporated by reference from the Current Report on Form 8-K filed with the Commission on August 4, 2022. |
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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.
| WEED, Inc. | ||
| Dated: May 16, 2023 | /s/ Glenn E. Martin | |
| By: | Glenn E. Martin | |
| Its: | President, Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Accounting Officer) (Principal Financial Officer) | |
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