CALCULATION OF REGISTRATION FEE
Title of each
class of
securities to be
registered
|
Amount
to be
registered (1)
|
Proposed
maximum
offering price
per share (2)
|
Proposed
maximum
aggregate
offering price (1)
|
Amount of
registration
fee (3)
|
Common
Stock, $0.001 par value
|
8,982,015
|
$1.05
|
$9,431,115.75
|
$1,093.07
|
Total
Registration Fee
|
$1,093.07
|
(1)
The Registrant is
registering for resale by the selling stockholders identified in
the prospectus contained herein 8,982,015 shares of common stock.
Pursuant to Rule 416 under the Securities Act of 1933, as amended,
the shares of common stock registered hereby also include an
indeterminate number of additional shares of common stock as may
from time to time become issuable by reason of stock splits, stock
dividends, recapitalizations or other similar transactions.
Pursuant to Rule 416 of the Securities Act, as amended, this
registration statement shall be deemed to cover additional
securities (i) to be offered or issued in connection with any
provision of any securities purported to be registered hereby to be
offered pursuant to terms that provide for a change in the amount
of securities being offered or issued to prevent dilution resulting
from stock splits, stock dividends, or similar transactions and
(ii) of the same class as the securities covered by this
registration statement issued or issuable prior to completion of
the distribution of the securities covered by this registration
statement as a result of a split of, or a stock dividend paid with
respect to, the registered securities.
(2)
Estimated
solely for purposes of calculating the registration fee under Rule
457 under the Securities Act, as amended, based on the average of
the high and low price of the Registrant’s common stock on
August 7, 2017, as quoted on OTC Markets on a day within five
business days from the date of filings of this registration
statement, which was $1.05 per share (based on high and low prices
of $1.07 and $1.02).
(3)
The registration
fee is calculated pursuant to Rule 457(c) of the Securities Act of
1933 based
on the average
of the high and low price of the Registrant’s common stock on
August 7, 2017, as quoted on OTC Markets on a day within five
business days from the date of filings of this registration
statement, which was $1.05 per share (based on high and low prices
of $1.07 and $1.02)
.
The
registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933 or
until the registration statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may
determine.
YOU MAY
RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR SALE OF COMMON STOCK MEANS THAT INFORMATION
CONTAINED IN THIS PROSPECTUS IS CORRECT AFTER THE DATE OF THIS
PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THESE SHARES OF THE COMMON STOCK IN
ANY CIRCUMSTANCES UNDER WHICH THE OFFER OR SOLICITATION IS
UNLAWFUL.
|
8,982,015
SHARES
WEED, INC.
|
________________
|
|
|
|
TABLE OF CONTENTS
|
|
|
|
|
|
Page
|
|
|
|
|
Prospectus Summary
|
2
|
-----------------------
PROSPECTUS
-----------------------
_____________,
2017
|
Corporate Information
|
2
|
Risk Factors
|
4
|
Use of Proceeds
|
8
|
Selling Security Holders
|
9
|
Plan of Distribution
|
13
|
Description of Securities
|
15
|
Interests of Experts and Counsel
|
15
|
Description of Business
|
16
|
Description of Property
|
23
|
Legal Proceedings
|
23
|
Index to Financial Statements
|
25
|
Management’s Discussion and Analysis or
Plan of
Operation
|
26
|
Changes in Accountants
|
35
|
Directors, Executive Officers
|
36
|
Executive Compensation
|
37
|
Security Ownership
|
39
|
Certain Transactions
|
39
|
Available Information
|
42
|
Experts
|
42
|
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the SEC is effective. This prospectus is not
an offer to sell and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
|
Subject to Completion, Dated August 11, 2017
PROSPECTUS
8,982,015
shares of common stock
WEED, INC.
This
prospectus relates to the resale of Common Shares which were issued
by WEED, Inc., a Nevada corporation (“we” or the
“Company”) in previous private placement transactions
by the selling security holders named herein under “Selling
Shareholders.” We will not receive any proceeds from the
resale of these Common Shares.
The
Selling Shareholders may offer all or part of the shares for resale
from time to time through public or private transactions, at either
prevailing market prices or at privately negotiated prices. The
Company is paying for all registration, listing and qualification
fees, printing fees and legal fees.
Our
Common Shares are quoted on OTC Market’s “OTC
Pink” tier under the ticker symbol “BUDZ.” On
August 7, 2017, the closing price of our Common Shares was $1.03
per share.
Investing
in the common stock involves risks. WEED, Inc., currently has
limited operations, limited income, and limited assets, is in
unsound financial condition, and you should not invest unless you
can afford to lose your entire investment. See “Risk
Factors” beginning on page 4. Neither the Securities and
Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The
date of this prospectus is August __, 2017
PROSPECTUS
SUMMARY
You should read the following summary together with the more
detailed information and the financial statements appearing
elsewhere in this Prospectus. This Prospectus contains
forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors,
including those set forth under “Risk Factors” and
elsewhere in this Prospectus. Unless the context indicates or
suggests otherwise, references to “we,”
“our,” “us,” the “Company,” or
the “Registrant” refer to WEED, Inc., a Nevada
corporation.
WEED,
INC.
We are
an early stage holding company currently focused on the development
and application of cannabis-derived compounds for the treatment of
human disease. Our wholly-owned subsidiary, Sangre AT, LLC
(“Sangre”), has begun a planned five-year Cannabis
Genomic Study to complete a global genomic classification of the
Cannabis plant genus. By targeting cannabis-derived molecules that
stimulate the endocannabinoid system, Sangre’s research team
plans to develop scientifically-valid and evidence-based cannabis
strains for the production of disease-specific medicines. The goal
of the research is to identify, collect, patent, and archive a
collection of highly-active medicinal strains. We plan to conduct
this study only in states where cannabis has been legalized for
medicinal purposes.
Using
annotated genomic data and newly generated phenotypic data, Sangre
plans to identify and isolate regions of the plant genome which are
related to growth, synthesis of desired molecules, and drought and
pest resistance. This complex data set would then be utilized in a
breeding program to generate and establish new hybrid cultivars
which exemplify the traits that are desired by the medical and
patient community. This breeding program would produce new seed
stocks and clones, which we plan on patenting. If successful this
intellectual property should generate immense value for the
Company. After developing a comprehensive understanding of the
annotated genome of a variety of cannabis strains, and obtaining
intellectual property protection over the most promising strains,
we plan to provide the blueprints for the development of
significant medicinal products for the treatment of human diseases
including, but not
limited to, autism,
pediatric brain cancer, PTSD, epilepsy,
chronic pain, and Crohn’s disease.
Currently, we do
not have the money or funding to achieve the above goals and we
will not be able to achieve our goals unless we are successful in
obtaining additional funding, likely through sales of our
securities, all which may serve to dilute the ownership position of
our current and future shareholders.
Corporate
Information
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.
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 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 dormant since its inception.
Our
corporate offices are located at 4920 N. Post Trail, Tucson, AZ
85750, telephone number (520) 818-8582.
SUMMARY OF THE OFFERING
Common Shares offered by Selling Shareholders
|
|
8,982,015
Common Shares.
|
|
|
|
Common Shares outstanding before the offering
|
|
99,991,020 Common Shares as of the date hereof.
|
|
|
|
Common Shares outstanding after the offering
|
|
99,991,020 Common Shares.
|
|
|
|
Use of proceeds
|
|
We will not receive any proceeds from the sale of shares by
the
Selling
Shareholders.
|
|
|
|
OTC Markets Trading Symbol
|
|
BUDZ
|
|
|
|
Risk Factors
|
|
The Common Shares offered hereby involves a high degree of
risk
and
should not be purchased by investors who cannot afford the
loss
of their entire investment. See “Risk
Factors”.
|
RISK FACTORS
We have a limited operating history and historical financial
information upon which you may evaluate our
performance.
You
should consider, among other factors, our prospects for success in
light of the risks and uncertainties encountered by companies that,
like us, are in their early stages of development. We may not
successfully address these risks and uncertainties or successfully
complete our studies and/or implement our existing and new
products. If we fail to do so, it could materially harm our
business and impair the value of our common stock. Even if we
accomplish these objectives, we may not generate the positive cash
flows or profits we anticipate in the future. We were incorporated
in the State of Arizona on August 20, 1999. From 2005 until 2015,
we were an exploration stage mineral exploration company that owned
a number of unpatented mining claims and Arizona State Land
Department claims. On November 26, 2014, our Board of Directors
approved the redomestication of our company from Arizona to Nevada
and we shifted our business focus to a company concentrating on the
development and application of cannabis-derived compounds for the
treatment of human disease. Although our subsidiary, Sangre, has
begun its planned five-year Cannabis Genomic Study to complete a
global genomic classification of the Cannabis plant genus the
completion of the study is likely years away. Unanticipated
problems, expenses and delays are frequently encountered in
establishing a new business, conducting research, and developing
new products. These include, but are not limited to, inadequate
funding, unforeseen research issues, lack of consumer acceptance,
competition, product development, and inadequate sales and
marketing. The failure by us to meet any of these conditions would
have a materially adverse effect upon us and may force us to reduce
or curtail operations. No assurance can be given that we can or
will ever operate profitably.
We may not be able to meet our future capital needs.
To
date, we have not generated any revenue and we have limited cash
liquidity and capital resources. Our future capital requirements
will depend on many factors, including the progress and results of
our Cannabis Genomic Study, our ability to develop products, cash
flow from operations, and competing market developments. We
anticipate the Cannabis Genomic Study will cost approximately
$15,000,000 to complete. We will need additional capital in the
near future. Any equity financings will result in dilution to our
then-existing stockholders. Although we currently do not have any
debt financing, any sources of debt financing in the future may
result in a high interest expense. Any financing, if available, may
be on unfavorable terms. If adequate funds are not obtained, we
will be required to reduce or curtail operations.
If we cannot obtain additional funding, our research and
development efforts may be reduced or discontinued and we may not
be able to continue operations.
We
have historically experienced negative cash flows from operations
since our inception and we expect the negative cash flows from
operations to continue for the foreseeable future. Unless and until
we are able to generate revenues, we expect such losses to continue
for the foreseeable future. As discussed in our financial
statements, there exists substantial doubt regarding our ability to
continue as a going concern.
Research
and development efforts are highly dependent on the amount of cash
and cash equivalents on hand combined with our ability to raise
additional capital to support our future operations through one or
more methods, including but not limited to, issuing additional
equity or debt.
In
addition, we may also raise additional capital through additional
equity offerings, and licensing our research and/or future products
in development. While we will continue to explore these potential
opportunities, there can be no assurances that we will be
successful in raising sufficient capital on terms acceptable to us,
or at all, or that we will be successful in licensing our future
products. Based on our current projections, we believe we have
insufficient cash on hand to meet our obligations as they become
due based on current assumptions. The uncertainties surrounding our
future cash inflows have raised substantial doubt regarding our
ability to continue as a going concern.
Any disruption and/or instability in economic conditions and
capital markets could adversely affect our ability to access the
capital markets, and thus adversely affect our business and
liquidity.
Economic
conditions and issues with the financial markets have had, and will
continue to have, a negative impact on our ability to access the
capital markets, and thus have a negative impact on our business
and liquidity. The shortage of liquidity and credit combined with
the substantial losses in worldwide equity markets could lead to an
extended worldwide recession. We may face significant challenges if
conditions in the capital markets do not improve. Our ability to
access the capital markets has been and continues to be severely
restricted at a time when we need to access such markets, which
could have a negative impact on our business plans. Even if we are
able to raise capital, it may not be at a price or on terms that
are favorable to us. We cannot predict the occurrence of future
disruptions or how long the current conditions may
continue.
Our proposed business is dependent on laws pertaining to the
cannabis industry
.
Continued
development of the cannabis industry is dependent upon continued
legislative authorization of marijuana at the state level. Any
number of factors could slow or halt progress in this area.
Further, progress for the industry, while encouraging, is not
assured. While there may be ample public support for legislative
action, numerous factors impact the legislative process. Any
one of these factors could slow or halt use of marijuana, which
would negatively impact our business.
As
of the end of February, 2017, 28 states and the District of
Columbia allow its citizens to use medical marijuana. Voters in the
states of Colorado, Washington, Alaska, Oregon and the District of
Columbia have approved ballot measures to legalize cannabis for
adult use. The state laws are in conflict with the Federal
Controlled Substances Act, which makes marijuana use and possession
illegal on a national level. The prior administration (President
Obama) effectively stated that it is not an efficient use of
resources to direct law federal law enforcement agencies to
prosecute those lawfully abiding by state-designated laws allowing
the use and distribution of medical marijuana. However, the Trump
administration has indicated the potential for stricter enforcement
of the marijuana industry at the federal level, but to date there
has been very little in terms of action. There is no guarantee that
the Trump administration or future administrations will maintain
the low-priority enforcement of federal laws in the marijuana
industry that was adopted by the Obama administration. The Trump
administration or any new administration that follows could change
this policy and decide to enforce the federal laws strongly. Any
such change in the federal government’s enforcement of
current federal laws could cause significant financial damage to
our business and our shareholders.
Further,
and while we do not intend to harvest, distribute or sell cannabis,
if we conduct research with the cannabis plant or lease buildings
to growers of cannabis, etc., we could be deemed to be
participating in marijuana cultivation, which remains illegal under
federal law, and exposes us to potential criminal liability, with
the additional risk that our properties could be subject to civil
forfeiture proceedings.
The
cannabis industry faces strong opposition
.
It is believed by many that large well-funded businesses may have a
strong economic opposition to the cannabis industry. We believe
that the pharmaceutical industry clearly does not want to cede
control of any product that could generate significant revenue. For
example, medical cannabis will likely adversely impact the existing
market for the current “marijuana pill” sold by
mainstream pharmaceutical companies. Further, the medical cannabis
industry could face a material threat from the pharmaceutical
industry, should cannabis displace other drugs or encroach upon the
pharmaceutical industry’s products. The pharmaceutical
industry is well funded with a strong and experienced lobby that
eclipses the funding of the medical cannabis movement. Any inroads
the pharmaceutical industry could make in halting or impeding the
cannabis industry could have a detrimental impact on our proposed
business.
Cannabis
remains illegal under Federal law
.
Cannabis is a schedule-I controlled substance and is illegal under
federal law. Even in those states in which the use of cannabis has
been legalized, its production and use remains a violation of
federal law. Since federal law criminalizing the use of cannabis
preempts state laws that legalize its use, strict enforcement
of federal law regarding marijuana would likely result in our
inability to proceed with our business plan.
Laws and
regulations affecting the medical cannabis industry are constantly
changing, which could detrimentally affect our proposed
operations.
Local,
state and federal medical cannabis laws and regulations are broad
in scope and subject to evolving interpretations, which could
require us to incur substantial costs associated with compliance or
alter our business plan. In addition, violations of these laws, or
allegations of such violations, could disrupt our business and
result in a material adverse effect on our operations. In addition,
it is possible that regulations may be enacted in the future that
will be directly applicable to our proposed business. We cannot
predict the nature of any future laws, regulations, interpretations
or applications, nor can we determine what effect additional
governmental regulations or administrative policies and procedures,
when and if promulgated, could have on our business.
If we are unable to recruit and retain qualified personnel, our
business could be harmed.
Our
growth and success highly depend on qualified personnel.
Competition in the industry could cause us difficulty in recruiting
or retaining a sufficient number of qualified technical personnel,
which could harm our ability to develop new products. Also, the
fact cannabis remains illegal at the federal level may dissuade
qualified personnel from working in the cannabis industry, thus
limiting the pool of qualified individuals to run our business. If
we are unable to attract and retain necessary key talents, it would
harm our ability to develop competitive product and retain good
customers and could adversely affect our business and operating
results.
We may be unable to adequately protect our proprietary
rights.
Our
ability to compete partly depends on the superiority, uniqueness
and value of our intellectual property. To protect our proprietary
rights, we will rely on a combination of patent, copyright and
trade secret laws, confidentiality agreements with our employees
and third parties, and protective contractual provisions. Despite
these efforts, any of the following occurrences may reduce the
value of our intellectual property:
●
Our applications
for patents relating to our business may not be granted and, if
granted, may be challenged or invalidated;
●
Issued patents may
not provide us with any competitive advantages;
●
Our efforts to
protect our intellectual property rights may not be effective in
preventing misappropriation of our technology;
●
Our efforts may not
prevent the development and design by others of products or
technologies similar to or competitive with, or superior to those
we develop;
●
Another party may
obtain a blocking patent and we would need to either obtain a
license or design around the patent in order to continue to offer
the contested feature or service in our products; or
●
The fact cannabis
is illegal at the federal level may impact our ability to secure
patents from the United States Patent and Trademark Office, and
other intellectual property protections may not be available to
us.
We may become involved in lawsuits to protect or enforce our
patents that would be expensive and time consuming.
In
order to protect or enforce our patent rights, we may initiate
patent litigation against third parties. In addition, we may become
subject to interference or opposition proceedings conducted in
patent and trademark offices to determine the priority and
patentability of inventions. The defense of intellectual property
rights, including patent rights through lawsuits, interference or
opposition proceedings, and other legal and administrative
proceedings, would be costly and divert our technical and
management personnel from their normal responsibilities. An adverse
determination of any litigation or defense proceedings could put
our pending patent applications at risk of not being
issued.
Furthermore,
because of the substantial amount of discovery required in
connection with intellectual property litigation, there is a risk
that some of our confidential information could be compromised by
disclosure during this type of litigation. For example, during the
course of this kind of litigation, confidential information may be
inadvertently disclosed in the form of documents or testimony in
connection with discovery requests, depositions or trial testimony.
This disclosure could have a material adverse effect on our
business and our financial results.
The Selling Shareholders may sell their shares of common stock in
the open market, which may cause our stock price to
decline.
The
Selling Shareholders may sell the shares of common stock being
registered in this offering in the public market. That means that
up to 8,982,015 shares of common stock, the number of shares being
registered in this offering, may be sold in the public market. Such
sales will likely cause our stock price to decline.
Sale of our common stock by the Selling Shareholders could
encourage short sales by third parties, which could contribute to
the further decline of our stock price.
The
significant downward pressure on the price of our common stock
caused by the sale of material amounts of common stock could
encourage short sales by third parties. Such an event could place
further downward pressure on the price of our common
stock.
Our common stock has been thinly traded and we cannot predict the
extent to which a trading market will develop.
Our
common stock is traded on the OTC Markets’ “Pink
Current Information” tier. Our common stock is thinly traded
compared to larger more widely known companies. Thinly traded
common stock can be more volatile than common stock trading in an
active public market. We cannot predict the extent to which an
active public market for our common stock will develop or be
sustained after this offering.
Because we are subject to the “penny stock” rules, the
level of trading activity in our stock may be reduced.
Our
common stock is traded on the OTC Markets’ “Pink
Current Information” tier. Broker-dealer practices in
connection with transactions in “penny stocks” are
regulated by certain penny stock rules adopted by the Securities
and Exchange Commission. Penny stocks, like shares of our common
stock, generally are equity securities with a price of less than
$5.00, other than securities registered on certain national
securities exchanges or quoted on NASDAQ. The penny stock rules
require a broker-dealer, prior toa transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks
and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and
offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and, if the
broker-dealer is the sole market maker, the broker-dealer must
disclose this fact and the broker-dealer's presumed control over
the market, and monthly account statements showing the market value
of each penny stock held in the customer's account. In addition,
broker-dealers who sell these securities to persons other than
established customers and “accredited investors” must
make a special written determination that the penny stock is a
suitable investment for the purchaser and receive the purchaser's
written agreement to the transaction. Consequently, these
requirements may have the effect of reducing the level of trading
activity, if any, in the secondary market for a security subject to
the penny stock rules, and investors in our common stock may find
it difficult to sell their shares.
SPECIAL
NOTE ABOUT FORWARD-LOOKING STATEMENTS
We have
made forward-looking statements in this prospectus, including the
sections entitled “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and
“Business,” that are based on our management’s
beliefs and assumptions and on information currently available to
our management. Forward-looking statements include the information
concerning our possible or assumed future results of operations,
business strategies, financing plans, competitive position,
industry environment, potential growth opportunities, the effects
of future regulation and the effects of competition.
Forward-looking statements include all statements that are not
historical facts and can be identified by the use of
forward-looking terminology such as the words“believe,”
“expect,” “anticipate,”
“intend,” “plan,” “estimate” or
similar expressions. These statements are only predictions and
involve known and unknown risks and uncertainties, including the
risks outlined under “Risk Factors” and elsewhere in
this prospectus.
Although we believe
that the expectations reflected in our forward-looking statements
are reasonable, we cannot guarantee future results, events, levels
of activity, performance or achievement. We are not under any duty
to update any of the forward-looking statements after the date of
this prospectus to conform these statements to actual results,
unless required by law.
USE
OF PROCEEDS
This
prospectus relates to shares of our common stock that may be
offered and sold from time to time by the Selling Shareholders. We
will not receive any proceeds from the sale of shares of common
stock in this offering.
SELLING SHAREHOLDERS
The Selling Shareholders may offer from time to
time up to an aggregate of 8,982,015
shares of our Common Stock.
Except
as otherwise provided, the following table sets forth certain
information with respect to the beneficial ownership of our common
stock including the names of the Selling Shareholders, the number
of shares of our Common Stock owned beneficially by the Selling
Shareholders as of August 7, 2017, the number of shares of Common
Stock being offered by each selling stockholder hereby, and the
number and percentage of shares of Common Stock that will be owned
by each selling stockholder following the completion of this
offering:
Name of Selling Shareholder
|
Shares of Common Stock Owned Prior to Offering
|
Shares of Common Stock to be Offered for the Selling
Shareholder’s Account
|
Shares of Common Stock Owned by Selling Shareholder After the
Offering
|
Percent of Common Stock to be Owned by the Selling Shareholder
After the Offering
|
|
|
|
|
|
Victor and Krista
Amereno
|
2,124
|
2,124
|
--
|
--
|
Melanie
Anderson
|
250,000
|
250,000
|
--
|
--
|
James Burton
Anderson
|
500,000
|
500,000
|
--
|
--
|
Kelly
Berry
|
1,063
|
1,063
|
--
|
--
|
Daniel J Breen/Ryan
Breen
|
37,151
|
37,151
|
--
|
--
|
Jayne
Breen
|
860,000
|
860,000
|
--
|
--
|
John
Breen
|
22,291
|
22,291
|
--
|
--
|
Nakai
Breen
|
5,309
|
5,309
|
--
|
--
|
Ryan
Breen
|
5,010,615
|
1,000,000
|
4,010,615
|
4.01
%
|
Mark
Brewster
|
534
|
534
|
--
|
--
|
Richard
Bridgeforth
|
43,186
|
43,186
|
--
|
--
|
Buena Vista
Consultant LLC
(1)
|
3,186
|
3,186
|
--
|
--
|
Candice
Bullis
|
1,063
|
1,063
|
--
|
--
|
Mindy
Bullis
|
2,124
|
2,124
|
--
|
--
|
Michelle
Cammaran
|
532
|
532
|
--
|
--
|
Kiante Devaun
Carroll
|
5,309
|
5,309
|
--
|
--
|
CFO Solutions LLC
(2)
|
3,077
|
3,077
|
--
|
--
|
CH Capital LLC
(3)
|
53,070
|
53,070
|
--
|
--
|
Charles
Castelli
|
50,000
|
50,000
|
--
|
--
|
Jessica M
Cox
|
2,124
|
2,124
|
--
|
--
|
John
D’Andrea
|
5,309
|
5,309
|
--
|
--
|
Dale R
Johnson
|
120,000
|
120,000
|
--
|
--
|
Philip
Doyley
|
2,124
|
2,124
|
--
|
--
|
David A
Eckert
|
132,970
|
132,970
|
--
|
--
|
FMTC Roth Ira FBO
David A Eckert
|
19,696
|
19,696
|
--
|
--
|
Elliott
Kwestels
|
128,000
|
128,000
|
--
|
--
|
Charlotte Elliott
& Gary Elliott
|
3,186
|
3,186
|
--
|
--
|
Aimee
Elliott
|
5,309
|
5,309
|
--
|
--
|
Fred
Erickson
|
2,124
|
2,124
|
--
|
--
|
Experimental
Schools Corporation of Arizona
(4)
|
2,124
|
2,124
|
--
|
--
|
Joseph
Feeney
|
2,124
|
2,124
|
--
|
--
|
Larry
Fuller
|
2,030
|
2,030
|
--
|
--
|
Joe & Theresia
Gantenhammer
|
1,594
|
1,594
|
--
|
--
|
GEM Management
Group LLC Nicole Breen
|
19,947,520
(10)
|
305,505
|
19,642,015
(10)
|
19.58
%
|
Christopher
Gewelke
|
1,063
|
1,063
|
--
|
--
|
Peter
Gilboy
|
2,656
|
2,656
|
--
|
--
|
Lawrence
Gochioco
|
2,000
|
2,000
|
--
|
--
|
Malcolm
Gochioco
|
1,000
|
1,000
|
--
|
--
|
Niels Karsten
Gudell
|
2,124
|
2,124
|
--
|
--
|
Shaddine
Gum
|
1,063
|
1,063
|
--
|
--
|
Whitney
Gum
|
1,063
|
1,063
|
--
|
--
|
Darren
Hamans
|
10,000
|
10,000
|
--
|
--
|
Chris
Harriman
|
124,601
|
124,601
|
--
|
--
|
Camille
Hartmetz
|
532
|
532
|
--
|
--
|
JB
Henrickson
|
12,303
|
12,303
|
--
|
--
|
Scott
Hill
|
13,170
|
13,170
|
--
|
--
|
Sandra
Hogan
|
3,000
|
3,000
|
--
|
--
|
Arnold
Hollander
|
1,063
|
1,063
|
--
|
--
|
Richard
Huff
|
1,063
|
1,063
|
--
|
--
|
Scott Douglas
Hurley
|
1,063
|
1,063
|
--
|
--
|
Rudy
Ingersoll
|
2,124
|
2,124
|
--
|
--
|
Jeff
Miller
|
240,000
|
240,000
|
--
|
--
|
Dale
Johnson
|
94
|
94
|
--
|
--
|
KGP Consulting LLC
(5)
|
1,063
|
1,063
|
--
|
--
|
Gurutej Kaur
Khalsa
|
1,063
|
1,063
|
--
|
--
|
RBC Capital Markets
LLc Cust FBO Elliot Kwestels
|
8,000
|
8,000
|
--
|
--
|
Brenda L Damarin
TTEE
|
2,000
|
2,000
|
--
|
--
|
Ashley Jason
Lee
|
1,063
|
1,063
|
--
|
--
|
Craig
Lee
|
532
|
532
|
--
|
--
|
Edward E
Lehman
|
5,230
|
5,230
|
--
|
--
|
Roger
Leon
|
1,063
|
1,063
|
--
|
--
|
Derrick
Lewis
|
2,656
|
2,656
|
--
|
--
|
Steven
Long
|
2,124
|
2,124
|
--
|
--
|
Charles
Lull
|
490,063
|
490,063
|
--
|
--
|
Ashley & Robert
Luna
|
10,615
|
10,615
|
--
|
--
|
Linda J
Martin
|
21,229
|
21,229
|
--
|
--
|
Nodar Temuri
Maskhulia
|
1,063
|
1,063
|
--
|
--
|
Edward
Matkoff
|
55,000
|
55,000
|
--
|
--
|
Rodger
Mattes
|
2,124
|
2,124
|
--
|
--
|
Edward
Mccullough
|
1,063
|
1,063
|
--
|
--
|
Alexandra
Miller
|
2,124
|
2,124
|
--
|
--
|
Gregory
Miller
|
1,063
|
1,063
|
--
|
--
|
Gregory Paul
Miller
|
1,099
|
1,099
|
--
|
--
|
Jaret
Miller
|
6,370
|
6,370
|
--
|
--
|
Mari
Miller
|
1,063
|
1,063
|
--
|
--
|
Melissa
Miller
|
1,063
|
1,063
|
--
|
--
|
Jenny
Miranda
|
532
|
532
|
--
|
--
|
Robin
Mitchell
|
4,778
|
4,778
|
--
|
--
|
Flora
Nefwani
|
2,124
|
2,124
|
--
|
--
|
Jaliyah
Nefwani
|
1,063
|
1,063
|
--
|
--
|
Kingston
Nefwani
|
1,063
|
1,063
|
--
|
--
|
Marialice
Nichols
|
6,000
|
6,000
|
--
|
--
|
Gabriel
O’Daniel
|
5,309
|
5,309
|
--
|
--
|
Holliegh
O’Daniel
|
5,309
|
5,309
|
--
|
--
|
Jordan
O’Daniel
|
5,309
|
5,309
|
--
|
--
|
Kimberly
O’Daniel
|
21,229
|
21,229
|
--
|
--
|
Ronald
Olsen
|
10,934
|
10,934
|
--
|
--
|
Ronald C
Olsen
|
1,329
|
1,329
|
--
|
--
|
Steve
Pagac
|
1,063
|
1,063
|
--
|
--
|
Patrick
Brodnick
|
240,000
|
240,000
|
--
|
--
|
Jason &
Christina Pawelczyk
|
2,124
|
2,124
|
--
|
--
|
Perleberg
Enterprises Inc.
(6)
|
1,063
|
1,063
|
--
|
--
|
Bryan H
Perleberg
|
532
|
532
|
--
|
--
|
Tyler D
Perleberg
|
532
|
532
|
--
|
--
|
Michael
Peskin
|
922
|
922
|
--
|
--
|
Todd
Peterson
|
12,000
|
12,000
|
--
|
--
|
Robert
Pulver
|
1,063
|
1,063
|
--
|
--
|
Jessica
Raygoza
|
532
|
532
|
--
|
--
|
RBC Capital Markets
LLC Cust FBO Elliott Kwestels
|
4,000
|
4,000
|
--
|
--
|
Keith
Regan
|
4,245
|
4,245
|
--
|
--
|
Danny
Roth
|
1,000
|
1,000
|
--
|
--
|
Sal
Rutigliano
|
165,000
|
165,000
|
--
|
--
|
Alec Noel
Sanchez
|
1,063
|
1,063
|
--
|
--
|
Jordyn Kane
Sanchez
|
1,063
|
1,063
|
--
|
--
|
Nicole
Sanchez
|
2,124
|
2,124
|
--
|
--
|
Barbra
Sasselli
|
1,063
|
1,063
|
--
|
--
|
Melanie
Scopelitus
|
90,000
|
90,000
|
--
|
--
|
Kalena Larise
Scott
|
1,063
|
1,063
|
--
|
--
|
Kimberly
Scott
|
2,124
|
2,124
|
--
|
--
|
Carmen
Seabre
|
1,700
|
1,700
|
--
|
--
|
Valerie
Seabre
|
31,842
|
31,842
|
--
|
--
|
Buddy
Shaw
|
532
|
532
|
--
|
--
|
Linda
Shaw
|
21,229
|
21,229
|
--
|
--
|
Linda & Jerry
Shaw
|
5,309
|
5,309
|
--
|
--
|
Patricia
Shouse
|
1,063
|
1,063
|
--
|
--
|
Robert
Shouse
|
1,063
|
1,063
|
--
|
--
|
Sikh Dharma of
Phoenix, Inc.
(7)
|
6,370
|
6,370
|
--
|
--
|
Carmine
Simpson
|
1,500
|
1,500
|
--
|
--
|
Soul Singh &
Meher Kaur Khalsa
|
5,309
|
5,309
|
--
|
--
|
Jonathan
Smuda
|
532
|
532
|
--
|
--
|
Wendy L
Starr-Turley
|
532
|
532
|
--
|
--
|
Stephanie &
Jose Alonso Garcia
|
1,063
|
1,063
|
--
|
--
|
Stephen R
Murphy
|
25,000
|
25,000
|
--
|
--
|
David
Summers
|
1,063
|
1,063
|
--
|
--
|
Gordan
Surran
|
532
|
532
|
--
|
--
|
Tanque Verde
Baptist Church
|
10,615
|
10,615
|
--
|
--
|
Thomas
Harrington
|
102,000
|
102,000
|
--
|
--
|
Diane
Thomas
|
1,063
|
1,063
|
--
|
--
|
Diane K
Wallace
|
162
|
162
|
--
|
--
|
John M
Wallace
|
162
|
162
|
--
|
--
|
Water of Life
Metropolation Community
(8)
|
10,615
|
10,615
|
--
|
--
|
Benita
Watford
|
6,370
|
6,370
|
--
|
--
|
Russell
Watson
|
10,615
|
10,615
|
--
|
--
|
Edward
Weaver
|
1,063
|
1,063
|
--
|
--
|
Roger
Weckworth
|
1,275
|
1,275
|
--
|
--
|
Herbert
Weiss
|
2,500
|
2,500
|
--
|
--
|
Beverly
Weiss
|
5,309
|
5,309
|
--
|
--
|
Charles
Welch
|
2,230
|
2,230
|
--
|
--
|
Antonia
Whyte
|
20,000
|
20,000
|
--
|
--
|
Patrick E
Williams
|
195,850
|
195,850
|
--
|
--
|
Varooge
Yarganian
|
1,063
|
1,063
|
--
|
--
|
Jennifer Jill
Zavada
|
1,063
|
1,063
|
--
|
--
|
Tom
Zdroik
|
1,063
|
1,063
|
--
|
--
|
Lex
Seabre
|
1,500,000
|
1,500,000
|
--
|
--
|
Rodger
Seabre
|
1,300,000
|
1,300,000
|
--
|
--
|
Mary A
Williams
|
145,850
|
145,850
|
--
|
--
|
Travis
Nelson
|
50,000
|
50,000
|
--
|
--
|
Amanda
Gross
|
33,000
|
33,000
|
--
|
--
|
Ted
Hadfields
|
50,000
|
50,000
|
--
|
--
|
Yuriy
Fofanov
|
50,000
|
50,000
|
--
|
--
|
Chad
Wagner
|
25,000
|
25,000
|
--
|
--
|
Russ
Karlen
|
100,000
|
100,000
|
--
|
--
|
Eric
Karlen
|
20,000
|
20,000
|
--
|
--
|
Matthew
Turner
|
20,000
|
20,000
|
--
|
--
|
(1)
Buena
Vista Consultant LLC is controlled by Alan
Blankenship.
(2)
CFO
Solutions LLC is controlled by J.B. Henriksen.
(3)
CH
Capital LLC is controlled by Mark Steward.
(4)
Experimental
Schools Corporation of Arizona is controlled by Nicholas
Sofka.
(5)
KGP
Consulting LLC is controlled by Kerri G. Parsons.
(6)
Perleberg
Enterprises Inc. is controlled by Dean Perlberg
(7)
Sikh
Dharma of Phoenix, Inc. is controlled by Soul Singh
Khaksa.
(8)
Water
of Life Metropolation Community is controlled by Rev. James
Burns.
(9)
Because
these shares are held jointly with Daniel J. Breen they are not
included in Ryan Breen’s ownership, which is listed
separately.
(10)
Includes
all shares beneficially-owned by Ms. Nicole Breen, including those
in her name, those in children’s names, and those held in the
name of GEM Management, LLC.
None
of the Selling Shareholders has, or within the past three years has
had, any position, office or material relationship with us or any
of our predecessors or affiliates, except as follows:
● Nicole
Breen is our Secretary and Treasurer and serves on our Board of
Directors.
PLAN
OF DISTRIBUTION
We
are not offering any of the Selling Shareholders’ securities.
These shares may be sold by the Selling Shareholders from time to
time at prevailing market prices. We will not receive any of the
proceeds from any sale by the Selling Shareholders. The Selling
Shareholders may sell or distribute their shares in transactions
through underwriters, brokers, dealers or agents from time to time
or through privately negotiated transactions, including in
distributions to shareholders or partners or other persons
affiliated with the Selling Shareholders. If the Selling
Shareholder enters into an agreement after the date of this
prospectus to sell their shares to a broker-dealer as a principal
and that broker-dealer is acting as an underwriter, we will file a
post-effective amendment to the registration statement containing
this prospectus identifying the broker-dealer and disclosing
required information on the plan of distribution. Additionally,
prior to any involvement of any broker-dealer in the offering, such
broker-dealer must seek and obtain clearance of the underwriting
compensation and arrangements from the Financial Industry
Regulatory Agency.
Penny Stock Rules / Section 15(g) of the Exchange Act
Our
shares may be considered penny stock covered by Section 15(g) of
the Securities Exchange Act of 1934, as amended, and Rules 15g-1
through 15g-6 promulgated thereunder. They impose additional sales
practice requirements on broker/dealers who sell our securities to
persons other than established customers and accredited investors
who are generally institutions with assets in excess of $5,000,000
or individuals with net worth in excess of $1,000,000 (including
spouse's net worth and may include the fair market value of home
furnishings and automobiles, but excluding from the calculation the
value any primary residence and the related amount of any
indebtedness on primary residence up to the fair market value of
the primary residence (any indebtedness that exceeds the fair
market value of the primary residence must be deducted from net
worth calculation)) or annual income exceeding $200,000 or $300,000
jointly with their spouses.
Rule
15g-1 exempts a number of specific transactions from the scope of
the penny stock rules. Rule 15g-2 declares unlawful broker/dealer
transactions in penny stocks unless the broker/dealer has first
provided to the customer a standardized disclosure
document.
Rule
15g-3 provides that it is unlawful for a broker/dealer to engage in
a penny stock transaction unless the broker/dealer first discloses
and subsequently confirms to the customer current quotation prices
or similar market information concerning the penny stock in
question.
Rule
15g-4 prohibits broker/dealers from completing penny stock
transactions for a customer unless the broker/dealer first
discloses to the customer the amount of compensation or other
remuneration received as a result of the penny stock
transaction.
Rule
15g-5 requires that a broker/dealer executing a penny stock
transaction, other than one exempt under Rule 15g-1, disclose to
its customer, at the time of or prior to the transaction,
information about the sales person’s
compensation.
Rule
15g-6 requires broker/dealers selling penny stocks to provide their
customers with monthly account statements.
Rule
15g-9 requires broker/dealers to approved the transaction for the
customer’s account; obtain a written agreement from the
customer setting forth the identity and quantity of the stock being
purchased; obtain from the customer information regarding his
investment experience; make a determination that the investment is
suitable for the investor; deliver to the customer a written
statement for the basis for the suitability determination and that
it is unlawful to effect the transaction without written
authorization for the transaction from the customer.
The
application of the penny stock rules may affect your ability to
resell your shares due to broker-dealer reluctance to undertake the
above-described regulatory burdens.
DESCRIPTION
OF SECURITIES
Our
authorized capital stock consists of 200,000,000 shares of common
stock, par value $0.001, and 20,000,000 shares of preferred stock,
par value $0.001. As of June 30, 2017, there are 99,991,020 shares
of our common stock issued and outstanding, held by approximately
258 shareholders of record. There are no shares of our preferred
stock outstanding as of the date of this filing.
Common Stock
. Each shareholder of our
common stock is entitled to a pro rata share of cash distributions
made to shareholders, including dividend payments. The holders of
our common stock are entitled to one vote for each share of record
on all matters to be voted on by shareholders. There is no
cumulative voting with respect to the election of our directors or
any other matter. Therefore, the holders of more than 50% of the
shares voted for the election of those directors can elect all of
the directors. The holders of our common stockare entitled to
receive dividends when and if declared by our Board of Directors
from funds legally available therefore. Cash dividends are at the
sole discretion of our Board of Directors. In the event of our
liquidation, dissolution or winding up, theholders of common stock
are entitled to share ratably in all assets remaining available for
distribution to them after payment of our liabilities and after
provision has been made for each class of stock, if any, having any
preference in relation to our common stock. Holders of shares of
our common stock have no conversion, preemptive or other
subscription rights, and there are no redemption provisions
applicable to our common stock.
Dividend Policy
. We have never issued
any dividends and do not expect to pay any stock dividend or any
cash dividends on our common stock in the foreseeable future. We
currently intend to retain our earnings, if any, for use in our
business. Any dividends declared on our common stock in the future
will be at the discretion of our Board of Directors and subject to
any restrictions that may be imposed by our lenders.
Preferred Stock
. We are authorized to
issue 20,000,000 shares of preferred stock, par value $0.001. We
have not issued, nor established any series for, any of our
preferred stock. Our preferred stock is “blank check
preferred” whereby our Board of Directors may create a series
of preferred stock and set the rights and preferences of such
preferred stock, without further shareholder approval. The
availability or issuance of preferred shares in the future could
delay, defer, discourage or prevent a change in control. On January
14, 2015, our Board of Directors approved the creation of a class
of preferred stock to be entitled “Series B Convertible
Preferred Stock” with the following rights and preferences:
(i) no dividend rights; (ii) no liquidation preference over the
Company’s common stock; (iii) conversion rights into shares
of common stock at a ratio of 20 shares of common stock for each
share of Series B Convertible Preferred Stock; (iv) no redemption
rights; (v) no call rights by the Company; and (vi) voting rights
on an “as converted” basis on all matters properly
brought before our common stockholders for a vote. This class of
preferred stock has not been created yet and no shares have been
issued, but we agreed to create this class of preferred stock and
issue shares as set forth in the employment agreements we have with
Glenn E. Martin, Nicole Breen and Ryan Breen, as detailed
herein.
INTEREST
OF NAMED EXPERTS AND COUNSEL
Law
Offices of Craig V. Butler serves as our legal counsel in
connection with this offering. Mr. Butler does not own any of our
securities.
DESCRIPTION
OF BUSINESS
General
We are
an early stage holding company currently focused on the development
and application of cannabis-derived compounds for the treatment of
human disease. Our wholly-owned subsidiary, Sangre AT, LLC
(“Sangre”), has begun a planned five-year Cannabis
Genomic Study to complete a global genomic classification of the
Cannabis plant genus. By targeting cannabis-derived molecules that
stimulate the endocannabinoid system, Sangre’s research team
plans to develop scientifically-valid and evidence-based cannabis
strains for the production of disease-specific medicines. The goal
of the research is to identify, collect, patent, and archive a
collection of highly-active medicinal strains. We plan to conduct
this study only in states where cannabis has been legalized for
medicinal purposes.
Using
annotated genomic data and newly generated phenotypic data, Sangre
plans to identify and isolate regions of the plant genome which are
related to growth, synthesis of desired molecules, and drought and
pest resistance. This complex data set would then be utilized in a
breeding program to generate and establish new hybrid cultivars
which exemplify the traits that are desired by the medical and
patient community. This breeding program would produce new seed
stocks and clones, which we plan on patenting. If successful this
intellectual property should generate immense value for the
Company. After developing a comprehensive understanding of the
annotated genome of a variety of cannabis strains, and obtaining
intellectual property protection over the most promising strains,
we plan to provide the blueprints for the development of
significant medicinal products for the treatment of human diseases
including, but not limited to, autism pediatric brain cancer, PTSD,
epilepsy, chronic pain, and Crohn’s disease.
Our
current, short-term goals relate to the Cannabis Genomic Study and
the resulting development of a variety of new cannabis strains,
and, over the next 5 years, we plan to process those results in
order to become an international cannabis research and product
development company, with a globally-recognized brand focusing on
building and purchasing labs, land and building commercial grade
“Cultivation Centers” to consult, assist, manage &
lease to universities, state governments, licensed dispensary
owners and organic grow operators on a contract basis with a
concentration on the legal and medical cannabis
sector..
Our
long-term plan is to become a true “Seed-to-Sale”
global holding company providing infrastructure, financial
solutions, product development, and real estate options in this new
emerging market. Our long term growth may also come from the
acquisition of synergistic businesses, such as distilleries, to
make anything from infused beverages to super oxygenated water with
CBD and THC. Currently, WEED Inc has formed WEED Australia Ltd.,
registered as an unlisted public company in Australia to address
this Global demand.
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 dormant since its
inception.
Our
website is www.weedunitedstates.com.
Cannabis Genomic Study
After
more than 40 years of illicit, underground breeding programs, the
genetic integrity of Cannabis has been significantly degraded. Our
subsidiary, Sangre AT, LLC (“Sangre”) plans to use a
gene-based breeding program to root out inferior cultivars and
replace them with fully-validated and patentable cultivars which
produce consistent plant products for the medicinal markets. We
believe our unique gene-based breeding program will improve
cultivars and introduce integrity, stability, and quality to the
market in the following ways:
●
Accelerated and
optimized growth rates; modern genomic resources will enhance
traditional breeding methods
●
Generation of new
cultivars, accelerating and perfecting the art of selective
breeding
●
Provide the ability
to assay for specific genes within the crop, which is critical to
strain tracking and market quality assurance
●
Improve disease and
drought resistance
We
believe our gene-based breeding program will facilitate and
accelerate:
●
Improved
therapeutic properties
●
New therapies for
migraines/chronic pain, epilepsy, cancer, PTSD, chronic head
injury, and others
●
Enhanced
opportunities for new drug discovery through collaborations with
national medical research and treatment centers and Bio-pharma
companies
●
Development and
protection of intellectual property
The Research Plan
In
order to achieve the desired results outlined above, Sangre has
developed a
research plan entitled the
“Cannabis Genomic Study.” The goal of the study is to
complete a global genomic classification of the Cannabis plant
genus. Once the classification is complete, the research team plans
to develop new cannabis strains that show the highest likelihood of
being successful in the treatment of a variety of human diseases,
test those strains and then work to produce those strains in a
medicinal form for the treatment of disease. The research plan will
be conducted using the following steps: Extraction, Purification,
Sequencing. Annotation, and Cloning
(micro-propagation).
Extraction
:
The extraction of genomic DNA from cannabis is a complex process of
cell lysis and DNA recovery. Sangre AgroTech has evaluated,
updated, and validated new methods for DNA
recovery.
Purification
:
Using next generation purification chemistries, the DNA is cleaned
and concentrated for downstream applications.
Sequencing
:
The Cannabis DNA is sequenced using both the Illumina MiSeq and
MinIon instruments.
Annotation
:
The genomic data is assembled and annotated using proprietary
bioinformatic systems and the data provided to the Sangre AgroTech
genetic breeders and cellular cloners.
Cloning
:
Through this process, new, high-value cannabis strains are
developed.
The
objectives of the research plan are as follows:
Technical Objective
1
: Using two next generation
sequencing platforms and proprietary bioinformatics programs, we
will sequence five cultivars of Cannabis, and generate fully
annotated genomic data.
Technical Objective
2
: Using the selected cultivars, backcross and forward
hybridization studies
will be
performed to produce a new generation of stock. The progeny of
these crosses will be grown, genetically finger-printed, and
introduced to the market under patent protection. Up-selection and
cultivation of cultivars for quality assurance.
Technical Objective
3
: Genotypic and phenotypic measurements of the offspring
will be
performed using Next
Generation Sequence Analysis, Genotyping, and Phenotyping analysis.
Product focus groups will evaluate new cultivars. Patent protection
will be initiated for new cultivars which meet product development
criteria.
Technical Objective
4
:
Utilize gene-driven breeding
of up-selected cultivars to initiate the generation of
“designer” cultivars for clinical
research.
Technical Objective
5
: Market placement of selected, genetically enhanced
cultivars for the medicinal and bio-pharma markets.
Competitive
Advantages
Sangre’s
research and development team works with next generation sequencing
(NGS) and emerging third generation instruments, and has developed
the most advanced proprietary bioinformatics data systems
available. Sangre uses a unique two sequencing approach. One system
provides DNA reads of up to 300,000 base pair reads and an NGS
system which provides highly accurate short reads. This allows the
genomic data to be assembled in a scaffold construct; the long
reads forming the scaffold and the short reads providing highly
accurate verification and quality assurance of the genomic data.
This approach, together with the bioinformatics program,
facilitates a highly accurate construct of the Cannabis genome
which can be annotated and facilitate gene discovery and gene
location. Sangre combination of personnel, skill-sets, and data
analytics capabilities will allow us to accomplish our goals in
months, rather than years.
Using
annotated genomic data and newly generated phenotypic data, we plan
to identify and isolate regions of the genome which are related to
growth, synthesis of desired molecules, and environmental
compatibility. This complex data set will be utilized in a breeding
program to generate and establish new hybrid cultivars which
exemplify the traits that are desired by the medical community.
This breeding program will produce new seed stocks, clones,
cultivars, and intellectual property which will generate value for
the business organization.
Sangre
will develop a translational breeding program to establish a new
collection of Cannabis cultivars for the national market. Using
genetic screening technology and micro-propagation, cultivars can
be up-selected for specific traits and grown to address the needs
of consumers in the medicinal and drug discovery markets. The
combination of next generation genomics, selective hybridization,
and In Vitro cloning provide us with the tools to enhance new
cultivars of patentable Cannabis.
Marketing
We have
not developed a marketing plan and do not intend to until we are in
the latter stages of the Cannabis Genomic Study and believe we have
strains that are marketable for the treatment of disease. At that
time we plan to develop a marketing plan for our newly-developed
strains of Cannabis. We believe that if we are successful in
developing strains of Cannabis that effectively treat human
diseases then the market for our products will be a vibrant
market.
Manufacturing
We are
not currently manufacturing any products and do not intend to do so
until we are in the latter stages of the Cannabis Genomic Study and
believe we have strains that are marketable for the treatment of
disease such that we could begin the manufacturing of such
products, either in-house or through relationships with third party
companies. We do not currently have any relationships with third
party companies for the manufacturing of any products.
Competition
As
Cannabis has moved through the legalization process in North
America, research groups in Canada and the Unites States have
initiated work on understanding the Cannabis genome.
Next Generation Sequencing
Next-generation
sequencing (NGS), introduced nearly ten years ago, is the catch-all
term used to describe several sequencing technologies
including:
●
Illumina
(Solexa) sequencing
●
Roche
454 sequencing
●
Ion
torrent: Proton / PGM sequencing
●
SOLiD
sequencing
These
recent sequencing technologies allow scientists to sequence DNA and
RNA much more quickly and cheaply than the previously used Sanger
sequencing, and as such, have greatly expanded the study of
genomics and molecular biology. Numerous laboratories within the
Cannabis community are currently employing this
technology.
Colorado State University – Boulder
To
the best of our knowledge, Colorado State University –
Boulder is conducting a Cannabis Genomic Research Initiative, which
is currently seeking to describe the Cannabis genome. The data
generated through this effort is provided through the public domain
to growers in an effort to stimulate the production of new,
high-value stains of Cannabis. .
Anandia Labs
Anandia
Labs is conducting work in the area of Cannabis genomics based on
sequence work which was completed in 2011. The sequencing work
conducted was based on “next generation sequencing”
technology and resulted in the generation of tens-of-thousands of
DNA segments that have yet to be completely and correctly
reassembled. Much of the sequence data that was generated through
their sequencing efforts has been placed into the public domain and
shared with other laboratories. In some instances, the data has
been found to be less than accurate.
Phylos Biosciences
Phylos
Biosciences is currently using DNA-based genetic fingerprinting to
establish relationships between strains and to assist in the
development of phenotypic databases to accelerate traditional
breeding programs. Phylos Biosciences has a primary goal of
bringing clarity to the Cannabis market and promote the generation
of IP held by individual growers. To the best of our knowledge,
Phylos Biosciences is not engaged in whole genome sequencing and is
not engaged in any genetic enhancements of the Cannabis strains.
They simply supply genetic
data to their customer base to more effectively drive the
traditional breeding process.
New West Genetics
New West Genetics aims to improve and develop
industrial hemp as a viable crop for the United States. New
West Genetics seeks to exploit the diverse end uses of hemp
and optimize the genetics of hemp to create a lucrative crop
to add to the rotation of US farmers. Industrial
hemp’s uses and potential are as great as many major
crops, if not more. We believe NWG is utilizing modern
sequencing technology and statistical genomics approaches to
understand these factors as they apply to hemp production in states
where it is legal to grow. Understanding the genotype to phenotype
map will be increasingly useful for expanding production of
hemp.
Intellectual Property
Currently, we do
not have any patents, but consider certain elements of our Cannabis
Genomic Study to be trade secrets and we protect it as our
intellectual property. In the future, if we are successful in
identifying certain Cannabis strains as promising for the treatment
of diseases we will seek to patent those strains.
Government Regulation
As
of the end of February, 2017, 28 states and the District of
Columbia allow its citizens to use medical marijuana. Voters in the
states of Colorado, Washington, Alaska, Oregon and the District of
Columbia have approved ballot measures to legalize cannabis for
adult use. The state laws are in conflict with the Federal
Controlled Substances Act, which makes marijuana use and possession
illegal on a national level. The prior administration (President
Obama) effectively stated that it is not an efficient use of
resources to direct law federal law enforcement agencies to
prosecute those lawfully abiding by state-designated laws allowing
the use and distribution of medical marijuana. However, the Trump
administration has indicated the potential for stricter enforcement
of the marijuana industry at the federal level, but to date there
has been very little in terms of action. There is no guarantee that
the Trump administration or future administrations will maintain
the low-priority enforcement of federal laws in the marijuana
industry that was adopted by the Obama administration. The Trump
administration or any new administration that follows could change
this policy and decide to enforce the federal laws strongly. Any
such change in the federal government’s enforcement of
current federal laws could cause significant financial damage to
our business and our shareholders.
Further,
and while we do not intend to harvest, distribute or sell cannabis,
if we conduct research with the cannabis plant or lease buildings
to growers of marijuana, etc., we could be deemed to be
participating in marijuana cultivation, which remains illegal under
federal law, and exposes us to potential criminal liability, with
the additional risk that our properties could be subject to civil
forfeiture proceedings.
Sangre Agreement
On
April 20, 2017, we entered into a Share Exchange Agreement with
Sangre AT, LLC, a Wyoming limited liability company, under which we
acquired all of the issued and outstanding limited liability
company membership units of Sangre in exchange for Five Hundred
Thousand (500,000) shares of our common stock, restricted in
accordance with Rule 144. As a result of this agreement, Sangre is
a wholly-owned subsidiary of WEED, Inc.
Employees
As of
June 30, 2017 we employed three persons on a full time basis,
namely Glenn E. Martin, Nicole Breen and Ryan Breen. Sangre
contracts with two individuals on full-time basis and three
individuals on a part-time basis. All these individuals are
independent contractors.
La Veta, Co. Property
On July 26, 2017,
we acquired property located in La Veta, Colorado in order for
Sangre to complete its 5-Year, $15+ million Cannabis Genomic Study.
The site includes a 10,000+ sq. ft.
building that will house Sangre’s genomic research facility,
a 4,000+ square foot building for plant product analytics and plant
product extraction, a 3,500 sq. ft. corporate office center, and 25
RV slots with full water and electric, which we plan to convert
into a series of small research pods. Under the terms of the
purchase agreement, we paid $525,000 down, including 25,000 shares
of our common stock, and Sangre took immediate possession of the
property. We are obligated to pay an additional $400,000 in cash
and issue an additional 75,000 shares of our common stock over the
next two years in order to pay the entire purchase price. We
estimate it will take approximately $675,000 in order to convert
the existing buildings into the facilities necessary for Sangre
AgroTech to conduct its research, plus an additional $1,000,000 for
security & ground buildout. An additional $1 million for
scientific equipment has been ordered for plant production and
product extraction. We plan to complete the initial property
renovations by Q1 of 2018. The equipment is scheduled to be
delivered in Q2 2018. We will need to raise additional funds in
order to pay the remainder of the purchase price, as well as to
complete the planned renovations.
ORGANIZATION WITHIN LAST FIVE YEARS
We were
originally incorporated under the name Plae, Inc., in the State of
Arizona on August 20, 1999. At the time we operated under the name
Plae, Inc., no business was conducted. No books or records were
maintained and no meetings were held. In essence, nothing was done
after incorporation until Glenn E. Martin took possession of Plae,
Inc. in January 2005. On February 18, 2005, the corporate name was
changed to King Mines, Inc. and then subsequently changed to its
current name, United Mines, Inc., on March 30, 2005. No shares were
issued until the Company became United Mines, Inc. From 2005 until
2015, we were an exploration stage mineral exploration company that
owned a number of unpatented mining claims and Arizona State Land
Department claims.
On
November 26, 2014, our Board of Directors approved the
redomestication of our company from Arizona to Nevada (the
“Articles of Domestication”), and approved Articles of
Incorporation in Nevada, which differed from then-Articles of
Incorporation in Arizona, primarily by (a) changing our name from
United Mines, Inc. to WEED, Inc., (b) authorizing Twenty Million
(20,000,000) shares of preferred stock, with blank check rights
granted to our Board of Directors, and (c) authorizing Two Hundred
Million (200,000,000) shares of common stock (the “Nevada
Articles of Incorporation”). On December 19, 2014, the
holders of a majority of our outstanding common stock approved the
Articles of Domestication and the Nevada Articles of Incorporation
at a Special Meeting of Shareholders. On January 16, 2015, the
Articles of Domestication and the Nevada Articles of Incorporation
went effective with the Secretary of State of the State of Nevada.
On February 2, 2015, our name change to WEED, Inc., and a
corresponding ticker symbol change to “BUDZ” went
effective with FINRA and was reflected on the quotation of our
common stock on OTC Markets.
These
changes were effected in order to make our corporate name and
ticker symbol better align with our short-term and long-term
business focus. Our current, short-term goals relate to the
Cannabis Genomic Study and the resulting development of a variety
of new cannabis strains, and, over the next 5 years, we plan to
process those results in order to become an international cannabis
research and product development company, with a
globally-recognized brand focusing on building and purchasing labs,
land and building commercial grade “Cultivation
Centers” to consult, assist, manage & lease to
universities, state governments, licensed dispensary owners and
organic grow operators on a contract basis with a concentration on
the legal and medical cannabis sector..
Our
long-term plan is to become a true “Seed-to-Sale”
global holding company providing infrastructure, financial
solutions, product development, and real estate options in this new
emerging market. Our long term growth may also come from the
acquisition of synergistic businesses, such as distilleries, to
make anything from infused beverages to super oxygenated water with
CBD and THC. Currently, WEED Inc has formed WEED Australia Ltd.,
registered as an unlisted public company in Australia to address
this Global demand.
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 dormant since its inception. We will
look to conduct future research, marketing, import/exporting, and
manufacturing of our proprietary products on an international
level.
DESCRIPTION OF PROPERTY
Our
company headquarters and executive offices are located at 4920 N.
Post Trail, Tucson, AZ 85750. Our offices are currently located in
office space provided by our President on a month-to-month basis at
a monthly rent of $1,000, which began on April 1, 2017. Our office
space is approximately 1,000 square feet. We also maintain two
virtual office locations, located at 1 South Church Avenue, Suite
1200, Tucson, AZ 85750, and 3960 Howard Hughes Parkway, Suite 500,
Las Vegas NV 89169.
On July 26, 2017,
we acquired property located in La Veta, Colorado in order for
Sangre to complete its 5-Year, $15+ million Cannabis Genomic Study.
The site includes a 10,000+ sq. ft.
building that will house Sangre’s genomic research facility,
a 4,000+ square foot building for plant product analytics and plant
product extraction, a 3,500 sq. ft. corporate office center, and 25
RV slots with full water and electric, which we plan to convert
into a series of small research pods. Under the terms of the
purchase agreement, we paid $525,000 down, including 25,000 shares
of our common stock, and Sangre took immediate possession of the
property. We are obligated to pay an additional $400,000 in cash
and issue an additional 75,000 shares of our common stock over the
next two years in order to pay the entire purchase price. We
estimate it will take approximately $675,000 in order to convert
the existing buildings into the facilities necessary for Sangre
AgroTech to conduct its research, plus an additional $1,000,000 for
security & ground buildout. An additional $1 million for
scientific equipment has been ordered for plant production and
product extraction. We plan to complete the initial property
renovations by Q1 of 2018. The equipment is scheduled to be
delivered in Q2 2018. We will need to raise additional funds in
order to pay the remainder of the purchase price, as well as to
complete the planned renovations.
LEGAL PROCEEDINGS
We are
not currently involved in any legal proceedings.
In the
ordinary course of business, we are from time to time involved in
various pending or threatened legal actions. The litigation process
is inherently uncertain and it is possible that the resolution of
such matters might have a material adverse effect upon our
financial condition and/or results of operations. However, in the
opinion of our management, other than as set forth herein, matters
currently pending or threatened against us are not expected to have
a material adverse effect on our financial position or results of
operations.
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
Our
stock is quoted on the OTC Markets’ “Pink Current
Information” tier under the symbol “BUDZ.” We
were originally quoted over-the-counter on November 2009. We have
99,991,020 shares of our common stock outstanding. The following
table sets forth the high and low bid information for each quarter
within the two most recent fiscal years, as estimated based on
information on OTC Markets. The information reflects prices between
dealers, and does not include retail markup, markdown, or
commission, and may not represent actual transactions.
|
|
|
|
Fiscal Year
Ended
December 31,
|
|
|
|
|
|
|
|
|
|
2016
|
|
First
Quarter
|
$
0.13
|
$
0.043
|
|
|
Second
Quarter
|
$
0.10
|
$
0.055
|
|
|
Third
Quarter
|
$
0.14
|
$
0.07
|
|
|
Fourth
Quarter
|
$
0.89
|
$
0.15
|
|
|
|
|
|
2015
|
|
First
Quarter
|
$
0.115
|
$
0.07
|
|
|
Second
Quarter
|
$
0.10
|
$
0.06
|
|
|
Third
Quarter
|
$
0.085
|
$
0.05
|
|
|
Fourth
Quarter
|
$
0.08
|
$
0.043
|
The
Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure relating to the market for penny stocks in
connection with trades in any stock defined as a penny stock. The
Commission has adopted regulations that generally define a penny
stock to be any equity security that has a market price of less
than $5.00 per share, subject to a few exceptions which we do not
meet. Unless an exception is available, the regulations require the
delivery, prior to any transaction involving a penny stock, of a
disclosure schedule explaining the penny stock market and the risks
associated therewith.
There
is currently no outstanding options to purchase WEED, Inc. common
stock. We do not have any convertible debentures outstanding that
permit the holder to convert the outstanding obligation into shares
of our common stock.
The
number of holders of record of shares of our common stock is Two
Hundred Fifty Eight (258).
There
have been no cash dividends declared on our common stock. Dividends
are declared at the sole discretion of our Board of
Directors.
We have
not adopted any stock option or stock bonus plans.
FINANCIAL STATEMENTS
Index
to Financial Statements
|
|
|
|
|
|
Independent
Auditors’
Report
|
|
F-1
|
Consolidated
Balance Sheets of WEED, Inc. as of December 31, 2016 and
2015
|
|
F-2
|
Consolidated
Statements of Operations of WEED, Inc. for the Years Ended December
31, 2016 and 2015
|
|
F-3
|
Consolidated
Statements of Changes in Stockholders’ Equity of WEED, Inc.
for the Years Ended December 31, 2016 and 2015
|
|
F-4
|
Consolidated
Statements of Cash Flows of WEED, Inc. for the Years Ended December
31, 2016 and 2015
|
|
F-5
|
Notes
to Financial Statements
|
|
F-6
|
|
|
|
|
|
|
Consolidated
Balance Sheets of WEED, Inc. as of March 31, 2017
(Unaudited)
|
|
F-21
|
Consolidated
Statement of Operations of WEED, Inc. for the Three Months Ended
March 31, 2017 and 2016 (Unaudited)
|
|
F-22
|
Consolidated
Statements of Cash Flows of WEED, Inc. for the Three Months Ended
March 31, 2017 and March 31, 2016 (Unaudited)
|
|
F-23
|
Notes
to Condensed Consolidated Financial Statements
|
|
F-24
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the
Board of Directors and
Stockholders
of Weed, Inc.
We have
audited the accompanying balance sheets of Weed, Inc. as of
December 31, 2016 and 2015, and the related statements of income,
comprehensive income, stockholders’ equity, and cash flows
for each of the years in the two-year period ended December 31,
2016. Weed, Inc’s management is responsible for these
financial statements. Our responsibility is to express an opinion
on these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. The company is not required to have, nor
were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the
company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our
opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Weed, Inc. as
of December 31, 2016 and 2015, and the results of its operations
and its cash flows for each of the years in the two-year period
ended December 31, 2016, in conformity with accounting principles
generally accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note
2 to the financial statements, the Company suffered a net loss from
operations and has a net capital deficiency, which raises
substantial doubt about its ability to continue as a going concern.
Management’s plans regarding those matters are also described
in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this
uncertainty.
/s/
M&K CPAS, PLLC
|
|
|
Houston,
Texas
|
|
|
August
11, 2017
|
|
|
|
WEED, INC. (Formerly United Mines, Inc.)
|
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
Cash
|
$
231
|
$
7
|
Prepaid
expenses
|
5,053
|
2,067
|
Total
current assets
|
5,284
|
2,074
|
|
|
|
Property
and equipment, net
|
264
|
394
|
|
|
|
Total
assets
|
$
5,548
|
$
2,468
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$
35,661
|
$
51,748
|
Accrued
officer compensation
|
157,505
|
86,000
|
Accrued
interest
|
36,760
|
32,022
|
Convertible
notes payable
|
35,000
|
35,000
|
Notes
payable, related parties
|
16,300
|
13,300
|
Total
current liabilities
|
281,226
|
218,070
|
|
|
|
Commitments
and contingencies
|
-
|
-
|
|
|
|
Stockholders'
equity (deficit):
|
|
|
Preferred
stock, $0.001 par value, 20,000,000 shares
|
|
|
authorized,
no shares designated, issued and outstanding
|
-
|
-
|
Common
stock, $0.001 par value, 200,000,000 shares
|
|
|
authorized,
103,953,307 and 61,118,307 shares issued and
|
|
|
outstanding
at December 31, 2016 and 2015, respectively
|
103,953
|
61,118
|
Additional
paid in capital
|
15,219,762
|
11,056,712
|
Subscriptions
payable, consisting of -0- and 1,770,000
|
|
|
shares
at December 31, 2016 and 2015, respectively
|
-
|
114,990
|
Accumulated
deficit
|
(15,599,393
)
|
(11,448,422
)
|
Total
stockholders' equity (deficit)
|
(275,678
)
|
(215,602
)
|
|
|
|
Total
liabilities and stockholders' equity (deficit)
|
$
5,548
|
$
2,468
|
|
|
|
The accompanying notes are an integral part of these financial
statements.
|
WEED, INC. (Formerly United Mines, Inc.)
|
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
-
|
$
-
|
|
|
|
Operating
expenses:
|
|
|
General
and administrative
|
2,211,787
|
594,446
|
Professional
fees
|
1,933,733
|
639,149
|
Depreciation
and amortization
|
130
|
130
|
Total
operating expenses
|
4,145,650
|
1,233,725
|
|
|
|
Net
operating loss
|
(4,145,650
)
|
(1,233,725
)
|
|
|
|
Other
expense:
|
|
|
Interest
expense
|
(5,321
)
|
(4,824
)
|
|
|
|
Net
loss
|
$
(4,150,971
)
|
$
(1,238,549
)
|
|
|
|
|
|
|
Weighted
average number of common shares
|
|
|
outstanding
- basic and fully diluted
|
71,250,288
|
54,390,978
|
|
|
|
Net
loss per share - basic and fully diluted
|
$
(0.06
)
|
$
(0.02
)
|
|
|
|
The accompanying notes are an integral part of these financial
statements.
|
WEED, INC. (Formerly United Mines, Inc.)
|
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2014
|
-
|
$
-
|
44,333,307
|
$
44,333
|
$
9,901,547
|
$
156,100
|
$
(10,209,873
)
|
$
(107,893
)
|
|
|
|
|
|
|
|
|
|
Common
stock sold for cash
|
-
|
-
|
555,000
|
555
|
60,945
|
(37,500
)
|
-
|
24,000
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services, related parties
|
-
|
-
|
12,000,000
|
12,000
|
828,000
|
-
|
-
|
840,000
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services
|
-
|
-
|
4,230,000
|
4,230
|
266,020
|
(3,610
)
|
-
|
266,640
|
|
|
|
|
|
|
|
|
|
Imputed
interest on non-interest bearing related party debts
|
-
|
-
|
-
|
-
|
200
|
-
|
-
|
200
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2015
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,238,549
)
|
(1,238,549
)
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2015
|
-
|
$
-
|
61,118,307
|
$
61,118
|
$
11,056,712
|
$
114,990
|
$
(11,448,422
)
|
$
(215,602
)
|
|
|
|
|
|
|
|
|
|
Common
stock sold for cash
|
-
|
-
|
325,000
|
325
|
69,675
|
-
|
-
|
70,000
|
|
|
|
|
|
|
|
|
|
Common
stock issued for down payment on land purchase
|
-
|
-
|
50,000
|
50
|
42,450
|
-
|
-
|
42,500
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services, related parties
|
-
|
-
|
36,000,000
|
36,000
|
3,564,000
|
-
|
-
|
3,600,000
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services
|
-
|
-
|
6,460,000
|
6,460
|
486,342
|
(114,990
)
|
-
|
377,812
|
|
|
|
|
|
|
|
|
|
Imputed
interest on non-interest bearing related party debts
|
-
|
-
|
-
|
-
|
583
|
-
|
-
|
583
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2016
|
-
|
-
|
-
|
-
|
-
|
-
|
(4,150,971
)
|
(4,150,971
)
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2016
|
-
|
$
-
|
103,953,307
|
$
103,953
|
$
15,219,762
|
$
-
|
$
(15,599,393
)
|
$
(275,678
)
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial
statements.
|
WEED, INC. (Formerly United Mines, Inc.)
|
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
Net
(loss)
|
$
(4,150,971
)
|
$
(1,238,549
)
|
Adjustments
to reconcile net loss
|
|
|
to
net cash used in operating activities:
|
|
|
Depreciation
|
130
|
130
|
Imputed
interest on non-interest bearing related party debts
|
583
|
200
|
Shares
issued for down payment on land purchase
|
42,500
|
-
|
Shares
issued for services, related parties
|
3,600,000
|
840,000
|
Shares
issued for services
|
377,812
|
266,640
|
Decrease
(increase) in assets:
|
|
|
Prepaid
expenses
|
(2,986
)
|
7,956
|
Increase
(decrease) in liabilities:
|
|
|
Accounts
payable
|
(16,087
)
|
19,199
|
Accrued
compensation
|
71,505
|
74,000
|
Accrued
interest
|
4,738
|
4,624
|
Net
cash used in operating activities
|
(72,776
)
|
(25,800
)
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
Proceeds
from notes payable, related parties
|
16,005
|
1,300
|
Repayments
on notes payable, related parties
|
(13,005
)
|
(5,115
)
|
Proceeds
from the sale of common stock
|
70,000
|
24,000
|
Net
cash provided by financing activities
|
73,000
|
20,185
|
|
|
|
NET
CHANGE IN CASH
|
224
|
(5,615
)
|
CASH
AT BEGINNING OF PERIOD
|
7
|
5,622
|
|
|
|
CASH
AT END OF PERIOD
|
$
231
|
$
7
|
|
|
|
SUPPLEMENTAL
INFORMATION:
|
|
|
Interest
paid
|
$
-
|
$
-
|
Income
taxes paid
|
$
-
|
$
-
|
|
|
|
The accompanying notes are an integral part of these financial
statements.
|
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Years Ended December 31, 2016 and 2015
Note 1 – Nature of Business and Significant Accounting
Policies
Nature of Business
WEED,
Inc. (the “Company”), (formerly United Mines, Inc.) was
incorporated under the laws of the State of Arizona on
August 20, 1999 (“Inception Date”) as Plae,
Inc. to engage in the exploration of gold and silver mining
properties. On November 26, 2014, the Company was renamed
from United Mines, Inc. to WEED, Inc. and was repurposed to pursue
a business involving the purchase of land, and building Commercial
Grade “Cultivation Centers” to consult, assist, manage
& lease to Licensed Dispensary owners and organic grow
operators on a contract basis, with a concentration on the legal
and medical marijuana sector. The Company’s plan is to become
a True “Seed-to-Sale” company providing infrastructure,
financial solutions and real estate options in this new emerging
market. The Company, under United Mines, was formerly in the
process of acquiring mineral properties or claims located in the
State of Arizona, USA. The name was previously changed on February
18, 2005 to King Mines, Inc. and then subsequently changed to
United Mines, Inc. on March 30, 2005. The Company trades
on the OTC Pink Sheets under the stock symbol: BUDZ.
The
accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States
of America. These statements reflect all adjustments, consisting of
normal recurring adjustments, which in the opinion of management
are necessary for fair presentation of the information contained
therein.
The
Company has a calendar year end for reporting
purposes.
Use of Estimates
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and the disclosure of
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents
We
maintain cash balances in non-interest-bearing accounts, which do
not currently exceed federally insured limits. For the purpose of
the statements of cash flows, all highly liquid investments with an
original maturity of three months or less are considered to be cash
equivalents. There were no cash equivalents on hand for the periods
presented herein.
Fair Value of Financial Instruments
Under
FASB ASC 820-10-05, the Financial Accounting Standards Board
establishes a framework for measuring fair value in generally
accepted accounting principles and expands disclosures about fair
value measurements. This Statement reaffirms that fair value is the
relevant measurement attribute. The adoption of this standard did
not have a material effect on the Company’s financial
statements as reflected herein. The carrying amounts of cash,
prepaid expenses and accrued expenses reported on the balance sheet
are estimated by management to approximate fair value primarily due
to the short term nature of the instruments.
Property and Equipment
Property
and equipment is stated at the lower of cost or estimated net
recoverable amount. The cost of property, plant and equipment is
depreciated using the straight-line method based on the lesser of
the estimated useful lives of the assets or the lease term based on
the following life expectancy:
Software
|
3
years
|
Furniture
and fixtures
|
5
years
|
Equipment
|
5-7
years
|
Repairs
and maintenance expenditures are charged to operations as incurred.
Major improvements and replacements, which have extend the useful
life of an asset, are capitalized and depreciated over the
remaining estimated useful life of the asset. When assets are
retired or sold, the cost and related accumulated depreciation and
amortization are eliminated and any resulting gain or loss is
reflected in operations.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Years Ended December 31, 2016 and 2015
Impairment of Long-Lived Assets
Long-lived
assets held and used by the Company are reviewed for possible
impairment whenever events or circumstances indicate the carrying
amount of an asset may not be recoverable or is impaired.
Recoverability is assessed using undiscounted cash flows based upon
historical results and current projections of earnings before
interest and taxes. Impairment is measured using discounted cash
flows of future operating results based upon a rate that
corresponds to the cost of capital. Impairments are recognized in
operating results to the extent that carrying value exceeds
discounted cash flows of future operations.
Basic and Diluted Loss Per Share
The
basic net loss per common share is computed by dividing the net
loss by the weighted average number of common shares outstanding.
Diluted net loss per common share is computed by dividing the net
loss adjusted on an “as if converted” basis, by the
weighted average number of common shares outstanding plus potential
dilutive securities. For the periods presented, potential dilutive
securities had an anti-dilutive effect and were not included in the
calculation of diluted net loss per common share.
Stock-Based Compensation
Under
FASB ASC 718-10-30-2, all share-based payments to employees,
including grants of employee stock options, to be recognized in the
income statement based on their fair values. Pro forma disclosure
is no longer an alternative. The Company’s stock based
compensation consisted of the following during the years ended
December 31, 2016 and 2015,
respectively:
|
|
|
|
|
|
|
|
|
Common stock issued
for down payment on land purchase
|
$
42,500
|
$
-
|
Common stock issued
for services, related parties
|
3,600,000
|
840,000
|
Common stock issued
for services
|
377,812
|
266,640
|
Total stock based
compensation
|
$
4,020,312
|
$
1,106,640
|
Revenue Recognition
Sales on fixed price contracts are recorded when services are
earned, the earnings process is complete or substantially complete,
and the revenue is measurable and collectability is reasonably
assured. Provisions for discounts and rebates to customers,
estimated returns and allowances, and other adjustments are
provided for in the same period the related sales are recorded. The
Company will defer any revenue from sales in which payment has been
received, but the earnings process has not occurred. Sales have not
yet commenced on the MMJ business. The Company also did not
recognize revenues from its previous mining operations during the
periods presented herein.
Advertising and Promotion
All
costs associated with advertising and promoting products are
expensed as incurred. These expenses were $-0- and $-0- for the
years ended December 31, 2016 and 2015,
respectively.
Income Taxes
Deferred
tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. A valuation allowance is
provided for significant deferred tax assets when it is more likely
than not, that such asset will not be recovered through future
operations.
Uncertain Tax Positions
In
accordance with ASC 740, “Income Taxes” (“ASC
740”), the Company recognizes the tax benefit from an
uncertain tax position only if it is more likely than not that the
tax position will be capable of withstanding examination by the
taxing authorities based on the technical merits of the position.
These standards prescribe a recognition threshold and measurement
attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return.
These standards also provide guidance on de-recognition,
classification, interest and penalties, accounting in interim
periods, disclosure, and transition.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Years Ended December 31, 2016 and 2015
Various
taxing authorities periodically audit the Company’s income
tax returns. These audits include questions regarding the
Company’s tax filing positions, including the timing and
amount of deductions and the allocation of income to various tax
jurisdictions. In evaluating the exposures connected with these
various tax filing positions, including state and local taxes, the
Company records allowances for probable exposures. A number of
years may elapse before a particular matter, for which an allowance
has been established, is audited and fully resolved. The Company
has not yet undergone an examination by any taxing
authorities.
The
assessment of the Company’s tax position relies on the
judgment of management to estimate the exposures associated with
the Company’s various filing positions.
Recently Issued Accounting Pronouncements
In
January 2017, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update
(“ASU”) 2017-04,
Intangibles – Goodwill and Other (Topic
350)
. ASU 2017-04 simplifies the subsequent measurement of
goodwill by removing the second step of the two-step impairment
test. The amendment requires an entity to perform its annual, or
interim goodwill impairment test by comparing the fair value of a
reporting unit with its carrying amount. An impairment charge
should be recognized for the amount by which the carrying amount
exceeds the reportingunit's fair value; however, the loss
recognized should not exceed the total amount of goodwill allocated
to that reporting unit. An entity still has the option to perform
the qualitative assessment for a reporting unit to determine if the
quantitative impairment test is necessary. The amendment should be
applied on a prospective basis. ASU 2017-04 is effective for fiscal
years beginning after December 15, 2019, including interim periods
within those fiscal years. Early adoption is permitted for interim
or annual goodwill impairment tests performed on testing dates
after January 1, 2017. The Company intends to early adopt the ASU
in 2017.
In
January 2017, the FASB issued ASU 2017-01,
Business Combinations (Topic 805): Clarifying
the Definition of a Business
, which clarifies the definition
of a business to assist entities with evaluating whether
transactions should be accounted for as acquisitions (or disposals)
of assets or businesses. The standard will be effective for the
Company in the first quarter of 2018. Early adoption is permitted.
The Company is currently evaluating the impact of adopting this ASU
on its consolidated financial statements.
In December 2016, the
FASB issued
ASU 2016-20,
Technical
Corrections and Improvements to Topic 606, Revenue from Contracts
with Customers
.
ASU 2016-20 amended
guidance regarding accounting for
Revenue from Contracts with Customers
,
which requires an entity to recognize the amount of revenue to
which it expects to be entitled for the transfer of promised goods
or services to customers. When effective, this standard will
replace most existing revenue recognition guidance in generally
accepted accounting principles (“GAAP”). The standard
also requires more detailed disclosures and provides additional
guidance for transactions that were not comprehensively addressed
in GAAP. This guidance is required to be adopted by us in the first
quarter of fiscal 2019 by either recasting all years presented in
our financial statements or by recording the impact of adoption as
an adjustment to retained earnings at the beginning of the year of
adoption. We are currently evaluating the impact this guidance will
have on our consolidated financial statements.
In
October 2016, the FASB issued ASU No. 2016-17,
Consolidation (Topic 810): Interests Held
through Related Parties that are under Common Control
. The
amendments in this Update improve GAAP involving situations
consisting of common control, wherein a single decision maker
focuses on the economics to which it is exposed when determining
whether it is the primary beneficiary of a variable interest entity
(“VIE”) before potentially evaluating which party is
most closely associated with the VIE. ASU 2016-17 is effective for
public entities for fiscal periods beginning after December 15,
2017, including interim periods within those fiscal years. Early
adoption is permitted, including adoption in an interim period. If
an entity early adopts the amendments in an interim period, any
adjustments should be reflected as of the beginning of the fiscal
year that includes that interim period. The Company is currently
evaluating the impact of adopting this ASU on its consolidated
financial statements.
In
October 2016, the FASB issued ASU No. 2016-16,
Income Taxes (Topic 740): Intra-Entity
Transfers of Assets Other Than Inventory
, which reduces the
complexity in the accounting standards by allowing the recognition
of current and deferred income taxes for an intra-entity asset
transfer, other than inventory, when the transfer occurs.
Historically, recognition of the income tax consequence was not
recognized until the asset was sold to an outside party. This
amendment should be applied on a modified retrospective basis
through a cumulative-effect adjustment directly to retained
earnings as of the beginning of the period of adoption. ASU 2016-16
is effective for annual periods beginning after December 15, 2017,
including interim reporting periods within those annual reporting
periods. Early adoption is permitted for all entities as of the
beginning of an annual reporting period for which financial
statements (interim or annual) have not been issued or made
available for issuance. That is, earlier adoption should be in the
first interim period if an entity issues interim financial
statements. The Company is currently evaluating the impact of
adopting this ASU on its consolidated financial
statements.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Years Ended December 31, 2016 and 2015
No
other new accounting pronouncements, issued or effective during the
years ended December 31, 2016 and 2015, have had or are
expected to have a significant impact on the Company’s
financial statements.
Note 2 – Going Concern
As
shown in the accompanying financial statements, the Company has no
revenues, incurred net losses from operations resulting in an
accumulated deficit of $15,599,393, and had negative working
capital of ($275,942) at December 31, 2016. These factors
raise substantial doubt about the Company’s ability to
continue as a going concern. Management is actively pursuing new
products and services to begin generating revenues. In addition,
the Company is currently seeking additional sources of capital to
fund short term operations. The Company, however, is dependent upon
its ability to secure equity and/or debt financing and there are no
assurances that the Company will be successful; therefore, without
sufficient financing it would be unlikely for the Company to
continue as a going concern.
The
financial statements do not include any adjustments that might
result from the outcome of any uncertainty as to the
Company’s ability to continue as a going concern. The
financial statements also do not include any adjustments relating
to the recoverability and classification of recorded asset amounts,
or amounts and classifications of liabilities that might be
necessary should the Company be unable to continue as a going
concern.
Note 3 – Related Party
Notes Payable
From
time to time, the Company has received short term loans from
officers and directors as disclosed in Note 7 below.
Common Stock
On
October 1, 2016, the Company granted 7,000,000 shares of common
stock to our CEO, Glenn E. Martin, as a bonus for services
performed pursuant to an amended employment agreement. The total
fair value of the common stock was $700,000 based on the closing
price of the Company’s common stock on the date of
grant.
In
addition, on October 1, 2016, the Company granted a total of
14,000,000 shares of common stock to Mr. Martin for services
performed pursuant to his previous employment agreement. The total
fair value of the common stock was $1,400,000 based on the closing
price of the Company’s common stock on the date of
grant.
On
October 1, 2016, the Company granted 4,000,000 shares of common
stock to a related party as a bonus for services performed pursuant
to an amended employment agreement. The total fair value of the
common stock was $400,000 based on the closing price of the
Company’s common stock on the date of grant.
In
addition, on October 1, 2016, the Company granted a total of
8,000,000 shares of common stock to a related party for services
performed pursuant to their previous employment agreement. The
total fair value of the common stock was $800,000 based on the
closing price of the Company’s common stock on the date of
grant.
On
October 1, 2016, the Company granted 1,000,000 shares of common
stock to a related party as a bonus for services performed pursuant
to an amended employment agreement. The total fair value of the
common stock was $100,000 based on the closing price of the
Company’s common stock on the date of grant.
In
addition, on October 1, 2016, the Company granted a total of
2,000,000 shares of common stock to a related party for services
performed pursuant to their previous employment agreement. The
total fair value of the common stock was $200,000 based on the
closing price of the Company’s common stock on the date of
grant.
On
January 1, 2015, the Company granted 7,000,000 shares of common
stock to our CEO, Glenn E. Martin, for services performed. The
total fair value of the common stock was $490,000 based on the
closing price of the Company’s common stock on the date of
grant. The shares were subsequently issued on June 29,
2015.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Years Ended December 31, 2016 and 2015
On
January 1, 2015, the Company granted 4,000,000 shares of common
stock to a related party for services performed. The total fair
value of the common stock was $280,000 based on the closing price
of the Company’s common stock on the date of grant. The
shares were subsequently issued on June 29, 2015.
On
January 1, 2015, the Company granted 1,000,000 shares of common
stock to a related party for services performed. The total fair
value of the common stock was $70,000 based on the closing price of
the Company’s common stock on the date of grant. The shares
were subsequently issued on June 29, 2015.
A total
of $157,505 and $86,000 of officer compensation was unpaid and
outstanding at December 31, 2016 and 2015,
respectively.
Capital Contributions
The
Company imputed interest on non-interest bearing, related party
loans, resulting in a total of $583 and $200 of contributed capital
during the years ended December 31, 2016 and 2015,
respectively.
Note 4 – Fair Value of Financial Instruments
Under
FASB ASC 820-10-5, fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date (an exit price). The standard outlines a valuation framework
and creates a fair value hierarchy in order to increase the
consistency and comparability of fair value measurements and the
related disclosures. Under GAAP, certain assets and liabilities
must be measured at fair value, and FASB ASC 820-10-50 details the
disclosures that are required for items measured at fair
value.
The
Company has certain financial instruments that must be measured
under the new fair value standard. The Company’s financial
assets and liabilities are measured using inputs from the three
levels of the fair value hierarchy. The three levels are as
follows:
Level 1
- Inputs are unadjusted quoted prices in active markets for
identical assets or liabilities that the Company has the ability to
access at the measurement date.
Level 2
- Inputs include quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar assets or
liabilities in markets that are not active, inputs other than
quoted prices that are observable for the asset or liability (e.g.,
interest rates, yield curves, etc.), and inputs that are derived
principally from or corroborated by observable market data by
correlation or other means (market corroborated
inputs).
Level 3
- Unobservable inputs that reflect our assumptions about the
assumptions that market participants would use in pricing the asset
or liability.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Years Ended December 31, 2016 and 2015
The
following schedule summarizes the valuation of financial
instruments at fair value on a recurring basis in the balance
sheets as of December 31, 2016 and 2015, respectively:
|
Fair
Value Measurements at December 31, 2016
|
|
|
|
|
Assets
|
|
|
|
Cash
|
$
7
|
$
-
|
$
-
|
Total
assets
|
7
|
-
|
-
|
Liabilities
|
|
|
|
Convertible notes
payable
|
-
|
35,000
|
-
|
Notes payable,
related parties
|
-
|
16,300
|
-
|
Total
liabilities
|
-
|
51,300
|
-
|
|
$
7
|
$
(51,300
)
|
$
-
|
|
Fair
Value Measurements at December 31, 2015
|
|
|
|
|
Assets
|
|
|
|
Cash
|
$
7
|
$
-
|
$
-
|
Total
assets
|
7
|
-
|
-
|
Liabilities
|
|
|
|
Convertible notes
payable
|
-
|
35,000
|
-
|
Notes payable,
related parties
|
-
|
13,300
|
-
|
Total
liabilities
|
-
|
48,300
|
-
|
|
$
7
|
$
(48,300
)
|
$
-
|
The
fair values of our related party debts are deemed to approximate
book value, and are considered Level 2 inputs as defined by
ASC Topic 820-10-35.
There
were no transfers of financial assets or liabilities between Level
1, Level 2 and Level 3 inputs for the years ended
December 31, 2016 or the year ended December 31,
2015.
Note 5 – Property and Equipment
Property
and equipment consist of the following at December 31, 2016 and
2015, respectively:
|
|
|
|
|
Office
equipment
|
$
650
|
$
650
|
Less accumulated
depreciation
|
(386
)
|
(256
)
|
|
$
264
|
$
394
|
Depreciation
and amortization expense totaled $130 and $130 for the years ended
December 31, 2016 and 2015, respectively.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Years Ended December 31, 2016 and 2015
Note 6 – Convertible Notes Payable
Convertible
notes payable consist of the following at December 31, 2016 and
2015, respectively:
|
|
|
|
|
|
|
|
|
On December 7,
2007, the Company issued a 10% note payable to the Lebrecht Group,
PC (“Lebrecht Note”) for services rendered related to
the registration of certain securities of the Company. The note and
accrued interest were due December 7, 2008 and at the option of the
holder payable in full on the maturity date or in 12 monthly
payments beginning on the maturity date. The note and accrued
interest are convertible to common shares at any time at the option
of the holder at 75% of the average closing bid price on the five
trading days immediately preceding the conversion. Management
estimates, at this time, that 1,650,000 shares may be issued if
this conversion feature is exercised. In accordance with generally
accepted accounting principles, the 25% discount to market related
to the beneficial conversion feature has been reported as a
component of additional paid in capital. Additionally, since this
represents a prepayment for services related to a future public
offering, management had elected to offset the cost to future
capital raised as a result of the offering, if any. Currently in
default.
|
$
35,000
|
$
35,000
|
Total convertible
notes payable
|
35,000
|
35,000
|
Less unamortized
debt discounts:
|
|
|
Discount on
beneficial conversion feature
|
-
|
-
|
Convertible notes
payable (in default)
|
$
35,000
|
$
35,000
|
The
Company recognized interest expense related to the convertible
debts for the years ended December 31, 2016 and 2015,
respectively, as follows:
|
|
|
|
|
|
|
|
|
Interest
|
$
3,500
|
$
3,500
|
Amortization of
beneficial conversion feature
|
-
|
-
|
Total interest
expense
|
$
3,500
|
$
3,500
|
In
addition, the Company recognized and measured the embedded
beneficial conversion feature present in the convertible debts by
allocating a portion of the proceeds equal to the intrinsic value
of the feature to additional paid-in-capital. The intrinsic value
of the feature was calculated on the commitment date using the
effective conversion price of the convertible debt. This intrinsic
value is limited to the portion of the proceeds allocated to the
convertible debt.
Furthermore,
the Company confirmed and agreed with Lebrecht Law Group, PC that
they would not force the Company to settle in shares of common
stock in the event there are not enough authorized shares at time
of conversion.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Years Ended December 31, 2016 and 2015
Note 7 – Notes Payable, Related Parties
Notes
payable, related parties consist of the following at
December 31, 2016 and 2015,
respectively:
|
|
|
|
|
|
|
|
|
On various dates,
the Company received advances from the Company’s CEO. The
unsecured non-interest bearing loans were due on demand. The loans
were repaid in full over various dates from March 15, 2016 through
November 3, 2016.
|
$
-
|
$
-
|
|
|
|
On August 23, 2016,
the Company received an unsecured, non-interest bearing loan in the
amount of $3,000, due on demand from an affiliate, bearing interest
at 10% per annum.
|
3,000
|
-
|
|
|
|
On January 21,
2015, the Company received an unsecured loan in the amount of
$1,300, due on demand from an affiliate, bearing interest at 10%
per annum.
|
1,300
|
1,300
|
|
|
|
On April 12, 2010,
the Company received an unsecured, non-interest bearing loan in the
amount of $2,000, due on demand from an affiliate. Interest is
being imputed at the Company’s estimated borrowing rate, or
10% per annum.
|
2,000
|
2,000
|
|
|
|
Over various dates
in 2011 and 2012, the Company received unsecured loans in the
aggregate amount of $10,000, due on demand, bearing interest at
10%, from an affiliate.
|
10,000
|
10,000
|
|
|
|
Notes payable,
related parties
|
$
16,300
|
$
13,300
|
The
Company recorded interest expense in the amount of $1,821 and
$1,324 for the years ended December 31, 2016 and 2015,
respectively, including imputed interest expense in the amount of
$583 and $200 for the years ended December 31, 2016 and
2015, respectively related to notes payable, related
parties.
Note 8 – Commitments and Contingencies
On
November 8, 2016, the Company entered into an agreement with
Gregory DiPaolo’s Pro Am Golf, LLC to acquire land currently
housing a golf course and restaurant. The total purchase price of
$1,600,000 is to be paid with a deposit of 50,000 shares of common
stock, followed by cash of $1,250,000 and 300,000 shares of the
Company’s common stock to be delivered at closing. The
deposit of 50,000 shares issued as a deposit was $42,500 based on
the closing price of the Company’s common stock on the date
of grant. The Company subsequently closed on the property on July
27, 2017.
On
September 30, 2014, the majority of shareholders approved a
Settlement Agreement dated December 11, 2013 and signed on
August 19, 2014 pursuant to Case No. C20125545 in the Superior
Court of the State of Arizona, whereby among other provisions, the
Plaintiffs, consisting of United Mines, Inc. (“UMI”)
and its then principals, agreed to the cancellation of a total of
4,820,953 shares of common stock and control of the Company in
exchange for (i) sixty five (65) of the unpatented Bureau of Land
Management (“BLM”) mining claims, the mill site,
buildings and equipment, (ii) the four (4) Arizona State Land
Department Exploration Permits registered to the Company, (iii) any
permits, financial and reclamation guaranties, bonds and licenses
connected with the foregoing assets. In addition, thirty-three (33)
unpatented BLM mining claims remained the property of UMI, along
with any associated permits, financial and reclamation guaranties,
bonds, licenses, and the rights to the corporation, the
corporation’s name, stock symbol, or any other asset of UMI,
shall remain the property of UMI under the management of Glenn E.
Martin. As of the date of this report, the Plaintiffs have not
surrendered the stock certificates to the Company.
Note 9 – Stockholders’ Equity
Preferred Stock
On
December 5, 2014, the Company amended the Articles of
Incorporation, pursuant to which 20,000,000 shares of “blank
check” preferred stock with a par value of $0.001 were
authorized. No series of preferred stock has been designated to
date.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Years Ended December 31, 2016 and 2015
Common Stock
On
December 5, 2014, the Company amended the Articles of
Incorporation, and increased the authorized shares to 200,000,000
shares of $0.001 par value common stock.
Common Stock Sales (2016)
On
October 31, 2016, the Company sold 50,000 units at $0.10 per unit,
consisting of 50,000 shares of common stock and warrants to
purchase 50,000 shares of common stock at an exercise price of
$1.50 per share over a one (1) year period from the date of
purchase in exchange for total proceeds of $5,000. The proceeds
received were allocated between the common stock and warrants on a
relative fair value basis.
On
October 25, 2016, the Company sold 150,000 units at $0.3333 per
unit, consisting of 150,000 shares of common stock and warrants to
purchase 150,000 shares of common stock at an exercise price of
$1.50 per share over a one (1) year period from the date of
purchase in exchange for total proceeds of $50,000. The proceeds
received were allocated between the common stock and warrants on a
relative fair value basis.
On
October 19, 2016, the Company sold 25,000 units at $0.20 per unit,
consisting of 25,000 shares of common stock and warrants to
purchase 25,000 shares of common stock at an exercise price of
$1.50 per share over a one (1) year period from the date of
purchase in exchange for total proceeds of $5,000. The proceeds
received were allocated between the common stock and warrants on a
relative fair value basis.
On
October 19, 2016, the Company sold 100,000 units at $0.10 per unit,
consisting of 100,000 shares of common stock and warrants to
purchase 100,000 shares of common stock at an exercise price of
$1.50 per share over a one (1) year period from the date of
purchase in exchange for total proceeds of $10,000. The proceeds
received were allocated between the common stock and warrants on a
relative fair value basis.
Common Stock Sales (2015)
On
August 17, 2015, the Company sold 90,000 units at $0.10 per unit,
consisting of 90,000 shares of common stock and warrants to
purchase 90,000 shares of common stock at an exercise price of
$0.50 per share over a one (1) year period from the date of
purchase in exchange for total proceeds of $9,000. The proceeds
received were allocated between the common stock and warrants on a
relative fair value basis.
On
February 20, 2015, the Company sold 40,000 units at $0.25 per unit,
consisting of 40,000 shares of common stock and warrants to
purchase 100,000 shares of common stock at an exercise price of
$0.75 per share over a one (1) year period from the date of
purchase in exchange for total proceeds of $10,000. The proceeds
received were allocated between the common stock and warrants on a
relative fair value basis.
On
January 30, 2015, the Company sold 50,000 units at $0.10 per unit,
consisting of 50,000 shares of common stock and warrants to
purchase 50,000 shares of common stock at an exercise price of
$0.75 per share, exercisable until December 31, 2015, in exchange
for total proceeds of $5,000. The proceeds received were allocated
between the common stock and warrants on a relative fair value
basis.
Common Stock in Satisfaction of Subscriptions Payable
(2016)
On
October 27, 2016, the Company issued a total of 4,650,000 shares of
common stock in satisfaction of common stock granted during the
year ended December 31, 2015, in the aggregate value of
$304,302.
Common Stock Issued as Down Payment for Land Purchase
(2016)
On
November 8, 2016, the Company granted 50,000 shares of common stock
as a good faith deposit on a potential land purchase agreement that
has not yet closed, as the Company does not currently have
sufficient resources. The total fair value of the common stock was
$42,500 based on the closing price of the Company’s common
stock on the date of grant.
Common Stock Issued for Services, Related Parties
(2016)
On
October 1, 2016, the Company granted 7,000,000 shares of common
stock to our CEO, Glenn E. Martin, as a bonus for services
performed pursuant to an amended employment agreement. The total
fair value of the common stock was $700,000 based on the closing
price of the Company’s common stock on the date of
grant.
In
addition, on October 1, 2016, the Company granted a total of
14,000,000 shares of common stock to Mr. Martin for services
performed pursuant to his previous employment agreement. The total
fair value of the common stock was $1,400,000 based on the closing
price of the Company’s common stock on the date of
grant.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Years Ended December 31, 2016 and 2015
On
October 1, 2016, the Company granted 4,000,000 shares of common
stock to a related party as a bonus for services performed pursuant
to an amended employment agreement. The total fair value of the
common stock was $400,000 based on the closing price of the
Company’s common stock on the date of grant.
In
addition, on October 1, 2016, the Company granted a total of
8,000,000 shares of common stock to a related party for services
performed pursuant to their previous employment agreement. The
total fair value of the common stock was $800,000 based on the
closing price of the Company’s common stock on the date of
grant.
On
October 1, 2016, the Company granted 1,000,000 shares of common
stock to a related party as a bonus for services performed pursuant
to an amended employment agreement. The total fair value of the
common stock was $100,000 based on the closing price of the
Company’s common stock on the date of grant.
In
addition, on October 1, 2016, the Company granted a total of
2,000,000 shares of common stock to a related party for services
performed pursuant to their previous employment agreement. The
total fair value of the common stock was $200,000 based on the
closing price of the Company’s common stock on the date of
grant.
Common Stock Issued for Services (2016)
On
October 19, 2016, the Company granted 10,000 shares of common stock
to a consultant for services performed. The total fair value of the
common stock was $8,500 based on the closing price of the
Company’s common stock on the date of grant.
On
September 28, 2016, the Company granted 600,000 shares of common
stock to a consultant for services performed. The total fair value
of the common stock was $60,000 based on the closing price of the
Company’s common stock on the date of grant.
On
September 28, 2016, the Company granted 600,000 shares of common
stock to another consultant for services performed. The total fair
value of the common stock was $60,000 based on the closing price of
the Company’s common stock on the date of grant.
On
September 28, 2016, the Company granted 600,000 shares of common
stock to a third consultant for services performed. The total fair
value of the common stock was $60,000 based on the closing price of
the Company’s common stock on the date of grant.
On July
1, 2016, the Company granted 500,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $35,000 based on the closing price of the
Company’s common stock on the date of grant.
On July
1, 2016, the Company granted 500,000 shares of common stock to
another consultant for services performed. The total fair value of
the common stock was $35,000 based on the closing price of the
Company’s common stock on the date of grant.
On
March 18, 2016, the Company granted 60,000 shares of common stock
to a consultant for services performed. The total fair value of the
common stock was $5,820 based on the closing price of the
Company’s common stock on the date of grant.
On
March 18, 2016, the Company granted 500,000 shares of common stock
to a consultant for services performed. The total fair value of the
common stock was $48,500 based on the closing price of the
Company’s common stock on the date of grant.
On
March 18, 2016, the Company granted 120,000 shares of common stock
to a consultant for services performed. The total fair value of the
common stock was $11,640 based on the closing price of the
Company’s common stock on the date of grant.
On
February 12, 2016, the Company granted 120,000 shares of common
stock to a consultant for services performed. The total fair value
of the common stock was $5,832 based on the closing price of the
Company’s common stock on the date of grant.
On
February 1, 2016, the Company granted 500,000 shares of common
stock to a consultant for services performed. The total fair value
of the common stock was $22,000 based on the closing price of the
Company’s common stock on the date of grant.
On
February 1, 2016, the Company granted 500,000 shares of common
stock to another consultant for services performed. The total fair
value of the common stock was $22,000 based on the closing price of
the Company’s common stock on the date of grant.
On
February 1, 2016, the Company granted 20,000 shares of common stock
to a consultant for services performed. The total fair value of the
common stock was $880 based on the closing price of the
Company’s common stock on the date of grant.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Years Ended December 31, 2016 and 2015
On
February 1, 2016, the Company granted 60,000 shares of common stock
to a consultant for services performed. The total fair value of the
common stock was $2,640 based on the closing price of the
Company’s common stock on the date of grant.
Common Stock Issued for Services (2015)
On
November 25, 2015, the Company granted 500,000 shares of common
stock to another consultant for services performed. The total fair
value of the common stock was $30,000 based on the closing price of
the Company’s common stock on the date of grant. The shares
were subsequently issued on October 27, 2016.
On
November 1, 2015, the Company granted 260,000 shares of common
stock to another consultant for services performed. The total fair
value of the common stock was $20,800 based on the closing price of
the Company’s common stock on the date of grant. The shares
were subsequently issued on October 27, 2016.
On
October 1, 2015, the Company granted 600,000 shares of common stock
to another consultant for services performed. The total fair value
of the common stock was $33,000 based on the closing price of the
Company’s common stock on the date of grant. The shares were
subsequently issued on October 27, 2016.
On
September 24, 2015, the Company granted 100,000 shares of common
stock to another consultant for services performed. The total fair
value of the common stock was $5,500 based on the closing price of
the Company’s common stock on the date of grant. The shares
were subsequently issued on October 27, 2016.
On
September 1, 2015, the Company granted 250,000 shares of common
stock to another consultant for services performed. The total fair
value of the common stock was $21,250 based on the closing price of
the Company’s common stock on the date of grant. The shares
were subsequently issued on October 27, 2016.
On
August 12, 2015, the Company granted 60,000 shares of common stock
to another consultant for services performed. The total fair value
of the common stock was $4,440 based on the closing price of the
Company’s common stock on the date of grant. The shares were
subsequently issued on October 27, 2016.
On
April 1, 2015, the Company granted 600,000 shares of common stock
to a consultant for services performed. The total fair value of the
common stock was $48,000 based on the closing price of the
Company’s common stock on the date of grant.
On
April 1, 2015, the Company granted 500,000 shares of common stock
to a consultant for services performed. The total fair value of the
common stock was $40,000 based on the closing price of the
Company’s common stock on the date of grant.
On
March 16, 2015, the Company granted 50,000 shares of common stock
to a consultant for services performed. The total fair value of the
common stock was $4,000 based on the closing price of the
Company’s common stock on the date of grant.
On
March 16, 2015, the Company granted 60,000 shares of common stock
to a consultant for services performed. The total fair value of the
common stock was $4,800 based on the closing price of the
Company’s common stock on the date of grant.
On
March 16, 2015, the Company granted 120,000 shares of common stock
to a consultant for services performed. The total fair value of the
common stock was $9,600 based on the closing price of the
Company’s common stock on the date of grant.
On
March 16, 2015, the Company granted 40,000 shares of common stock
to a consultant for services performed. The total fair value of the
common stock was $3,200 based on the closing price of the
Company’s common stock on the date of grant.
On
March 16, 2015, the Company granted 40,000 shares of common stock
to another consultant for services performed. The total fair value
of the common stock was $3,200 based on the closing price of the
Company’s common stock on the date of grant.
On
February 20, 2015, the Company granted 240,000 shares of common
stock to a consultant for services performed. The total fair value
of the common stock was $21,600 based on the closing price of the
Company’s common stock on the date of grant.
On
February 12, 2015, the Company granted 60,000 shares of common
stock to a consultant for services performed. The total fair value
of the common stock was $8,850 based on the closing price of the
Company’s common stock on the date of grant.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Years Ended December 31, 2016 and 2015
On
January 1, 2015, the Company granted 120,000 shares of common stock
to a consultant for services performed. The total fair value of the
common stock was $8,400 based on the closing price of the
Company’s common stock on the date of grant.
On
January 1, 2015, the Company granted 7,000,000 shares of common
stock to our CEO, Glenn E. Martin, for services performed. The
total fair value of the common stock was $490,000 based on the
closing price of the Company’s common stock on the date of
grant. The shares were subsequently issued on June 29,
2015.
On
January 1, 2015, the Company granted 4,000,000 shares of common
stock to a related party for services performed. The total fair
value of the common stock was $280,000 based on the closing price
of the Company’s common stock on the date of grant. The
shares were subsequently issued on June 29, 2015.
On
January 1, 2015, the Company granted 1,000,000 shares of common
stock to a related party for services performed. The total fair
value of the common stock was $70,000 based on the closing price of
the Company’s common stock on the date of grant. The shares
were subsequently issued on June 29, 2015.
Capital Contributions
The
Company imputed interest on non-interest bearing, related party
loans, resulting in a total of $583 and $200 of contributed capital
during the years ended December 31, 2016 and 2015,
respectively.
Note 10 – Common Stock Warrants
Common Stock Warrants Granted (2016)
On
October 31, 2016, the Company sold warrants to purchase 50,000
shares of common stock at $1.50 per share over a one (1) year
period from the date of sale, in exchange for total proceeds of
$5,000 in conjunction with the sale of 50,000 shares of common
stock. The relative fair value of the 50,000 common stock warrants
using the Black-Scholes option-pricing model was $914, or $0.01828
per share, based on a volatility rate of 217%, a risk-free interest
rate of 0.66% and an expected term of 1.0 year. The proceeds
received were allocated between the common stock and warrants on a
relative fair value basis.
On
October 25, 2016, the Company sold warrants to purchase 150,000
shares of common stock at $1.50 per share over a one (1) year
period from the date of sale, in exchange for total proceeds of
$50,000 in conjunction with the sale of 150,000 shares of common
stock. The relative fair value of the 150,000 common stock warrants
using the Black-Scholes option-pricing model was $2,725, or
$0.01817 per share, based on a volatility rate of 217%, a risk-free
interest rate of 0.66% and an expected term of 1.0 year. The
proceeds received were allocated between the common stock and
warrants on a relative fair value basis.
On
October 19, 2016, the Company sold warrants to purchase 25,000
shares of common stock at $1.50 per share over a one (1) year
period from the date of sale, in exchange for total proceeds of
$5,000 in conjunction with the sale of 25,000 shares of common
stock. The relative fair value of the 25,000 common stock warrants
using the Black-Scholes option-pricing model was $608, or $0.02432
per share, based on a volatility rate of 216%, a risk-free interest
rate of 0.65% and an expected term of 1.0 year. The proceeds
received were allocated between the common stock and warrants on a
relative fair value basis.
On
October 19, 2016, the Company sold warrants to purchase 100,000
shares of common stock at $1.50 per share over a one (1) year
period from the date of sale, in exchange for total proceeds of
$10,000 in conjunction with the sale of 100,000 shares of common
stock. The relative fair value of the 100,000 common stock warrants
using the Black-Scholes option-pricing model was $2,856, or
$0.02856 per share, based on a volatility rate of 216%, a risk-free
interest rate of 0.65% and an expected term of 1.0 year. The
proceeds received were allocated between the common stock and
warrants on a relative fair value basis.
Common Stock Warrants Granted (2015)
On
August 17, 2015, the Company sold warrants to purchase 90,000
shares of common stock at $0.50 per share over a one (1) year
period from the date of sale, in exchange for total proceeds of
$9,000 in conjunction with the sale of 90,000 shares of common
stock. The relative fair value of the 90,000 common stock warrants
using the Black-Scholes option-pricing model was $2,501, or
$0.02779 per share, based on a volatility rate of 207%, a risk-free
interest rate of 0.40% and an expected term of 1.0 year. The
proceeds received were allocated between the common stock and
warrants on a relative fair value basis.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Years Ended December 31, 2016 and 2015
On
February 20, 2015, the Company sold warrants to purchase 100,000
shares of common stock at $0.75 per share over a one (1) year
period from the date of sale, in exchange for total proceeds of
$10,000 in conjunction with the sale of 40,000 shares of common
stock. The relative fair value of the 100,000 common stock warrants
using the Black-Scholes option-pricing model was $3,179, or
$0.03179 per share, based on a volatility rate of 210%, a risk-free
interest rate of 0.23% and an expected term of 1.0 year. The
proceeds received were allocated between the common stock and
warrants on a relative fair value basis.
On
January 30, 2015, the Company sold warrants to purchase 50,000
shares of common stock at $0.75 per share over a one (1) year
period from the date of sale, in exchange for total proceeds of
$5,000 in conjunction with the sale of 50,000 shares of common
stock. The relative fair value of the 50,000 common stock warrants
using the Black-Scholes option-pricing model was $1,890, or
$0.03781 per share, based on a volatility rate of 212%, a risk-free
interest rate of 0.18% and an expected term of 1.0 year. The
proceeds received were allocated between the common stock and
warrants on a relative fair value basis.
Common Stock Warrants Cancelled
No
warrants were cancelled during the years ended December 31, 2016
and 2015.
Common Stock Warrants Expired
A total
of 190,000 and 325,000 warrants expired during years ended
December 31, 2016 and 2015,
respectively.
Common Stock Warrants Exercised
No
warrants were exercised during the years ended December 31, 2016
and 2015.
The
following is a summary of information about the Common Stock
Warrants outstanding at December 31, 2016.
|
|
|
|
Shares Underlying
|
Shares
Underlying Warrants Outstanding
|
|
Warrants Exercisable
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
Shares
|
|
Average
|
|
Weighted
|
|
Shares
|
|
Weighted
|
Range
of
|
|
Underlying
|
|
Remaining
|
|
Average
|
|
Underlying
|
|
Average
|
Exercise
|
|
Warrants
|
|
Contractual
|
|
Exercise
|
|
Warrants
|
|
Exercise
|
Prices
|
|
Outstanding
|
|
Life
|
|
Price
|
|
Exercisable
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
$1.50
|
|
325,000
|
|
9.75
months
|
|
$1.50
|
|
325,000
|
|
$1.50
|
The
fair value of each warrant grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following
weighted-average assumptions used for grants under the fixed option
plan:
|
|
|
|
|
|
|
|
|
Average risk-free
interest rates
|
0.66
%
|
0.27
%
|
Average expected
life (in years)
|
1.0
|
1.0
|
The
Black-Scholes option pricing model was developed for use in
estimating the fair value of short-term traded options that have no
vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective
assumptions including expected stock price volatility. Because the
Company’s common stock warrants have characteristics
significantly different from those of traded options and because
changes in the subjective input assumptions can materially affect
the fair value estimate, in management’s opinion the existing
models do not necessarily provide a reliable single measure of the
fair value of its common stock warrants. During the years ended
December 31, 2016 and 2015 there were no warrants
granted with an exercise price below the fair value of the
underlying stock at the grant date.
The
weighted average fair value of warrants granted with exercise
prices at the current fair value of the underlying stock was
approximately $0.02186 and $0.03154 per warrant granted during the
years ended December 31, 2016 and 2015, respectively.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Years Ended December 31, 2016 and 2015
The
following is a summary of activity of outstanding common stock
warrants:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December
31, 2014
|
275,000
|
$
0.50
|
Warrants
expired
|
(325,000
)
|
0.54
|
Warrants
granted
|
240,000
|
0.66
|
Balance, December
31, 2015
|
190,000
|
$
0.63
|
Warrants
expired
|
(190,000
)
|
0.63
|
Warrants
granted
|
325,000
|
1.50
|
Balance, December
31, 2016
|
325,000
|
$
1.50
|
|
|
|
Exercisable,
December 31, 2016
|
325,000
|
$
1.50
|
Note 11 – Income Taxes
The
Company accounts for income taxes under FASB ASC 740-10, which
requires use of the liability method. FASB ASC 740-10-25 provides
that deferred tax assets and liabilities are recorded based on the
differences between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes, referred
to as temporary differences.
For the
years ended December 31, 2016 and 2015, the Company incurred a net
operating loss and, accordingly, no provision for income taxes has
been recorded. In addition, no benefit for income taxes has been
recorded due to the uncertainty of the realization of any tax
assets. At December 31, 2016 and December 31, 2015, the Company had
approximately $10,212,000 and $8,050,000 of federal net operating
losses, respectively. The net operating loss carry forwards, if not
utilized, will begin to expire in 2031.
The
components of the Company’s deferred tax asset are as
follows:
|
|
|
|
|
|
Deferred tax
assets:
|
|
|
Net operating loss
carry forwards
|
$
3,574,200
|
$
2,817,500
|
|
|
|
Net deferred tax
assets before valuation allowance
|
$
3,574,200
|
$
2,817,500
|
Less: Valuation
allowance
|
(3,574,200
)
|
(2,817,500
)
|
Net deferred tax
assets
|
$
-
|
$
-
|
Based
on the available objective evidence, including the Company’s
history of losses, management believes it is more likely than not
that the net deferred tax assets will not be fully realizable.
Accordingly, the Company provided for a full valuation allowance
against its net deferred tax assets at December 31, 2016
and 2015, respectively.
A
reconciliation between the amounts of income tax benefit determined
by applying the applicable U.S. and State statutory income tax rate
to pre-tax loss is as follows:
|
|
|
|
|
|
|
|
|
Federal and state
statutory rate
|
35
%
|
35
%
|
Change in valuation
allowance on deferred tax assets
|
(35
%)
|
(35
%)
|
In
accordance with FASB ASC 740, the Company has evaluated its tax
positions and determined there are no uncertain tax
positions.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Years Ended December 31, 2016 and 2015
Note 12 – Subsequent Events
Common Stock Sales
On
January 23, 2017, the Company sold 2,000 units at $2.00 per unit,
consisting of 2,000 shares of common stock and warrants to purchase
2,000 shares of common stock at an exercise price of $3.00 per
share, exercisable until January 23, 2018, in exchange for total
proceeds of $4,000. The proceeds received were allocated between
the common stock and warrants on a relative fair value
basis.
On
January 9, 2017, the Company sold 50,000 units at $1.00 per unit,
consisting of 50,000 shares of common stock and warrants to
purchase 50,000 shares of common stock at an exercise price of
$3.00 per share, exercisable until January 9, 2018, in exchange for
total proceeds of $50,000. The proceeds received were allocated
between the common stock and warrants on a relative fair value
basis.
Warrants Exercised
On
January 7, 2017, a warrant holder exercised warrants to purchase
2,666 shares of common stock at a strike price of $1.50 in exchange
for proceeds of $3,999.
Common Stock Issued for Bartered Assets
On
January 18, 2017, the Company exchanged 66,000 units, consisting of
66,000 shares of common stock and warrants to purchase 66,000
shares of common stock at an exercise price of $3.00 per share,
exercisable until January 18, 2018, in exchange for a
2017 Audi Q7 and a 2017 Audi A4. The total fair
value received, based on the market price of the stock at $4.02 per
share, was allocated to the $105,132 purchase price of the vehicles
and the $160,188 excess value of the common stock and warrants was
expensed as stock based compensation.
Common Stock Issued for Services
On
March 2, 2017, the Company granted 12,000 shares of common stock to
a consultant for services performed. The total fair value of the
common stock was $34,200 based on the closing price of the
Company’s common stock on the date of grant.
Common Stock Cancellations
On
January 26, 2017, the Company cancelled a total of 1,000,000 shares
of common stock previously granted to two individuals for
non-performance of services.
WEED, INC. (Formerly United Mines, Inc.)
|
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
Cash
|
$
167,015
|
$
231
|
Prepaid
expenses
|
40,508
|
5,053
|
Total
current assets
|
207,523
|
5,284
|
|
|
|
Property
and equipment, net
|
101,158
|
264
|
|
|
|
Total
assets
|
$
308,681
|
$
5,548
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$
22,557
|
$
35,661
|
Accrued
officer compensation
|
177,005
|
157,505
|
Accrued
interest
|
37,993
|
36,760
|
Convertible
notes payable
|
35,000
|
35,000
|
Notes
payable, related parties
|
21,126
|
16,300
|
Total
current liabilities
|
293,681
|
281,226
|
|
|
|
Commitments
and contingencies
|
-
|
-
|
|
|
|
Stockholders'
equity (deficit):
|
|
|
Preferred
stock, $0.001 par value, 20,000,000 shares
|
|
|
authorized,
no shares designated, issued and outstanding
|
-
|
-
|
Common
stock, $0.001 par value, 200,000,000 shares
|
|
|
authorized,
103,135,973 and 103,953,307 shares issued and
|
|
|
outstanding
at March 31, 2017 and December 31, 2016, respectively
|
103,136
|
103,953
|
Additional
paid in capital
|
15,788,499
|
15,219,762
|
Subscriptions
payable, consisting of 425,000 and -0- shares
|
|
|
at
March 31, 2017 and December 31, 2016, respectively
|
377,500
|
-
|
Accumulated
deficit
|
(16,254,135
)
|
(15,599,393
)
|
Total
stockholders' equity (deficit)
|
15,000
|
(275,678
)
|
|
|
|
Total
liabilities and stockholders' equity (deficit)
|
$
308,681
|
$
5,548
|
|
|
|
See accompanying notes to financial statements.
|
WEED, INC. (Formerly United Mines, Inc.)
|
STATEMENTS OF OPERATIONS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
-
|
$
-
|
|
|
|
Operating
expenses:
|
|
|
General
and administrative
|
68,134
|
24,720
|
Professional
fees
|
580,986
|
120,348
|
Depreciation
and amortization
|
4,238
|
33
|
Total
operating expenses
|
653,358
|
145,101
|
|
|
|
Net
operating loss
|
(653,358
)
|
(145,101
)
|
|
|
|
Other
expense:
|
|
|
Interest
expense
|
(1,384
)
|
(1,227
)
|
|
|
|
Net
loss
|
$
(654,742
)
|
$
(146,328
)
|
|
|
|
|
|
|
Weighted
average number of common shares
|
|
|
outstanding
- basic and fully diluted
|
103,393,921
|
61,118,307
|
|
|
|
Net
loss per share - basic and fully diluted
|
$
(0.01
)
|
$
(0.00
)
|
|
|
|
See accompanying notes to financial statements.
|
WEED, INC. (Formerly United Mines, Inc.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
Net
(loss)
|
$
(654,742
)
|
$
(146,328
)
|
Adjustments
to reconcile net loss
|
|
|
to
net cash used in operating activities:
|
|
|
Depreciation
|
4,238
|
33
|
Imputed
interest on non-interest bearing related party debts
|
151
|
69
|
Shares
issued for services
|
547,138
|
119,312
|
Decrease
(increase) in assets:
|
|
|
Prepaid
expenses
|
(35,455
)
|
775
|
Increase
(decrease) in liabilities:
|
|
|
Accounts
payable
|
(13,104
)
|
1,544
|
Accrued
compensation
|
19,500
|
19,500
|
Accrued
interest
|
1,233
|
1,158
|
Net
cash used in operating activities
|
(131,041
)
|
(3,937
)
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
Proceeds
from notes payable, related parties
|
9,000
|
10,000
|
Repayments
on notes payable, related parties
|
(4,174
)
|
(6,000
)
|
Proceeds
from the sale of common stock
|
292,999
|
-
|
Net
cash provided by financing activities
|
297,825
|
4,000
|
|
|
|
NET
CHANGE IN CASH
|
166,784
|
63
|
CASH
AT BEGINNING OF PERIOD
|
231
|
7
|
|
|
|
CASH
AT END OF PERIOD
|
$
167,015
|
$
70
|
|
|
|
SUPPLEMENTAL
INFORMATION:
|
|
|
Interest
paid
|
$
-
|
$
-
|
Income
taxes paid
|
$
-
|
$
-
|
|
|
|
NON-CASH
INVESTING AND FINANCING ACTIVITIES:
|
|
|
Value
of fixed assets acquired in exchange for stock
|
$
105,132
|
$
-
|
|
|
|
See accompanying notes to financial statements.
|
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Three Months Ended March 31, 2017 and 2016
(Unaudited)
Note 1 – Nature of Business and Significant Accounting
Policies
Nature of Business
WEED,
Inc. (the “Company”), (formerly United Mines, Inc.) was
incorporated under the laws of the State of Arizona on
August 20, 1999 (“Inception Date”) as Plae,
Inc. to engage in the exploration of gold and silver mining
properties. On November 26, 2014, the Company was renamed
from United Mines, Inc. to WEED, Inc. and was repurposed to pursue
a business involving the purchase of land, and building Commercial
Grade “Cultivation Centers” to consult, assist, manage
& lease to Licensed Dispensary owners and organic grow
operators on a contract basis, with a concentration on the legal
and medical marijuana sector. The Company’s plan is to become
a True “Seed-to-Sale” company providing infrastructure,
financial solutions and real estate options in this new emerging
market. The Company, under United Mines, was formerly in the
process of acquiring mineral properties or claims located in the
State of Arizona, USA. The name was previously changed on February
18, 2005 to King Mines, Inc. and then subsequently changed to
United Mines, Inc. on March 30, 2005. The Company trades
on the OTC Pink Sheets under the stock symbol: BUDZ.
The
accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States
of America. These statements reflect all adjustments, consisting of
normal recurring adjustments, which in the opinion of management
are necessary for fair presentation of the information contained
therein.
The
Company has a calendar year end for reporting
purposes.
Use of Estimates
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and the disclosure of
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents
We
maintain cash balances in non-interest-bearing accounts, which do
not currently exceed federally insured limits. For the purpose of
the statements of cash flows, all highly liquid investments with an
original maturity of three months or less are considered to be cash
equivalents. There were no cash equivalents on hand for the periods
presented herein.
Fair Value of Financial Instruments
Under
FASB ASC 820-10-05, the Financial Accounting Standards Board
establishes a framework for measuring fair value in generally
accepted accounting principles and expands disclosures about fair
value measurements. This Statement reaffirms that fair value is the
relevant measurement attribute. The adoption of this standard did
not have a material effect on the Company’s financial
statements as reflected herein. The carrying amounts of cash,
prepaid expenses and accrued expenses reported on the balance sheet
are estimated by management to approximate fair value primarily due
to the short term nature of the instruments.
Property and Equipment
Property
and equipment is stated at the lower of cost or estimated net
recoverable amount. The cost of property, plant and equipment is
depreciated using the straight-line method based on the lesser of
the estimated useful lives of the assets or the lease term based on
the following life expectancy:
Software
|
3
years
|
Furniture
and fixtures
|
5
years
|
Equipment
|
5-7
years
|
Repairs
and maintenance expenditures are charged to operations as incurred.
Major improvements and replacements, which have extend the useful
life of an asset, are capitalized and depreciated over the
remaining estimated useful life of the asset. When assets are
retired or sold, the cost and related accumulated depreciation and
amortization are eliminated and any resulting gain or loss is
reflected in operations.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Three Months Ended March 31, 2017 and 2016
(Unaudited)
Impairment
of Long-Lived Assets
Long-lived
assets held and used by the Company are reviewed for possible
impairment whenever events or circumstances indicate the carrying
amount of an asset may not be recoverable or is impaired.
Recoverability is assessed using undiscounted cash flows based upon
historical results and current projections of earnings before
interest and taxes. Impairment is measured using discounted cash
flows of future operating results based upon a rate that
corresponds to the cost of capital. Impairments are recognized in
operating results to the extent that carrying value exceeds
discounted cash flows of future operations.
Basic and Diluted Loss Per Share
The
basic net loss per common share is computed by dividing the net
loss by the weighted average number of common shares outstanding.
Diluted net loss per common share is computed by dividing the net
loss adjusted on an “as if converted” basis, by the
weighted average number of common shares outstanding plus potential
dilutive securities. For the periods presented, potential dilutive
securities had an anti-dilutive effect and were not included in the
calculation of diluted net loss per common share.
Stock-Based Compensation
Under
FASB ASC 718-10-30-2, all share-based payments to employees,
including grants of employee stock options, to be recognized in the
income statement based on their fair values. Pro forma disclosure
is no longer an alternative. The Company’s stock based
compensation issued for services was $547,138 and $119,312 for the
three months ended March 31, 2017 and 2016,
respectively.
Revenue Recognition
Sales on fixed price contracts are recorded when services are
earned, the earnings process is complete or substantially complete,
and the revenue is measurable and collectability is reasonably
assured. Provisions for discounts and rebates to customers,
estimated returns and allowances, and other adjustments are
provided for in the same period the related sales are recorded. The
Company will defer any revenue from sales in which payment has been
received, but the earnings process has not occurred. Sales have not
yet commenced on the MMJ business. The Company also did not
recognize revenues from its previous mining operations during the
periods presented herein.
Advertising and Promotion
All
costs associated with advertising and promoting products are
expensed as incurred. These expenses were $1,621 and $-0- for the
three months ended March 31, 2017 and 2016,
respectively.
Income Taxes
Deferred
tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. A valuation allowance is
provided for significant deferred tax assets when it is more likely
than not, that such asset will not be recovered through future
operations.
Uncertain Tax Positions
In
accordance with ASC 740, “Income Taxes” (“ASC
740”), the Company recognizes the tax benefit from an
uncertain tax position only if it is more likely than not that the
tax position will be capable of withstanding examination by the
taxing authorities based on the technical merits of the position.
These standards prescribe a recognition threshold and measurement
attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return.
These standards also provide guidance on de-recognition,
classification, interest and penalties, accounting in interim
periods, disclosure, and transition.
Various
taxing authorities periodically audit the Company’s income
tax returns. These audits include questions regarding the
Company’s tax filing positions, including the timing and
amount of deductions and the allocation of income to various tax
jurisdictions. In evaluating the exposures connected with these
various tax filing positions, including state and local taxes, the
Company records allowances for probable exposures. A number of
years may elapse before a particular matter, for which an allowance
has been established, is audited and fully resolved. The Company
has not yet undergone an examination by any taxing
authorities.
The
assessment of the Company’s tax position relies on the
judgment of management to estimate the exposures associated with
the Company’s various filing positions.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Three Months Ended March 31, 2017 and 2016
(Unaudited)
Recently
Issued Accounting Pronouncements
In
January 2017, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update
(“ASU”) 2017-04,
Intangibles – Goodwill and Other (Topic
350)
. ASU 2017-04 simplifies the subsequent measurement of
goodwill by removing the second step of the two-step impairment
test. The amendment requires an entity to perform its annual, or
interim goodwill impairment test by comparing the fair value of a
reporting unit with its carrying amount. An impairment charge
should be recognized for the amount by which the carrying amount
exceeds the reporting unit's fair value; however, the loss
recognized should not exceed the total amount of goodwill allocated
to that reporting unit. An entity still has the option to perform
the qualitative assessment for a reporting unit to determine if the
quantitative impairment test is necessary. The amendment should be
applied on a prospective basis. ASU 2017-04 is effective for fiscal
years beginning after December 15, 2019, including interim periods
within those fiscal years. Early adoption is permitted for interim
or annual goodwill impairment tests performed on testing dates
after January 1, 2017. The Company intends to early adopt the ASU
in 2017.
In
January 2017, the FASB issued ASU 2017-01,
Business Combinations (Topic 805): Clarifying
the Definition of a Business
, which clarifies the definition
of a business to assist entities with evaluating whether
transactions should be accounted for as acquisitions (or disposals)
of assets or businesses. The standard will be effective for the
Company in the first quarter of 2018. Early adoption is permitted.
The Company is currently evaluating the impact of adopting this ASU
on its consolidated financial statements.
No
other new accounting pronouncements, issued or effective during the
three months ended March 31, 2017, have had or are expected to have
a significant impact on the Company’s financial
statements.
Note 2 – Going Concern
As
shown in the accompanying financial statements, the Company has no
revenues, incurred net losses from operations resulting in an
accumulated deficit of $16,254,135, and had negative working
capital of ($86,158) at March 31, 2017. These factors
raise substantial doubt about the Company’s ability to
continue as a going concern. Management is actively pursuing new
products and services to begin generating revenues. In addition,
the Company is currently seeking additional sources of capital to
fund short term operations. The Company, however, is dependent upon
its ability to secure equity and/or debt financing and there are no
assurances that the Company will be successful; therefore, without
sufficient financing it would be unlikely for the Company to
continue as a going concern.
The
financial statements do not include any adjustments that might
result from the outcome of any uncertainty as to the
Company’s ability to continue as a going concern. The
financial statements also do not include any adjustments relating
to the recoverability and classification of recorded asset amounts,
or amounts and classifications of liabilities that might be
necessary should the Company be unable to continue as a going
concern.
Note 3 – Related Party
Notes Payable
From
time to time, the Company has received short term loans from
officers and directors as disclosed in Note 7 below.
Capital Contributions
The
Company imputed interest on non-interest bearing, related party
loans, resulting in a total of $151 and $69 of contributed capital
during the three months ended March 31, 2017 and 2016,
respectively.
Common Stock Issued for Bartered Assets
On
January 18, 2017, the Company exchanged 66,000 units, consisting of
66,000 shares of common stock and warrants to purchase 66,000
shares of common stock at an exercise price of $3.00 per share,
exercisable until January 18, 2018, in exchange for a
2017 Audi Q7 and a 2017 Audi A4 driven by the
Officers. The total fair value received, based on the market price
of the stock at $4.02 per share, was allocated to the $105,132
purchase price of the vehicles and the $160,188 excess value of the
common stock and warrants was expensed as stock based
compensation.
A total
of $177,005 and $157,505 of officer compensation was unpaid and
outstanding at March 31, 2017 and December 31, 2016,
respectively.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Three Months Ended March 31, 2017 and 2016
(Unaudited)
Note
4 – Fair Value of Financial Instruments
Under
FASB ASC 820-10-5, fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date (an exit price). The standard outlines a valuation framework
and creates a fair value hierarchy in order to increase the
consistency and comparability of fair value measurements and the
related disclosures. Under GAAP, certain assets and liabilities
must be measured at fair value, and FASB ASC 820-10-50 details the
disclosures that are required for items measured at fair
value.
The
Company has certain financial instruments that must be measured
under the new fair value standard. The Company’s financial
assets and liabilities are measured using inputs from the three
levels of the fair value hierarchy. The three levels are as
follows:
Level 1
- Inputs are unadjusted quoted prices in active markets for
identical assets or liabilities that the Company has the ability to
access at the measurement date.
Level 2
- Inputs include quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar assets or
liabilities in markets that are not active, inputs other than
quoted prices that are observable for the asset or liability (e.g.,
interest rates, yield curves, etc.), and inputs that are derived
principally from or corroborated by observable market data by
correlation or other means (market corroborated
inputs).
Level 3
- Unobservable inputs that reflect our assumptions about the
assumptions that market participants would use in pricing the asset
or liability.
The
following schedule summarizes the valuation of financial
instruments at fair value on a recurring basis in the balance
sheets as of March 31, 2017 and December 31, 2016,
respectively:
|
Fair
Value Measurements at March 31, 2017
|
|
|
|
|
Assets
|
|
|
|
Cash
|
$
167,015
|
$
-
|
$
-
|
Total
assets
|
167,015
|
-
|
-
|
Liabilities
|
|
|
|
Convertible notes
payable
|
-
|
35,000
|
-
|
Notes payable,
related parties
|
-
|
21,126
|
-
|
Total
liabilities
|
-
|
56,126
|
-
|
|
$
167,015
|
$
(56,126
)
|
$
-
|
|
Fair
Value Measurements at December 31, 2016
|
|
|
|
|
Assets
|
|
|
|
Cash
|
$
231
|
$
-
|
$
-
|
Total
assets
|
231
|
-
|
-
|
Liabilities
|
|
|
|
Convertible notes
payable
|
-
|
35,000
|
-
|
Notes payable,
related parties
|
-
|
16,300
|
-
|
Total
liabilities
|
-
|
51,300
|
-
|
|
$
231
|
$
(51,300
)
|
$
-
|
The
fair values of our related party debts are deemed to approximate
book value, and are considered Level 2 inputs as defined by
ASC Topic 820-10-35.
There
were no transfers of financial assets or liabilities between Level
1, Level 2 and Level 3 inputs for the three months ended
March 31, 2017 and the year ended
December 31, 2016.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Three Months Ended March 31, 2017 and 2016
(Unaudited)
Note
5 – Property and Equipment
Property
and equipment consist of the following at March 31, 2017 and
December 31, 2016, respectively:
|
|
|
|
|
|
Automobiles
|
$
105,132
|
$
-
|
Office
equipment
|
650
|
650
|
|
105,782
|
650
|
Less accumulated
depreciation
|
(4,624
)
|
(386
)
|
|
$
101,158
|
$
264
|
Depreciation
and amortization expense totaled $4,238 and $33 for the three
months ended March 31, 2017 and 2016, respectively.
Note 6 – Convertible Notes Payable
Convertible
notes payable consist of the following at March 31, 2017 and
December 31, 2016, respectively:
|
|
|
|
|
|
|
|
|
On
December 7, 2007, the Company issued a 10% note payable to the
Lebrecht Group, PC (“Lebrecht Note”) for services
rendered related to the registration of certain securities of the
Company. The note and accrued interest were due December 7, 2008
and at the option of the holder payable in full on the maturity
date or in 12 monthly payments beginning on the maturity date. The
note and accrued interest are convertible to common shares at any
time at the option of the holder at 75% of the average closing bid
price on the five trading days immediately preceding the
conversion. Management estimates, at this time, that 1,650,000
shares may be issued if this conversion feature is exercised. In
accordance with generally accepted accounting principles, the 25%
discount to market related to the beneficial conversion feature has
been reported as a component of additional paid in capital.
Additionally, since this represents a prepayment for services
related to a future public offering, management had elected to
offset the cost to future capital raised as a result of the
offering, if any. Currently in default.$
|
35,000
|
$
35,000
|
The
Company recognized interest expense of $875 and $875 related to the
convertible debts for the three months ended
March 31, 2017 and 2016, respectively.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Three Months Ended March 31, 2017 and 2016
(Unaudited)
Note
7 – Notes Payable, Related Parties
Notes
payable, related parties consist of the following at March 31, 2017
and December 31, 2016, respectively:
|
|
|
|
|
|
|
|
|
On various dates,
the Company received advances from the Company’s CEO. The
unsecured non-interest bearing loans were due on
demand.
|
$
4,826
|
$
-
|
|
|
|
On August 23, 2016,
the Company received an unsecured, non-interest bearing loan in the
amount of $3,000, due on demand from an affiliate, bearing interest
at 10% per annum.
|
3,000
|
3,000
|
|
|
|
On January 21,
2015, the Company received an unsecured loan in the amount of
$1,300, due on demand from an affiliate, bearing interest at 10%
per annum.
|
1,300
|
1,300
|
|
|
|
On April 12, 2010,
the Company received an unsecured, non-interest bearing loan in the
amount of $2,000, due on demand from an affiliate. Interest is
being imputed at the Company’s estimated borrowing rate, or
10% per annum.
|
2,000
|
2,000
|
|
|
|
Over various dates
in 2011 and 2012, the Company received unsecured loans in the
aggregate amount of $10,000, due on demand, bearing interest at
10%, from an affiliate.
|
10,000
|
10,000
|
|
|
|
Notes payable,
related parties
|
$
21,126
|
$
16,300
|
The
Company recorded interest expense in the amount of $509 and $352
for the three months ended March 31, 2017 and 2016,
respectively, including imputed interest expense in the amount of
$151 and $69 for the three months ended March 31, 2017
and 2016, respectively related to notes payable, related
parties.
Note 8 – Commitments and Contingencies
On
November 8, 2016, the Company entered into an agreement with
Gregory DiPaolo’s Pro Am Golf, LLC to acquire land currently
housing a golf course and restaurant. The total purchase price of
$1,600,000 is to be paid with a deposit of 50,000 shares of common
stock, followed by cash of $1,250,000 and 300,000 shares of the
Company’s common stock to be delivered at closing. The
deposit of 50,000 shares issued as a deposit was $42,500 based on
the closing price of the Company’s common stock on the date
of grant. The Company subsequently closed on the property on July
27, 2017.
Note 9 – Stockholders’ Equity
Preferred Stock
On
December 5, 2014, the Company amended the Articles of
Incorporation, pursuant to which 20,000,000 shares of “blank
check” preferred stock with a par value of $0.001 were
authorized. No series of preferred stock has been designated to
date.
Common Stock
On
December 5, 2014, the Company amended the Articles of
Incorporation, and increased the authorized shares to 200,000,000
shares of $0.001 par value common stock.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Three Months Ended March 31, 2017 and 2016
(Unaudited)
Common Stock Sales
On
March 15, 2017 and March 31, 2017, the Company received an
aggregate $235,000 of advances on the subsequent sale on
April 20, 2017 of 375,000 units at $1.00 per unit, consisting
of 375,000 shares of common stock and warrants to purchase 375,000
shares of common stock at an exercise price of $3.00 per share,
exercisable until April 20, 2018, in exchange for total proceeds of
$375,000. The proceeds received were allocated between the common
stock and warrants on a relative fair value basis. The $235,000 was
presented as a subscriptions payable at March 31,
2017.
On
January 23, 2017, the Company sold 2,000 units at $2.00 per unit,
consisting of 2,000 shares of common stock and warrants to purchase
2,000 shares of common stock at an exercise price of $3.00 per
share, exercisable until January 23, 2018, in exchange for total
proceeds of $4,000. The proceeds received were allocated between
the common stock and warrants on a relative fair value
basis.
On
January 9, 2017, the Company sold 50,000 units at $1.00 per unit,
consisting of 50,000 shares of common stock and warrants to
purchase 50,000 shares of common stock at an exercise price of
$3.00 per share, exercisable until January 9, 2018, in exchange for
total proceeds of $50,000. The proceeds received were allocated
between the common stock and warrants on a relative fair value
basis.
Warrants Exercised
On
January 7, 2017, a warrant holder exercised warrants to purchase
2,666 shares of common stock at a strike price of $1.50 in exchange
for proceeds of $3,999.
Common Stock Issued for Bartered Assets
On
January 18, 2017, the Company exchanged 66,000 units, consisting of
66,000 shares of common stock and warrants to purchase 66,000
shares of common stock at an exercise price of $3.00 per share,
exercisable until January 18, 2018, in exchange for a
2017 Audi Q7 and a 2017 Audi A4. The total fair
value received, based on the market price of the stock at $4.02 per
share, was allocated to the $105,132 purchase price of the vehicles
and the $160,188 excess value of the common stock and warrants was
expensed as stock based compensation.
Common Stock Issued for Services
On
March 2, 2017, the Company granted 50,000 shares of common stock to
a consultant for services performed. The total fair value of the
common stock was $142,500 based on the closing price of the
Company’s common stock on the date of grant. The shares were
subsequently issued on April 28, 2017, therefore the issuance was
presented as a subscription payable at March 31, 2017.
On
March 2, 2017, the Company granted 12,000 shares of common stock to
a consultant for services performed. The total fair value of the
common stock was $34,200 based on the closing price of the
Company’s common stock on the date of grant.
On
January 7, 2017, the Company granted 50,000 shares of common stock
to a consultant for services performed. The total fair value of the
common stock was $210,250 based on the closing price of the
Company’s common stock on the date of grant.
Common Stock Cancellations
On
January 26, 2017, the Company cancelled a total of 1,000,000 shares
of common stock previously granted to two individuals for
non-performance of services.
Capital Contributions
The
Company imputed interest on non-interest bearing, related party
loans, resulting in a total of $151 and $69 of contributed capital
during the three months ended March 31, 2017 and 2016,
respectively.
Note 10 – Common Stock Warrants
Common Stock Warrants Granted
On
January 23, 2017, the Company sold warrants to purchase 2,000
shares of common stock at $3.00 per share over a one (1) year
period from the date of sale, in exchange for total proceeds of
$4,000 in conjunction with the sale of 2,000 shares of common
stock. The relative fair value of the 2,000 common stock warrants
using the Black-Scholes option-pricing model was $5,106, or
$2.55281 per share, based on a volatility rate of 211%, a risk-free
interest rate of 0.79% and an expected term of 1.0 year. The
proceeds received were allocated between the common stock and
warrants on a relative fair value basis.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Three Months Ended March 31, 2017 and 2016
(Unaudited)
On
January 9, 2017, the Company sold warrants to purchase 50,000
shares of common stock at $3.00 per share over a one (1) year
period from the date of sale, in exchange for total proceeds of
$50,000 in conjunction with the sale of 50,000 shares of common
stock. The relative fair value of the 50,000 common stock warrants
using the Black-Scholes option-pricing model was $108,228, or
$2.16456 per share, based on a volatility rate of 210%, a risk-free
interest rate of 0.82% and an expected term of 1.0 year. The
proceeds received were allocated between the common stock and
warrants on a relative fair value basis.
Warrants Exercised
On
January 7, 2017, a warrant holder exercised warrants to purchase
2,666 shares of common stock at a strike price of $1.50 in exchange
for proceeds of $3,999.
Common Stock Warrants Expired or Cancelled
No
warrants were expired or cancelled during the three months ended
March 31, 2017.
Note 11 – Income Taxes
The
Company accounts for income taxes under FASB ASC 740-10, which
requires use of the liability method. FASB ASC 740-10-25 provides
that deferred tax assets and liabilities are recorded based on the
differences between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes, referred
to as temporary differences.
For the
three months ended March 31, 2017 and the year ended December 31,
2016, the Company incurred a net operating loss and, accordingly,
no provision for income taxes has been recorded. In addition, no
benefit for income taxes has been recorded due to the uncertainty
of the realization of any tax assets. At March 31, 2017 and
December 31, 2016, the Company had approximately $10,334,000 and
$8,056,000 of federal net operating losses, respectively. The net
operating loss carry forwards, if not utilized, will begin to
expire in 2031.
The
components of the Company’s deferred tax asset are as
follows:
|
|
|
|
|
|
Deferred tax
assets:
|
|
|
Net operating loss
carry forwards
|
$
3,616,900
|
$
2,862,500
|
|
|
|
Net deferred tax
assets before valuation allowance
|
$
3,616,900
|
$
2,862,500
|
Less: Valuation
allowance
|
(3,616,900
)
|
(2,862,500
)
|
Net deferred tax
assets
|
$
-
|
$
-
|
Based
on the available objective evidence, including the Company’s
history of losses, management believes it is more likely than not
that the net deferred tax assets will not be fully realizable.
Accordingly, the Company provided for a full valuation allowance
against its net deferred tax assets at March 31, 2017 and
December 31, 2016, respectively.
A
reconciliation between the amounts of income tax benefit determined
by applying the applicable U.S. and State statutory income tax rate
to pre-tax loss is as follows:
|
|
|
|
|
|
|
|
|
Federal and state
statutory rate
|
35
%
|
35
%
|
Change in valuation
allowance on deferred tax assets
|
(35
%)
|
(35
%)
|
In
accordance with FASB ASC 740, the Company has evaluated its tax
positions and determined there are no uncertain tax
positions.
WEED, INC.
(Formerly
United Mines, Inc.)
Notes
to Financial Statements
For the
Three Months Ended March 31, 2017 and 2016
(Unaudited)
Note 12 – Subsequent Events
Common Stock Sales
On
April 20, 2017, the Company received the final payment of $140,000,
in addition to the previously received $235,000, on the sale of
375,000 units at $1.00 per unit, consisting of 375,000 shares of
common stock and warrants to purchase 375,000 shares of common
stock at an exercise price of $3.00 per share, exercisable until
April 20, 2018. The total proceeds of $375,000 received were
allocated between the common stock and warrants on a relative fair
value basis.
Common Stock Issued for Acquisition
On May
9, 2017, the Company issued a total of 500,000 shares of common to
seven individuals pursuant to the closing of an acquisition of
Sangre AT, LLC, a Wyoming limited liability company
(“Sangre”) in exchange for 100% of the interests in
Sangre. The total fair value of the common stock was $569,000 based
on the closing price of the Company’s common stock on the
date of grant.
Common Stock Issued on Subscriptions Payable
On
April 28, 2017, the Company issued 50,000 shares of common stock on
a subscriptions payable in the amount of $142,500 to a consultant
for services performed in the prior period.
Common Stock Issued for Services
On
April 20, 2017, the Company granted an aggregate of 216,000 shares
of common stock to eleven consultants for services performed. The
aggregate fair value of the common stock was $433,663 based on the
closing price of the Company’s common stock on the date of
grant.
On
April 20, 2017, the Company granted an aggregate of 216,000 shares
of common stock to eleven consultants for services performed. The
aggregate fair value of the common stock was $433,663 based on the
closing price of the Company’s common stock on the date of
grant.
Common Stock Cancellations
On May
9, 2017, the Company cancelled a total of 600,000 shares of common
stock previously granted to a consultant for non-performance of
services.
On
April 25, 2017, a total of 4,820,953 shares were cancelled and
returned to treasury pursuant to compliance with the September 30,
2014 approval by the majority of shareholders of the terms of a
Settlement Agreement dated December 11, 2013 and signed on
August 19, 2014 pursuant to Case No. C20125545 in the Superior
Court of the State of Arizona, whereby among other provisions, the
Plaintiffs, consisting of United Mines, Inc. (“UMI”)
and its then principals, agreed to the cancellation of a total of
4,820,953 shares of common stock and control of the Company in
exchange for (i) sixty five (65) of the unpatented Bureau of Land
Management (“BLM”) mining claims, the mill site,
buildings and equipment, (ii) the four (4) Arizona State Land
Department Exploration Permits registered to the Company, (iii) any
permits, financial and reclamation guaranties, bonds and licenses
connected with the foregoing assets. In addition, thirty-three (33)
unpatented BLM mining claims remained the property of UMI, along
with any associated permits, financial and reclamation guaranties,
bonds, licenses, and the rights to the corporation, the
corporation’s name, stock symbol, or any other asset of UMI,
shall remain the property of UMI under the management of Glenn E.
Martin.
SELECTED
FINANCIAL DATA
As a
smaller reporting company we are not required to provide this
information.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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
andavailability; 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
anddifficulty in forecasting operating results; changes in business
strategy or development plans; business disruptions; the ability to
attract and retain qualified personnel; the ability to protect
technology; and other risks that might be detailed from time to
time in our filings with the Securities and Exchange
Commission.
Although the
forward-looking statements in this Registration Statement 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
We are
an early stage holding company currently focused on the development
and application of cannabis-derived compounds for the treatment of
human disease. Our wholly-owned subsidiary, Sangre AT, LLC
(“Sangre”), has begun a planned five-year Cannabis
Genomic Study to complete a global genomic classification of the
Cannabis plant genus. By targeting cannabis-derived molecules that
stimulate the endocannabinoid system, Sangre’s research team
plans to develop scientifically-valid and evidence-based cannabis
strains for the production of disease-specific medicines. The goal
of the research is to identify, collect, patent, and archive a
collection of highly-active medicinal strains. We plan to conduct
this study only in states where cannabis has been legalized for
medicinal purposes.
Using
annotated genomic data and newly generated phenotypic data, Sangre
plans to identify and isolate regions of the plant genome which are
related to growth, synthesis of desired molecules, and drought and
pest resistance. This complex data set would then be utilized in a
breeding program to generate and establish new hybrid cultivars
which exemplify the traits that are desired by the medical and
patient community. This breeding program would produce new seed
stocks and clones, which we plan on patenting. If successful this
intellectual property should generate immense value for the
Company. After developing a comprehensive understanding of the
annotated genome of a variety of cannabis strains, and obtaining
intellectual property protection over the most promising strains,
we plan to provide the blueprints for the development of
significant medicinal products for the treatment of human diseases,
including, but not limited to, as autism, pediatric brain cancer,
PTSD, epilepsy, chronic pain, and Crohn’s
disease.
Our
current, short-term goals relate to the Cannabis Genomic Study and
the resulting development of a variety of new cannabis strains,
and, over the next 5 years, we plan to process those results in
order to become an international cannabis research and product
development company, with a globally-recognized brand focusing on
building and purchasing labs, land and building commercial grade
“Cultivation Centers” to consult, assist, manage &
lease to universities, state governments, licensed dispensary
owners and organic grow operators on a contract basis with a
concentration on the legal and medical cannabis
sector.
Our long-term plan
is to become a true “Seed-to-Sale” global holding
company providing infrastructure, financial solutions, product
development, and real estate options in this new emerging market.
Our long term growth may also come from the acquisition of
synergistic businesses, such as distilleries, to make anything from
infused beverages to super oxygenated water with CBD and THC.
Currently, WEED Inc has formed WEED Australia Ltd., registered as
an unlisted public company in Australia to address this Global
demand. 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 dormant since its inception. We
will look to conduct future research, marketing, import/exporting,
and manufacturing of our proprietary products on an international
level.
On July
26, 2017, we acquired property located in La Veta, Colorado in
order to Sangre to complete its 5-Year, $15+ million Cannabis
Genomic Study. The site includes a 10,000+ sq. ft. building that
will house Sangre’s genomic research facility, a 4,000+
square foot building for plant product analytics and plant product
extraction, a 3,500 sq. ft. corporate office center, and 25 RV
slots with full water and electric, which we plan to convert into a
series of small research pods. Under the terms of the purchase
agreement, we paid $525,000 down, along with 25,000 shares of our
common stock, and Sangre took immediate possession of the property.
We are obligated to pay an additional $400,000 in cash and issue an
additional 75,000 shares of our common stock over the next two
years in order to pay the entire purchase price. We estimate it
will take approximately $675,000 in order to convert the existing
buildings into the facilities necessary for Sangre AgroTech to
conduct its research, plus an additional $1,000,000 for security
& ground buildout, and an additional $1 million for scientific
equipment, ordered for plant production and product extraction. We
plan to complete the initial property renovations by Q1 of 2018.
The equipment is scheduled to be delivered in Q2 2018. We will need
to raise additional funds in order to pay the remainder of the
purchase price, as well as to complete the planned
renovations.
Corporate Overview
We were
originally incorporated under the name Plae, Inc., in the State of
Arizona on August 20, 1999. At the time we operated under the name
Plae, Inc., no business was conducted. No books or records were
maintained and no meetings were held. In essence, nothing was done
after incorporation until Glenn E. Martin took possession of Plae,
Inc. in January 2005. On February 18, 2005, the corporate name was
changed to King Mines, Inc. and then subsequently changed to its
current name, United Mines, Inc., on March 30, 2005. No shares were
issued until the Company became United Mines, Inc. From 2005 until
2015, we were an exploration stage mineral exploration company that
owned a number of unpatented mining claims and Arizona State Land
Department claims.
On
November 26, 2014, our Board of Directors approved the
redomestication of our company from Arizona to Nevada (the
“Articles of Domestication”), and approved Articles of
Incorporation in Nevada, which differed from then-Articles of
Incorporation in Arizona, primarily by (a) changing our name from
United Mines, Inc. to WEED, Inc., (b) authorizing Twenty Million
(20,000,000) shares of preferred stock, with blank check rights
granted to our Board of Directors, and (c) authorizing Two Hundred
Million (200,000,000) shares of common stock (the “Nevada
Articles of Incorporation”). On December 19, 2014, the
holders of a majority of our outstanding common stock approved the
Articles of Domestication and the Nevada Articles of Incorporation
at a Special Meeting of Shareholders. On January 16, 2015, the
Articles of Domestication and the Nevada Articles of Incorporation
went effective with the Secretary of State of the State of Nevada.
On February 2, 2015, our name change to WEED, Inc., and a
corresponding ticker symbol change to “BUDZ” went
effective with FINRA and was reflected on the quotation of our
common stock on OTC Markets.
These
changes were effected in order to make our corporate name and
ticker symbol better align with our short-term and long-term
business focus. Our current, short-term goals relate to the
Cannabis Genomic Study and the resulting development of a variety
of new cannabis strains, and, over the next 5 years, we plan to
process those results in order to become an international cannabis
research and product development company, with a
globally-recognized brand focusing on building and purchasing labs,
land and building commercial grade “Cultivation
Centers” to consult, assist, manage & lease to
universities, state governments, licensed dispensary owners and
organic grow operators on a contract basis with a concentration on
the legal and medical cannabis sector.
Our
long-term plan is to become a true “Seed-to-Sale”
global holding company providing infrastructure, financial
solutions, product development, and real estate options in this new
emerging market. Our long term growth may also come from the
acquisition of synergistic businesses, such as distilleries, to
make anything from infused beverages to super oxygenated water with
CBD and THC. Currently, WEED Inc has formed WEED Australia Ltd.,
registered as an unlisted public company in Australia to address
this Global demand.
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 dormant since its inception. We will
look to conduct future research, marketing, import/exporting, and
manufacturing of our proprietary products on an international
level.
On
April 20, 2017, we entered into a Share Exchange Agreement with
Sangre AT, LLC, a Wyoming limited liability company, under which we
acquired all of the issued and outstanding limited liability
company membership units of Sangre in exchange for Five Hundred
Thousand (500,000) shares of our common stock, restricted in
accordance with Rule 144. As a result of this agreement, Sangre is
a wholly-owned subsidiary of WEED, Inc.
This
discussion and analysis should be read in conjunction with our
financial statements included as part of this Registration
Statement.
Results of Operations for Three Months ended March 31, 2017
compared to Three Months ended March 31, 2016
Summary
of Results of Operations
|
Three
Months Ended March 31,
|
|
|
|
Revenue
|
$
-
|
$
-
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
General and
administrative
|
68,134
|
24,720
|
Professional
fees
|
580,986
|
120,348
|
Depreciation and
amortization
|
4,238
|
33
|
Total operating
expenses
|
653,358
|
145,101
|
|
|
|
Net operating
loss
|
(653,358
)
|
(145,101
)
|
|
|
|
Interest
expense
|
(1,384
)
|
(1,227
)
|
|
|
|
Net
loss
|
$
(654,742
)
|
$
(146,328
)
|
Operating Loss; Net Loss
Our net
loss increased by $508,414, from ($146,328) to ($654,742), from the
three months ended March 31, 2017 compared to the three months
ended March 31, 2016. Our operating loss increased by $508,257,
from ($145,101) to ($653,358) for the same period. The increase in
operating loss and net loss compared to the prior year period is
primarily a result of a significant increase in professional fees
and a slight increase in general and administrative expenses. These
changes are detailed below.
Revenue
We have
not had any revenues since our inception. Prior to February 18,
2005, we were an exploration stage mineral exploration company that
owned a number of unpatented mining claims and Arizona State Land
Department claims. In late 2014, we changed 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 and
process those result, and in the long-term is 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 increased by $43,414, from $24,720 for
the three months ended March 31, 2016 to $68,134 for the three
months ended March 31, 2017, primarily due to increased consulting
and administrative costs incurred as we changed our business focus
from mining to one involved in the cannabis research
industry.
Professional Fees
Our
professional fees increased during the three months ended March 31,
2017 compared to the three months ended March 31, 2016. Our
professional fees were $580,986 for the three months ended March
31, 2017 and $120,348 for the three months ended March 31, 2016.
These fees are largely related to fees paid for legal and
accounting services, along with compensation to independent
contractors, and increased significantly primarily as a result of
increased stock-based compensation awards. We expect these fees to
continue to grow steadily as our business expands. 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.
Interest Income/Expense; Net
Interest expense
increased from $1,227 to $1,384 for the three months ended March
31, 2016 compared to the same period in 2017. Our interest expense
primarily relates to interest on a convertible note and short term
loans.
Liquidity and Capital Resources for Three Months ended March 31,
2017 compared to Three Months ended March 31, 2016
Introduction
During
the three months ended March 31, 2017 and 2016, because of our
operating, we did not generate positive operating cash flows. Our
cash on hand as of March 31, 2017 was $167,015 and our monthly cash
flow burn rate is approximately $45,000. Our short term cash needs
have been satisfied through proceeds from the sales of our
securities. We currently do not believe we will be able to satisfy
our cash needs from our revenues for many years to
come.
Our
cash, current assets, total assets, current liabilities, and total
liabilities as of March 31, 2017 and December 31, 2016,
respectively, are as follows:
|
|
|
|
|
|
|
|
Cash
|
$
167,015
|
$
231
|
$
166,784
|
Total Current
Assets
|
207,523
|
5,284
|
202,239
|
Total
Assets
|
308,681
|
5,548
|
303,133
|
Total Current
Liabilities
|
293,681
|
281,226
|
12,455
|
Total
Liabilities
|
$
293,681
|
$
281,226
|
$
12,455
|
Our
current assets increased by $202,239 as of March 31, 2017 as
compared to December 31, 2016, due to a significant increase in
cash and prepaid expenses as of March 31, 2017. The increase in our
total assets between the two periods was primarily attributed to
the increase in our cash on hand of $166,784, which was primarily
due to the cash we had from the sales of our securities as of March
31, 2017, as well as a significant increase in our property and
equipment, net, which was primarily due to the addition of two
vehicles acquired in January of 2017.
Our
current liabilities and total liabilities increased by $12,455, as
of March 31, 2017 as compared to December 31, 2016. A primary cause
of this increase was an increase of $19,500 in our accrued officer
compensation and an increase of approximately $5,000 in short term
loans, partially offset by an approximate $13,000 decrease in our
accounts payable between the two periods.
In
order to repay our obligations in full or in part when due, we will
be required to raise capital from other sources. There is no
assurance, however, that we will be successful in these
efforts.
Cash Requirements
We had
cash available as of March 31, 2017 of $167,015 and $231 on
December 31, 2016. Based on our lack of revenues and our current
monthly burn rate, around $45,000, we will need to continue
borrowing from our shareholders and other related parties, and/or
raise money from the sales of our securities, to fund our future
planned operations.
Sources and Uses of Cash
Operations
We had
net cash used by operating activities of $131,041 for the three
months ended March 31, 2017, as compared to $3,937 for the three
months ended March 31, 2016. For the period in 2017, the net cash
used in operating activities consisted primarily of our net loss of
($654,742), offset by shares issued for services of $547,138,
depreciation of $4,238, and adjusted by an increase in prepaid
expenses of $35,455, accrued compensation of $19,500, accrued
interest of $1,233, and a decrease in accounts payable of $13,104.
For the same period in 2016, the net cash provided by operating
activities consisted primarily of our net loss of ($146,328),
partially offset by shares issued for services of $119,312 and
adjusted by a decrease in prepaid expenses of $775, and increases
in accounts payable of $1,544, accrued compensation of $19,500, and
accrued interest of $1,158.
Investments
We did
not have any net cash provided (used) by investing activities for
the three months ended March 31, 2017 or March 31,
2016.
Financing
Our net
cash provided by financing activities for the three months ended
March 31, 2017 was $297,825, compared to $4,000 for the three
months ended March 31, 2016. For the period in 2017, our financing
activities related to proceeds from the sale of common stock of
$292,999 and proceeds from notes payable, related parties of
$9,000, offset by repayments on notes payable, related parties of
($4,174). For the period in 2016, our financing activities
consisted of proceeds from notes payable, related parties of
$10,000, offset by repayments on notes payable, related parties of
($6,000).
Year
Ended December 31, 2016 compared to Year Ended December 31,
2015
Results of Operations
Summary
of Results of Operations
|
|
|
|
|
Revenue
|
$
-
|
$
-
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
General and
administrative
|
2,211,787
|
594,446
|
Professional
fees
|
1,933,733
|
639,149
|
Depreciation and
amortization
|
130
|
130
|
Total operating
expenses
|
4,145,650
|
1,233,725
|
|
|
|
Net operating
loss
|
(4,145,650
)
|
(1,233,725
)
|
|
|
|
Interest
expense
|
(5,321
)
|
(4,824
)
|
|
|
|
Net
loss
|
$
(4,150,971
)
|
$
(1,238,549
)
|
Operating Loss; Net Loss
Our net
loss increased by $2,912,422, from ($1,238,549) to ($4,150,971),
from the year ended 2015 compared to 2016. Our operating loss
increased by $2,911,925, from ($1,233,725) to ($4,145,650) for the
same period. The increase in operating loss and net loss compared
to the prior year is primarily a result of our increase in general
and administrative expenses, as well as our increase in
professional fees. These changes are detailed below.
Revenue
We have
not had any revenues since our inception. Prior to February 18,
2005, we were an exploration stage mineral exploration company that
owned a number of unpatented mining claims and Arizona State Land
Department claims. In late 2014, we changed 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 and
process those result, and in the long-term is 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 increased by $1,617,341, from $594,446
for the year ended December 31, 2015 to $2,211,787 for the year
ended December 31, 2016, primarily due to an increase in our
stock-based compensation awarded to our executives.
Professional Fees
Our
professional fees increased during the year ended December 31, 2016
compared to the year ended December 31, 2015. Our professional fees
were $1,933,733 for the year ended December 31, 2016 and $639,149
for the year ended December 31, 2015. These fees are largely
related to fees paid for legal and accounting services, along with
compensation to independent contractors, and increased
significantly primarily as a result of increased stock-based
compensation awards. We expect these fees to continue grow steadily
as our business expands. 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.
Interest Income/Expense; Net
Interest expense
increased from $4,824 to $5,321 for the year ended December 31,
2015 compared to the same period in 2016. Our interest expense
primarily relates to interest on a convertible note and short term
loans.
Liquidity and Capital Resources
Introduction
During
the years ended December 31, 2016 and 2015, because of our
operating losses, we did not generate positive operating cash
flows. Our cash on hand as of December 31, 2016 was $231 and our
monthly cash flow burn rate was approximately $6,000. As a result,
we had significant short term cash needs. These needs were
satisfied through proceeds from the sales of our securities. We
currently do not believe we will be able to satisfy our cash needs
from our revenues for many years to come.
Our
cash, current assets, total assets, current liabilities, and total
liabilities as of December 31, 2016 and 2015, respectively, are as
follows:
|
|
|
|
|
|
|
|
Cash
|
$
231
|
$
7
|
$
224
|
Total Current
Assets
|
5,284
|
2,074
|
3,210
|
Total
Assets
|
5,548
|
2,468
|
3,080
|
Total Current
Liabilities
|
281,226
|
218,070
|
63,156
|
Total
Liabilities
|
$
281,226
|
$
218,070
|
$
63,156
|
Our
current assets increased by $3,210 as of December 31, 2016 as
compared to December 31, 2015. The increase in our total assets
between the two periods was primarily attributed to an increase in
prepaid expenses as of December 31, 2016.
Our
current liabilities and total liabilities increased by $63,156, as
of December 31, 2016 as compared to December 31, 2015. A large
portion of this increase was due to higher accrued officer
compensation.
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, 2016 of $231 and $7 on December
31, 2015. Based on our revenues, cash on hand and current monthly
burn rate of approximately $45,000, we will need to continue
borrowing from our shareholders and other related parties, and/or
raise money from the sales of our securities, to fund
operations.
Sources and Uses of Cash
Operations
We had
net cash used in operating activities of $72,776 for the year ended
December 31, 2016, as compared to $25,800 for the year ended
December 31, 2015. In 2016, the net cash used in operating
activities consisted primarily of our net loss of ($4,150,971),
offset by shares issued for services, related parties of
$3,600,000, shares issued for services of $377,812, and shares
issued for down payment on land purchase of $42,500, adjusted by an
increase in prepaid expenses of $2,986, accrued compensation of
$71,505, accrued interest of $4,738, and a decrease in accounts
payable of $16,087. For the same period in 2016, the net cash
provided by operating activities consisted primarily of our net
loss of ($1,238,549), offset by shares issued for services, related
parties of $840,000 and shares issued for services of $266,640,
adjusted by an increase in accounts payable of $19,199, accrued
compensation of $74,000, accrued interest of $4,624, and a decrease
in prepaid expenses of $7,956.
Investments
We did
not have any net cash provided (used) by investing activities for
the years ended December 31, 2016 or December 31,
2015.
Financing
Our net
cash provided by financing activities for the year ended December
31, 2016 was $73,000, compared to $20,185 for the year ended
December 31, 2015. For the period in 2016, our financing activities
related to proceeds from the sale of common stock of $70,000 and
proceeds from notes payable, related parties of $16,005, offset by
repayments on notes payable, related parties of ($13,005). For the
period in 2015, our financing activities consisted of proceeds from
the sale of common stock of $24,000 and proceeds from notes
payable, related parties of $1,300, offset by repayments on notes
payable, related parties of ($5,115)
Contractual
Obligations
December 31,
2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
obligations
|
$
51,300
|
$
-
|
$
-
|
$
-
|
$
-
|
$
51,300
|
Operating
leases
|
9,000
|
12,000
|
12,000
|
12,000
|
12,000
|
57,000
|
|
$
60,300
|
$
12,000
|
$
12,000
|
$
12,000
|
$
12,000
|
$
108,300
|
Off
Balance Sheet Arrangements
We have
no off balance sheet arrangements.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
We have
no information required to be disclosed under this
Item.
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We
are exposed to market risks, which include interest rate changes in
United States of America and commodity prices. We do not engage in
financial transactions for trading or speculative
purposes.
Interest Rate
Risk
. There may be interest
charged on our accounts payable, as well as interest we charge on
our accounts receivable, depending on their age. Typically these
interest rates are fixed are not affected by changes in market
interest rates. However, from time to time we may enter into debt
transactions that have a variable interest rate which would leave
us subject to interest rate fluctuations.
Commodity Prices.
If we get operational, we will be
exposed to fluctuation in market prices for the raw materials
necessary to manufacture our products. To mitigate risk associated
with increases in market prices and commodity availability, we will
attempt to negotiate contracts with favorable terms directly with
vendors. We do not believe we will enter into forward contracts or
other market instruments as a means of achieving our objectives or
minimizing our risk exposures on these
materials.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
The
following table sets forth the names and ages of the current
directors and executive officers of the Company, the principal
offices and positions with the Company held by each person and the
date such person became a director or executive officer of the
Company. The executive officers of the Company are elected annually
by the Board of Directors. The directors serve one-year terms until
their successors are elected. The executive officers serve terms of
one year or until their death, resignation or removal by the Board
of Directors. Unless described below, there are no family
relationships among any of the directors and officers.
Name
|
|
Age
|
|
Position(s)
|
|
|
|
|
|
Glenn
E. Martin
|
|
63
|
|
President,
Chief Executive Officer, Chief Financial Officer and a
Director
|
|
|
|
|
|
Nicole
M. Breen
|
|
41
|
|
Secretary,
Treasurer and a Director
|
Glenn E. Martin
was appointed as our
President, Chief Executive Officer and Chief Financial Officer on
September 30, 2014. Mr. Martin has been a Director since January 1,
2005. Mr. Martin was our President from 2005 until 2012. Prior to
joining United Mines, Mr. Martin has served in an executive
capacity with several different companies. From 1988 through the
fall of 1992, Mr. Martin was Executive Director of World Trade
Center, Tucson, a subsidiary of the former Twin Towers in New York
City. In this position he oversaw the day to day operation,
including projects, programs, and seminars for the U.S. Dept. of
Commerce associate office in the W.T.C., Tucson promoting D.O.C.
programs, servicing clients for both the D.O.C. and Small Business
administration. During his tenure with World Trade Center he served
as speaker for international trade seminars and the AIESEC (U.S)
National Leadership Seminars. Member; Hong Kong Trade Association
1988 to present. Member; Society of Mining, Metallurgy &
Exploration (2008) Guest speaker at Inaugural HKBAH Annual Event in
May 2010 & member of Hong Kong Business Association of Hawaii
(2010)
During
our fiscal years ended December 31, 2016 and December 31, 2015, Mr.
Martin received $7,995 and $4,000, respectively, in cash
compensation for his services in addition to a total of 28,000,000
shares of our common stock as compensation for the years ended
December 31, 2015 and December 31, 2016. As of December 31, 2016,
Mr. Martin owns or controls an aggregate of 55,841,078 shares of
our common stock.
Nicole M. Breen
, was appointed as our
Secretary and Treasurer on September 30, 2014. Ms. Breen has been a
Director since January 1, 2005. Ms. Breen was our Secretary and
Treasurer from 2005 until 2012. From June 2000 to 2012 she served
as the Managing Associate of GEM Management Group, LLC specializing
in acquiring mineral rights and mining properties, along with
servicing administration requirements for the company. All Ms.
Breen’s current work in the Cannabis industry is done on our
behalf. In this position she oversees as corporate secretary,
recording secretary and the day-to-day treasury operations of the
company. Ms. Breen received her Bachelor of Science in Physical
Education in Education, with a minor in Elementary Education, from
the University of Arizona.
During
our fiscal years ended December 31, 2016 and December 31, 2015, Ms.
Breen did not receive cash compensation for her services but she
did receive a total of 16,000,000 shares of our common stock as
compensation for the years ended December 31, 2015 and December 31,
2016. As of December 31, 2016, Ms. Breen owned 19,947,520 shares of
our common stock.
Nicole
Breen is Glenn Martin’s daughter.
EXECUTIVE
COMPENSATION
The
Summary Compensation Table shows certain compensation information
for services rendered in all capacities for the fiscal years ended
December 31, 2016 and 2015. Other than as set forth herein, no
executive officer’s salary and bonus exceeded $100,000 in any
of the applicable years. The following information includes the
dollar value of base salaries, bonus awards, the number of stock
options granted and certain other compensation, if any, whether
paid or deferred.
SUMMARY
COMPENSATION TABLE
|
Name
and Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensa-tion
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensa
-
tion
($)
|
Total
($)
|
Glenn
E. Martin
President, CEO and
CFO
|
2016
2015
|
7,995
4,000
|
-0-
-0-
|
2,100,000
490,000
|
-0-
-0-
|
-0-
-0-
|
-0-
-0-
|
-0-
-0-
|
2,107,995
494,000
|
Nicole
M. Breen
Secretary and
Treasurer
|
2016
2015
|
-0-
-0-
|
-0-
-0-
|
1,200,000
280,000
|
-0-
-0-
|
-0-
-0-
|
-0-
-0-
|
-0-
-0-
|
1,200,000
280,000
|
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
Option Awards
|
Stock Awards
|
Name
|
Number of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Equity Incentive Plan Awards: Number of Securities Underlying
Unexercised Unearned Options
(#)
|
Option Exercise Price
($)
|
Option Expiration Date
|
Number of Shares or Units of Stock That Have Not
Vested
(#)
|
Market Value of Shares or Units of Stock That Have Not
Vested
($)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or
Other Rights That Have Not Vested
(#)
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned
Shares, Units or Other Rights That Have Not Vested
($)
|
|
|
|
|
|
|
|
|
|
|
Glenn
E. Martin
|
-0-
|
-0-
|
-0-
|
N/A
|
N/A
|
-0-
|
-0-
|
-0-
|
-0-
|
|
|
|
|
|
|
|
|
|
|
Nicole
M. Breen
|
-0-
|
-0-
|
-0-
|
N/A
|
N/A
|
-0-
|
-0-
|
-0-
|
-0-
|
In 2014
and 2016 we entered into employment agreements with Glenn E.
Martin, our Chief Executive Officer and Chief Financial Officer,
Nicole Breen, our Secretary and Treasurer and Ryan Breen, our Vice
President and Social Media Officer.
Under
the terms of our agreement with Mr. Martin dated October 1, 2016,
he serves as our President and Chief Executive Officer. The
agreement is for a two-year term and Mr. Martin received Seven
Million (7,000,000) shares of our common stock, restricted in
accordance with Rule 144, and is to received Seven Million
(7,000,000) additional shares as his annual salary for agreeing to
serve as our President and Chief Executive Officer. Additionally,
Mr. Martin is entitled to One Million (1,000,000) shares of a
yet-to-be-created class of Series B Preferred Stock if we regain
“fully-reporting” status with the Securities and
Exchange Commission. We are obligated to maintain and pay the
premiums for “key man” life insurance in the amount of
$1,000,000. Our agreement with Mr. Martin also contains various
provisions related to his termination without cause and in the
event we undergo a change of control transaction.
To date, no
“key man” insurance has been
obtained.
Under
the terms of our agreement with Mrs. Breen dated October 1, 2016,
she serves as our Secretary and Treasurer. The agreement is for a
two-year term and Ms. Breen received Four Million (4,000,000)
shares of our common stock, restricted in accordance with Rule 144,
and is to received Four Million (4,000,000) additional shares as
her annual salary for agreeing to serve as our Secretary and
Treasurer. Additionally, Ms. Breen is entitled to One Hundred
Thousand (100,000) shares of a yet-to-be-created class of Series B
Preferred Stock if we regain “fully-reporting” status
with the Securities and Exchange Commission. Our agreement with Ms.
Breen also contains various provisions related to her termination
without cause and in the event we undergo a change of control
transaction.
Under
the terms of our agreement with Mr. Ryan Breen dated October 1,
2016, he serves as our Vice President and Social Media Officer. The
agreement is for a two-year term and Mr. Breen received One Million
(1,000,000) shares of our common stock, restricted in accordance
with Rule 144, and is to received One Million (1,000,000)
additional shares as his annual salary for agreeing to serve as our
Vice President and Social Media Officer. Additionally, Mr. Breen is
entitled to One Hundred Thousand (100,000) shares of a
yet-to-be-created class of Series B Preferred Stock if we regain
“fully-reporting” status with the Securities and
Exchange Commission. Our agreement with Mr. Breen also contains
various provisions related to his termination without cause and in
the event we undergo a change of control transaction.
When
our Board of Directors approved the employments agreements they
resolved to create a new series of preferred stock to be entitled
“Series B Convertible Preferred Stock” with the
following rights and preferences: (i) no dividend rights; (ii) no
liquidation preference over the Company’s common stock; (iii)
conversion rights into shares of common stock at a ratio of 20
shares of common stock for each share of Series V Convertible
Preferred Stock; (iv) no redemption rights; (v) no call rights by
the Company; and (vi) voting rights on an “as
converted” basis on all matters properly brought before our
common stockholders for a vote.
Long-Term Incentive
Plans. We do not provide its officers or employees with pension,
stock appreciation rights, long-term incentive or other plans and
has no intention of implementing any of these plans for the
foreseeable future.
Employee Pension,
Profit Sharing or other Retirement Plans. We do not have a defined
benefit, pension plan, profit sharing or other retirement plan,
although it may adopt one or more of such plans in the
future.
Compensation
of Directors
Our
directors did not receive any compensation for their services as
directors during the fiscal year ended December 31, 2016 or
2015.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of June 30, 2017, certain
information with respect to our equity securities owned of record
or beneficially by (i) each Officer and Director of the Company;
(ii) each person who owns beneficially more than 10% of each class
of the Company’s outstanding equity securities; and (iii) all
Directors and Executive Officers as a group.
Common Stock
|
Title
of Class
|
Name
and Address
of
Beneficial Owner
(1)
|
Amount
and Nature of
Beneficial
Ownership
|
Percent
of
Class
(2)
|
Common
Stock
|
Glenn
E. Martin
(3)(4)
|
55,841,078
|
55.80%
|
|
|
|
|
Common
Stock
|
Nicole
M. Breen
(3)(5)
|
19,947,520
|
19.89%
|
|
|
|
|
Common
Stock
|
Ryan
Breen
(6)
|
5,010,615
|
5.01%
|
|
|
|
|
Common
Stock
|
All
Directors and Officers
As a
Group (2 persons)
|
75,788,598
|
75.49%
|
(1)
Unless otherwise
indicated, based on 99,991,020 shares of common stock issued and
outstanding. Shares of common stock subject to options or warrants
currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage of the person
holding such options or warrants, but are not deemed outstanding
for the purposes of computing the percentage of any other
person.
(2)
Indicates one of
our officers or directors.
(3)
Unless indicated
otherwise, the address of the shareholder is WEED, Inc., at 4920 N.
Post Trail, Tucson, AZ 85750.
(4)
Includes 80,666
shares of common stock held in the name of Tanque Verde Valley
Missionary Society, an entity controlled by Mr.
Martin.
(5)
Includes 305,505
shares of common stock held in the name of GEM Management Group,
LLC, an entity controlled by Ms. Breen, and an aggregate of 15,927
shares of common stock held in the name of Ms. Breen’s
children.
(6)
Ryan Breen is the
spouse of Nicole M. Breen.
The
issuer is not aware of any person who owns of record, or is known
to own beneficially, ten percent or more of the outstanding
securities of any class of the issuer, other than as set forth
above. The issuer is not aware of any person who controls the
issuer as specified in Section 2(a)(1) of the 1940 Act. There are
no classes of stock other than common stock issued or outstanding.
The Company does not have an investment advisor.
There
are no current arrangements which will result in a change in
control.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On
October 1, 2016, we granted 7,000,000 shares of common stock to our
CEO, Glenn E. Martin, as a bonus for services performed pursuant to
an amended employment agreement. The total fair value of the common
stock was $700,000 based on the closing price of our common stock
on the date of grant.
In
addition, on October 1, 2016, we granted a total of 14,000,000
shares of common stock to Mr. Martin for services performed
pursuant to his previous employment agreement. The total fair value
of the common stock was $1,400,000 based on the closing price of
our common stock on the date of grant.
On
October 1, 2016, we granted 4,000,000 shares of common stock to
Nicole Breen as a bonus for services performed pursuant to an
amended employment agreement. The total fair value of the common
stock was $400,000 based on the closing price of our common stock
on the date of grant.
In
addition, on October 1, 2016, we granted a total of 8,000,000
shares of common stock to Nicole Breen for services performed
pursuant to their previous employment agreement. The total fair
value of the common stock was $800,000 based on the closing price
of our common stock on the date of grant.
On
October 1, 2016, we granted 1,000,000 shares of common stock to
Ryan Breen as a bonus for services performed pursuant to an amended
employment agreement. The total fair value of the common stock was
$100,000 based on the closing price of our common stock on the date
of grant.
On
October 1, 2016, we granted a total of 2,000,000 shares of common
stock to Ryan Breen for services performed pursuant to their
previous employment agreement. The total fair value of the common
stock was $200,000 based on the closing price of our common stock
on the date of grant.
On
January 1, 2015, we granted 7,000,000 shares of common stock to our
CEO, Glenn E. Martin, for services performed. The total fair value
of the common stock was $490,000 based on the closing price of our
common stock on the date of grant. The shares were subsequently
issued on June 29, 2015.
On
January 1, 2015, we granted 4,000,000 shares of common stock to
Nicole Breen for services performed. The total fair value of the
common stock was $280,000 based on the closing price of our common
stock on the date of grant. The shares were subsequently issued on
June 29, 2015.
On
January 1, 2015, we granted 1,000,000 shares of common stock to
Ryan Breen for services performed. The total fair value of the
common stock was $70,000 based on the closing price of our common
stock on the date of grant. The shares were subsequently issued on
June 29, 2015.
On or
about December 5, 2014, we issued 18,000,000 shares to Glenn
Martin, our Chief Executive Officer, at $0.05 per share, in
exchange for services rendered to the company.
On or
about September 30, 2014, we issued: (i) an aggregate of 9,600,000
shares to Glenn Martin, Nicole Breen and Ryan Breen, affiliates of
the company, at $0.05 per share, in exchange for services rendered
to the company.
We
lease our executive offices our Glenn E. Martin, our President, on
a month-to-month basis at a monthly rent of $1,000, which began on
April 1, 2017.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
Section
15 of our Articles of Incorporation provides that, to the fullest
extent permitted by law, no director or officer shall be personally
liable to the corporation or its shareholders for damages for
breach of any duty owed to the corporation or its
shareholders.
Section
16 of our Articles of Incorporation provides that, to the fullest
extent permitted by the General Corporation Law of the State of
Nevada we will indemnify our officers and directors from and
against any and all expenses, liabilities, or other
matters.
Article
IX of our Bylaws further addresses indemnification of our directors
and officers and allows us to indemnify our directors in the event
they meet certain criteria in terms of acting in good faith and in
an official capacity within the scope of their duties, when such
conduct leads them to be involved in a legal action.
Insofar
as indemnification for liabilities arising under the Securities Act
of 1933 (the “Act”) may be permitted to directors,
officers and controlling persons of the small business issuer
pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable.
AVAILABLE INFORMATION
We have
filed with the SEC a registration statement on Form S-1 under the
Securities Act with respect to the resale of shares of our common
stock by the Selling Shareholders. This prospectus, which
constitutes a part of the registration statement, does not contain
all of the information set forth in the registration statement or
the exhibits filed therewith. For further information about us, our
common stock and the Selling Shareholders, reference is made to the
registration statement and the exhibits filed therewith. Statements
contained in this prospectus regarding the contents of any contract
or any other document that is filed as an exhibit to the
registration statement are not necessarily complete, and in each
instance we refer you to the copy of such contract or other
document filed as an exhibit to the registration statement. A copy
of the registration statement and the exhibits filed therewith may
be inspected without charge at the public reference room maintained
by the SEC, located at 100 F Street, NE, Washington, DC 20549, and
copies of all or any part of the registration statement may be
obtained from that office upon the payment of the fees prescribed
by the SEC. Please call the SEC at 1-800-SEC-0330 for further
information about the public reference room. The SEC also maintains
a website that contains reports, proxy and information statements
and other information regarding registrants that file
electronically with the SEC. The address of the website is
www.sec.gov
.
Upon
effectiveness of this registration statement, we will become
subject to the information and periodic reporting requirements of
the Exchange Act and, in accordance therewith, we will file
periodic reports, proxy statements and other information with the
SEC. Such periodic reports, proxy statements and other information
will be available for inspection and copying at the public
reference room and website of the SEC referred to
above.
EXPERTS
The
financial statements of WEED, Inc. as of December 31, 2016 and
December 31, 2015 and for the years ended December 31, 2016 and
December 31, 2015, and the balance sheets of WEED, Inc. as of
December 31, 2016 and December 31, 2015 have been included herein
in reliance upon the reports of M&K CPAS, PLLC., independent
registered public accounting firm, appearing elsewhere herein, and
upon the authority of said firm as experts in accounting and
auditing.
PART II – INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We will
pay all expenses in connection with the registration and sale of
the common stock by the Selling Shareholders, who may be deemed to
be an underwriters in connection with their offering of shares. The
estimated expenses of issuance and distribution are set forth
below:
Registration
Fees
|
Approximately
|
$
1,094
|
Transfer Agent
Fees
|
Approximately
|
2,000
|
Costs of Printing
and Engraving
|
Approximately
|
1,000
|
Legal
Fees
|
Approximately
|
40,000
|
Accounting and
Audit Fees
|
Approximately
|
51,000
|
Total
|
|
$
95,094
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section
15 of our Articles of Incorporation provides that, to the fullest
extent permitted by law, no director or officer shall be personally
liable to the corporation or its shareholders for damages for
breach of any duty owed to the corporation or its
shareholders.
Section
16 of our Articles of Incorporation provides that, to the fullest
extent permitted by the General Corporation Law of the State of
Nevada we will indemnify our officers and directors from and
against any and all expenses, liabilities, or other
matters.
Article
IX of our Bylaws further addresses indemnification of our directors
and officers and allows us to indemnify our directors in the event
they meet certain criteria in terms of acting in good faith and in
an official capacity within the scope of their duties, when such
conduct leads them to be involved in a legal action.
Insofar
as indemnification for liabilities arising under the Securities Act
of 1933 (the “Act”) may be permitted to directors,
officers and controlling persons of the small business issuer
pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable.
RECENT SALES OF UNREGISTERED SECURITIES
In the
last three fiscal years and subsequent interim periods, we issued
the following shares of common stock and preferred stock. The
following issuances were made in reliance on Section 4(a)(2) of the
Securities Act of 1933, as amended.
During the three months ended March 31, 2017,
we issued, or agreed to issue, the following
:
Common Stock Sales
(i) On
March 15, 2017 and March 31, 2017, we received an aggregate
$235,000 of advances on the subsequent sale on April 20, 2017 of
375,000 units at $1.00 per unit, consisting of 375,000 shares of
common stock and warrants to purchase 375,000 shares of common
stock at an exercise price of $3.00 per share, exercisable until
April 20, 2019, in exchange for total proceeds of
$375,000.
(ii) On
January 23, 2017, we sold 2,000 units at $2.00 per unit, consisting
of 2,000 shares of common stock and warrants to purchase 2,000
shares of common stock at an exercise price of $3.00 per share,
exercisable until January 23, 2018, in exchange for total proceeds
of $4,000.
(iii) On
January 9, 2017, we sold 50,000 units at $1.00 per unit, consisting
of 50,000 shares of common stock and warrants to purchase 50,000
shares of common stock at an exercise price of $3.00 per share,
exercisable until January 9, 2018, in exchange for total proceeds
of $50,000.
Warrants Exercised
(i) On
January 7, 2017, a warrant holder exercised warrants to purchase
2,666 shares of common stock at a strike price of $1.50 in exchange
for proceeds of $3,999.
Common Stock Issued for Bartered Assets
(i) On
January 18, 2017, we exchanged 66,000 units, consisting of 66,000
shares of common stock and warrants to purchase 66,000 shares of
common stock at an exercise price of $3.00 per share, exercisable
until January 18, 2018, in exchange for a 2017 Audi Q7 and a 2017
Audi A4.
Common Stock Issued for Services
(i) On
March 2, 2017, we granted 50,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $142,500 based on the closing price of our common
stock on the date of grant.
(ii) On
March 2, 2017, we granted 12,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $34,200 based on the closing price of our common
stock on the date of grant.
(iii) On
January 7, 2017, we granted 50,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $210,250 based on the closing price of our common
stock on the date of grant.
During the three months ended December 31,
2016, we issued, or agreed to issue, the
following
:
(i) On
October 31, 2016, we sold 50,000 units at $0.10 per unit,
consisting of 50,000 shares of common stock and warrants to
purchase 50,000 shares of common stock at an exercise price of
$1.50 per share over a one (1) year period from the date of
purchase in exchange for total proceeds of $5,000.
(ii) On
October 25, 2016, we sold 150,000 units at $0.3333 per unit,
consisting of 150,000 shares of common stock and warrants to
purchase 150,000 shares of common stock at an exercise price of
$1.50 per share over a one (1) year period from the date of
purchase in exchange for total proceeds of $50,000.
(iii) On
October 19, 2016, we sold 25,000 units at $0.20 per unit,
consisting of 25,000 shares of common stock and warrants to
purchase 25,000 shares of common stock at an exercise price of
$1.50 per share over a one (1) year period from the date of
purchase in exchange for total proceeds of $5,000.
(iv) On
October 19, 2016, we sold 100,000 units at $0.10 per unit,
consisting of 100,000 shares of common stock and warrants to
purchase 100,000 shares of common stock at an exercise price of
$1.50 per share over a one (1) year period from the date of
purchase in exchange for total proceeds of $10,000.
(v) On
November 8, 2016, we granted 50,000 shares of common stock as a
good faith deposit on a potential land purchase agreement that has
not yet closed, as we does not currently have sufficient resources.
The total fair value of the common stock was $42,500 based on the
closing price of our common stock on the date of
grant.
(vi) On
October 1, 2016, we granted 7,000,000 shares of common stock to our
CEO, Glenn E. Martin, as a bonus for services performed pursuant to
an amended employment agreement. The total fair value of the common
stock was $700,000 based on the closing price of our common stock
on the date of grant.
(vii) In
addition, on October 1, 2016, we granted a total of 14,000,000
shares of common stock to Mr. Martin for services performed
pursuant to his previous employment agreement. The total fair value
of the common stock was $1,400,000 based on the closing price of
our common stock on the date of grant.
(viii) On
October 1, 2016, we granted 4,000,000 shares of common stock to
Nicole Breen as a bonus for services performed pursuant to an
amended employment agreement. The total fair value of the common
stock was $400,000 based on the closing price of our common stock
on the date of grant.
(ix) In
addition, on October 1, 2016, we granted a total of 8,000,000
shares of common stock to Nicole Breen for services performed
pursuant to their previous employment agreement. The total fair
value of the common stock was $800,000 based on the closing price
of our common stock on the date of grant.
(x) On
October 1, 2016, we granted 1,000,000 shares of common stock to
Ryan Breen as a bonus for services performed pursuant to an amended
employment agreement. The total fair value of the common stock was
$100,000 based on the closing price of our common stock on the date
of grant.
(xi) On
October 1, 2016, we granted a total of 2,000,000 shares of common
stock to Ryan Breen for services performed pursuant to their
previous employment agreement. The total fair value of the common
stock was $200,000 based on the closing price of our common stock
on the date of grant.
(xii) On
October 19, 2016, we granted 10,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $8,500 based on the closing price of our common
stock on the date of grant.
Common
stock warrants granted during the three months ended December 31,
2016:
(i) On
October 31, 2016, we sold warrants to purchase 50,000 shares of
common stock at $1.50 per share over a one (1) year period from the
date of sale, in exchange for total proceeds of $5,000 in
conjunction with the sale of 50,000 shares of common
stock.
(ii) On
October 25, 2016, we sold warrants to purchase 150,000 shares of
common stock at $1.50 per share over a one (1) year period from the
date of sale, in exchange for total proceeds of $50,000 in
conjunction with the sale of 150,000 shares of common
stock.
(iii) On
October 19, 2016, we sold warrants to purchase 25,000 shares of
common stock at $1.50 per share over a one (1) year period from the
date of sale, in exchange for total proceeds of $5,000 in
conjunction with the sale of 25,000 shares of common
stock.
(iv) On
October 19, 2016, we sold warrants to purchase 100,000 shares of
common stock at $1.50 per share over a one (1) year period from the
date of sale, in exchange for total proceeds of $10,000 in
conjunction with the sale of 100,000 shares of common
stock.
During the three months ended September 30,
2016, we issued, or agreed to issue, the
following
:
(i) On
September 28, 2016, we granted 600,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $60,000 based on the closing price of our common
stock on the date of grant. The shares were subsequently issued on
November 23, 2016.
(ii) On
September 28, 2016, we granted 600,000 shares of common stock to a
different consultant for services performed. The total fair value
of the common stock was $60,000 based on the closing price of our
common stock on the date of grant. The shares were subsequently
issued on November 23, 2016.
(iii) On
September 28, 2016, we granted 600,000 shares of common stock to a
third consultant for services performed. The total fair value of
the common stock was $60,000 based on the closing price of our
common stock on the date of grant. The shares were subsequently
issued on November 23, 2016.
During the three months ended June 30, 2016, we
did not issue any of our securities
.
During the three months ended March 31, 2016,
we issued, or agreed to issue, the following
:
(i) On
March 18, 2016, we granted 60,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $5,820 based on the closing price of our common
stock on the date of grant. The shares were subsequently issued on
October 27, 2016.
(ii) On
March 18, 2016, we granted 500,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $48,500 based on the closing price of our common
stock on the date of grant. The shares were subsequently issued on
October 27, 2016.
(iii) On
March 18, 2016, we granted 120,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $11,640 based on the closing price of our common
stock on the date of grant. The shares were subsequently issued on
October 27, 2016.
(iv) On
February 12, 2016, we granted 120,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $5,832 based on the closing price of our common
stock on the date of grant. The shares were subsequently issued on
October 27, 2016.
(v) On
February 1, 2016, we granted 500,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $22,000 based on the closing price of our common
stock on the date of grant. The shares were subsequently issued on
October 27, 2016.
(vi) On
February 1, 2016, we granted 500,000 shares of common stock to
another consultant for services performed. The total fair value of
the common stock was $22,000 based on the closing price of our
common stock on the date of grant. The shares were subsequently
issued on October 27, 2016.
(vii) On
February 1, 2016, we granted 20,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $880 based on the closing price of our common
stock on the date of grant. The shares were subsequently issued on
October 27, 2016.
(viii) On
February 1, 2016, we granted 60,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $2,640 based on the closing price of our common
stock on the date of grant. The shares were subsequently issued on
October 27, 2016.
During the three months ended December 31,
2015, we did not issue any of our securities
.
During the three months ended September 30,
2015, we issued, or agreed to issue, the
following
:
(i) On
August 17, 2015, we sold 90,000 units at $0.10 per unit, consisting
of 90,000 shares of common stock and warrants to purchase 90,000
shares of common stock at an exercise price of $0.50 per share over
a one (1) year period from the date of purchase in exchange for
total proceeds of $9,000. We did not issue these shares until the
quarter ended December 31, 2016.
During the six months ended June 30, 2015, we
issued the following
:
(i) During
the six months ended June 30, 2015, we issued a total of 2,775,000
shares of common stock in satisfaction of common stock granted
during the year ended December 31, 2014, in the aggregate value of
$156,100
(ii) On
January 1, 2015, we granted 120,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $8,400 based on the closing price of our common
stock on the date of grant.
(iii) On
January 1, 2015, we granted 7,000,000 shares of common stock to our
CEO, Glenn E. Martin, for services performed. The total fair value
of the common stock was $490,000 based on the closing price of our
common stock on the date of grant. The shares were subsequently
issued on June 29, 2015.
(iv) On
January 1, 2015, we granted 4,000,000 shares of common stock to
Nicole Breenfor services performed. The total fair value of the
common stock was $280,000 based on the closing price of our common
stock on the date of grant. The shares were subsequently issued on
June 29, 2015.
(v) On
January 1, 2015, we granted 1,000,000 shares of common stock to
Ryan Breen for services performed. The total fair value of the
common stock was $70,000 based on the closing price of our common
stock on the date of grant. The shares were subsequently issued on
June 29, 2015.
(vi) On
January 30, 2015, we sold 50,000 units, consisting of 50,000 shares
of common stock and warrants to purchase 50,000 shares of common
stock at an exercise price of $0.10 per share over a one (1) year
period from the date of purchase in exchange for total proceeds of
$5,000.
(vii) On
February 12, 2015, we granted 60,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $8,850 based on the closing price of our common
stock on the date of grant.
(viii) On
February 20, 2015, we granted 240,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $21,600 based on the closing price of our common
stock on the date of grant.
(ix) On
February 20, 2015, we sold another 40,000 units, consisting of
50,000 shares of common stock and warrants to purchase 50,000
shares of common stock at an exercise price of $0.25 per share over
a one (1) year period from the date of purchase in exchange for
total proceeds of $10,000.
(x) On
March 16, 2015, we granted 50,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $4,000 based on the closing price of our common
stock on the date of grant.
(xi) On
March 16, 2015, we granted 60,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $4,800 based on the closing price of our common
stock on the date of grant.
(xii) On
March 16, 2015, we granted 120,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $9,600 based on the closing price of our common
stock on the date of grant.
(xiii) On
March 16, 2015, we granted 40,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $3,200 based on the closing price of our common
stock on the date of grant.
(xiv) On
March 16, 2015, we granted 40,000 shares of common stock to another
consultant for services performed. The total fair value of the
common stock was $3,200 based on the closing price of our common
stock on the date of grant.
(xv) On
April 1, 2015, we granted 600,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $40,000 based on the closing price of our common
stock on the date of grant.
(xvi) On
April 1, 2015, we granted 500,000 shares of common stock to a
consultant for services performed. The total fair value of the
common stock was $48,000 based on the closing price of our common
stock on the date of grant.
On or about December 5, 2014, we issued the
following
:
(i) 18,000,000
shares to Glenn Martin, our Chief Executive Officer, at $0.05 per
share.
(ii) 989,000
shares to two non-affiliates, at an average price of $0.20 per
share.
On or about September 30, 2014, we issued the
following
:
(i) An
aggregate of 9,600,000 shares to Glenn Martin, Nicole Breen and
Ryan Breen, affiliates of we, at $0.05 per share.
(ii) 1,500,000
shares to two non-affiliates, valued at $0.05 per
share.
EXHIBITS
*
To be included in
subsequent filing.
Undertakings
A. Insofar
as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, we have
been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by us of expenses
incurred or paid by our director, officer or controlling person in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such
issue.
B. The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration
statement:
(a) To
include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) To
reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b)
(Section 230.424(b) of Regulation S-K) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the
“Calculation of Registration Fee” table in the
effective registration statement; and
(c) To
include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That,
for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To
remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
SIGNATURES
Pursuant to the
requirements of the Securities Act of 1933, the registrant has duly
caused this registration statement to be signed on its behalf by
the undersigned, in the City of Tucson, State of
Arizona.
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WEED, Inc.
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Dated:
August 11,
2017
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/s/ Glenn E.
Martin
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By:
Glenn E. Martin
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Its:
President, Chief Executive Officer (Principal
Executive Officer), Chief Financial Officer (Principal Financial
Officer)
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Pursuant to the
requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the
capacities and on the dates stated.
Dated:
August 11,
2017
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/s/ Glenn E.
Martin
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By:
Glenn E. Martin, Director and President, Chief
Executive Officer (Principal Executive Officer), Chief Financial
Officer (Principal Financial Officer)
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Dated:
August 11,
2017
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/s/ Nicole M.
Breen
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By:
Nicole M. Breen, Director, Secretary and Treasurer
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