10-Q: Farmhouse Inc. Reports Q1 2024 Results, Revenue Up but Losses Continue

Farmhouse Inc. saw a revenue increase in Q1 2024 compared to the same period last year, but the company continues to operate at a loss.

Summary

• Farmhouse Inc. reported its financial results for the first quarter of 2024, ending March 31st.
• The company's revenue increased to $2,261, up from $1,069 in the same quarter of the previous year.
• However, the company experienced a net loss of $116,071, which is an improvement compared to the $171,315 loss in Q1 2023.
• The company's operating expenses decreased to $104,103 from $159,329 year-over-year.
• The company's cash and cash equivalents stood at $446 as of March 31, 2024, compared to zero at the end of 2023.
• The company has a total stockholders deficit of $2,078,477.
• The company's accumulated deficit is $6,421,559.
• The company's basic and diluted net loss per share was $0.01 for both Q1 2024 and Q1 2023.
• The company's total liabilities are $2,079,944.
• The company's total assets are $1,467.

Sentiment

Score: 3

Explanation: The document shows some positive signs with increased revenue and reduced losses, but the company's financial position is weak, and there are significant concerns about its ability to continue as a going concern. The high debt levels and defaults are also concerning.

Positives

• The company's revenue increased year-over-year.
• The company's net loss decreased year-over-year.
• Operating expenses decreased year-over-year.
• The company's cash position improved from zero at the end of 2023 to $446 as of March 31, 2024.

Negatives

• The company continues to operate at a loss.
• The company has a significant stockholders deficit of $2,078,477.
• The company has a significant accumulated deficit of $6,421,559.
• The company's auditors have raised substantial doubt about its ability to continue as a going concern.

Risks

• The company's ability to continue as a going concern is in doubt due to recurring losses and negative cash flows.
• The company is dependent on private equity and financing to fund its operations.
• The company may not be able to raise the necessary capital to cover its ongoing expenses and expand its product offerings.
• The company's convertible notes payable and notes payable are in default.
• The company is subject to risks related to its business, industry, and operations.
• The company's disclosure controls and procedures were not effective as of March 31, 2024.

Future Outlook

The company intends to finance its future working capital needs from the sale of common stock, loans from company officers, and loans from third parties until funds from operations are sufficient. The company is also exploring new IP collaborations and a potential acquisition of Thrown, LLC.

Management Comments

• Management believes that loans and advances from Company officers, funds raised from the sale of its common stock, and funds raised from loans with third parties allow the Company sufficient capital for operations and to continue as a going concern.
• Management is aware of the risks associated with high-interest liability and is committed to meeting all obligations under the terms of the notes.

Industry Context

The company operates in the cannabis industry, which is characterized by state-by-state regulations and an uncertain federal regulatory landscape. The company is leveraging its brand and connections to facilitate valuable relationships within the industry, particularly in the emerging Web3 space.

Comparison to Industry Standards

• It is difficult to directly compare Farmhouse Inc.'s results to industry standards due to its unique business model combining cannabis, social networking, and Web3 licensing.
• Many cannabis companies focus on cultivation, distribution, or retail, while Farmhouse is primarily a technology and licensing company.
• The company's revenue is relatively low compared to established cannabis companies, but its focus on IP licensing and digital collectibles is a unique approach.
• The company's financial position is weak compared to industry benchmarks, with a significant stockholders deficit and accumulated deficit.
• The company's reliance on debt and equity financing is common for early-stage companies in the cannabis industry, but the high interest rates on some of its debt are concerning.
• The company's focus on digital collectibles and Web3 is a relatively new area, and there are no clear industry standards for comparison.

Legal Proceedings

• The company's subsidiary, DTLA, is involved in ongoing litigation related to a Strategic Consulting Agreement with Los Angeles Farmers, Inc. (LAFI).
• The sale of LAFI was completed in April 2024, but it is uncertain whether DTLA will recover anything from the sale.

Related Party Transactions

• Company officers provided cash advances for operating expenses and direct payment of company expenses.
• Company officers were owed $36,141 as of March 31, 2024.
• Company officers own approximately 43.2% of the Company as of March 31, 2024.
• The company has agreed to indemnify company officers for certain events or occurrences arising as a result of the officer or director serving in such capacities.

Stakeholder Impact

• Shareholders face the risk of further dilution due to potential equity financing.
• Employees may be impacted by the company's financial instability.
• Customers may be affected by the company's ability to continue operations.
• Creditors face the risk of non-payment due to the company's financial difficulties.
• Suppliers may be impacted by the company's ability to pay for goods and services.

Next Steps

• The company will continue to develop new IP collaborations.
• The company will work towards a definitive agreement with Thrown, LLC.
• The company will seek to raise additional capital through equity and debt financing.
• The company will continue to expand its product offerings.

Key Dates

Keywords

cannabis, NFT, Web3, licensing, social network, technology, financial results, Farmhouse Inc, revenue, net loss, going concern