10-Q: Dogecoin Cash Inc. Reports 31% Revenue Drop in Q3 Amidst Increased Competition

Dogecoin Cash, Inc., formerly Cannabis Sativa, Inc., experienced a 31% decrease in revenue for the nine months ended September 30, 2024, primarily due to heightened competition in the cannabis telemedicine market.

Summary

• Dogecoin Cash, Inc., formerly Cannabis Sativa, Inc., reported its financial results for the third quarter of 2024.
• The company experienced a 27% decrease in revenue for the three months ended September 30, 2024, compared to the same period in 2023, with revenue dropping from $271,207 to $189,121.
• For the nine months ended September 30, 2024, revenue decreased by 31%, from $939,772 to $648,643.
• The company attributes the revenue decline to increased competition in the cannabis telemedicine industry.
• Operating expenses also decreased, with total expenses down 41% for the quarter and 24% for the nine-month period.
• The net loss from continuing operations was $181,847 for the quarter and $554,583 for the nine-month period.
• The company had $41,352 in cash on hand at the end of the third quarter of 2024.
• The company has an accumulated deficit of $82,895,826 as of September 30, 2024.
• Management has identified material weaknesses in disclosure controls and procedures due to the small size of the accounting staff.
• The company is evaluating acquiring cyber liability insurance.
• The company is considering raising capital through public or private offerings.

Sentiment

Score: 3

Explanation: The document indicates significant financial challenges, including a substantial revenue decline, net losses, and a large accumulated deficit. The company's low cash balance and identified material weaknesses in internal controls further contribute to a negative outlook.

Positives

• Cost of revenues as a percentage of sales decreased by 30% for the quarter and 23% for the nine-month period.
• Total operating expenses decreased in both the three and nine month periods.
• Decreases were seen in depreciation and amortization, wages and salaries, and general and administrative expenses.
• PrestoDoctor management salaries also decreased in both the three and nine month periods.

Negatives

• The company experienced a significant decrease in revenue, attributed to increased competition in the cannabis telemedicine industry.
• The company reported a net loss from continuing operations for both the three and nine month periods.
• The company has a substantial accumulated deficit of $82,895,826.
• The company's cash on hand is only $41,352, which is not sufficient to meet immediate operational needs.
• Material weaknesses were identified in the company's disclosure controls and procedures.

Risks

• The company faces significant competition in the cannabis telemedicine market, which is impacting revenue.
• The company's low cash balance raises concerns about its ability to meet immediate operational needs.
• The accumulated deficit of $82,895,826 indicates a history of losses and potential financial instability.
• Material weaknesses in disclosure controls and procedures could lead to inaccurate financial reporting.
• The company's ability to continue as a going concern is dependent on its ability to generate profitable operations or raise capital.
• Raising capital through public or private offerings will cause dilution to current shareholders.

Future Outlook

The company may seek to raise money for working capital purposes through a public offering of its equity capital or through a private placement of equity capital or convertible debt. It will be important for the Company to be successful in its efforts to raise capital in this manner if it is going to be able to further its business plan in an aggressive manner. Raising capital in this manner will cause dilution to current shareholders.

Management Comments

• Our CEO is responsible for overseeing our business operations and is responsible for day-to-day assessment and confers weekly with subsidiary webmaster to understand any risks from cybersecurity threats, including the prevention, mitigation, detection, and remediation of cybersecurity incidents.
• Management of the Company believes that these material weaknesses are due to the small size of the companys accounting staff.
• As the Company grows, management expects to increase the number of employees, which will enable us to implement adequate segregation of duties within the internal control framework.

Industry Context

The company's struggles reflect the increasing competition in the cannabis telemedicine industry, which is impacting revenue and market share. This suggests a need for the company to differentiate its services or find new revenue streams to remain competitive.

Comparison to Industry Standards

• The reported revenue decline of 31% over nine months is significantly worse than the average growth rate of the telemedicine industry, which has seen a surge in demand in recent years, although the cannabis specific telemedicine sector may be more volatile.
• Companies like Teladoc Health and Amwell, while not directly comparable due to their broader scope, have shown more stable revenue growth, indicating that Dogecoin Cash, Inc. is facing unique challenges.
• The company's accumulated deficit of $82.9 million is substantial compared to other companies in the telemedicine space, suggesting a need for significant financial restructuring or capital infusion.
• The identification of material weaknesses in disclosure controls is a serious concern, as it indicates a lack of robust internal processes, which is not typical for publicly traded companies.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not a party to any material legal proceedings, and, to the best of our knowledge, no such legal proceedings have been threatened against us.

Related Party Transactions

• The company has received funds from borrowings on notes payable and advances from related parties and officers of the Company to cover operating expenses.
• During the nine months ended September 30, 2024, David Tobias, the Companys chief executive officer and director, loaned $7,240 to the Company for notes payable.
• During the nine months ended June 30, 2024, the Company and Cathy Carroll, director, entered into a note payable for $42,500 for compensation due her for services.
• The company has an outstanding loan in the amount of $4,000 to a director of the Company which was paid off with stock on May 22, 2024.
• The company has a balance due from MJ Harvest, Inc. of $75,054.
• The company has a balance due from a director of $1,250.

Stakeholder Impact

• Shareholders will experience dilution if the company raises capital through public or private offerings.
• Employees may be impacted by the company's financial challenges and potential restructuring.
• Customers may be affected by changes in the company's services or pricing due to financial pressures.
• Creditors may be concerned about the company's ability to repay its debts given its low cash balance and accumulated deficit.

Next Steps

• The company is evaluating whether to acquire cyber liability insurance.
• The company is considering raising capital through public or private offerings.
• The company is continuing discussions with MJ Harvest in hopes of completing the merger.
• The company will be working to implement adequate segregation of duties within the internal control framework as the company grows.

Key Dates

Keywords

Dogecoin Cash, Cannabis Sativa, telemedicine, revenue, net loss, financial results, cybersecurity, capital raise, disclosure controls, going concern