10-Q

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 June 30, 2023

Commission File No. 000-53425

1606 Corp.

(Name of small business issuer in its charter)

Nevada	86-1497346
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2425 E. Camelback Rd Suite 150

Phoenix, AZ 85016

(Address of principal executive offices)

(602) 481-1544

(Issuer’s telephone number)

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. 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 and post such files). Yes ☒     No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or 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 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐     No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of August 11, 2023, the Company had 46,158,606 outstanding shares of its common stock, par value $0.0001.

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2, of Part I of this report include forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by forward-looking statements.

In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “proposed,” “intended,” or “continue” or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other “forward-looking” information. There may be events in the future that we are not able to accurately predict or control. Before you invest in our securities, you should be aware that the occurrence of any of the events described in this Quarterly Report could substantially harm our business, results of operations and financial condition, and that upon the occurrence of any of these events, the trading price of our securities could decline and you could lose all or part of your investment. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, growth rates, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this Quarterly Report to conform these statements to actual results.

2

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Balance Sheets (unaudited)	4
	Condensed Statements of Operations (unaudited)	5
	Condensed Statements of Stockholders’ Deficit (unaudited)	6
	Condensed Statements of Cash Flows (unaudited)	7
	Notes to Condensed Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	15
Item 4.	Controls and Procedures	16
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Mine Safety Disclosures	17
Item 5.	Other Information	17
Item 6.	Exhibits	18
Signatures		19

3

1606 CORP.
CONDENSED BALANCE SHEETS
(unaudited)
	June 30,			December 31,
	2023			2022
ASSETS
Current Assets:
Cash	$	26,973		$	105,065
Accounts Receivable		3,600			-
Notes Receivable		21,500			-
Inventory		129,202			113,174
Prepaids & Other Current Assets		-			13,577
Total Current Assets		181,275			231,816
Total Assets	$	181,275		$	231,816
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Credit Card Payable	$	38,395		$	25,188
Accrued Expenses		7,083			-
Accrued Interest Payable - Related Party		8,215			3,173
Note Payable to Shareholder		755,050			735,050
Note Payable to Related Party		63,456			63,456
Total Current Liabilities		872,199			826,867
Commitments and Contingencies (Note 5)
Undesignated Preferred Stock, par value $0.0001; 40,000,000 authorized; no shares issued and
outstanding as of June 30, 2023 and December 31, 2022		-			-
Class A Convertible Preferred Stock, par value $0.0001 per share, 60,000,000 shares authorized;
56,632,599 and 56,635,000 shares issued and outstanding as of June 30, 2023 and
December 31, 2022, respectively		5,663			5,663
Common Stock, par value $0.0001 per share, 5,000,000,000 shares authorized, 46,158,606 and
and 37,428,394 shares issued and outstanding as of June 30, 2023 and December 31, 2022,
respectively		4,616			3,743
Additional Paid-in Capital		841,471			236,841
Accumulated Deficit		(1,542,674	)		(841,298	)
Total Stockholders' Deficit		(690,924	)		(595,051	)
Total Liabilities and Stockholders' Deficit	$	181,275		$	231,816

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

4

1606 CORP.

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended						Six Months Ended
	June 30						June 30
	2023			2022			2023			2022
Revenues, net of discounts	$	304		$	4,382		$	1,474		$	9,302
Cost of goods sold		3,556			1,472			4,781			3,236
Gross profit (loss)		(3,252	)		2,910			(3,307	)		6,066
Operating expenses:
Write-off of investments		65,000			-			65,000			-
Selling, general and administrative		402,912			124,481			633,069			273,403
Total operating expenses		467,912			124,481			698,069			273,403
Loss before Income tax		(471,164	)		(121,571	)		(701,376	)		(267,337	)
Income tax expense (benefit)		-			-			-			-
Net loss	$	(471,164	)	$	(121,571	)	$	(701,376	)	$	(267,337	)
Net loss per share - basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.01	)
Weighted average shares outstanding - basic and diluted		44,326,744			37,103,394			43,541,222			37,103,394

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

5

1606 Corp.
CONDENSED STATEMENTS OF STOCKHOLDERS' DEFICIT
(unaudited)
	Preferred Stock						Common Stock				Additional Paid-in			Accumulated			Total Stockholders'
	Shares			Amount			Shares		Amount		Capital			Deficit			(Deficit)
Balance, December 31, 2021		56,635,000		$	5,663			37,103,394	$	3,710	$	74,374		$	(301,261	)	$	(217,514	)
Net loss		-			-			-		-		-			(145,766	)		(145,766	)
Balance, March 31, 2022		56,635,000		$	5,663			37,103,394	$	3,710	$	74,374		$	(447,027	)	$	(363,280	)
Net loss		-			-			-		-		-			(121,571	)		(121,571	)
Balance, June 30, 2022		56,635,000		$	5,663			37,103,394	$	3,710	$	74,374		$	(568,598	)	$	(484,851	)
Balance, December 31, 2022		56,635,000		$	5,663			37,428,394	$	3,742	$	236,842		$	(841,298	)	$	(595,051	)
Net loss		-			-			-		-		-			(230,212	)		(230,212	)
Share conversions		(202,405	)		(20	)		5,060,125		506		(486	)		-			-
Common stock issued for cash		-			-			725,000		73		412,427			-			412,500
Balance, March 31, 2023		56,432,595		$	5,643			43,213,519	$	4,321	$	648,783		$	(1,071,510	)	$	(412,763	)
Shares issued for services provided - May 22, 2023		-			-			1,445,087		145		49,855						50,000
Shares issued for services provided - June 2, 2023		200,004			20			1,500,000		150		142,833						143,003
Net loss		-			-			-		-		-			(471,164	)		(471,164	)
Balance, June 30, 2023		56,632,599		$	5,663			46,158,606	$	4,616	$	841,471		$	(1,542,674	)	$	(690,924	)

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

6

1606 CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
	Six Months Ended June 30,
	2023			2022
Cash flows from operating activities:
Net loss	$	(701,376	)	$	(267,337	)
Adjusted for Non-cash Activity:
Shares issued for services provided		193,003			-
Write-off of investments		65,000
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in operating assets and liabilities:
Accounts Receivable		(3,600	)		(510	)
Inventory		(16,028	)		(62,408	)
Prepaids & Other Current Assets		13,577			-
Credit Card Payable		13,207			-
Accrued Expenses		7,083
Accrued Interest Payable - Related Party		5,042			-
Net cash used in operating activities		(424,093	)		(330,255	)
Cash flows from investing activities:
Increase in operating companies		(65,000	)		-
Investment in Note Receivable		(21,500	)		-
Net cash used in investing activities		(86,500	)		-
Cash flows from financing activities:
Increase in Note Payable to Shareholder		20,000			340,000
Proceeds from sale of common stock		412,500			-
Net cash provided by financing activities		432,500			340,000
Net Change in Cash		(78,092	)		9,745
Cash, beginning of the period		105,065			9,543
Cash, end of the period	$	26,973		$	19,288
Supplemental Disclosure of Cash Flows Information:
Cash paid for interest	$	-		$	-
Income taxes paid	$	-		$	-

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

7

1606 Corp.

Notes to Condensed Financial Statements

NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Corporate History

1606 Corp. (“1606” or the “Company”) was formed in February 2021 and was a division of Singlepoint Inc. (“Singlepoint”) until April 2021, when Singlepoint spun off 1606, whereby each holder of common stock and Class A preferred stock of Singlepoint received one share of unregistered and restricted common stock or Class A Preferred Stock of the Company for each such shared owned of Singlepoint.

Business

1606 Corp. is an early-stage sales marketing company focused on the domestic hemp cigarette (aka “pre-roll”) market. The Company currently sells its hemp products through individual online sales.

Going Concern

The financial statements have been prepared assuming the Company will continue as a going concern. As of June 30, 2023, the Company has yet to achieve significant profitable operations and is dependent on its ability to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s ability to continue in existence is dependent on its ability to develop its business and to achieve profitable operations. Since the Company does not anticipate achieving profitable operations and/or adequate cash flows in the near term, management will continue to pursue additional equity financing through private placements of the Company’s common stock.

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the Company’s financial position as of June 30, 2023 and December 31, 2022, and the results of the Company’s operations for the interim periods presented. We follow the same accounting policies when preparing quarterly financial data as we use for preparing annual data. These statements should be read in conjunction with the financial statements and the notes included in our latest annual report on Form 10-K for the year ended December 31, 2022, and our other reports on file with the Securities and Exchange Commission (“SEC”).

Management believes the assumptions underlying the Company’s standalone financial statements are reasonable. Nevertheless, the financial statements may not include all the actual expenses that would have been incurred had the Company operated as a standalone company during the periods presented, and may not reflect the Company’s results of operations, financial position and cash flows had the Company operated as a standalone company during the periods presented. Actual costs that would have been incurred if the Company had operated as a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) 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 financial statements, and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results may differ from those estimates.

Cash

Cash consists of highly liquid investments with an original maturity of three months or less.

8

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounts Receivable and Credit Policy

Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Management of the Company considers all receivables collectable. Uncollectable accounts are charged to expense when the account is determined to be uncollectable. The allowance is provided based upon a review of the individual accounts outstanding, prior history of uncollectable accounts receivable and existing economic conditions. At June 30, 2023 and December 31, 2022, the allowance for doubtful accounts balance is $0.

Inventory

Inventories are valued at the lower of cost (first in, first out basis) or market, and consist primarily of hemp products. The Company’s inventory as of June 30, 2023, and December 31, 2022 consisted of finished hemp products. At each balance sheet date, the Company evaluates inventories for excess quantities, obsolescence, or shelf-life expiration. This evaluation includes analysis of historical sales levels by product, projections of future demand and the risk of technological or competitive obsolescence for products. To the extent that management determines there is excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value of this inventory to estimated net realizable value. No such adjustments were deemed necessary during the periods presented.

Investments

Investments are recorded at cost and evaluated for impairment each balance sheet date.  During the quarter ended June 30, 2023, the Company wrote-off investments of $15,000 and $50,000 initially made under the terms of a separate Letter of Intent and Member Interest Purchase Agreement, respectively in companies that operate in the hemp market.  See Note 5 – Commitments and Contingencies.

Revenue Recognition

The Company, which has adopted ASC 606 “Revenue from Contracts with Customers”, derives its revenues primarily from the sale of hemp products. Revenues are recognized when control of these products is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products. Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Any shipping and handling fees charged to customers are reported within revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The Company does not have any significant financing components as payment is received at or shortly after the point of sale.

Cost of Goods Sold and Selling, General and Administrative Expenses

Costs associated with the production and procurement of product are included in cost of goods sold, including shipping and handling costs such as inbound freight costs, purchasing, and receiving costs, inspection costs and other product procurement related charges. All other expenses are included in selling, general and administrative expenses, as the predominant expenses associated therewith are general and administrative in nature.

Income taxes

Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities at the applicable tax rates. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates.

Tax benefits are recognized from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by a tax authority and based upon the technical merits of the tax position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized upon settlement. An unrecognized tax benefit, or a portion thereof, is presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed.

9

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Net Loss Per Common Share

a. Basic loss per share data is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted loss per share data is computed using the weighted-average number of common and dilutive common-equivalent shares outstanding during the period. Dilutive common-equivalent shares consist of shares that would be issued upon the exercise of stock options and other common stock equivalents, computed using the treasury stock method, and are excluded from the calculation of weighted average dilutive common shares, to the extent they are issued and outstanding, because their effect would be anti-dilutive. The number of potentially dilutive shares excluded from the calculation of diluted earnings per share were 2,265,400 related to the Company’s Class A Preferred Stock. These shares were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive.

b. At June 30, 2023 and 2022, 46,158,606 and 37,103,394 shares of the Company’s Common Stock were outstanding, respectively. These share amounts are utilized for the calculation of basic and diluted earnings per share for the three and six month periods then ended.

Selling and Marketing

Selling and Marketing costs are expensed as incurred and are reported under selling, general and marketing in the accompanying statements of operations. Such costs were $84,892 and $19,090 for the three months ended June 30, 2023 and 2022, respectively and $122,777 and $65,678 for the six months ended June 30, 2023 and 2022, respectively.

Fair value measurements

Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below:

Level 1 —Quoted prices for identical assets or liabilities in active markets.

Level 2 —Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 —Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are unobservable.

The Company considers the carrying amounts of its financial instruments (cash, credit card payable and accrued interest payable) in the balance sheets to approximate fair value because of the short-term and/or highly liquid nature of these financial instruments.

Segment reporting

The Company operates in one business segment. As a result, the Company’s operations are a single reportable segment, which is consistent with the Company’s internal management reporting.

Subsequent Events

The Company has evaluated all subsequent events from June 30, 2023, through the date of filing of this report.

Recent Accounting Pronouncements 

The Company has considered the potential impact of recent accounting pronouncements and has not identified any that are expected to have a material impact on the financial statements.

10

NOTE 3 – RELATED PARTY TRANSACTIONS

Related Party Transactions

During the quarter ended June 30, 2023, a total of 200,001 shares of Class A Preferred Stock were issued to the Company’s Vice President, Austen Lambrecht, the son of Greg Lambrecht, the Company’s Chief Executive Officer (“CEO”). In addition, one share of Class A Preferred Stock was issued to Greg Lambrecht and each of the two other members of the Company’s Board of Directors for services provided. See Note 4 – Capital Stock.

During the three and six month periods ended June 30, 2023, the Company borrowed $20,000 and $0, respectively, and during the three and six months ended June 30, 2022 the Company borrowed $195,000 and $340,000, respectively in a series of cash payments from the Company’s CEO in exchange for the issuance of a promissory note. The promissory note is not secured by Company assets, does not bear interest and is due in full on December 31, 2023. The promissory note totals $755,050 at June 30, 2023.

In June 2021, the Company entered into an Asset Purchase Agreement with SinglePoint to purchase certain assets in exchange for the issuance of a promissory note (the “Note”) for $63,456 with SinglePoint. The Note bears interest at 5%, has a three-year term, and is due in monthly installments of $1,902 beginning August 1, 2021. The Company has not made any payments on the Note and is currently in default. Accrued interest on the Note totaled $8,215 and $3,173 at June 30, 2023 and December 31, 2022, respectively.

NOTE 4 – CAPITAL STOCK

Capital Stock

The Company’s authorized capital stock consists of 5,000,000,000 shares of common stock at $0.0001 par value per share and 100,000,000 shares of Preferred Stock at $0.0001 par value per share. The Company has designated 60,000,000 shares of Preferred Stock as Class A Convertible Preferred Stock (the “Class A Preferred Stock”). The remaining 40,000,000 of Preferred Stock remains undesignated.

Common Stock

The holders of common stock are entitled to one vote for each share held. The affirmative vote of a majority of votes cast at a meeting which commences with a lawful quorum is sufficient for approval of most matters upon which shareholders may or must vote, including the questions presented for approval or ratification at the Company’s Annual Shareholders’ Meeting. An amendment of the Company’s Articles of Incorporation, however, requires the affirmative vote of a majority of the Company’s total voting power for approval. Common shares do not carry cumulative voting rights, and holders of more than 50% of the common stock have the power to elect all directors and, as a practical matter, to control the Company. Holders of common stock are not entitled to preemptive rights, and the common stock may only be redeemed at the Company’s election.

During the quarter ended June 30, 2023, a total of 2,945,087 shares of the Company’s common stock was issued in payment for various services provided. The shares had a fair value of $83,000 based on the closing market price of the common shares on the date of grant. There were no additional shares of common stock issued during the six-month period ended June 30, 2023.

During the six-month period ended June 30, 2023, an additional 5,060,125 common shares were issued upon conversion of 202,405 shares of Class A Preferred Stock and 725,000 common shares were sold at $.50 per share for a total purchase price of $412,500.

Preferred Stock

As of June 30, 2023, the Company had 56,632,599 shares of Class A Preferred Stock outstanding, of which 31,092,596 shares are held by the Company’s CEO. The former officers and directors of Singlepoint hold the remaining shares of the Class A Preferred Stock.

The Class A Preferred Stock has certain material rights and preferences (as is more fully set forth in the Certificate of Designation of the Class A Preferred Stock).

During the quarter ended June 30, 2023, a total of 200,001 shares of Class A Preferred Stock was issued to the Company’s Vice President, Austen Lambrecht and one share of Class A Preferred Stock was issued to Greg Lambrecht and each of the two other members of the Company’s Board of Directors for services provided. The value of all these shares was determined to be $110,003 based on an assumed conversion at a one-for-25 ratio of the Class A Preferred Stock for common shares and the closing market price of the common shares on the date of grant.

During the six-month period ended June 30, 2023, an additional 202,405 shares of Class A Preferred Stock were converted into 5,060,125 common shares. No shares of the Company’s Class A Preferred Stock were issued during the quarter and six-month period ended June 30, 2022.

11

NOTE 4 – CAPITAL STOCK (continued)

Ranking

The Class A Preferred Stock ranks, as to dividends and upon liquidation, senior and prior to the Common Stock of the Company.

Liquidation

In the event of liquidation, dissolution or winding up of the Company, the holders of the Class A Preferred Stock are entitled, out of the assets of the Company legally available for distribution, to receive, before any payment to the holders of shares of Common Stock or any other class or series of stock ranking junior, and amount per share equal to $1.00.

Voting

Each share of Class A Preferred Stock entitles the holder thereof to 50 votes on any matters requiring a shareholder vote of the Company.

Conversion

Each share of our Class A Preferred Stock is convertible into Common Stock on a one-for-25 basis at the option of the holder.

NOTE 5 – COMMITMENTS AND CONTINGENCIES

Letter of Intent

On February 22, 2023, the Company entered into a Letter of Intent for the acquisition of a Fifty-One Percent (51%) ownership interest in a natural therapeutic products company for total purchase consideration of $7,140,000 consisting of cash payments of $150,000 and $6,990,000 in Company common stock.  During the quarter ended June 30, 2023, the Company wrote off the initial $15,000 investment as it was determined the acquisition would not move forward and recovery of the amount was uncertain.

Membership Interest Purchase Agreement

On February 28, 2023, the Company entered into a Membership Interest Purchase Agreement for the acquisition of Fifty-One Percent (51%) of the Membership Units of a hemp distribution company for total purchase consideration consisting of 230,559 shares of the Company’s common stock and a cash payment of $50,000.  During the quarter ended June 30, 2023, the Company wrote off the initial $50,000 investment as it was determined the acquisition would not move forward and recovery of the amount was uncertain.

Legal Proceedings and Other Claims

From time to time, we are a party to claims and actions for matters arising out of our business operations. We regularly evaluate the status of the legal proceedings and other claims in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss, or an additional loss, may have been incurred and determine if accruals are appropriate. If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of possible loss or range of possible loss can be made for disclosure. Although the outcome of claims and litigation is inherently unpredictable, we believe that we have adequate provisions for any probable and estimable losses. It is possible, nevertheless, that our consolidated financial position, results of operations or liquidity could be materially and adversely affected in any particular period by the resolution of a claim or legal proceeding. Legal expenses related to defense, negotiations, settlements, rulings, and advice of outside legal counsel are expensed as incurred.

Employment Agreements

In February 2023, the Company entered into an employment agreement with Austen Lambrecht. The agreement provides that Austen Lambrecht would serve as Vice President for a term of three years at an annual salary of Eighty-Five Thousand Dollars ($85,000), with an incentive bonus and stock options as determined by the Board of Directors. The agreement automatically renews for additional six-month periods unless either party has provided written termination of this Agreement at least 90 days prior to the expiration of such term. The agreement also provides for compensation under certain severance and change of control circumstance of twelve months of salary and other bonus dollars that may be due.

The Company has $7,083 accrued and unpaid compensation at June 30, 2023 under this agreement.

Employment Agreements (continued)

In May 2021, the Company entered into an employment agreement with Greg Lambrecht. The agreement provides that Mr. Lambrecht would serve as Chief Executive Officer Company for a term of three years at an annual salary of Two Hundred Fifty Thousand Dollars ($250,000), and an incentive bonus as determined by the Board of Directors. The agreement automatically renews for additional six-month periods unless either party has provided written termination of this Agreement at least 90 days prior to the expiration of such term.

Greg Lambrecht has agreed to waive his right to payment of any amounts due but unpaid under his employment contract.

12

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

Plan of Operation

The Company was incorporated in Nevada in February 2021 as a spin-off from Singlepoint Inc. in April 2021. We offer nicotine-free and tobacco-free alternatives to traditional cigarettes and vaping products. Our manufacturers use state of the art manufacturing in the United States and a blend of all-natural ingredients to provide smokers aged 21+ an alternative to traditional cigarettes that does not contain nicotine or tobacco, and promote health benefits such as pain management, reduced anxiety and enhanced wakefulness. Our smokable hemp cigarettes are an alternative for customers that currently smoke or want to quit smoking nicotine. All our hemp cigarettes are manufactured with 100% premium hemp flower and are nicotine-free, tobacco-free and organically grown – free of pesticides and other contaminants. Our key customers comprise distributors and retail customers, including convenience stores, smoke shops and individual purchasers.

We are focused on increasing our retail footprint concentrating on regional expansion in addition to continuing to grow our online presence and retail distribution network. We sell our products directly online through our website, www.1606hemp.com, and ship them directly to anywhere within the United States. Our products are also sold in approximately 300 retail stores.

With our corporate headquarters located in Phoenix, AZ and our executive team experienced in tobacco sales, distribution, commercialization, and marketing, we believe our product “1606 Original Hemp” is positioned to become the market leader in the smokable industrial hemp cigarette marketplace.

We have released four primary flavor variants namely Original, Smooth, Menthol, and Mango. Original is a full-flavored product which has been developed to closely emulate the taste experience of a regular tobacco cigarette. Smooth has been developed to produce a flavor profile which is milder in taste. Menthol has been developed to mimic the taste profile of a mentholated tobacco cigarette. Mango has been developed to produce a product that appeals to consumers that want a flavored product. 1606 will market its products under the 1606 Hemp brand for the Original Hemp product and under Zero for the product that has no Marijuana smell. Through the application of a flavoring treatment, they can completely transform the raw material into a finished product that tastes and smells similar to tobacco when combusted. This material is referred to as Base Cigarette Material (“BCM”). Similarly, to fine-cut tobacco, BCM is derived entirely from plant matter, however BCM is fundamentally different from fine-cut tobacco in that it has no tobacco content whatsoever. As such, BCM contains no nicotine, is non-addictive, and undergoes substantially different processing than fine-cut tobacco. This process forms a significant part of the value of Zero brand and is a closely guarded trade secret.

Results of Operations

Comparison of the Three Months Ended June 30, 2023 with the Three Months Ended June 30, 2022

Net Revenue. For the three months ended June 30, 2023 and 2022, we generated revenues of $304 and $4,382, respectively. The decrease in revenues was directly related to the decrease in sales of hemp cigarettes.

Cost of Goods Sold. For the three months ended June 30, 2023 and 2022, cost of revenue was $3,556 and $1,472, respectively. The increase was directly related to distribution of product samples in an effort to expand distribution and increase the number of retail locations that carry our products for sale.

Gross Profit. As a result of the foregoing, we had a negative gross profit of $(3,252) for the three months ended June 30, 2023, compared with a gross profit of $2,910 for the three months ended June 30, 2022.

Operating Expenses. For the three months ended June 30, 2023 and 2022, total operating expenses were $467,912 and $124,481, respectively. The increase was primarily due to write-off of investments, higher legal and professional expenses related to regulatory filings and listing of our common stock, higher advertising and marketing spend associated with efforts to expand distribution of our product offerings and higher salaries and wages.

Net Loss. For the three months ended June 30, 2023 and 2022, net loss was $471,164 and $121,571, respectively.  The increase in net loss was primarily due to higher operating expenses discussed above.

13

Comparison of the Six Months Ended June 30, 2023 with the Six Months June 30, 2022

Net Revenue. For the six months ended June 30, 2023 and 2022, we generated revenues of $1,474 and $9,302, respectively. The decrease in revenues was due primarily to the decrease in sales of hemp cigarettes.

Cost of Goods Sold. For the six months ended June 30, 2023 and 2022, cost of revenue was $4,781 and $3,236, respectively. The increase was directly related to distribution of product samples in an effort to expand distribution and increase the number of retail locations that carry our products for sale.

Gross Profit. As a result of the foregoing, we had a negative gross profit of $(3,307) for the six months ended June 30, 2023, compared with a gross profit of $6,066 for the six months ended June 30, 2022.

Operating Expenses. For the six months ended June 30, 2023 and 2022, total operating expenses were $698,069 and $273,403, respectively. The increase was primarily due to write-off of investments, higher legal and professional expenses related to regulatory filings and listing of our common stock, higher advertising and marketing spend associated with efforts to expand distribution of our product offerings and higher salaries and wages.

Net Loss. For the six months ended June 30, 2023 and 2022, net loss was $701,376 and $267,337, respectively.  The increase in net loss was primarily due to higher operating expenses as discussed above.

Liquidity and Capital Resources

As of June 30, 2023, the Company has yet to achieve profitable operations, and while the Company hopes to achieve profitable operations in the future, if not it may need to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s principal sources of liquidity have been cash provided by operating activities, as well as its ability to raise capital. The Company’s operating results for future periods are subject to numerous uncertainties and it is uncertain if the Company will be able to become profitable and continue growth for the foreseeable future. If management is not able to increase revenue and/or manage operating expenses, the Company may not be able to achieve profitability. The Company’s ability to continue in existence is dependent on the Company’s ability to achieve profitable operations.

To continue operations for the next 12 months, we will have a cash need of approximately $1,000,000. Should we not be able to fulfill our cash needs through the increase of revenue, we will need to raise money through outside investors through convertible notes, debt or similar instrument(s). The Company plans to pay off current liabilities through sales and increasing revenue through sales of Company services and or products, or through financing activities as mentioned above, although there is no guarantee that the Company will ultimately do so.

Advances from Officer

During the three months ended June 30, 2023, the Company borrowed $20,000 of additional funds from the Chief Executive Officer. Accordingly, the promissory note due to him increased from December 31, 2022 and totals $755,050. The note does not bear interest and is due in a lump sum payment on December 31, 2023.

Operating Activities

Cash used in operating activities – Net cash used in operating activities was $424,093 for the six months ended June 30, 2023, primarily as a result of our net loss of $701,376, reduced by $193,003 for non-cash expense associated with grants of our common and Class A Preferred shares and $65,000 for the write-off of investments.  Net cash used in operating activities was $330,255 for the six months ended June 30, 2022, primarily as a result of our net loss of $267,337.  

Investing Activities

Cash flow used in investing activities – Net cash used in investing activities during the six months ended June 30, 2023, totaled $86,500. The Company made preliminary investments of $50,000 and $15,000 in two separate operating companies which were then subsequently written-off (see Note 5 of the Notes to the Condensed Financial Statements for further details).  The $21,500 related to additional funds advanced to one of the target companies for which the Company now has Notes Receivable.  There was no cash used in investing activities during the six months ended June 30, 2022.

Financing Activities

Cash flow from financing activities – During the six months ended June 30, 2023, our financing activities provided cash of $432,500 primarily from the sale of the Company’s common stock. For the six months ended June 30, 2022, our financing activities provided cash of $340,000 resulting from additional borrowings from our Chief Executive Officer.

14

Critical Accounting Policies

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Notes to the Consolidated Financial Statements describes the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements. Estimates are used for, but not limited to, contingencies and taxes. Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Consolidated Financial Statements.

Loss Contingencies

The Company is subject to various loss contingencies arising in the ordinary course of business. The Company considers the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as its ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired, or a liability has been incurred and the amount of the loss can be reasonably estimated. The Company regularly evaluates current information available to us to determine whether such accruals should be adjusted.

Income Taxes

The Company recognizes deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities. The deferred tax assets and liabilities represent the expected future tax return benefits or consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled.

Recent Accounting Pronouncements

See Note 2 of the notes to the condensed financial statements for discussion of Recent Accounting Pronouncements.

Off-Balance Sheet Arrangements

We are not currently a party to, or otherwise involved with, any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Recently Adopted Accounting Standards

None.

Purchase of Significant Equipment

We have not previously, nor do we intend to purchase any significant equipment during the next twelve months.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

15

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have performed an evaluation under the supervision and with the participation of our management, including our President and Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of our disclosure controls and procedures, (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2023. Based on that evaluation, our management, including our President and CEO and CFO, concluded that our disclosure controls and procedures were not effective as of March 31, 2023 to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer, as appropriate to allow timely decisions regarding required disclosure due to the material weaknesses described below.

Based on our evaluation under the framework described above, our management concluded that we had “material weaknesses” (as such term is defined below) in our control environment and financial reporting process consisting of the following as of the Evaluation Date:

1)	lack of a functioning audit committee resulting in ineffective oversight in the establishment and monitoring of required internal control and procedures; and
2)	inadequate segregation of duties consistent with control objectives.

A “material weakness” is defined under SEC rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

A system of controls, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting

None.  

16

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Except as discussed below are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.

Item 1A. Risk Factors

The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

17

Item 6. Exhibits

Exhibit Number	Name of Exhibit
31.1	Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. (1)
31.2	Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. (1)
32.1	Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002. (1)
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

________________

⁽¹⁾ Filed herewith.  In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act except to the extent that the registrant specifically incorporates it by reference.

18

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

	1606 Corp.
Dated: August 14, 2023	By:	/s/ Gregory Lambrecht
		Gregory Lambrecht
		Chief Executive Officer, Chief Financial Officer, Director

19

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECURITIES EXCHANGE ACT OF 1934

RULE 13a-14(a) OR 15d-14(a)

I, Gregory Lambrecht, certify that:

1.	I have reviewed this Form 10-Q for 1606 Corp. for the quarter ended June 30, 2023;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on the most recent evaluation of internal control over financial reporting, to the registrant’s other certifying officer and registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	1606 Corp.
Date: August 14, 2023	By:	/s/ Gregory Lambrecht
	Name:	Gregory Lambrecht
	Title:	CEO
		(Chief Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECURITIES EXCHANGE ACT OF 1934

RULE 13a-14(a) OR 15d-14(a)

I, Gregory Lambrecht, certify that:

1.	I have reviewed this Form 10-Q for 1606 Corp. for the quarter ended June 30, 2023;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s other certifying officer and registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	1606 Corp.
Date: August 14, 2023	By:	/s/ Gregory Lambrecht
	Name:	Gregory Lambrecht
	Title:	Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

EXHIBIT 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

The undersigned, Chief Executive Officer and Chief Financial Officer of 1606 Corp., hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to their knowledge, the Quarterly Report on Form 10-Q of 1606 Corp. for quarter ended June 30, 2023, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of 1606 Corp.

Date: August 14, 2023	By:	/s/ Gregory Lambrecht
		Gregory Lambrecht
		Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Gregory Lambrecht
		Gregory Lambrecht
		Chief Financial Officer
		(Principal Financial Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to 1606 Corp. and will be retained by 1606 Corp. and furnished to the Securities and Exchange Commission or its staff.

XML

Cover - shares	6 Months Ended
	Jun. 30, 2023	Aug. 11, 2023
Cover [Abstract]
Entity Registrant Name	1606 Corp.
Entity Central Index Key	0001877461
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	true
Entity Current Reporting Status	Yes
Document Period End Date	Jun. 30, 2023
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Entity Ex Transition Period	false
Entity Common Stock Shares Outstanding		46,158,606
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-53425
Entity Incorporation State Country Code	NV
Entity Tax Identification Number	86-1497346
Entity Address Address Line 1	2425 E. Camelback Rd Suite 150
Entity Address City Or Town	Phoenix
Entity Address State Or Province	AZ
Entity Address Postal Zip Code	85016
City Area Code	602
Local Phone Number	481-1544
Entity Interactive Data Current	Yes

XML

CONDENSED BALANCE SHEETS - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Current Assets:
Cash	$ 26,973	$ 105,065
Accounts Receivable	3,600	0
Note Receivable	21,500	0
Inventory	129,202	113,174
Prepaids and other current assets	0	13,577
Total Current Assets	181,275	231,816
Total Assets	181,275	231,816
Current Liabilities:
Credit card payable	38,395	25,188
Accrued Expenses	7,083	0
Accrued interest payable - related party	8,215	3,173
Note payable to related party	63,456	63,456
Note Payable to Shareholder	755,050	735,050
Total current liabilities	872,199	826,867
Stockholders' Equity (Deficit):
Common Stock, par value $0.0001 per share, 5,000,000,000 shares authorized, 43,213,519 and 37,428,394 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	4,616	3,743
Additional paid-in capital	841,471	236,841
Accumulated deficit	(1,542,674)	(841,298)
Total stockholders' deficit	(690,924)	(595,051)
Total liabilities and stockholders' deficit	181,275	231,816
Undesignated Preferred Stock [Member]
Stockholders' Equity (Deficit):
Preferred stock	0	0
Class A Convertible Preferred Stock [Member]
Stockholders' Equity (Deficit):
Preferred stock	$ 5,663	$ 5,663

XML

CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	5,000,000,000	5,000,000,000
Common stock, shares issued	46,158,606	37,428,394
Common stock, shares outstanding	46,158,606	37,103,394
Preferred stock, par value	$ 0.0001
Preferred stock, shares authorized	100,000,000
Undesignated Preferred Stock [Member]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	40,000,000	40,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Class A Convertible Preferred Stock [Member]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	60,000,000	60,000,000
Preferred stock, shares issued	56,632,599	56,635,000
Preferred stock, shares outstanding	56,632,599	56,635,000

XML

CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Revenues, net of discounts	$ 304	$ 4,382	$ 1,474	$ 9,302
Cost of goods sold	3,556	1,472	4,781	3,236
Gross profit (loss)	(3,252)	2,910	(3,307)	6,066
Operating expenses:
Write-off of investments	65,000	0	65,000	0
Selling, general and administrative	402,912	124,481	633,069	273,403
Total operating expenses	467,912	124,481	698,069	273,403
Loss before Income tax	(471,164)	(121,571)	(701,376)	(267,337)
Income tax expense (benefit)	0	0	0	0
Net loss	$ (471,164)	$ (121,571)	$ (701,376)	$ (267,337)
Net loss per share - basic and diluted	$ (0.01)	$ (0.00)	$ (0.01)	$ (0.01)
Weighted average shares outstanding - basic and diluted	44,326,744	37,103,394	43,541,222	37,103,394

XML

CONDENSED STATEMENTS OF STOCKHOLDERS' DEFICIT (Unaudited) - USD ($)	Total	Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit
Balance, shares at Dec. 31, 2021		56,635,000	37,103,394
Balance, amount at Dec. 31, 2021	$ (217,514)	$ 5,663	$ 3,710	$ 74,374	$ (301,261)
Net loss	(145,766)	$ 0	$ 0	0	(145,766)
Balance, shares at Mar. 31, 2022		56,635,000	37,103,394
Balance, amount at Mar. 31, 2022	(363,280)	$ 5,663	$ 3,710	74,374	(447,027)
Balance, shares at Dec. 31, 2021		56,635,000	37,103,394
Balance, amount at Dec. 31, 2021	(217,514)	$ 5,663	$ 3,710	74,374	(301,261)
Net loss	(267,337)
Balance, shares at Jun. 30, 2022		56,635,000	37,103,394
Balance, amount at Jun. 30, 2022	(484,851)	$ 5,663	$ 3,710	74,374	(568,598)
Balance, shares at Mar. 31, 2022		56,635,000	37,103,394
Balance, amount at Mar. 31, 2022	(363,280)	$ 5,663	$ 3,710	74,374	(447,027)
Net loss	(121,571)	$ 0	$ 0	0	(121,571)
Balance, shares at Jun. 30, 2022		56,635,000	37,103,394
Balance, amount at Jun. 30, 2022	(484,851)	$ 5,663	$ 3,710	74,374	(568,598)
Balance, shares at Dec. 31, 2022		56,635,000	37,428,394
Balance, amount at Dec. 31, 2022	(595,051)	$ 5,663	$ 3,742	236,842	(841,298)
Net loss	(230,212)	$ 0	$ 0	0	(230,212)
Share conversions, shares		(202,405)	5,060,125
Share conversions, amount	0	$ (20)	$ 506	(486)	0
Common stock issued for cash, shares			725,000
Common stock issued for cash, amount	412,500	$ 0	$ 73	412,427	0
Balance, shares at Mar. 31, 2023		56,432,595	43,213,519
Balance, amount at Mar. 31, 2023	(412,763)	$ 5,643	$ 4,321	648,783	(1,071,510)
Balance, shares at Dec. 31, 2022		56,635,000	37,428,394
Balance, amount at Dec. 31, 2022	(595,051)	$ 5,663	$ 3,742	236,842	(841,298)
Net loss	(701,376)
Balance, shares at Jun. 30, 2023		56,632,599	46,158,606
Balance, amount at Jun. 30, 2023	(690,924)	$ 5,663	$ 4,616	841,471	(1,542,674)
Balance, shares at Mar. 31, 2023		56,432,595	43,213,519
Balance, amount at Mar. 31, 2023	(412,763)	$ 5,643	$ 4,321	648,783	(1,071,510)
Net loss	(471,164)	$ 0	$ 0	0	(471,164)
Shares issued for services provided - May 22, 2023, shares			1,445,087
Shares issued for services provided - May 22, 2023, amount	50,000		$ 145	49,855
Shares issued for services provided - June 2, 2023, shares		200,004	1,500,000
Shares issued for services provided - June 2, 2023, amount	143,003	$ 20	$ 150	142,833
Balance, shares at Jun. 30, 2023		56,632,599	46,158,606
Balance, amount at Jun. 30, 2023	$ (690,924)	$ 5,663	$ 4,616	$ 841,471	$ (1,542,674)

XML

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net loss	$ (701,376)	$ (267,337)
Adjusted for Non-cash Activity:
Shares issued for services provided	193,003	0
Write-off of investments	65,000	0
Changes in operating assets and liabilities:
Accounts Receivable	(3,600)	(510)
Inventory	(16,028)	(62,408)
Prepaids & Other Current Assets	13,577	0
Credit Card Payable	13,207	0
Accrued Expenses	7,083
Accrued Interest Payable - Related Party	5,042	0
Net cash used in operating activities	(424,093)	(330,255)
Cash flows from investing activities:
Investment in operating companies	65,000	0
Increase in Note Receivable	21,500	0
Net cash used in investing activities	(86,500)	0
Cash flows from financing activities:
Increase in Note Payable to Shareholder	20,000	340,000
Proceeds from sale of common stock	412,500	0
Net cash provided by financing activities	432,500	340,000
Net Change in Cash	(78,092)	9,745
Cash, beginning of the period	105,065	9,543
Supplemental Disclosure of Cash Flows Information:
Cash paid for interest	0	0
Income taxes paid	$ 0	$ 0

XML

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2023

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Corporate History

1606 Corp. (“1606” or the “Company”) was formed in February 2021 and was a division of Singlepoint Inc. (“Singlepoint”) until April 2021, when Singlepoint spun off 1606, whereby each holder of common stock and Class A preferred stock of Singlepoint received one share of unregistered and restricted common stock or Class A Preferred Stock of the Company for each such shared owned of Singlepoint.

Business

1606 Corp. is an early-stage sales marketing company focused on the domestic hemp cigarette (aka “pre-roll”) market. The Company currently sells its hemp products through individual online sales.

Going Concern

The financial statements have been prepared assuming the Company will continue as a going concern. As of June 30, 2023, the Company has yet to achieve significant profitable operations and is dependent on its ability to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s ability to continue in existence is dependent on its ability to develop its business and to achieve profitable operations. Since the Company does not anticipate achieving profitable operations and/or adequate cash flows in the near term, management will continue to pursue additional equity financing through private placements of the Company’s common stock.

XML

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2023

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the Company’s financial position as of June 30, 2023 and December 31, 2022, and the results of the Company’s operations for the interim periods presented. We follow the same accounting policies when preparing quarterly financial data as we use for preparing annual data. These statements should be read in conjunction with the financial statements and the notes included in our latest annual report on Form 10-K for the year ended December 31, 2022, and our other reports on file with the Securities and Exchange Commission (“SEC”).

Management believes the assumptions underlying the Company’s standalone financial statements are reasonable. Nevertheless, the financial statements may not include all the actual expenses that would have been incurred had the Company operated as a standalone company during the periods presented, and may not reflect the Company’s results of operations, financial position and cash flows had the Company operated as a standalone company during the periods presented. Actual costs that would have been incurred if the Company had operated as a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) 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 financial statements, and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results may differ from those estimates.

Cash

Cash consists of highly liquid investments with an original maturity of three months or less.

Accounts Receivable and Credit Policy

Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Management of the Company considers all receivables collectable. Uncollectable accounts are charged to expense when the account is determined to be uncollectable. The allowance is provided based upon a review of the individual accounts outstanding, prior history of uncollectable accounts receivable and existing economic conditions. At June 30, 2023 and December 31, 2022, the allowance for doubtful accounts balance is $0.

Inventory

Inventories are valued at the lower of cost (first in, first out basis) or market, and consist primarily of hemp products. The Company’s inventory as of June 30, 2023, and December 31, 2022 consisted of finished hemp products. At each balance sheet date, the Company evaluates inventories for excess quantities, obsolescence, or shelf-life expiration. This evaluation includes analysis of historical sales levels by product, projections of future demand and the risk of technological or competitive obsolescence for products. To the extent that management determines there is excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value of this inventory to estimated net realizable value. No such adjustments were deemed necessary during the periods presented.

Investments

Investments are recorded at cost and evaluated for impairment each balance sheet date.  During the quarter ended June 30, 2023, the Company wrote-off investments of $15,000 and $50,000 initially made under the terms of a separate Letter of Intent and Member Interest Purchase Agreement, respectively in companies that operate in the hemp market.  See Note 5 – Commitments and Contingencies.

Revenue Recognition

The Company, which has adopted ASC 606 “Revenue from Contracts with Customers”, derives its revenues primarily from the sale of hemp products. Revenues are recognized when control of these products is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products. Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Any shipping and handling fees charged to customers are reported within revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The Company does not have any significant financing components as payment is received at or shortly after the point of sale.

Cost of Goods Sold and Selling, General and Administrative Expenses

Costs associated with the production and procurement of product are included in cost of goods sold, including shipping and handling costs such as inbound freight costs, purchasing, and receiving costs, inspection costs and other product procurement related charges. All other expenses are included in selling, general and administrative expenses, as the predominant expenses associated therewith are general and administrative in nature.

Income taxes

Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities at the applicable tax rates. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates.

Tax benefits are recognized from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by a tax authority and based upon the technical merits of the tax position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized upon settlement. An unrecognized tax benefit, or a portion thereof, is presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed.

Net Loss Per Common Share

a. Basic loss per share data is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted loss per share data is computed using the weighted-average number of common and dilutive common-equivalent shares outstanding during the period. Dilutive common-equivalent shares consist of shares that would be issued upon the exercise of stock options and other common stock equivalents, computed using the treasury stock method, and are excluded from the calculation of weighted average dilutive common shares, to the extent they are issued and outstanding, because their effect would be anti-dilutive. The number of potentially dilutive shares excluded from the calculation of diluted earnings per share were 2,265,400 related to the Company’s Class A Preferred Stock. These shares were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive.

b. At June 30, 2023 and 2022, 46,158,606 and 37,103,394 shares of the Company’s Common Stock were outstanding, respectively. These share amounts are utilized for the calculation of basic and diluted earnings per share for the three and six month periods then ended.

Selling and Marketing

Selling and Marketing costs are expensed as incurred and are reported under selling, general and marketing in the accompanying statements of operations. Such costs were $84,892 and $19,090 for the three months ended June 30, 2023 and 2022, respectively and $122,777 and $65,678 for the six months ended June 30, 2023 and 2022, respectively.

Fair value measurements

Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below:

Level 1 —Quoted prices for identical assets or liabilities in active markets.

Level 2 —Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 —Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are unobservable.

The Company considers the carrying amounts of its financial instruments (cash, credit card payable and accrued interest payable) in the balance sheets to approximate fair value because of the short-term and/or highly liquid nature of these financial instruments.

Segment reporting

The Company operates in one business segment. As a result, the Company’s operations are a single reportable segment, which is consistent with the Company’s internal management reporting.

Subsequent Events

The Company has evaluated all subsequent events from June 30, 2023, through the date of filing of this report.

Recent Accounting Pronouncements 

The Company has considered the potential impact of recent accounting pronouncements and has not identified any that are expected to have a material impact on the financial statements.

XML

RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2023

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

NOTE 3 – RELATED PARTY TRANSACTIONS

Related Party Transactions

During the quarter ended June 30, 2023, a total of 200,001 shares of Class A Preferred Stock were issued to the Company’s Vice President, Austen Lambrecht, the son of Greg Lambrecht, the Company’s Chief Executive Officer (“CEO”). In addition, one share of Class A Preferred Stock was issued to Greg Lambrecht and each of the two other members of the Company’s Board of Directors for services provided. See Note 4 – Capital Stock.

During the three and six month periods ended June 30, 2023, the Company borrowed $20,000 and $0, respectively, and during the three and six months ended June 30, 2022 the Company borrowed $195,000 and $340,000, respectively in a series of cash payments from the Company’s CEO in exchange for the issuance of a promissory note. The promissory note is not secured by Company assets, does not bear interest and is due in full on December 31, 2023. The promissory note totals $755,050 at June 30, 2023.

In June 2021, the Company entered into an Asset Purchase Agreement with SinglePoint to purchase certain assets in exchange for the issuance of a promissory note (the “Note”) for $63,456 with SinglePoint. The Note bears interest at 5%, has a three-year term, and is due in monthly installments of $1,902 beginning August 1, 2021. The Company has not made any payments on the Note and is currently in default. Accrued interest on the Note totaled $8,215 and $3,173 at June 30, 2023 and December 31, 2022, respectively.

XML

CAPITAL STOCK

6 Months Ended

Jun. 30, 2023

CAPITAL STOCK

CAPITAL STOCK

NOTE 4 – CAPITAL STOCK

Capital Stock

The Company’s authorized capital stock consists of 5,000,000,000 shares of common stock at $0.0001 par value per share and 100,000,000 shares of Preferred Stock at $0.0001 par value per share. The Company has designated 60,000,000 shares of Preferred Stock as Class A Convertible Preferred Stock (the “Class A Preferred Stock”). The remaining 40,000,000 of Preferred Stock remains undesignated.

Common Stock

The holders of common stock are entitled to one vote for each share held. The affirmative vote of a majority of votes cast at a meeting which commences with a lawful quorum is sufficient for approval of most matters upon which shareholders may or must vote, including the questions presented for approval or ratification at the Company’s Annual Shareholders’ Meeting. An amendment of the Company’s Articles of Incorporation, however, requires the affirmative vote of a majority of the Company’s total voting power for approval. Common shares do not carry cumulative voting rights, and holders of more than 50% of the common stock have the power to elect all directors and, as a practical matter, to control the Company. Holders of common stock are not entitled to preemptive rights, and the common stock may only be redeemed at the Company’s election.

During the quarter ended June 30, 2023, a total of 2,945,087 shares of the Company’s common stock was issued in payment for various services provided. The shares had a fair value of $83,000 based on the closing market price of the common shares on the date of grant. There were no additional shares of common stock issued during the six-month period ended June 30, 2023.

During the six-month period ended June 30, 2023, an additional 5,060,125 common shares were issued upon conversion of 202,405 shares of Class A Preferred Stock and 725,000 common shares were sold at $.50 per share for a total purchase price of $412,500.

Preferred Stock

As of June 30, 2023, the Company had 56,632,599 shares of Class A Preferred Stock outstanding, of which 31,092,596 shares are held by the Company’s CEO. The former officers and directors of Singlepoint hold the remaining shares of the Class A Preferred Stock.

The Class A Preferred Stock has certain material rights and preferences (as is more fully set forth in the Certificate of Designation of the Class A Preferred Stock).

During the quarter ended June 30, 2023, a total of 200,001 shares of Class A Preferred Stock was issued to the Company’s Vice President, Austen Lambrecht and one share of Class A Preferred Stock was issued to Greg Lambrecht and each of the two other members of the Company’s Board of Directors for services provided. The value of all these shares was determined to be $110,003 based on an assumed conversion at a one-for-25 ratio of the Class A Preferred Stock for common shares and the closing market price of the common shares on the date of grant.

During the six-month period ended June 30, 2023, an additional 202,405 shares of Class A Preferred Stock were converted into 5,060,125 common shares. No shares of the Company’s Class A Preferred Stock were issued during the quarter and six-month period ended June 30, 2022.

Ranking

The Class A Preferred Stock ranks, as to dividends and upon liquidation, senior and prior to the Common Stock of the Company.

Liquidation

In the event of liquidation, dissolution or winding up of the Company, the holders of the Class A Preferred Stock are entitled, out of the assets of the Company legally available for distribution, to receive, before any payment to the holders of shares of Common Stock or any other class or series of stock ranking junior, and amount per share equal to $1.00.

Voting

Each share of Class A Preferred Stock entitles the holder thereof to 50 votes on any matters requiring a shareholder vote of the Company.

Conversion

Each share of our Class A Preferred Stock is convertible into Common Stock on a one-for-25 basis at the option of the holder.

XML

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2023

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 5 – COMMITMENTS AND CONTINGENCIES

Letter of Intent

On February 22, 2023, the Company entered into a Letter of Intent for the acquisition of a Fifty-One Percent (51%) ownership interest in a natural therapeutic products company for total purchase consideration of $7,140,000 consisting of cash payments of $150,000 and $6,990,000 in Company common stock.  During the quarter ended June 30, 2023, the Company wrote off the initial $15,000 investment as it was determined the acquisition would not move forward and recovery of the amount was uncertain.

Membership Interest Purchase Agreement

On February 28, 2023, the Company entered into a Membership Interest Purchase Agreement for the acquisition of Fifty-One Percent (51%) of the Membership Units of a hemp distribution company for total purchase consideration consisting of 230,559 shares of the Company’s common stock and a cash payment of $50,000.  During the quarter ended June 30, 2023, the Company wrote off the initial $50,000 investment as it was determined the acquisition would not move forward and recovery of the amount was uncertain.

Legal Proceedings and Other Claims

From time to time, we are a party to claims and actions for matters arising out of our business operations. We regularly evaluate the status of the legal proceedings and other claims in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss, or an additional loss, may have been incurred and determine if accruals are appropriate. If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of possible loss or range of possible loss can be made for disclosure. Although the outcome of claims and litigation is inherently unpredictable, we believe that we have adequate provisions for any probable and estimable losses. It is possible, nevertheless, that our consolidated financial position, results of operations or liquidity could be materially and adversely affected in any particular period by the resolution of a claim or legal proceeding. Legal expenses related to defense, negotiations, settlements, rulings, and advice of outside legal counsel are expensed as incurred.

Employment Agreements

In February 2023, the Company entered into an employment agreement with Austen Lambrecht. The agreement provides that Austen Lambrecht would serve as Vice President for a term of three years at an annual salary of Eighty-Five Thousand Dollars ($85,000), with an incentive bonus and stock options as determined by the Board of Directors. The agreement automatically renews for additional six-month periods unless either party has provided written termination of this Agreement at least 90 days prior to the expiration of such term. The agreement also provides for compensation under certain severance and change of control circumstance of twelve months of salary and other bonus dollars that may be due.

The Company has $7,083 accrued and unpaid compensation at June 30, 2023 under this agreement.

Employment Agreements (continued)

In May 2021, the Company entered into an employment agreement with Greg Lambrecht. The agreement provides that Mr. Lambrecht would serve as Chief Executive Officer Company for a term of three years at an annual salary of Two Hundred Fifty Thousand Dollars ($250,000), and an incentive bonus as determined by the Board of Directors. The agreement automatically renews for additional six-month periods unless either party has provided written termination of this Agreement at least 90 days prior to the expiration of such term.

Greg Lambrecht has agreed to waive his right to payment of any amounts due but unpaid under his employment contract.

XML

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2023

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Investments

Investments are recorded at cost and evaluated for impairment each balance sheet date.  During the quarter ended June 30, 2023, the Company wrote-off investments of $15,000 and $50,000 initially made under the terms of a separate Letter of Intent and Member Interest Purchase Agreement, respectively in companies that operate in the hemp market.  See Note 5 – Commitments and Contingencies.

Basis of Presentation

The accompanying condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the Company’s financial position as of June 30, 2023 and December 31, 2022, and the results of the Company’s operations for the interim periods presented. We follow the same accounting policies when preparing quarterly financial data as we use for preparing annual data. These statements should be read in conjunction with the financial statements and the notes included in our latest annual report on Form 10-K for the year ended December 31, 2022, and our other reports on file with the Securities and Exchange Commission (“SEC”).

Management believes the assumptions underlying the Company’s standalone financial statements are reasonable. Nevertheless, the financial statements may not include all the actual expenses that would have been incurred had the Company operated as a standalone company during the periods presented, and may not reflect the Company’s results of operations, financial position and cash flows had the Company operated as a standalone company during the periods presented. Actual costs that would have been incurred if the Company had operated as a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) 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 financial statements, and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results may differ from those estimates.

Cash and Cash Equivalents

Cash consists of highly liquid investments with an original maturity of three months or less.

Accounts Receivable and Credit Policy

Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Management of the Company considers all receivables collectable. Uncollectable accounts are charged to expense when the account is determined to be uncollectable. The allowance is provided based upon a review of the individual accounts outstanding, prior history of uncollectable accounts receivable and existing economic conditions. At June 30, 2023 and December 31, 2022, the allowance for doubtful accounts balance is $0.

Inventory

Inventories are valued at the lower of cost (first in, first out basis) or market, and consist primarily of hemp products. The Company’s inventory as of June 30, 2023, and December 31, 2022 consisted of finished hemp products. At each balance sheet date, the Company evaluates inventories for excess quantities, obsolescence, or shelf-life expiration. This evaluation includes analysis of historical sales levels by product, projections of future demand and the risk of technological or competitive obsolescence for products. To the extent that management determines there is excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value of this inventory to estimated net realizable value. No such adjustments were deemed necessary during the periods presented.

Revenue Recognition

The Company, which has adopted ASC 606 “Revenue from Contracts with Customers”, derives its revenues primarily from the sale of hemp products. Revenues are recognized when control of these products is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products. Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Any shipping and handling fees charged to customers are reported within revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The Company does not have any significant financing components as payment is received at or shortly after the point of sale.

Cost of Goods Sold and Selling, General and Administrative Expenses

Costs associated with the production and procurement of product are included in cost of goods sold, including shipping and handling costs such as inbound freight costs, purchasing, and receiving costs, inspection costs and other product procurement related charges. All other expenses are included in selling, general and administrative expenses, as the predominant expenses associated therewith are general and administrative in nature.

Income Taxes

Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities at the applicable tax rates. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates.

Tax benefits are recognized from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by a tax authority and based upon the technical merits of the tax position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized upon settlement. An unrecognized tax benefit, or a portion thereof, is presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed.

Net Loss Per Common Share

a. Basic loss per share data is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted loss per share data is computed using the weighted-average number of common and dilutive common-equivalent shares outstanding during the period. Dilutive common-equivalent shares consist of shares that would be issued upon the exercise of stock options and other common stock equivalents, computed using the treasury stock method, and are excluded from the calculation of weighted average dilutive common shares, to the extent they are issued and outstanding, because their effect would be anti-dilutive. The number of potentially dilutive shares excluded from the calculation of diluted earnings per share were 2,265,400 related to the Company’s Class A Preferred Stock. These shares were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive.

b. At June 30, 2023 and 2022, 46,158,606 and 37,103,394 shares of the Company’s Common Stock were outstanding, respectively. These share amounts are utilized for the calculation of basic and diluted earnings per share for the three and six month periods then ended.

Selling and Marketing

Selling and Marketing costs are expensed as incurred and are reported under selling, general and marketing in the accompanying statements of operations. Such costs were $84,892 and $19,090 for the three months ended June 30, 2023 and 2022, respectively and $122,777 and $65,678 for the six months ended June 30, 2023 and 2022, respectively.

Fair Value measurements

Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below:

Level 1 —Quoted prices for identical assets or liabilities in active markets.

Level 2 —Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 —Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are unobservable.

The Company considers the carrying amounts of its financial instruments (cash, credit card payable and accrued interest payable) in the balance sheets to approximate fair value because of the short-term and/or highly liquid nature of these financial instruments.

Segment reporting

The Company operates in one business segment. As a result, the Company’s operations are a single reportable segment, which is consistent with the Company’s internal management reporting.

Subsequent Events

The Company has evaluated all subsequent events from June 30, 2023, through the date of filing of this report.

Recent Accounting Pronouncements

The Company has considered the potential impact of recent accounting pronouncements and has not identified any that are expected to have a material impact on the financial statements.

XML

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Allowance for doubtful accounts balance	$ 0		$ 0		$ 0
Selling and Marketing costs	$ 84,892	$ 122,777	$ 19,090	$ 65,678
Common stock, shares outstanding	46,158,606		46,158,606		37,103,394
Class A Preferred Stock [Member]
Potentially dilutive shares	2,265,400		2,265,400
Letter of Intent [Member]
Investments	$ 15,000		$ 15,000
Membership Interest Purchase Agreement [Member]
Investments	$ 50,000		$ 50,000

XML

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Note Payable to related party		$ 63,456		$ 63,456		$ 63,456
Accrued interest payable		8,215		8,215		3,173
Note Payable to Shareholder		755,050		755,050		$ 735,050
Chief Executive Officer [Member]
Increase in note payable to shareholder		$ 20,000	$ 195,000	$ 0	$ 340,000
Related Party Transaction, Due Date		Dec. 31, 2023
Vice President [Member] | Series A Preferred Stock [Member]
Preferred stock, issued		200,001		200,001
Asset Purchase Agreement [Member]
Note Payable to related party	$ 63,456
Interest rate	5.00%
Monthly installments	$ 1,902
Debt term	3 years

XML

CAPITAL STOCK (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Preferred stock, par value	$ 0.0001
Preferred stock, shares authorized	100,000,000
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	5,000,000,000	5,000,000,000
Common Stock, Voting Rights	The holders of common stock are entitled to one vote for each share held
Preferred Stock, Voting Rights	Each share of Class A Preferred Stock entitles the holder thereof to 50 votes on any matters requiring a shareholder vote of the Company
Common stock issued in payment, shares	2,945,087
Common stock issued in payment, value	$ 83,000
Share conversions, common shares	5,060,125
Share conversions, shares of Class A Preferred Stock	202,405
Preferred Stock, Conversion Basis	Each share of our Class A Preferred Stock is convertible into Common Stock on a one-for-25 basis at the option of the holder
Liquidation, amount per share	$ 1.00
Chief Executive Officer [Member]
Share conversions, shares of Class A Preferred Stock	200,001
Preferred Stock, Conversion Basis	shares was determined to be $110,003 based on an assumed conversion at a one-for-25 ratio
Undesignated Preferred Stock [Member]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	40,000,000	40,000,000
Preferred stock, shares outstanding	0	0
Class A Convertible Preferred Stock [Member]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	60,000,000	60,000,000
Preferred stock, shares outstanding	56,632,599	56,635,000
Class A Preferred Stock [Member]
Share conversions, common shares	5,060,125
Share conversions, shares of Class A Preferred Stock	202,405
Number of preferred stock shares held by CEO	31,092,596
Preferred stock, shares outstanding	56,632,599

XML

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	1 Months Ended
	Feb. 28, 2023	Feb. 22, 2023	May 31, 2021	Jun. 30, 2023
Employment Agreement [Member]
Unpaid Compensation expense				$ 7,083
Annual salary	$ 85,000		$ 250,000
Letter of Intent [Member]
Agreement for the acquisition, description		On February 22, 2023, the Company entered into a Letter of Intent for the acquisition of a Fifty-One Percent (51%) ownership interest in a natural therapeutic products company for total purchase consideration of $7,140,000 consisting of cash payments of $150,000 and $6,990,000 in Company common stock
Investments				15,000
Membership Interest Purchase Agreement [Member]
Agreement for the acquisition, description	On February 28, 2023, the Company entered into a Membership Interest Purchase Agreement for the acquisition of Fifty-One Percent (51%) of the Membership Units of a hemp distribution company for total purchase consideration consisting of 230,559 shares of the Company’s common stock and a cash payment of $50,000
Investments				$ 50,000