S-1: 1606 Corp. Files for Resale of 29.9 Million Shares of Common Stock by GHS Investments LLC

1606 Corp. has filed a registration statement for the resale of up to 29,876,884 shares of its common stock by the selling stockholder, GHS Investments LLC, following an equity financing agreement.

Summary

• 1606 Corp., a Nevada corporation, has filed a Form S-1 registration statement with the SEC.
• The registration statement pertains to the resale of up to 29,876,884 shares of common stock by GHS Investments LLC, the selling stockholder.
• These shares were issued pursuant to an Equity Financing Agreement dated February 6, 2023, between 1606 Corp. and GHS Investments LLC.
• If issued presently, the 29,876,884 shares would represent approximately 24% of the company's issued and outstanding shares as of November 5, 2024.
• 1606 Corp. will not receive any proceeds from the resale of shares by GHS, but will receive proceeds from the initial sale of shares to GHS pursuant to the Financing Agreement.
• The company will sell shares to GHS at 80% of the lowest traded price of its common stock during the ten consecutive trading day period preceding the date on which the company delivers a put notice to GHS.
• GHS has committed to providing up to $20,000,000 over a 24-month period after the effectiveness of the registration statement.
• The company has issued 400,000 shares of common stock as commitment shares to GHS, which are not being registered in this statement.
• As of November 4, 2024, the last reported sale price for 1606 Corp.'s common stock was $0.0136 per share.
• Gregory and Austen Lambrecht control a majority of the voting power of the company due to their ownership of Series B Preferred Stock.

Sentiment

Score: 3

Explanation: The document is largely factual, but the company's financial situation and dependence on future financing raise concerns. The control structure and potential dilution are also negative factors.

Positives

• The company has secured a commitment for up to $20,000,000 in financing from GHS Investments LLC over a 24-month period.
• Following an up-list to the NASDAQ or an equivalent national exchange, the purchase price will be 90% of the Market Price, subject to a floor of $2.00 per share.

Negatives

• The company will not receive any proceeds from the resale of shares by GHS.
• The company's stock is currently trading on the OTC Pink tier, which is considered highly speculative.
• The Lambrechts' control of voting power may not align with the interests of other stockholders.
• The company has a limited operating history and has generated minimal revenue.
• The company has experienced recurring losses from operations and negative cash flows from operating activities and anticipate that it will continue to incur significant operating losses in the future.

Risks

• The company's business plan is speculative and subject to numerous risks and uncertainties.
• The company may not be able to protect its proprietary rights, if any, from infringement or theft by third parties.
• The company may have inadequate capital to successfully execute its business plan.
• The company may not be able to successfully compete against companies with substantially greater resources.
• The company's business is dependent upon available suppliers on its platform.
• The company has no control over the manufacturing and quality of the products it sells.
• The company faces an inherent risk of exposure to product liability claims.
• The market for the company's common stock may be subject to penny stock restrictions, which may result in lack of liquidity and make trading difficult or impossible.
• The price of the company's common stock may be volatile, and the value of the company's common stock could decline.
• Shareholders may be diluted significantly because of the issuance of convertible financial instruments through the company's efforts to obtain financing and satisfy obligations through issuance of additional shares of the company's common stock.
• The company may not have access to the full amount under the financing agreement.

Future Outlook

The company believes it is positioned to become the market leader for AI Bot technology and sees future potential for its chatbot technology to expand beyond the CBD industry.

Industry Context

The company is focusing on the AI chatbot market, specifically for the CBD industry, which is positioned for exponential growth.

Related Party Transactions

• Gregory Lambrecht, former CEO, and Austen Lambrecht, current CEO, are father and son.
• Gregory and Austen Lambrecht control a majority of the voting power of the company due to their ownership of Series B Preferred Stock.
• In June 2021, the Company entered into an Asset Purchase Agreement with Singlepoint to purchase certain assets in exchange for the issuance of a promissory note (the Note) for $63,456.

Stakeholder Impact

• Existing shareholders may experience dilution due to the potential issuance of a large number of shares to GHS Investments LLC.
• The Lambrechts' control of voting power may limit the ability of minority shareholders to influence corporate affairs.

Key Dates

Keywords

common stock, GHS Investments LLC, equity financing, resale, registration statement, CBD industry, AI chatbot, 1606 Corp