Disclaimer Regarding Forward Looking Statements
Our Management's Discussion and Analysis or Plan of Operations contains not only
statements that are historical facts, but also statements that are
forward-looking. Forward-looking statements are, by their very nature, uncertain
and risky. These risks and uncertainties include international, national and
local general economic and market conditions; demographic changes; our ability
to sustain, manage, or forecast growth; our ability to successfully make and
integrate acquisitions; raw material costs and availability; new product
development and introduction; existing government regulations and changes in, or
the failure to comply with, government regulations; adverse publicity;
competition; the loss of significant customers or suppliers; fluctuations and
difficulty in forecasting operating results; changes in business strategy or
development plans; business disruptions; the ability to attract and retain
qualified personnel; the ability to protect technology; and other risks that
might be detailed from time to time in our filings with the Securities and
Exchange Commission.
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Although the forward-looking statements in this Annual Report reflect the good
faith judgment of our management, such statements can only be based on facts and
factors currently known by them. Consequently, and because forward-looking
statements are inherently subject to risks and uncertainties, the actual results
and outcomes may differ materially from the results and outcomes discussed in
the forward-looking statements. You are urged to carefully review and consider
the various disclosures made by us in this report and in our other reports as we
attempt to advise interested parties of the risks and factors that may affect
our business, financial condition, and results of operations and prospects.
Overview
Currently, WEED and its subsidiaries are working on or planning for several
different business opportunities in the cannabis & hemp field, including, but
not limited to: both indoor and outdoor "grows", cultivations & harvest for
research, product development, processing and manufacturing of both Pharma &
non-Pharma products, services, therapeutics, and treatments on a global basis
for both the Medical Cannabis & Hemp (<.03 thc) global market space. Long terms
goals include hopeful cures for many diseases and ailments for both man &
animals utilizing the Cannabaceae plant and its derivatives. We will need
additional financing to attempt to accomplish these goals.
Second, on November 22, 2021, WEED completed the purchase of the Sugar Hill Golf
course property located in the town of Portland, New York. WEED's acquisition of
this ~43 acre property with ~2000 ft. of Lake Erie waterfront also comes with
the "unlimited water extractions rights" from Lake Erie related to the property,
along with a complete wastewater management plant. WEED's initial plan is to
utilize the property to access the hemp and infused beverage markets as our
property in the middle of the largest concord grape producing region of the
United States. In the future, WEED may look to use the unique property
infrastructure to build a luxury condos & resort development in the most natural
settings to be ESG compliant in conjunction to WEEDs forming its Social Equity
Advisory Council (SEAC) to create Diversity & Equality in our industry. This
project is only in its conceptual stage, no funding or plans have been developed
other than the proposed name: The 4 Winds Luxury condos & resort to be "Cannabis
Friendly" which would be a "FIRST" in the nation.
Third, WEED established WEED Australia Ltd. and its wholly owned Cannabis
Institute of Australia (C.I.A.) in Australia in March of 2017, for the purpose
of conducting cannabis and hemp research and potentially developing products and
educational services in and for Australians as stated above. C.I.A. is a
non-profit entity formed for the purpose of conducting cannabis and hemp
research with universities and other non-profits to protect all intellectual
rights, properties and usage in our highly regulated industry. The C.I.A. has
the potential to develop products in Australia for domestic research and
development of products, services and educational purposes to all seven States
and territories, including Tasmania, to be marketed globally.
Our first business opportunity was, and continues to be, through our
wholly-owned subsidiary, Sangre AT, LLC ("Sangre"), where we are focused on the
development and application of cannabis-derived compounds for the treatment of
human disease and animal ailments. To that end Sangre, was working on a planned
five-year Cannabis Genomic Study to complete a genetic blueprint of the Cannabis
plant genus, by creating a global genomic classification of the entire plant.
Sangre completed a 1-2 year Pilot Study in 2017 & 2018 at the University of
Texas-Galveston thru Industrial Metagenomics at a cost of nearly $1 million USD.
Sangre completed the pilot study with 30 cultivars from strains collected
worldwide that included 30 strains (twenty-four female and six male). These
results are highly proprietary and the basis of future studies to come. We need
to raise additional funds to continue the next steps in our Cannabis Genomic
Study.
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On May 14th, 2018, the 70th Anniversary of the statehood of Israel, WEED formed
its wholly owned subsidiary, WEED Israel Cannabis Ltd., with the goal of
completing and adding to the noted studies above. As such, WEED Israel worked
with the Hebrew University in Jerusalem and with the top scientists globally in
the field of Cannabis & hemp. To that effect, WEED Israel looked to conduct
clinical trials and product development that would be the quality and
acceptability of the FDA in the United States. Due to current laws and
conditions in the USA, all research results and product development for both
Pharma & Non-Pharma products, cannot be introduced the United States
marketplace. Since starting in 2018, the USA has made vast improvements and
advancements in the legalization of both Cannabis and hemp. As of the end of
2021 there are 37 States that have approved a State level medical cannabis and
hemp programs, along with the District of Colombia. In addition, there are 17
States that have implemented or approved the "Adult Use" i.e. recreational
psyhcoactive aspects of high THC usage of cannabis.
In conjunction with WEED Israel Cannabis Ltd., we made arrangements with
Professor Elka Touitou to be the head of WEEDs Israeli Advisory Board to lead
and assist us with clinical trials in cannabis & hemp research studies in
Israel. Professor Touitou was the Head of the Innovative Dermal, Transdermal and
Transmucosal Delivery Lab at the Institute of Drug Research, The School of
Pharmacy, HUJ, now retired but still has HUJ clinical trial & independent
studies/lab privileges. Professor Touitou is an internationally renowned
authority in the field of drug delivery and design of new technologies for
efficient administration of drugs and development of new products. Professor
Touitou has been involved in Cannabinoid research since 1988 at The Hebrew
University of Jerusalem, (HUJ) Jerusalem, Israel. Previously, WEED was in the
process of buying Professor Touitou's various patents to include the
bioavailability aspects of the cannabaceae plant. However, after expending over
$500,000 USD to acquire the Professor Touitou's patents, we had to terminate the
agreement in 2019 due to the downturn of the Cannabis marketplace, and
specifically as to public cannabis companies, which could not be resumed due to
the Covid pandemic that was/is still ongoing globally. We have kept in constant
contact with Professor Touitou thru our Managing Director of WEED Israel, Mr.
Elliot Kwestel. As of 2022, Dr. Touitou still has interest in working with WEED
to complete the purchase of her patents and begin clinical trials upon proper
funding. WEED looks to achieve that funding thru our $40 million Regulation A+
Offering. Currently WEED intends to file a post qualification filing with the
SEC and launch our Offering later this spring.
Corporate Overview
We were originally incorporated under the name Plae, Inc., in the State of
Arizona on August 20, 1999. At the time we operated under the name Plae, Inc.,
no business was conducted. No books or records were maintained and no meetings
were held. In essence, nothing was done after incorporation until Glenn E.
Martin took possession of Plae, Inc. in January 2005. On February 18, 2005, the
corporate name was changed to King Mines, Inc. and then subsequently changed to
its current name, United Mines, Inc., on March 30, 2005. No shares were issued
until the Company became United Mines, Inc. From 2005 until 2015, we were an
exploration stage mineral exploration company that owned a number of unpatented
BLM mining claims and Arizona State Land Department exploration leases.
On November 26, 2014, our Board of Directors approved the redomestication of our
company from Arizona to Nevada (the "Articles of Domestication"), and approved
Articles of Incorporation in Nevada, which differed from then-Articles of
Incorporation in Arizona, primarily by (a) changing our name from United Mines,
Inc. to WEED, Inc., (b) authorizing Twenty Million (20,000,000) shares of
preferred stock, with blank check rights granted to our Board of Directors, and
(c) authorizing Two Hundred Million (200,000,000) shares of common stock (the
"Nevada Articles of Incorporation"). On December 19, 2014, the holders of a
majority of our outstanding common stock approved the Articles of Domestication
and the Nevada Articles of Incorporation at a Special Meeting of Shareholders.
On January 16, 2015, the Articles of Domestication and the Nevada Articles of
Incorporation went effective with the Secretary of State of the State of Nevada.
On February 2, 2015, our name change to WEED, Inc., and a corresponding ticker
symbol change to "BUDZ" went effective with FINRA and was reflected on the
quotation of our common stock on OTC Markets.
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These changes were effected in order to make our corporate name and ticker
symbol better align with our short-term and long-term business focus, which in
the short-term is to conduct Sangre's Cannabis Genomic Study over the next 5
years, process those results, and in the long-term to be an international
cannabis and hemp research and product development company, with a
globally-recognized brand focusing on building and purchasing labs, land and
building commercial grade "Cultivation Centers" to consult, assist, manage &
lease to universities, state governments, licensed dispensary owners and
worldwide organic grow operators on a contract basis, with a concentration on
the legal and medical Cannabis sector. Our long-term plan is to become a True
"Seed-to-Sale" global holding company providing infrastructure, financial
solutions, product development and real estate options in this new emerging
market. Our long term plans may also include acquisitions of synergistic
businesses, such as distilleries to make infused beverages and/or super
oxygenated water with CBD and THC. We have also formed WEED Australia Ltd.,
registered as an unlisted public company in Australia, to address future global
demand, however the entity has been essentially dormant other than building
relationships and speaking at The Pharmaceutical Guild of Australia conference
event in Sydney Australia, September 2019, since its inception.
This discussion and analysis should be read in conjunction with our financial
statements included as part of this Annual Report.
Results of Operations for the Years Ended December 31, 2022 and 2021
Year Ended December 31,
2022 2021
Revenue $ - $ -
Operating expenses:
General and administrative expenses 567,159 797,683
Professional fees 826,689 1,873,904
Depreciation and amortization 111,426 129,789
Total operating expenses 1,505,274 2,801,376
Loss from operations (1,505,274 ) (2,801,376 )
Other expense
Interest expense (117,124 ) (39,244 )
Other expense (719 ) (1,230 )
Gain on disposal of fixed asset 639,773 -
Impairment of goodwill and inventory (544,761 ) -
Total other expense, net (22,831 ) (40,747 )
Comprehensive net loss $ (1,528,882 ) $ (2,840,405 )
Operating Loss; Net Loss
Our comprehensive net loss decreased by $1,311,523, from ($2,840,405) to
($1,528,882), from the year ended 2021 compared to 2022. Our operating loss
decreased by $1,296,102, from ($2,801,376) to ($1,505,274) for the same period.
The decrease in operating loss is primarily a result of a significant decrease
in our professional fees, partially offset by an increase in our general and
administrative expenses. The decrease in our net loss is largely a result of our
operating loss decrease. These changes are detailed below.
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Revenue
We have not had any revenues since our inception. Our short-term and long-term
business focus is on the medical cannabis sector. Once we have sufficient
funding, we plan to research and possibly enter the hemp and infused beverage
industry through our newly acquired property in New York, and conduct Sangre's
Cannabis Genomic Study and process those result. In the long-term we plan to be
a company focused on purchasing land and building commercial grade "Cultivation
Centers" to consult, assist, manage & lease to licensed dispensary owners and
organic grow operators on a contract basis, with a concentration on the legal
and medical marijuana (Cannabis) sector. Our long-term plan is to become a True
"Seed-to-Sale" company providing infrastructure, financial solutions and real
estate options in this new emerging market, worldwide. We plan to make our brand
global and therefore we will look for opportunities to conduct future research,
marketing, import and exporting, and manufacturing of any proprietary products
on an international level.
General and Administrative Expenses
General and administrative expenses decreased by $230,524, from $797,683 for the
year ended December 31, 2021 to $567,159 for the year ended December 31, 2022,
primarily due to decreases in our consulting services and salary.
Professional Fees
Our professional fees decreased during the year ended December 31, 2022 compared
to the year ended December 31, 2021. Our professional fees were $826,689 for the
year ended December 31, 2022 and $1,873,904 for the year ended December 31,
2021. These fees are largely related to fees paid for legal and accounting
services, along with compensation to independent contractors, and increased
primarily as a result of increased stock-based compensation awards and the value
attributed to those shares of stock. We expect the amount of professional fees
we pay in cash to grow steadily as our business expands. However, the amount
attributed to the stock-based compensation could decrease in periods when our
stock price is lower, if we continue to use stock-based compensation. In the
event we undertake an unusual transaction, such as an acquisition, securities
offering, or file a registration statement, we would expect these fees to
substantially increase during that period.
Depreciation and Amortization
During the year ended December 31, 2022, we had depreciation and amortization of
$111,426, compared to $129,789 in the year ended December 31, 2021. The
depreciation and amortization expense in 2022 and 2021 was related to properties
and trademarks.
Interest Expense
Interest expense increased to ($117,124) from ($39,244) for the year ended
December 31, 2022 compared to the same period in 2021. Our interest expense
primarily relates to interest on short-term loans.
Other Expense
During 2022, we had other income of ($719) compared to other expense of ($1,230)
in 2021. In 2022, our other income related to foreign fringe benefit refund and
interest forgiveness. In 2021, the other expense primarily related to credit
card finance charges.
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Gain on Disposal of Fixed Assets
During the year ended December 31, 2022, we had gain disposal of fixed assets of
$639,773, compared to $0 in the year ended December 31, 2021. The gain on
extinguishment of debt in 2022 was related to the sale of a company property in
Cucharus, Colorado.
Impairment of Goodwill and Inventory
During 2022, we had impairment of goodwill and inventory of ($544,761), compared
to $0 in 2021. Our impairment of goodwill and inventory in 2022 related to
certain assets owned by a company we acquired since the company we acquired did
not have any business activities and certain inventory owned by the acquired
company was flooded in Arizona at the end of 2022, which resulted in
questionable future value.
Liquidity and Capital Resources
Introduction
During the years ended December 31, 2022 and 2021, because of our operating
losses, we did not generate positive operating cash flows. Our cash on hand as
of December 31, 2022 was $315,826 and our monthly cash flow burn rate was
approximately $40,000. Our cash on hand was primarily proceeds from the sale of
our property in Cucharus, Colorado, and partially from the sale of our
securities. We currently do not believe we will be able to satisfy our cash
needs from operations for many years to come.
Our cash, current assets, total assets, current liabilities, and total
liabilities as of December 31, 2022 and 2021, respectively, are as follows:
December 31, December 31,
2022 2021 Change
Cash $ 315,826 $ 19,654 $ 296,172
Total Current Assets 342,075 41,918 300,157
Total Assets 1,633,818 1,959,225 (325,407 )
Total Current Liabilities 1,464,022 1,341,725 122,297
Total Liabilities $ 1,464,022 $ 1,341,725 122,297
Our current assets increased by $300,157 as of December 31, 2022 as compared to
December 31, 2021, primarily due to increases in cash, prepaid expenses and
deposits, and other current assets. The increase in cash was related to the sale
of our property in Cucharus, Colorado. The decrease in our total assets between
the two periods was primarily attributed to decreases in land, building, and
property and equipment, partially offset by increases in our cash, prepaid
expenses, computers and equipment, and other current assets.
Our current liabilities and total liabilities increased by $122,297, as of
December 31, 2022 as compared to December 31, 2021. This increase in liabilities
as of December 31, 2022 was primarily related to increases in our accrued
expense, accrued officer compensation, and notes payable, related parties,
partially offset by decreases in our accounts payable, accrued interest, and
notes payable - in default, compared to December 31, 2021.
In order to repay our obligations in full or in part when due, we will be
required to raise significant capital from other sources. There is no assurance,
however, that we will be successful in these efforts.
Cash Requirements
We had cash available as of December 31, 2022 of $315,826 and $19,654 on
December 31, 2021. Based on our revenues, cash on hand and current monthly burn
rate of approximately $40,000, we will need to continue borrowing from our
shareholders and other related parties, and/or raise money from the sales of our
securities, to fund operations.
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Sources and Uses of Cash
Operations
We had net cash used in operating activities of $812,975 for the year ended
December 31, 2022, as compared to $568,914 for the year ended December 31, 2021.
In 2022, the net cash used in operating activities consisted primarily of our
net loss of ($1,528,105) and gain on disposal of fixed asset of ($639,773),
offset by estimated fair of shares issued for services of $613,600, depreciation
and amortization of $111,426, impairment of goodwill and inventory of $544,761,
debt discount amortization of $27,845, and imputed interest on related party
loans of $31,722, adjusted by an increases in prepaid expenses and deposits of
$4,457 and accrued expenses of $86,085, and decreases in accounts payable of
$56,079. In 2021, the net cash used in operating activities consisted primarily
of our net loss of ($2,841,850), offset by estimated fair value of stock-based
compensation of $2,002,850, depreciation and amortization of $129,789, and
imputed interest on RP loan of $16,226, adjusted by increases in prepaid
expenses and deposits of $8,241, and increases in accounts payable of $3,880 and
accrued expenses of $111,949.
Investments
In 2022, we had net cash provided by investing activities of $1,257,037,
consisting entirely of proceeds from disposal of a fixed asset. In 2021 we had
net cash used in investing activities of $271,233, consisting entirely of
purchases of property and equipment.
Financing
Our net cash provided by financing activities for the year ended December 31,
2022 was ($148,667), compared to $848,617 for the year ended December 31, 2021.
For the period in 2022, our financing activities related to proceeds from the
sale of common stock of $40,000, proceeds from notes payable - related party of
$504,000, repayments on notes payable-related party of ($585,721) and repayments
on notes payable of ($106,946). For the period in 2021, our financing activities
related to proceeds from the sale of common stock of $560,000, and proceeds from
notes payable of $387, proceeds from notes payable - related party of $338,201,
offset by repayments on notes payable of ($49,971).
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements.
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