Note
1 to the financial statements discloses all of the matters of which
we are aware that are relevant to the Company’s ability to
continue as a going concern, including significant conditions and
events, and managements plans.
/s/
M&K CPAS, PLLC
We
have served as the Company’s auditor since
2017.
Houston,
TX
April
26, 2018
WEED, INC. (Formerly United Mines, Inc.) &
Subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
Cash
|
$
161,178
|
$
231
|
Prepaid
expenses
|
32,999
|
5,053
|
Total
current assets
|
194,177
|
5,284
|
|
|
|
Land
|
113,750
|
-
|
Property
and equipment, net
|
1,000,412
|
264
|
|
|
|
Total
assets
|
$
1,308,339
|
$
5,548
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$
228,609
|
$
35,661
|
Accrued
officer compensation
|
179,331
|
157,505
|
Accrued
interest
|
16,188
|
36,760
|
Convertible
notes payable
|
-
|
35,000
|
Notes
payable, related parties
|
49,000
|
16,300
|
Note
payable
|
475,000
|
-
|
Total
current liabilities
|
948,128
|
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,
100,861,235 and 103,953,307 shares issued and
|
|
|
outstanding
at December 31, 2017 and 2016, respectively
|
100,861
|
103,953
|
Additional
paid in capital
|
19,139,868
|
15,219,762
|
Subscriptions
payable, consisting of 100,000 and -0-
|
|
|
shares
at December 31, 2017 and 2016, respectively
|
200,770
|
-
|
Accumulated
deficit
|
(19,081,288
)
|
(15,599,393
)
|
Total
stockholders' equity (deficit)
|
360,211
|
(275,678
)
|
|
|
|
Total
liabilities and stockholders' equity (deficit)
|
$
1,308,339
|
$
5,548
|
|
|
|
The
accompanying notes are an integral part of these financial
statements.
|
WEED, INC. (Formerly United Mines, Inc.) &
Subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
-
|
$
-
|
|
|
|
Operating
expenses:
|
|
|
General
and administrative
|
671,679
|
2,211,787
|
Professional
fees
|
1,667,804
|
1,933,733
|
Depreciation
and amortization
|
44,654
|
130
|
Total
operating expenses
|
2,384,137
|
4,145,650
|
|
|
|
Net
operating loss
|
(2,384,137
)
|
(4,145,650
)
|
|
|
|
Other
expense:
|
|
|
Goodwill
impairment
|
(1,015,910
)
|
-
|
Loss
on extinguishment of debt
|
(67,983
)
|
-
|
Interest
expense
|
(13,865
)
|
(5,321
)
|
|
|
|
Net
loss
|
$
(3,481,895
)
|
$
(4,150,971
)
|
|
|
|
|
|
|
Weighted
average number of common shares
|
|
|
outstanding
- basic and fully diluted
|
101,214,245
|
71,245,220
|
|
|
|
Net
loss per share - basic and fully diluted
|
$
(0.03
)
|
$
(0.06
)
|
|
|
|
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, 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
)
|
|
|
|
|
|
|
|
|
|
Common
stock sold for cash
|
-
|
-
|
1,903,333
|
1,903
|
1,327,097
|
-
|
-
|
1,329,000
|
|
|
|
|
|
|
|
|
|
Common
stock issued for cash, exercise of warrants
|
-
|
-
|
2,666
|
3
|
3,996
|
-
|
-
|
3,999
|
|
|
|
|
|
|
|
|
|
Common
stock issued for acquisition of Sangre AT, LLC
|
-
|
-
|
500,000
|
500
|
1,003,350
|
-
|
-
|
1,003,850
|
|
|
|
|
|
|
|
|
|
Common
stock issued for acquisition of land and
property
|
-
|
-
|
25,000
|
25
|
29,975
|
-
|
-
|
30,000
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services, related parties
|
-
|
-
|
200,000
|
200
|
364,550
|
-
|
-
|
364,750
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services
|
-
|
-
|
461,882
|
462
|
943,167
|
200,770
|
-
|
1,144,399
|
|
|
|
|
|
|
|
|
|
Common
stock issued for barter of vehicles
|
-
|
-
|
66,000
|
66
|
105,066
|
-
|
-
|
105,132
|
|
|
|
|
|
|
|
|
|
Common
stock and warrants exchanged for debt
|
-
|
-
|
70,000
|
70
|
136,163
|
-
|
-
|
136,233
|
|
|
|
|
|
|
|
|
|
Shares
cancelled in accordance with settlement
agreement
|
-
|
-
|
(4,829,953
)
|
(4,821
)
|
4,821
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Shares
cancelled for non-performance of services
|
-
|
-
|
(1,500,000
)
|
(1,500
)
|
1,500
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Imputed
interest on non-interest bearing related party
debts
|
-
|
-
|
-
|
-
|
421
|
-
|
-
|
421
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2017
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,481,895
)
|
(3,481,895
)
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2017
|
-
|
$
-
|
100,852,235
|
$
100,861
|
$
19,139,868
|
$
200,770
|
$
(19,081,288
)
|
$
360,211
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements.
|
WEED, INC. (Formerly United Mines, Inc.) &
Subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
Net
(loss)
|
$
(3,481,895
)
|
$
(4,150,971
)
|
Adjustments
to reconcile net loss
|
|
|
to
net cash used in operating activities:
|
|
|
Depreciation
|
44,654
|
130
|
Goodwill
impairment
|
1,015,910
|
-
|
Imputed
interest on non-interest bearing related party
debts
|
421
|
583
|
Loss
on extinguishment of debt
|
67,983
|
-
|
Shares
issued for down payment on land purchase
|
-
|
42,500
|
Shares
issued for services, related parties
|
364,750
|
3,600,000
|
Shares
issued for services
|
1,144,399
|
377,812
|
Decrease
(increase) in assets:
|
|
|
Prepaid
expenses
|
(27,946
)
|
(2,986
)
|
Increase
(decrease) in liabilities:
|
|
|
Accounts
payable
|
167,019
|
(16,087
)
|
Accrued
compensation
|
21,826
|
71,505
|
Accrued
interest
|
12,678
|
4,738
|
Net
cash used in operating activities
|
(670,201
)
|
(72,776
)
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
Cash
received in acquisition
|
54
|
-
|
Purchases
of land and property
|
(534,605
)
|
-
|
Net
cash used in investing activities
|
(534,551
)
|
-
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
Proceeds
from notes payable, related parties
|
46,000
|
16,005
|
Repayments
on notes payable, related parties
|
(13,300
)
|
(13,005
)
|
Proceeds
from the sale of common stock
|
1,332,999
|
70,000
|
Net
cash provided by financing activities
|
1,365,699
|
73,000
|
|
|
|
NET
CHANGE IN CASH
|
160,947
|
224
|
CASH
AT BEGINNING OF PERIOD
|
231
|
7
|
|
|
|
CASH
AT END OF PERIOD
|
$
161,178
|
$
231
|
|
|
|
SUPPLEMENTAL
INFORMATION:
|
|
|
Interest
paid
|
$
-
|
$
-
|
Income
taxes paid
|
$
-
|
$
-
|
|
|
|
NON-CASH
INVESTING AND FINANCING ACTIVITIES:
|
|
|
Value
of shares issued for acquisition of Sangre AT,
LLC
|
$
1,003,850
|
$
-
|
Value
of shares issued for acquisition of land and
property
|
$
30,000
|
$
-
|
Mortgage
issued for acquisition of land and property
|
$
475,000
|
$
-
|
Value
of shares issued in exchange for settlement of convertible
debt
|
$
86,800
|
$
-
|
Value
of warrants issued in exchange for settlement of convertible
debt
|
$
49,433
|
$
-
|
Value
of fixed assets acquired in exchange for stock
|
$
105,132
|
$
-
|
|
|
|
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, 2017 and 2016
Note
1 – Nature of Business and Significant Accounting
Policies
Nature of Business
WEED, Inc. (the
“Company”), (formerly United Mines, Inc.) was
incorporated under the laws of the State of Arizona on
August 20, 1999 (“Inception Date”) as Plae,
Inc. to engage in the exploration of gold and silver mining
properties. On November 26, 2014, the Company was renamed
from United Mines, Inc. to WEED, Inc. and was repurposed to pursue
a business involving the purchase of land, and building Commercial
Grade “Cultivation Centers” to consult, assist, manage
& lease to Licensed Dispensary owners and organic grow
operators on a contract basis, with a concentration on the legal
and medical marijuana sector. The Company’s plan is to become
a True “Seed-to-Sale” company providing infrastructure,
financial solutions and real estate options in this new emerging
market. The Company, under United Mines, was formerly in the
process of acquiring mineral properties or claims located in the
State of Arizona, USA. The name was previously changed on February
18, 2005 to King Mines, Inc. and then subsequently changed to
United Mines, Inc. on March 30, 2005. The Company trades
on the OTC Pink Sheets under the stock symbol:
BUDZ.
On April 20, 2017,
the Company acquired Sangre AT, LLC, a Wyoming company doing
business as Sangre AgroTech. (“Sangre”). Sangre is a
plant genomic research and breeding company comprised of
top-echelon scientists with extensive expertise in genomic
sequencing, genetics-based breeding, plant tissue culture, and
plant biochemistry, utilizing the most advanced sequencing and
analytical technologies and proprietary bioinformatics data systems
available. Sangre is working on a cannabis genomic study to
complete a global genomic classification of the cannabis plant
genus.
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.
Principles of Consolidation
The accompanying
consolidated financial statements include the accounts of the
following entities, all of which are under common control and
ownership:
|
|
State
of
|
|
|
|
Abbreviated
|
Name of
Entity
|
|
Incorporation
|
|
Relationship
(1)
|
|
Reference
|
WEED,
Inc.
|
|
Nevada
|
|
Parent
|
|
WEED
|
Sangre AT,
LLC
(2)
|
|
Wyoming
|
|
Subsidiary
|
|
Sangre
|
(1)
Sangre is a
wholly-owned subsidiary of WEED, Inc.
(2)
Sangre AT, LLC is
doing business as Sangre AgroTech.
The consolidated
financial statements herein contain the operations of the
wholly-owned subsidiary listed above. All significant inter-company
transactions have been eliminated in the preparation of these
financial statements. The parent company, WEED and subsidiary,
Sangre will be collectively referred to herein as the
“Company”, or “WEED”. The Company's
headquarters are located in Tucson, Arizona and its operations are
primarily within the United States, with minimal operations in
Australia.
These statements
reflect all adjustments, consisting of normal recurring
adjustments, which in the opinion of management are necessary for
fair presentation of the information contained
therein.
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.
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
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:
Automobiles
|
5
years
|
Furniture and
fixtures
|
5
years
|
Office
equipment
|
5
years
|
Lab
equipment
|
5
years
|
Property
|
15
years
|
Repairs and
maintenance expenditures are charged to operations as incurred.
Major improvements and replacements, which 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.
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.
Goodwill
The Company
evaluates the carrying value of goodwill during the fourth quarter
of each year and between annual evaluations if events occur or
circumstances change that would more likely than not reduce the
fair value of the reporting unit below its carrying amount. Such
circumstances could include, but are not limited to (1) a
significant adverse change in legal factors or in business climate,
(2) unanticipated competition, or (3) an adverse action or
assessment by a regulator. When evaluating whether goodwill is
impaired, the Company compares the fair value of the reporting unit
to which the goodwill is assigned to the reporting unit’s
carrying amount, including goodwill. The fair value of the
reporting unit is estimated using a combination of the income, or
discounted cash flows, approach and the market approach, which
utilizes comparable companies’ data. If the carrying amount
of a reporting unit exceeds its fair value, then the amount of the
impairment loss must be measured. The impairment loss would be
calculated by comparing the implied fair value of reporting unit
goodwill to its carrying amount. In calculating the implied fair
value of reporting unit goodwill, the fair value of the reporting
unit is allocated to all of the other assets and liabilities of
that unit based on their fair values. The excess of the fair value
of a reporting unit over the amount assigned to its other assets
and liabilities is the implied fair value of goodwill. An
impairment loss would be recognized when the carrying amount of
goodwill exceeds its implied fair value. The Company’s
evaluation of goodwill completed during 2017 resulted in an
impairment loss of $1,015,910.
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.
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
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, 2017 and 2016,
respectively:
|
|
|
|
|
|
|
|
|
Common stock issued
for down payment on land purchase
|
$
-
|
$
42,500
|
Common stock issued
for services, related parties
|
364,750
|
3,600,000
|
Common stock issued
for services
|
1,144,399
|
377,812
|
Total stock based
compensation
|
$
1,509,149
|
$
4,020,312
|
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 $4,139 and $-0- for the years ended
December 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 Years Ended
December 31, 2017 and 2016
Recently
Issued Accounting Pronouncements
In May 2017, the
Financial Accounting Standards Board (“FASB”) issued
Accounting Standard Update (“ASU”)
No. 2017-09
,
Compensation — Stock Compensation (Topic
718): Scope of Modification Accounting.
ASU 2017-09, which
provides guidance about which changes to the terms or conditions of
a share-based payment award require an entity to apply modification
accounting in Topic 718.
Per ASU
2017-09, a
n entity should account for the effects of a
modification unless all the following are met: (1) the fair value
(or calculated value or intrinsic value, if such an alternative
measurement method is used) of the modified award is the same as
the fair value (or calculated value or intrinsic value, if such an
alternative measurement method is used) of the original award
immediately before the original award is modified. If the
modification does not affect any of the inputs to the valuation
technique that the entity uses to value the award, the entity is
not required to estimate the value immediately before and after the
modification, (2) the vesting conditions of the modified award are
the same as the vesting conditions of the original award
immediately before the original award is modified, and (3) the
classification of the modified award as an equity instrument or a
liability instrument is the same as the classification of the
original award immediately before the original award is modified.
The current disclosure requirements in Topic 718 apply regardless
of whether an entity is required to apply modification accounting
under the amendments in ASU 2017-9.
ASU 2017-9 is effective for public business
entities for annual and interim periods in fiscal years beginning
after December 15, 2017.
Early adoption is permitted,
including adoption in any interim period, for (1) public business
entities for reporting periods for which financial statements have
not yet been issued and (2) all other entities for reporting
periods for which financial statements have not yet been made
available for issuance. The amendments in this ASU should be
applied prospectively to an award modified on or after the adoption
date. The adoption of
ASU
2017-09
is not expected to have a material impact on the
Company’s financial statements or related
disclosures.
In March 2017,
the FASB issued ASU No. 2017-07,
Compensation - Retirement Benefits (Topic
715): Improving the Presentation of Net Periodic Pension Cost and
Net Periodic Postretirement Benefit Cost
. This ASU requires
that an employer report the service cost component in the same line
item or items as other compensation costs arising from services
rendered by the pertinent employees during the period. The other
components of net benefit cost, which include interest cost and
prior service cost or credit, among others, are required to be
presented in the income statement separately from the service cost
component and outside a subtotal of income from operations, if one
is presented. This ASU is effective for the Company’s fiscal
year 2018, including interim periods. The Company is currently
evaluating the effects that the adoption of this ASU will have on
its consolidated financial statements. The adoption of
ASU 2017-07
is not expected to have a
material impact on the Company’s financial statements or
related disclosures.
In January 2017,
the FASB issued 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 adoption of
ASU 2017-04
is not expected to have a
material impact on the Company’s financial statements or
related disclosures.
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 adoption of
ASU 2017-01
is not expected to have a material impact on the Company’s
financial statements or related disclosures.
In May 2014 the
FASB issued ASU No. 2014-09,
Revenue from Contracts with Customers
.
Since ASU 2014-09 was issued, several additional ASUs have been
issued to clarify various elements of the guidance. These standards
provide guidance on recognizing revenue, including a five-step
model to determine when revenue recognition is appropriate. The
standard requires that an entity recognize revenue to depict the
transfer of control of promised goods or services to customers in
an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services.
Adoption of the new standard is effective for reporting periods
beginning after December 15, 2017. We plan to use the modified
retrospective method of adoption and will adopt the standard as of
January 1, 2018, the beginning of our next fiscal year. We have
completed an initial evaluation of the potential impact from
adopting the new standard, including a detailed review of
performance obligations for all material revenue streams. Based on
this initial evaluation, we do not expect adoption will have a
material impact on our financial position, results of operations,
or cash flows. Related disclosures will be expanded in line with
the requirements of the standard. The adoption of
ASU 2014-09
is not expected to have a
material impact on the Company’s financial statements or
related disclosures.
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
No other new
accounting pronouncements, issued or effective during the year
ended December 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 $19,081,288, and had negative working capital of
$753,951 at December 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 – Business Combination
Business Combination – Sangre AT, LLC, April 20,
2017
On April 20, 2017,
the Company closed on a Share Exchange Agreement
(“SEA”) with Sangre AT, LLC, a Wyoming company doing
business as Sangre AgroTech. Pursuant to the SEA, we purchased all
of the outstanding membership interests in consideration for an a
total of 500,000 shares of common stock to seven individuals,
valued at $1,003,850 based on the closing price of the
Company’s common stock on the date of
grant.
Sangre is a plant
genomic research and breeding company comprised of top-echelon
scientists with extensive expertise in genomic sequencing,
genetics-based breeding, plant tissue culture, and plant
biochemistry, utilizing the most advanced sequencing and analytical
technologies and proprietary bioinformatics data systems available.
Sangre is working on a cannabis genomic study to complete a global
genomic classification of the cannabis plant
genus.
In connection with
the SEA, two members of Sangre and the Company entered into
Consulting Agreements, pursuant to which the members of Sangre
agreed to provide consulting services to the Company for a period
of one year following closing, with the option to extend for a two
year period in annual increments, upon mutual written agreement by
both parties. Pursuant to the agreement, the members were each
awarded 50,000 shares of common stock with the issuances deferred
until January 1, 2018.
This acquisition
was accounted for as a business combination under the purchase
method of accounting, given that substantially all of the
Company’s assets and ongoing operations were acquired. The
purchase resulted in $1,015,910 of goodwill, which was subsequently
impaired and expensed in the current period. According to the
purchase method of accounting, the Company recognized the
identifiable assets acquired and liabilities assumed as
follows:
|
|
|
|
Consideration:
|
|
Fair value of
common stock paid at closing
(1)
|
$
1,003,850
|
Short term
liabilities assumed
(2)
|
25,929
|
Fair
value of total consideration exchanged
|
$
1,029,779
|
|
|
Fair
value of identifiable assets acquired assumed:
|
|
Cash
|
$
54
|
Fixed
assets
|
13,815
|
Total fair value of
assets assumed
|
13,869
|
Consideration paid in excess of fair value
(Goodwill)
(3)
|
$
1,015,910
|
|
(1)
Consideration
consisted of 500,000 shares of the Company’s common stock
valued at $1,003,850 based on the closing price of the
Company’s common stock on the date of
grant.
|
|
|
(2)
Assumed
liabilities consisted of trade payables and outstanding credit card
debt.
|
|
|
(3)
The
consideration paid in excess of the net fair value of assets
acquired and liabilities assumed has been recognized as goodwill
and was expensed due to economic uncertainties and the absence of a
revenue stream.
|
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
Management believes
the intangible assets acquired, consisting of the personnel of
Sangre, will enable the Company to launch their business model and
take advantage of additional growth
opportunities.
The unaudited
supplemental pro forma results of operations of the combined
entities had the dates of the acquisitions been January 1, 2017 are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
$
-
|
$
-
|
|
|
|
Expenses:
|
|
|
Operating
expenses
|
582,180
|
2,396,462
|
|
|
|
Net operating
loss
|
(582,180
)
|
(2,396,462
)
|
|
|
|
Other income
(expense)
|
(7,052
)
|
(1,097,758
)
|
|
|
|
Net
loss
|
$
(589,232
)
|
$
(3,494,220
)
|
|
|
|
Weighted average
number of common shares
|
|
|
Outstanding –
basic and fully diluted
|
100,711,076
|
101,364,930
|
|
|
|
Net loss per share
– basic and fully diluted
|
$
(0.01
)
|
$
(0.03
)
|
Note
4 – Related Party
Notes Payable
From time to time,
the Company has received short term loans from officers and
directors as disclosed in Note 10 below.
Capital Contributions
The Company imputed
interest on non-interest bearing, related party loans, resulting in
a total of $421 and $583 of contributed capital during the years
ended December 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.
Common Stock
On August 1, 2017,
the Company granted 150,000 shares of common stock to Mary
Williams, a principal of Sangre AT, LLC, for services performed.
The fair value of the common stock was $154,500 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 Pat Williams.
PhD, a principal of Sangre AT, LLC, 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.
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.
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
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.
A
total of $179,331 and $157,505 of officer compensation was unpaid
and outstanding at December 31, 2017 and 2016,
respectively.
Note
5 – 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, 2017 and 2016
The following
schedule summarizes the valuation of financial instruments at fair
value on a recurring basis in the balance sheets as of December 31,
2017 and 2016, respectively:
|
Fair Value
Measurements at December 31, 2017
|
|
|
|
|
Assets
|
|
|
|
Cash
|
$
161,178
|
$
-
|
$
-
|
Total
assets
|
161,178
|
-
|
-
|
Liabilities
|
|
|
|
Notes payable,
related parties
|
-
|
49,000
|
-
|
Notes
payable
|
-
|
475,000
|
-
|
Total
liabilities
|
-
|
524,000
|
-
|
|
$
161,178
|
$
(524,000
)
|
$
-
|
|
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 years ended
December 31, 2017 or the year ended December 31,
2016.
Note
6 – Prepaid Expenses
Prepaid expenses
consisted of the following as of December 31, 2017 and 2016,
respectively:
|
|
|
|
|
|
Annual license
fees
|
$
2,733
|
$
3,400
|
Prepaid
professional services
|
21,766
|
-
|
Prepaid
insurance
|
3,848
|
-
|
Annual mining claim
fees
|
1,653
|
1,653
|
Down payment on
purchase of property
|
3,000
|
-
|
|
$
32,999
|
$
5,053
|
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
Note
7 – Investment in Land and Property
On
July 26, 2017, the Company closed on the purchase of property,
consisting of a home, recreational facility and RV park located at
5535 State Highway 12 in La Veta, Colorado to be developed into a
bioscience center. The home has 4 Bedrooms and 2 Baths, and the
recreational facility has showers, laundry, and reception area with
an additional equipment barn attached, in addition to another
facility with 9,500 square feet. The RV Park has 24 sites with full
hook-ups including water, sewer, and electric, which the Company
plans to convert into a series of small research pods.
Under the terms of the purchase agreement, the Company paid
$525,000 down, including 25,000 shares of our common stock, and
Sangre took immediate possession of the property. Under the terms
of the original purchase agreement, the Company was 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. On January 12, 2018, the Company entered
into an Amendment No. 1 to the $475,000 principal amount promissory
note issued by the Company to the seller of the property, under
which both parties agreed to amend the purchase and the promissory
note to allow the Company to payoff the note in full if it paid
$100,000 in cash on or before January 15, 2018 and issued the
seller 125,000 shares of common stock, restricted in accordance
with Rule 144, on before January 20, 2018. Through an escrow
process, the Company paid the seller $100,000 in cash and issued
him 125,000 shares of common stock in accordance with the Amendment
No. 1, in exchange for a full release of the deed of trust that was
securing the promissory note, on January 17, 2018. As a result, the
$475,000 principal promissory note issued to the seller was deemed
paid-in-full and fully satisfied and the Company owned the property
without encumbrances as of that date. T
he total purchase
price was as follows:
|
|
|
|
Consideration:
|
|
Common stock
payment of 25,000 shares
(1)
|
$
30,000
|
Cash payment of
down payment
|
50,000
|
Cash paid at
closing
|
444,640
|
Short term
liabilities assumed and paid at closing
(2)
|
5,360
|
Note
payable
(3)
|
475,000
|
Total
purchase price
|
$
1,005,000
|
|
(1)
Consideration
consisted of an advance payment of 25,000 shares of the
Company’s common stock valued at $30,000 based on the closing
price of the Company’s common stock on the July 18, 2017 date
of grant.
|
|
|
(2)
Purchaser’s
shares of closing costs, including the seller’s prepaid
property taxes.
|
|
|
(3)
As
disclosed in Note 11, the seller financed $475,000 with a
promissory note bearing interest at 5%, payable in four consecutive
semi-annual installments in the amount of $118,750 plus accrued
interest commencing on January 26, 2018 and continuing on the 26th
day of July and the 26th day of January each year until the debt is
repaid on July 26, 2019. The note carries a late fee of $5,937.50
in the event any installment payment is more than 30 days late, and
upon default the interest rate shall increase to 12% per
annum.
|
Note
8 – Property and Equipment
Property and
equipment consist of the following at December 31, 2017 and 2016,
respectively:
|
|
|
|
|
|
Property
improvements
|
$
28,934
|
$
-
|
Automobiles
|
105,132
|
-
|
Office
equipment
|
4,934
|
650
|
Lab
equipment
|
15,202
|
-
|
Property
|
891,250
|
-
|
|
1,045,452
|
650
|
Less accumulated
depreciation
|
(45,040
)
|
(386
)
|
|
$
1,000,412
|
$
264
|
Non-depreciable
land with an appraised value of $113,750 was acquired with the La
Veta property on July 26, 2017.
Depreciation and
amortization expense totaled $44,654 and $130 for the years ended
December 31, 2017 and 2016, respectively.
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
Note
9 – Convertible Notes Payable
Convertible notes
payable consist of the following at December 31, 2017 and 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. 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.
|
$
-
|
$
35,000
|
The Company
recognized interest expense of $1,759 and $3,500 related to the
convertible debts for the years ended December 31, 2017
and 2016, respectively.
On June 16, 2017,
the note was assigned to another party and the debt, consisting of
$35,000 of principal and $33,250 of interest, was exchanged for
70,000 shares of common stock and warrants to acquire 70,000 more
shares at $3 per share over the following twelve months. The
securities exchanged were valued at $136,233 based on the closing
price of the Company’s common stock on the date of exchange,
resulting in a loss on extinguishment of
$67,983.
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
Note
10 – Notes Payable, Related Parties
Notes payable,
related parties consist of the following at
December 31, 2017 and 2016,
respectively:
|
|
|
|
|
|
|
|
|
On various dates, the
Company received advances from the Company’s CEO, Glenn
Martin. Mr. Martin owns approximately 56% of our common stock. The
unsecured non-interest bearing loans were due on demand. A detailed
list of advances and repayments follows:
|
|
|
|
|
|
|
|
|
March 14,
2016
|
$
10,000
|
March 15,
2016
|
$
(6,000
)
|
|
|
April 18,
2016
|
1,800
|
October 20,
2016
|
(3,000
)
|
|
|
June 16,
2016
|
1,100
|
October 27,
2016
|
(3,000
)
|
|
|
February 13,
2017
|
8,000
|
November 3,
2016
|
(900
)
|
|
|
March 10,
2017
|
1,000
|
March 23,
2017
|
(3,813
)
|
|
|
|
|
March 27,
2017
|
(360
)
|
|
|
|
|
July 3,
2017
|
(4,826
)
|
|
|
|
$
21,900
|
|
$
(21,900
)
|
$
-
|
$
-
|
|
|
|
On December 29,
2017, the Company received an unsecured loan, bearing interest at
2% in the amount of $37,000, due on demand from Dr. Pat Williams,
PhD. The largest aggregate amount outstanding was $37,000 during
the periods ended December 31, 2017 and December 31, 2016. Mr.
Williams is a founding member and principal of our wholly-owned
subsidiary, Sangre AT, LLC
|
37,000
|
-
|
|
|
|
On August 23, 2016,
the Company received an unsecured, non-interest bearing loan in the
amount of $3,000, due on demand from Wendy Seabre, bearing interest
at 10% per annum. Repaid on June 15, 2017. The largest aggregate
amount outstanding was $3,000 during the periods ended September
30, 2017 and December 31, 2016. Mrs. Seabre is the wife of Mr.
Roger Seabre, who owns approximately 2% of our common stock and has
been a significant investor recently.
|
-
|
3,000
|
|
|
|
On January 21,
2015, the Company received an unsecured loan in the amount of
$1,300, due on demand from Wendy Seabre, bearing interest at 10%
per annum. Repaid on June 15, 2017. The largest aggregate amount
outstanding was $1,300 during the periods ended September 30, 2017
and December 31, 2016. Mrs. Seabre is the wife of Mr. Roger Seabre,
who owns approximately 2% of our common stock and has been a
significant investor recently.
|
-
|
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 Robert Leitzman. Interest is
being imputed at the Company’s estimated borrowing rate, or
10% per annum. The largest aggregate amount outstanding was $2,000
during the periods ended September 30, 2017 and December 31, 2016.
Mr. Leitzman owns less than 1% of the Company’s common stock,
however, the Mr. Leitzman is deemed to be a related party given the
non-interest bearing nature of the loan and the materiality of the
debt at the time of origination.
|
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 Sandra Orman. The largest aggregate amount outstanding
was $10,000 during the periods ended September 30, 2017 and
December 31, 2016. Mrs. Orman owns less than 1% of the
Company’s common stock, however, Mrs. Orman is deemed to be a
related party given the nature of the loan and the materiality of
the debt at the time of origination.
|
10,000
|
10,000
|
|
|
|
Notes payable,
related parties
|
$
49,000
|
$
16,300
|
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
The Company
recorded interest expense in the amount of $1,059 and $1,821 for
the years ended December 31, 2017 and 2016, respectively,
including imputed interest expense in the amount of $421 and $583
for the years ended December 31, 2017 and 2016,
respectively related to notes payable, related
parties.
Note
11 – Note Payable
Note payable
consist of the following at December 31, 2017 and 2016,
respectively:
|
|
|
|
|
|
|
|
|
On July 26, 2017,
the Company issued a $475,000 note payable, bearing interest at 5%
per annum, to A.R. Miller (“Miller Note”) pursuant to
the purchase of land and property in La Veta, Colorado. The note is
to be paid in four consecutive semi-annual installments in the
amount of $118,750 plus accrued interest commencing on January 26,
2018 and continuing on the 26th day of July and the 26th day of
January each year until the debt is repaid on July 26, 2019. The
note carries a late fee of $5,937.50 in the event any installment
payment is more than 30 days late, and upon default the interest
rate shall increase to 12% per annum.
|
$
475,000
|
$
-
|
The Company
recognized interest expense of $10,281 and $-0- related to the note
payable for the years ended December 31, 2017 and 2016,
respectively.
Note
12 – Commitments and Contingencies
On November 8,
2016, the Company entered into an agreement with Gregory
DiPaolo’s Pro Am Golf, LLC to acquire improved property
located in Westfield, New York. 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. Subsequently, we entered into an amended Purchase and
Sale Agreement on October 24, 2017, under which we amended the
total purchase price to Eight Hundred Thousand Dollars ($800,000)
and forfeited our previous deposit of stock. Under the terms of the
amended agreement, we paid an additional Ten Thousand Dollar
($10,000) deposit on October 26, 2017, with the remaining purchase
price to be paid on or before the date closing date, which is
scheduled for February 1, 2018. The property is approximately 43
acres and has unlimited water extraction rights from the State of
New York. We plan to use this property as our inroads to the New
York hemp and infused beverage markets in the future. There are no
current plans or budget to proceed with operations in New York, and
there will not be until proper funding is secured after acquiring
this property.
Note
13 – 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.
Common Stock Sales (2017)
On November 10, 2017,
the Company sold 125,000 units at $1.00 per unit, consisting of
125,000 shares of common stock and warrants to purchase 125,000
shares of common stock at an exercise price of $3.00 per share,
exercisable until November 10, 2019, in exchange for total proceeds
of $125,000.
The proceeds
received were allocated between the common stock and warrants on a
relative fair value basis.
On
October 24, 2017, the Company sold 13,333 units at $0.75 per unit,
consisting of 13,333 shares of common stock and warrants to
purchase 13,333 shares of common stock at an exercise price of
$3.00 per share, exercisable until October 24, 2019, 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.
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
On September 29,
2017, the Company sold 300,000 units at $0.50 per unit, consisting
of 300,000 shares of common stock and warrants to purchase 300,000
shares of common stock at an exercise price of $3.00 per share,
exercisable until September 29, 2019, in exchange for total
proceeds of $150,000. The proceeds received were allocated between
the common stock and warrants on a relative fair value
basis.
On September 24,
2017, the Company sold 133,000 units at $0.7519 per unit,
consisting of 133,000 shares of common stock and warrants to
purchase 133,000 shares of common stock at an exercise price of
$3.00 per share, exercisable until September 24, 2019, in exchange
for total proceeds of $100,000. The proceeds received were
allocated between the common stock and warrants on a relative fair
value basis.
On September 5,
2017, the Company sold 40,000 units at $0.50 per unit, consisting
of 40,000 shares of common stock and warrants to purchase 40,000
shares of common stock at an exercise price of $3.00 per share,
exercisable until September 5, 2019, in exchange for total proceeds
of $20,000. The proceeds received were allocated between the common
stock and warrants on a relative fair value
basis.
On August 2, 2017,
the Company sold 100,000 units at $0.50 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 $3.00 per share,
exercisable until August 2, 2019, 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 July 7, 2017,
the Company sold 200,000 units at $0.50 per unit, consisting of
200,000 shares of common stock and warrants to purchase 200,000
shares of common stock at an exercise price of $3.00 per share,
exercisable until July 7, 2019, in exchange for total proceeds of
$100,000. The proceeds received were allocated between the common
stock and warrants on a relative fair value
basis.
On May 31, 2017,
the Company sold 20,000 units at $0.50 per unit, consisting of
20,000 shares of common stock and warrants to purchase 20,000
shares of common stock at an exercise price of $3.00 per share,
exercisable until May 31, 2019, 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 May 31, 2017,
the Company sold 300,000 units at $0.50 per unit, consisting of
300,000 shares of common stock and warrants to purchase 150,000
shares of common stock at an exercise price of $3.00 per share,
exercisable until May 31, 2019, in exchange for total proceeds of
$150,000. The proceeds received were allocated between the common
stock and warrants on a relative fair value
basis.
On May 25, 2017,
the Company sold 20,000 units at $0.50 per unit, consisting of
20,000 shares of common stock and warrants to purchase 20,000
shares of common stock at an exercise price of $3.00 per share,
exercisable until May 25, 2019, 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 May 25, 2017,
the Company sold 20,000 units at $0.50 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 $3.00 per share,
exercisable until May 25, 2019, 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 April 20, 2017,
the Company sold 500,000 units at $1.00 per unit, consisting of
500,000 shares of common stock and warrants to purchase 500,000
shares of common stock at an exercise price of $3.00 per share,
exercisable until April 20, 2018, in exchange for total proceeds of
$500,000. The proceeds received were allocated between the common
stock and warrants on a relative fair value
basis.
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.
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
Warrants Exercised (2017)
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 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 in Satisfaction of Subscriptions Payable
(2016)
On October 27,
2016, the Company issued a total of 1,770,000 shares of common
stock in satisfaction of common stock granted during the year ended
December 31, 2015, in the aggregate value of
$114,990.
Common Stock Issued for Acquisitions and Property Purchases
(2017)
On July 18, 2017,
the Company issued 25,000 shares of common stock as a good faith
deposit toward the purchase of land and property located in La
Veta, CO that closed on July 26, 2017, which were valued at $30,000
based on the closing price of the Company’s common stock on
the date of grant.
On April 20, 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 $1,003,850 based on the closing price of
the Company’s common stock on the date of
grant.
Common Stock Issued for Bartered Assets (2017)
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 and Warrants Issued for Settlement of Convertible Debt
(2017)
On June 16, 2017, a
convertible note, consisting of $35,000 of principal and $33,250 of
unpaid interest, was assigned to a third party and the debt was
exchanged for a unit offering, consisting of 70,000 shares of
common stock and warrants to purchase 70,000 shares of common stock
at an exercise price of $3.00 per share, exercisable until June 16,
2018. The stock was valued at $86,800 based on the closing price of
the Company’s common stock on the date of exchange and the
warrants were valued at $49,433 using the Black-Scholes
option-pricing model was $49,433, or $0.70618 per share, based on a
volatility rate of 211%, a risk-free interest rate of 1.21% and an
expected term of 1.0 year, resulting in a loss on extinguishment of
$67,983.
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
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
(2017)
On August 1, 2017,
the Company granted 150,000 shares of common stock to Mary
Williams, a principal of Sangre AT, LLC, for services performed.
The fair value of the common stock was $154,500 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 Pat Williams.
PhD, a principal of Sangre AT, LLC, 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 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.
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 (2017)
On December 27, 2017,
the Company granted an aggregate of 24,882 shares of common stock
to an individual as repayment for travel and hotel expenses
incurred by the individual during a trip to India on company
business.
The total fair value of the common stock was
$89,078 based on the closing price of the Company’s common
stock on the date of grant.
On November 7, 2017, the Company granted 60,000
shares of common stock to a consultant for services
performed.
The total fair value of the common stock was
$79,800 based on the closing price of the Company’s common
stock on the date of grant.
On August 1, 2017,
the Company granted an aggregate of 199,000 shares of common stock
to seven consultants for services performed. The aggregate fair
value of the common stock was $204,970 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 116,000 shares of common stock
to eleven consultants for services performed. The aggregate fair
value of the common stock was $232,893 based on the closing price
of the Company’s common stock on the date of
grant.
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.
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
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 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.
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.
Capital Contributions
The Company imputed
interest on non-interest bearing, related party loans, resulting in
a total of $421 and $583 of contributed capital during the years
ended December 31, 2017 and 2016, respectively.
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
Note
14 – Common Stock Warrants
Common Stock Warrants Granted (2017)
On November 10,
2017, the Company sold warrants to purchase 125,000 shares of
common stock at $3.00 per share over a two (2) year period from the
date of sale, in exchange for total proceeds of $125,000 in
conjunction with the sale of 125,000 shares of common stock. The
relative fair value of the 125,000 common stock warrants using the
Black-Scholes option-pricing model was $172,403, or $1.37922 per
share, based on a volatility rate of 206%, a risk-free interest
rate of 1.67% and an expected term of 2.0 years. The proceeds
received were allocated between the common stock and warrants on a
relative fair value basis.
On October 24,
2017, the Company sold warrants to purchase 13,333 shares of common
stock at $3.00 per share over a two (2) year period from the date
of sale, in exchange for total proceeds of $10,000 in conjunction
with the sale of 13,333 shares of common stock. The relative fair
value of the 13,333 common stock warrants using the Black-Scholes
option-pricing model was $13,089, or $0.98167 per share, based on a
volatility rate of 206%, a risk-free interest rate of 1.60% and an
expected term of 2.0 years. The proceeds received were allocated
between the common stock and warrants on a relative fair value
basis.
On September 29,
2017, the Company sold warrants to purchase 300,000 shares of
common stock at $3.00 per share over a two (2) year period from the
date of sale, in exchange for total proceeds of $150,000 in
conjunction with the sale of 300,000 shares of common stock. The
relative fair value of the 300,000 common stock warrants using the
Black-Scholes option-pricing model was $303,242, or $1.01081 per
share, based on a volatility rate of 206%, a risk-free interest
rate of 1.47% and an expected term of 2.0 years. The proceeds
received were allocated between the common stock and warrants on a
relative fair value basis.
On September 24,
2017, the Company sold warrants to purchase 133,000 shares of
common stock at $3.00 per share over a two (2) year period from the
date of sale, in exchange for total proceeds of $100,000 in
conjunction with the sale of 133,000 shares of common stock. The
relative fair value of the 133,000 common stock warrants using the
Black-Scholes option-pricing model was $152,795, or $1.14884 per
share, based on a volatility rate of 206%, a risk-free interest
rate of 1.46% and an expected term of 2.0 years. The proceeds
received were allocated between the common stock and warrants on a
relative fair value basis.
On September 5,
2017, the Company sold warrants to purchase 40,000 shares of common
stock at $3.00 per share over a two (2) year period from the date
of sale, in exchange for total proceeds of $20,000 in conjunction
with the sale of 40,000 shares of common stock. The relative fair
value of the 40,000 common stock warrants using the Black-Scholes
option-pricing model was $27,215, or $0.68039 per share, based on a
volatility rate of 207%, a risk-free interest rate of 1.30% and an
expected term of 2.0 years. The proceeds received were allocated
between the common stock and warrants on a relative fair value
basis.
On August 2, 2017,
the Company sold warrants to purchase 100,000 shares of common
stock at $3.00 per share over a two (2) year period from the date
of sale, in exchange for total proceeds of $50,000 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 $80,872, or $0.80872 per share, based on a
volatility rate of 210%, a risk-free interest rate of 1.36% and an
expected term of 2.0 years.. The proceeds received were allocated
between the common stock and warrants on a relative fair value
basis.
On July 7, 2017,
the Company sold warrants to purchase 200,000 shares of common
stock at $3.00 per share over a two (2) year period from the date
of sale, in exchange for total proceeds of $100,000 in conjunction
with the sale of 200,000 shares of common stock. The relative fair
value of the 200,000 common stock warrants using the Black-Scholes
option-pricing model was $156,339, or $0.78169 per share, based on
a volatility rate of 209%, a risk-free interest rate of 1.40% and
an expected term of 2.0 years. The proceeds received were allocated
between the common stock and warrants on a relative fair value
basis.
On June 16, 2017,
the Company issued warrants to purchase 70,000 shares of common
stock at $3.00 per share over a one (1) year period from the date
of exchange in conjunction with the issuance of 70,000 shares of
common stock in exchange for the settlement of a convertible note,
consisting of $35,000 of principal and $33,250 of interest. The
relative fair value of the 70,000 common stock warrants using the
Black-Scholes option-pricing model was $49,433, or $0.70618 per
share, based on a volatility rate of 211%, a risk-free interest
rate of 1.21% 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 May 31, 2017,
the Company sold warrants to purchase 20,000 shares of common stock
at $3.00 per share over a two (2) year period from the date of
sale, in exchange for total proceeds of $10,000 in conjunction with
the sale of 20,000 shares of common stock. The relative fair value
of the 20,000 common stock warrants using the Black-Scholes
option-pricing model was $8,946, or $0.44730 per share, based on a
volatility rate of 209%, a risk-free interest rate of 1.28% and an
expected term of 2.0 years. 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, 2017 and 2016
On May 31, 2017,
the Company sold warrants to purchase 300,000 shares of common
stock at $3.00 per share over a two (2) year period from the date
of sale, in exchange for total proceeds of $150,000 in conjunction
with the sale of 300,000 shares of common stock. The relative fair
value of the 300,000 common stock warrants using the Black-Scholes
option-pricing model was $134,190, or $0.44730 per share, based on
a volatility rate of 209%, a risk-free interest rate of 1.28% and
an expected term of 2.0 years. The proceeds received were allocated
between the common stock and warrants on a relative fair value
basis.
On May 25, 2017,
the Company sold warrants to purchase 20,000 shares of common stock
at $3.00 per share over a two (2) year period from the date of
sale, in exchange for total proceeds of $10,000 in conjunction with
the sale of 20,000 shares of common stock. The relative fair value
of the 20,000 common stock warrants using the Black-Scholes
option-pricing model was $5,887, or $0.29434 per share, based on a
volatility rate of 205%, a risk-free interest rate of 1.30% and an
expected term of 2.0 years. The proceeds received were allocated
between the common stock and warrants on a relative fair value
basis.
On May 25, 2017,
the Company sold warrants to purchase 100,000 shares of common
stock at $3.00 per share over a two (2) year period from the date
of sale, in exchange for total proceeds of $50,000 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 $29,434, or $0.29434 per share, based on a
volatility rate of 205%, a risk-free interest rate of 1.30% and an
expected term of 2.0 years. The proceeds received were allocated
between the common stock and warrants on a relative fair value
basis.
On April 20, 2017,
the Company sold warrants to purchase 500,000 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 $500,000 in conjunction
with the sale of 500,000 shares of common stock. The relative fair
value of the 500,000 common stock warrants using the Black-Scholes
option-pricing model was $626,641, or $1.25328 per share, based on
a volatility rate of 202%, a risk-free interest rate of 1.01% 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 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.
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.
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.
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
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 Cancelled
No warrants were
cancelled during the years ended December 31, 2017 and
2016.
Common Stock Warrants Expired
A
total of 322,334 and 190,000 warrants expired during years ended
December 31, 2017 and 2016,
respectively.
Common Stock 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.
The following is a
summary of information about the Common Stock Warrants outstanding
at December 31, 2017.
|
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
|
|
|
|
|
|
|
|
|
|
|
|
$3.00
|
|
1,973,333
|
|
14.25
months
|
|
$3.00
|
|
1,973,333
|
|
$3.00
|
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
|
1.25
%
|
0.66
%
|
Average expected
life (in years)
|
1.64
|
1.00
|
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, 2017 and 2016 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
$0.92649 and $0.02186 per warrant granted during the years ended
December 31, 2017 and 2016, respectively.
WEED,
INC.
(Formerly United
Mines, Inc.)
Notes to Financial
Statements
For the Years Ended
December 31, 2017 and 2016
The following is a
summary of activity of outstanding common stock
warrants:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
Warrants
expired
|
(325,000
)
|
1.50
|
Warrants
granted
|
1,973,333
|
3.00
|
Balance, December
31, 2017
|
1,973,333
|
$
3.00
|
|
|
|
Exercisable,
December 31, 2017
|
1,973,333
|
$
3.00
|
Note
15 – 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, 2017 and 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 December 31, 2017 and December 31, 2016, the Company had
approximately $10,786,000 and $8,179,000 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
|
$
3,775,100
|
$
2,862,500
|
|
|
|
Net deferred tax
assets before valuation allowance
|
$
3,775,100
|
$
2,862,500
|
Less: Valuation
allowance
|
(3,775,100
)
|
(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 December 31, 2017 and 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 Years Ended
December 31, 2017 and 2016
Note
16 – Subsequent Events
Common Stock Sales
On February 14, 2018, the Company sold 30,700 shares of common
stock in exchange for total proceeds of
$46,050.
On February 9, 2018, the Company sold 15,000 units at $3.00 per
unit, consisting of 15,000 shares of common stock and warrants to
purchase 15,000 shares of common stock at an exercise price of
$12.50 per share, exercisable until February 9, 2019, in exchange
for total proceeds of $45,000.
On January 23, 2018, the Company sold 100,000 units at $2.50 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
$12.50 per share, exercisable until January 23, 2020, in exchange
for total proceeds of $250,000.
On January 21, 2018, the Company sold 100,000 units at $2.50 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
$12.50 per share, exercisable until January 21, 2020, in exchange
for total proceeds of $250,000.
On January 5, 2018, the Company sold 100,000 units at $1.50 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
$5.00 per share, exercisable until January 5, 2019, in exchange for
total proceeds of $150,000.
On January 4, 2018, the Company sold 150,000 shares of common stock
in exchange for total proceeds of $225,000.
Common Stock Issued for Settlement of Debt
On January 12,
2018, the Company entered into an Amendment No. 1 to the $475,000
principal amount promissory note issued by the Company to the
seller of the property in La Veta, Colorado, under which both
parties agreed to amend the purchase and the promissory note to
allow the Company to pay off the note in full for the payment of
$100,000 in cash on or before January 15, 2018 and issued the
seller 125,000 shares of common stock, restricted in accordance
with Rule 144, on before January 20, 2018. The shares were issued
to the seller on January 12, 2018.
Common Stock in Satisfaction of Subscriptions
Payable
On February 16,
2018, the Company issued a total of 100,000 shares of common stock
in satisfaction of common stock granted during the year ended
December 31, 2017, in the aggregate value of
$200,770.
To the
Board of Directors and
Stockholders
of Sangre AT, LLC.
We have
audited the accompanying balance sheet of Sangre AT, LLC. as of
December 31, 2016, and the related statements of income,
comprehensive income, stockholders’ equity, and cash flows
from inception through December 31, 2016. Sangre AT, LLC.’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 Sangre AT, LLC
as of December 31, 2016, and the results of its operations and its
cash from inception through the 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 had no revenues or
assets as of December 31, 2016 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
|
|
|
|
November
16, 2017
|
|
|
|
SANGRE AT, LLC
|
BALANCE SHEET
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
Cash
|
$
-
|
Total
current assets
|
-
|
|
|
Total
assets
|
$
-
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
Accounts
payable
|
$
-
|
Total
current liabilities
|
-
|
|
|
Stockholders'
equity:
|
|
Members'
equity
|
-
|
Total
stockholders' equity
|
-
|
|
|
Total
liabilities and stockholders' equity
|
$
-
|
|
|
The
accompanying notes are an integral part of these financial
statements.
|
|
|
|
|
|
|
|
August
26, 2016
|
|
(inception)
to
|
|
December
31, 2016
|
|
|
Revenue
|
$
-
|
|
|
Operating
expenses:
|
|
General
and administrative
|
-
|
Depreciation
|
-
|
Total
operating expenses
|
-
|
|
|
Net
operating loss
|
-
|
|
|
Other
expense:
|
-
|
|
|
Net
loss
|
$
-
|
|
|
The
accompanying notes are an integral part of these financial
statements.
|
|
STATEMENT OF STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
August 26, 2016 (inception)
|
$
-
|
$
-
|
|
|
|
Net
loss for the period from August 26, 2016 (inception) to December
31, 2016
|
-
|
-
|
|
|
|
Balance,
December 31, 2016
|
$
-
|
$
-
|
|
|
|
T
he
accompanying notes are an integral part of these financial
statements.
|
SANGRE AT, LLC
|
STATEMENT OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
Net
Income
|
$
-
|
Decrease
(increase) in assets:
|
|
Prepaid
expenses
|
-
|
Increase
(decrease) in liabilities:
|
|
Accounts
payable
|
-
|
Net
cash provided by operating activities
|
-
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
Proceeds
from the sale of members' interests
|
-
|
Net
cash provided by financing activities
|
-
|
|
|
NET
CHANGE IN CASH
|
-
|
CASH
AT BEGINNING OF PERIOD
|
-
|
|
|
CASH
AT END OF PERIOD
|
$
-
|
|
|
SUPPLEMENTAL
INFORMATION:
|
|
Interest
paid
|
$
-
|
Income
taxes paid
|
$
-
|
|
|
The
accompanying notes are an integral part of these financial
statements.
|
Sangre
AT, LLC
Notes to Financial
Statements
For the Year Ended
December 31, 2016
Note
1 – Nature of Business and Significant Accounting
Policies
Nature of Business
Sangre AT, LLC (the
“Company”, “Sangre AgroTech”), was
incorporated under the laws of the State of Wyoming on
August 26, 2016 (“Inception Date”) to conduct
Cannabis research. The Company’s plan is to perform genome
sequencing of numerous strains of
Cannabis
sativa,
Cannabis indica,
and hybrids in order
to discover and describe compounds and/or classes of compounds
which can be used effectively in the treatment of human disease. As
in the case of the human genome, the cannabis genome is the
blueprint of the plant that contains all the biological and
chemical instructions for the growth, development, and synthesis of
the plants’ constituent molecules. Through the process of
whole genome sequencing, Sangre AgroTech can read and evaluate the
potential of any one strain for its ability to produce native
compounds which can be utilized for the treatment of human
disease.
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.
Sangre
AT, LLC
Notes to Financial
Statements
For the Year Ended
December 31, 2016
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.
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.
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.
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.
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.
Sangre
AT, LLC
Notes to Financial
Statements
For the Year Ended
December 31, 2016
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.
No other new
accounting pronouncements, issued or effective during the period
from August 26, 2016 (inception) to December 31, 2016,
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 had no revenues or
assets at December 31, 2016. These factors raise
substantial doubt about the Company’s ability to continue as
a going concern. Management is actively pursuing research 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 – Subsequent Events
Commencement of Research Activities
The Company
commenced research activities in March of 2017, consisting of a
cannabis genomic study to complete a global genomic classification
of the cannabis plant genus with the intent to discover native
compounds in cannabis strains that can be utilized for the
treatment of human disease.
Business Combination
On April 20, 2017,
the Company closed on a Share Exchange Agreement
(“SEA”) with WEED, Inc., an Arizona company that plans
to become a true “Seed-to-Sale” company providing
infrastructure, financial solutions and real estate options in the
emerging cannabis market. Pursuant to the SEA, WEED, Inc. purchased
all of the outstanding membership interests of Sangre AgroTech in
consideration for an a total of 500,000 shares of common to seven
individuals, valued at $1,003,850 based on the closing price of
WEED Inc.’s common stock on the date of grant.
In connection with
the SEA, two members of Sangre entered into Consulting Agreements,
pursuant to which the members of Sangre agreed to provide
consulting services to the Company for a period of one year
following closing, with the option to extend for a two year period
in annual increments, upon mutual written agreement by both
parties. Pursuant to the agreement, the members were each awarded
50,000 shares of common stock with the issuances deferred until
January 1, 2018.